CORRESP 1 filename1.htm

April 6, 2022

VIA EDGAR

U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Trade & Services
100 F Street, N.E.
Washington, D.C. 20549

Attention: Abe Friedman and Lyn Shenk

Re:
The RMR Group Inc.
Form 10-K for the Fiscal Year Ended September 30, 2021
Filed November 15, 2021
File No. 001-37616

Ladies and Gentlemen:

This letter is submitted in response to the comment from the Staff of the Division of Corporation Finance (the “Staff”), received by letter dated March 24, 2022, relating to the above-mentioned Annual Report on Form 10-K (the “Form 10-K”).

The Staff’s comment with respect to our Form 10-K has been reproduced below in italicized text. Our response thereto is set forth immediately following the reproduced comment.

Form 10-K for the Fiscal Year Ended September 30, 2021

Item 15. Exhibits and Financial Statement Schedules
Consolidated Statements of Income, page F-6



 1.
We have reviewed your response to comment 2, and reissue. We continue to believe that your revenues should be captioned as related party transactions on the face of your ‘Consolidated Statements of Income’ or parenthetically stated, pursuant to Rule 4-08(k)(1) of Regulation S-X which is prescriptive in stating “Amounts of related party transactions should be stated on the face of the balance sheet, statement of comprehensive income, or statement of cash flows.” Please revise or advise accordingly.

Response: We respectfully acknowledge the Staff’s comment and will revise future filings.

Upon review of the most recent public filings of 13 alternative asset managers with similar business operations and significant revenues from related parties, we noted only one company that identified revenues from related parties on the face of the income statement. This company included the following disclosure in the footer of their income statement, “Substantially all revenues are earned from affiliates of the Company. See accompanying notes.”

April 6, 2022
Page 2


As substantially all (i.e., 99.9% for the fiscal years ended September 30, 2021, 2020 and 2019) of the revenues of The RMR Group Inc. are earned from related parties, we intend to provide a footnote to our income statement in future filings that indicates substantially all revenues are earned from related parties. We believe this approach complies with Rule 4-08(k)(1) and is consistent with investor expectations. We have included an example of our proposed disclosure in Exhibit A. We will also continue to disclose the amounts of unrelated party revenues, to the extent they remain insignificant, within the notes to the financial statements.

We appreciate the Staff’s review of our Form 10-K. If you have any questions or concerns, or require additional information, please call me at (617) 796-7684.

 
Sincerely,
   
   
   
 
/s/ Matthew P. Jordan
 
Matthew P. Jordan
 
Executive Vice President,
 
Chief Financial Officer and Treasurer
 
The RMR Group Inc.

cc:
Faiz Ahmad
Skadden, Arps, Slate, Meagher & Flom LLP


April 6, 2022
Page 3


Exhibit A

The RMR Group Inc.
Condensed Consolidated Statements of Income
(amounts in thousands, except per share amounts)
(unaudited)

   
Three Months Ended December 31,
  
   
2021
    
2020
  
Revenues:
            
Management services
  
$
44,897
    
$
40,747
  
Advisory services
    
1,118
      
586
  
Total management and advisory services revenues
    
46,015
      
41,333
  
Reimbursable compensation and benefits
    
14,397
      
13,225
  
Reimbursable equity based compensation
    
1,598
      
3,003
  
Other reimbursable expenses
    
119,558
      
99,385
  
Total reimbursable costs
    
135,553
      
115,613
  
Total revenues
    
181,568
      
156,946
  
Expenses:
                
Compensation and benefits
    
31,791
      
29,494
  
Equity based compensation
    
2,219
      
3,561
  
Separation costs
    
—
      
4,159
  
Total compensation and benefits expense
    
34,010
      
37,214
  
General and administrative
    
7,671
      
6,260
  
Other reimbursable expenses
    
119,558
      
99,385
  
Transaction and acquisition related costs
    
—
      
117
  
Depreciation and amortization
    
236
      
238
  
Total expenses
    
161,475
      
143,214
  
Operating income
    
20,093
      
13,732
  
Interest and other income
    
57
      
231
  
Equity in earnings of investees
    
—
      
424
  
Unrealized gain on equity method investments accounted for under the fair value option
    
1,196
      
8,122
  
Income before income tax expense
    
21,346
      
22,509
  
Income tax expense
    
(3,054
)
    
(2,756
)
Net income
    
18,292
      
19,753
  
Net income attributable to noncontrolling interest
    
(10,250
)
    
(10,856
)
Net income attributable to The RMR Group Inc.
  
$
8,042
    
$
8,897
  
                 
Weighted average common shares outstanding - basic
    
16,325
      
16,252
  
Weighted average common shares outstanding - diluted
    
31,325
      
31,252
  
                 
Net income attributable to The RMR Group Inc. per common share - basic
  
$
0.49
    
$
0.54
  
Net income attributable to The RMR Group Inc. per common share - diluted
  
$
0.49
    
$
0.51
  
Substantially all revenues are earned from related parties. See accompanying notes.