The RMR Group Inc.

Good afternoon and welcome to the RMR Group Physical Third Quarter 2025 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's remarks, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note that this event is being recorded. I would now like to turn the conference over to Matt Murphy, Manager of Investor Relations. Please go ahead, sir.

Good afternoon, and thank you for joining RMR's third quarter fiscal 2025 conference call. With me on today's call are President and CEO Adam Portnoy and Chief Financial Officer Matt Jordan. In just a moment, they will provide details about our business and quarterly results, followed by a question and answer session. I would also like to note that the recording and retransmission of today's conference call is prohibited without the prior written consent of the company. Today's conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. These forward-looking statements are based on RMR's beliefs and expectations as of today, August 6, 2025, and actual results may differ materially from those that we project. The company undertakes no obligation to revise or publicly release the results of any revision to the forward-looking statements made in today's conference call. Additional information concerning factors that could cause those differences is contained in our filings with the Securities and Exchange Commission, which can be found on our website at rmrgroup.com. Investors are cautioned not to place undue reliance upon any forward-looking statements. In addition, we may discuss non-GAAP numbers during this call, including adjusted net income, adjusted earnings per share, distributable earnings, and adjusted EBITDA. A reconciliation of net income determined in accordance with U.S. generally accepted accounting principles to these non-GAAP figures can be found in our financial results. I will now turn the call over to Adam.

Thanks, Matt, and thank you all for joining us this afternoon. Yesterday, we reported third quarter results that were in line with our expectations, highlighted by adjusted NUD income of $0.28 per share, distributable earnings of $0.43 per share, and adjusted EBITDA of $20.1 million. Despite ongoing economic uncertainty, we have remained focused on the strategic initiatives of our managed REITs and RMR's private capital business. For the managed REITs, these initiatives have included deleveraging actions through a combination of asset sales and accretive refinancings. We've been pleased with the public market reactions to these initiatives as the share prices of certain of our REITs, most notably DHC and ILPT, have increased substantially year-to-date. Further, as a demonstration of the alignment of interests we have with our clients, These share price improvements have also resulted in our client companies accruing potential incentive fees this past quarter, which could result in a payment to RMR at year end that is in excess of $17 million. While potential incentive fees are subject to change, this is encouraging for RMR and its shareholders at this point in the calendar year. As it relates to our private capital initiatives, This aspect of our platform now totals over $12 billion. We continue to engage with investors regarding our platform's capabilities and the real estate strategies we are fundraising for and or investing in, which includes retail, residential, credit, and select development opportunities. Within the retail sector, a sector in which we have continued conviction We are sourcing opportunities to accumulate a portfolio of value-add multi-tenant retail assets of approximately $100 million in gross asset value as a mean to build a track record in this sector. Our first investment, a $21 million community shopping center located outside of Chicago, closed this past quarter. We plan to leverage our in-house retail team to execute the value-add business plan at this property. which is primarily focused on capital improvements to enhance the curb appeal of the center and strategic leasing. Upon execution of this value-add business plan, we expect to generate mid-teen returns. In terms of our residential and credit platforms, each of these sectors continue to benefit from market tailwinds, which is illustrated by each having robust pipelines of approximately $1 billion in possible deals. On the residential side, we anticipate closing two value-add acquisitions in August for an all-in cost of $147 million. One is a 266-unit property near Rowley, North Carolina, and the other is a 275-unit property near Orlando, Florida. These two properties, along with the two properties we acquired in a joint venture earlier this year in Florida, as well as our currently owned multifamily asset in Denver, will be the seed properties for our recently launched RMR residential enhanced growth venture. While it is early in the fundraising process, our conviction around the residential sector remains supported by decelerating supply growth and favorable migration trends, both of which will drive rent growth and occupancy gains for well-positioned assets, particularly across the Sunbelt. This venture is targeting returns in the mid to high teens. The investments we've made using our balance sheet, such as our value-add retail and residential acquisitions, are part of our continued strategy to diversify our client base and grow our private capital AUM. While the fundraising environment remains challenging, we are confident in our ability to grow private capital AUM over the long term. To that end, this past quarter, Mary Smedswick joined RMR as a senior vice president and head of capital formation. Mary has a successful track record of raising institutional capital, and we believe she will expand the sources of capital available to our various strategies. Turning to a few notable updates in our public capital clients, DHC posted solid second quarter results with almost all financial measures beating consensus estimates. DHC's strong results continue to be led by their shop segment, which saw same property cash basis NOI increase 18.5% year over year. This growth was a direct result of strong sector fundamentals, the strategic capital deployed across the portfolio over the last several years, and our active asset management. DHC has also been successful in selling assets at attractive valuations in an effort to de-lever. At SVC, results were in line with consensus expectations with RevPar cross SVC's hotel portfolio increasing 40 basis points year over year and outpacing the industry by 90 basis points, despite meaningful revenue displacement from renovation activity during the quarter. SVC continues to benefit from the stable cash flows of its triple net lease assets, which are anchored by SVC's $3.3 billion investment in travel centers, which are leased to investment grade BP through 2033. SVC has also made significant progress with its hotel sales, with 114 hotels now earmarked for sale in the second half of 2025. with over $900 million currently under binding agreement. ILPT's results were highlighted by continued strong operating results and ILPT's refinancing of $1.2 billion of floating rate debt with new five-year fixed rate debt at a weighted average interest rate of 6.4%. The refinancing and continued strength of ILPT's industrial portfolio helps support the decision of ILPT's board to increase its dividend to 5 cents per share per quarter. Lastly, OPI continues to face headwinds associated with its nationwide portfolio of office properties. OPI, along with its advisors, continues to explore all options to address its upcoming debt obligations. To conclude, we are pleased with the progress the company has made over the past quarter. assisting our clients with their financial and strategic objectives. We continue to believe RMR operates a durable business model supported by clients with a nationwide portfolio of real estate spanning multiple commercial real estate sectors. Our perpetual capital clients provides RMR with stability while also allowing us to pursue new growth initiatives to drive revenue and earnings growth. We look forward to updating you on our progress in the coming quarters. With that, I'll now turn the call over to Matt Jordan, Executive Vice President and our Chief Financial Officer.