Maryland (State of Organization) | 47-4122583 (IRS Employer Identification No.) |
Large accelerated filer ☐ | Accelerated filer ☐ | |
Non-accelerated filer ☒ | Smaller reporting company ☐ | |
(Do not check if a smaller reporting company) | ||
Emerging growth company ☒ |
Page | ||
June 30, | September 30, | |||||||
2017 | 2016 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 137,711 | $ | 65,833 | ||||
Due from related parties | 27,027 | 24,862 | ||||||
Prepaid and other current assets | 8,307 | 4,690 | ||||||
Total current assets | 173,045 | 95,385 | ||||||
Furniture and equipment | 4,572 | 5,024 | ||||||
Leasehold improvements | 1,094 | 1,077 | ||||||
Capitalized software costs | 3,786 | 4,250 | ||||||
Total property and equipment | 9,452 | 10,351 | ||||||
Accumulated depreciation | (6,123 | ) | (6,549 | ) | ||||
3,329 | 3,802 | |||||||
Due from related parties, net of current portion | 7,278 | 7,754 | ||||||
Equity method investment | 208 | — | ||||||
Goodwill | 1,859 | 2,295 | ||||||
Intangible assets, net of amortization | 608 | 1,085 | ||||||
Deferred tax asset | 43,332 | 45,819 | ||||||
Other assets, net of amortization | 174,329 | 181,391 | ||||||
Total assets | $ | 403,988 | $ | 337,531 | ||||
Liabilities and Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable, accrued expenses and deposits | $ | 41,209 | $ | 20,579 | ||||
Total current liabilities | 41,209 | 20,579 | ||||||
Long term portion of deferred rent payable, net of current portion | 975 | 778 | ||||||
Amounts due pursuant to tax receivable agreement, net of current portion | 62,029 | 62,029 | ||||||
Employer compensation liability, net of current portion | 7,278 | 7,754 | ||||||
Total liabilities | 111,491 | 91,140 | ||||||
Commitments and contingencies | ||||||||
Equity: | ||||||||
Class A common stock, $0.001 par value; 31,600,000 shares authorized; 15,094,510 and | ||||||||
15,082,432 shares issued and outstanding, respectively | 15 | 15 | ||||||
Class B-1 common stock, $0.001 par value; 1,000,000 shares authorized, issued and outstanding | 1 | 1 | ||||||
Class B-2 common stock, $0.001 par value; 15,000,000 shares authorized, issued and outstanding | 15 | 15 | ||||||
Additional paid in capital | 95,267 | 94,266 | ||||||
Retained earnings | 81,793 | 44,543 | ||||||
Cumulative other comprehensive income | 83 | 83 | ||||||
Cumulative common distributions | (29,274 | ) | (17,209 | ) | ||||
Total shareholders’ equity | 147,900 | 121,714 | ||||||
Noncontrolling interest | 144,597 | 124,677 | ||||||
Total equity | 292,497 | 246,391 | ||||||
Total liabilities and equity | $ | 403,988 | $ | 337,531 |
Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenues: | ||||||||||||||||
Management services | $ | 44,644 | $ | 41,867 | $ | 183,036 | $ | 182,940 | ||||||||
Reimbursable payroll and related costs | 9,839 | 9,744 | 29,023 | 25,993 | ||||||||||||
Advisory services | 1,019 | 600 | 3,033 | 1,741 | ||||||||||||
Total revenues | 55,502 | 52,211 | 215,092 | 210,674 | ||||||||||||
Expenses: | ||||||||||||||||
Compensation and benefits | 24,769 | 22,719 | 72,550 | 65,584 | ||||||||||||
Separation costs | — | 1,195 | — | 1,358 | ||||||||||||
General and administrative | 8,539 | 6,110 | 21,526 | 19,110 | ||||||||||||
Depreciation and amortization | 467 | 349 | 1,550 | 1,333 | ||||||||||||
Total expenses | 33,775 | 30,373 | 95,626 | 87,385 | ||||||||||||
Operating income | 21,727 | 21,838 | 119,466 | 123,289 | ||||||||||||
Interest and other income | 402 | 68 | 1,059 | 144 | ||||||||||||
Income before income tax expense and equity in earnings (loss) of investee | 22,129 | 21,906 | 120,525 | 123,433 | ||||||||||||
Income tax expense | (4,528 | ) | (4,504 | ) | (24,811 | ) | (19,904 | ) | ||||||||
Equity in earnings (loss) of investee | 4 | — | (161 | ) | — | |||||||||||
Net income | 17,605 | 17,402 | 95,553 | 103,529 | ||||||||||||
Net income attributable to noncontrolling interest | (10,748 | ) | (10,704 | ) | (58,303 | ) | (73,663 | ) | ||||||||
Net income attributable to RMR Inc. | $ | 6,857 | $ | 6,698 | $ | 37,250 | $ | 29,866 | ||||||||
Other comprehensive income (loss): | ||||||||||||||||
Foreign currency translation adjustments | 1 | (6 | ) | — | 13 | |||||||||||
Other comprehensive income (loss) | 1 | (6 | ) | — | 13 | |||||||||||
Comprehensive income | 17,606 | 17,396 | 95,553 | 103,542 | ||||||||||||
Comprehensive income attributable to noncontrolling interest | (10,748 | ) | (10,701 | ) | (58,303 | ) | (73,669 | ) | ||||||||
Comprehensive income attributable to RMR Inc. | $ | 6,858 | $ | 6,695 | $ | 37,250 | $ | 29,873 | ||||||||
Weighted average common shares outstanding - basic | 16,037 | 16,008 | 16,029 | 16,003 | ||||||||||||
Weighted average common shares outstanding - diluted | 16,058 | 16,008 | 16,044 | 16,003 | ||||||||||||
Net income attributable to RMR Inc. per common share - basic | $ | 0.43 | $ | 0.42 | $ | 2.32 | $ | 1.87 | ||||||||
Net income attributable to RMR Inc. per common share - diluted | $ | 0.43 | $ | 0.42 | $ | 2.31 | $ | 1.87 |
Cumulative | ||||||||||||||||||||||||||||||||||||||||
Class A | Class B-1 | Class B-2 | Additional | Other | Cumulative | Total | ||||||||||||||||||||||||||||||||||
Common | Common | Common | Paid In | Retained | Comprehensive | Common | Shareholders' | Noncontrolling | Total | |||||||||||||||||||||||||||||||
Stock | Stock | Stock | Capital | Earnings | Income | Distributions | Equity | Interest | Equity | |||||||||||||||||||||||||||||||
Balance at September 30, 2016 | $ | 15 | $ | 1 | $ | 15 | $ | 94,266 | $ | 44,543 | $ | 83 | $ | (17,209 | ) | $ | 121,714 | $ | 124,677 | $ | 246,391 | |||||||||||||||||||
Share grants, net | — | — | — | 1,001 | — | — | — | 1,001 | — | 1,001 | ||||||||||||||||||||||||||||||
Net income | — | — | — | — | 37,250 | — | — | 37,250 | 58,303 | 95,553 | ||||||||||||||||||||||||||||||
Tax distributions to Member | — | — | — | — | — | — | — | — | (27,133 | ) | (27,133 | ) | ||||||||||||||||||||||||||||
Common share distributions | — | — | — | — | — | — | (12,065 | ) | (12,065 | ) | (11,250 | ) | (23,315 | ) | ||||||||||||||||||||||||||
Balance at June 30, 2017 | $ | 15 | $ | 1 | $ | 15 | $ | 95,267 | $ | 81,793 | $ | 83 | $ | (29,274 | ) | $ | 147,900 | $ | 144,597 | $ | 292,497 |
Nine Months Ended June 30, | ||||||||
2017 | 2016 | |||||||
Cash Flows from Operating Activities | ||||||||
Net income | $ | 95,553 | $ | 103,529 | ||||
Adjustments to reconcile net income to net cash from operating activities: | ||||||||
Depreciation and amortization | 1,550 | 1,333 | ||||||
Straight line office rent | 197 | 257 | ||||||
Amortization expense related to other asset | 7,062 | 7,062 | ||||||
Deferred income taxes | 2,487 | 1,231 | ||||||
Operating expenses paid in RMR Inc. common shares | 1,021 | 175 | ||||||
Contingent consideration liability | (456 | ) | — | |||||
Equity in loss of investee | 161 | — | ||||||
Distribution from equity method investment | 70 | — | ||||||
Changes in assets and liabilities: | ||||||||
Due from related parties | (5,779 | ) | (4,757 | ) | ||||
Prepaid and other current assets | (3,617 | ) | (2,054 | ) | ||||
Accounts payable, accrued expenses and deposits | 24,682 | 17,198 | ||||||
Incentive fee allocable to ABP Trust | — | (26,611 | ) | |||||
Net cash from operating activities | 122,931 | 97,363 | ||||||
Cash Flows from Investing Activities | ||||||||
Purchase of property and equipment | (604 | ) | (955 | ) | ||||
Net cash used in investing activities | (604 | ) | (955 | ) | ||||
Cash Flows from Financing Activities | ||||||||
Distributions to noncontrolling interest | (38,383 | ) | (36,574 | ) | ||||
Distributions to common shareholders | (12,065 | ) | (13,207 | ) | ||||
Net cash used in financing activities | (50,448 | ) | (49,781 | ) | ||||
Effect of exchange rate fluctuations on cash and cash equivalents | (1 | ) | 13 | |||||
Increase in cash and cash equivalents | 71,878 | 46,640 | ||||||
Cash and cash equivalents at beginning of year | 65,833 | 34,497 | ||||||
Cash and cash equivalents at end of year | $ | 137,711 | $ | 81,137 | ||||
Supplemental cash flow information | ||||||||
Income taxes paid | $ | 23,336 | $ | 19,287 |
• | the sum of (a) 0.5% of the historical cost of transferred real estate assets, if any, as defined in the applicable business management agreement, plus (b) 0.7% of the average invested capital (exclusive of the transferred real estate assets), as defined in the applicable business management agreement, up to $250,000, plus (c) 0.5% of the average invested capital exceeding $250,000; and |
• | the sum of (a) 0.7% of the average market capitalization, as defined in the applicable business management agreement, up to $250,000, plus (b) 0.5% of the average market capitalization exceeding $250,000. |
• | reimbursement to us is generally completed prior to payment of the related expenses; |
• | the property owner is contractually obligated to fund such operating costs of the property from existing cash flow or direct funding from its building operating account and we bear little or no credit risk; |
• | our clients are the primary obligor in relationships with the affected suppliers and service providers; and |
• | we earn no margin on the reimbursement aspect of the arrangement, obtaining reimbursement only for actual costs incurred. |
Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||
Income taxes computed at the federal statutory rate | 35.0 | % | 35.0 | % | 35.0 | % | 35.0 | % | ||||
State taxes, net of federal benefit | 2.5 | % | 2.7 | % | 2.5 | % | 2.0 | % | ||||
Net income attributable to noncontrolling interest | (17.0 | )% | (17.1 | )% | (16.9 | )% | (20.9 | )% | ||||
Total | 20.5 | % | 20.6 | % | 20.6 | % | 16.1 | % |
June 30, | September 30, | |||||||
2017 | 2016 | |||||||
Money market funds included in cash and cash equivalents | $ | 134,398 | $ | 57,741 | ||||
Current portion of due from related parties related to share based payment awards | 1,363 | 4,977 | ||||||
Long term portion of due from related parties related to share based payment awards | 7,278 | 7,754 | ||||||
Current portion of employer compensation liability related to share based payment awards included in accounts payable, accrued expenses and deposits | 1,363 | 4,977 | ||||||
Long term portion of employer compensation liability related to share based payment awards | 7,278 | 7,754 |
Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||||||||||||
$ | % | $ | % | $ | % | $ | % | |||||||||||||||||||||
Managed REITs: | ||||||||||||||||||||||||||||
GOV | $ | 9,139 | 16.4 | % | $ | 8,310 | 15.9 | % | $ | 26,302 | 12.3 | % | $ | 23,351 | 11.1 | % | ||||||||||||
HPT | 10,636 | 19.2 | % | 9,840 | 18.8 | % | 84,156 | 39.1 | % | 90,621 | 43.0 | % | ||||||||||||||||
SIR | 11,089 | 20.0 | % | 10,824 | 20.7 | % | 33,108 | 15.4 | % | 30,722 | 14.6 | % | ||||||||||||||||
SNH | 15,653 | 28.2 | % | 14,855 | 28.5 | % | 45,433 | 21.1 | % | 42,190 | 20.0 | % | ||||||||||||||||
46,517 | 83.8 | % | 43,829 | 83.9 | % | 188,999 | 87.9 | % | 186,884 | 88.7 | % | |||||||||||||||||
Managed Operators: | ||||||||||||||||||||||||||||
Five Star | 2,439 | 4.4 | % | 2,387 | 4.6 | % | 7,206 | 3.4 | % | 7,109 | 3.4 | % | ||||||||||||||||
Sonesta | 671 | 1.2 | % | 594 | 1.1 | % | 1,745 | 0.8 | % | 1,503 | 0.7 | % | ||||||||||||||||
TA | 3,659 | 6.6 | % | 4,013 | 7.7 | % | 10,822 | 5.0 | % | 10,959 | 5.2 | % | ||||||||||||||||
6,769 | 12.2 | % | 6,994 | 13.4 | % | 19,773 | 9.2 | % | 19,571 | 9.3 | % | |||||||||||||||||
Other: | ||||||||||||||||||||||||||||
AIC | 60 | 0.1 | % | 60 | 0.1 | % | 180 | 0.1 | % | 180 | 0.1 | % | ||||||||||||||||
RIF | 613 | 1.1 | % | 600 | 1.1 | % | 1,826 | 0.8 | % | 1,741 | 0.8 | % | ||||||||||||||||
ABP Trust | 1,024 | 1.9 | % | 728 | 1.5 | % | 2,755 | 1.3 | % | 2,240 | 1.1 | % | ||||||||||||||||
1,697 | 3.1 | % | 1,388 | 2.7 | % | 4,761 | 2.2 | % | 4,161 | 2.0 | % | |||||||||||||||||
Total revenues from related parties | 54,983 | 99.1 | % | 52,211 | 100.0 | % | 213,533 | 99.3 | % | 210,616 | 100.0 | % | ||||||||||||||||
Other unrelated parties | 519 | 0.9 | % | — | — | % | 1,559 | 0.7 | % | 58 | — | % | ||||||||||||||||
$ | 55,502 | 100.0 | % | $ | 52,211 | 100.0 | % | $ | 215,092 | 100.0 | % | $ | 210,674 | 100.0 | % |
June 30, | September 30, | |||||||
2017 | 2016 | |||||||
Managed REITs: | ||||||||
GOV | $ | 5,832 | $ | 6,165 | ||||
HPT | 11,973 | 7,800 | ||||||
SIR | 6,244 | 7,190 | ||||||
SNH | 8,801 | 9,733 | ||||||
32,850 | 30,888 | |||||||
Managed Operators: | ||||||||
Five Star | 359 | 291 | ||||||
Sonesta | 24 | 5 | ||||||
TA | 436 | 711 | ||||||
819 | 1,007 | |||||||
Other Client Companies: | ||||||||
AIC | 20 | 21 | ||||||
RIF | 34 | 17 | ||||||
ABP Trust | 582 | 683 | ||||||
636 | 721 | |||||||
$ | 34,305 | $ | 32,616 |
Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Basic EPS | ||||||||||||||||
Numerator: | ||||||||||||||||
Net income attributable to RMR Inc. | $ | 6,857 | $ | 6,698 | $ | 37,250 | $ | 29,866 | ||||||||
Income attributable to unvested participating securities | (25 | ) | — | (135 | ) | — | ||||||||||
Net income attributable to RMR Inc. used in calculating basic EPS | $ | 6,832 | $ | 6,698 | $ | 37,115 | $ | 29,866 | ||||||||
Denominator: | ||||||||||||||||
Weighted average common shares outstanding - basic | 16,037 | 16,008 | 16,029 | 16,003 | ||||||||||||
Net income attributable to RMR Inc. per common share - basic | $ | 0.43 | $ | 0.42 | $ | 2.32 | $ | 1.87 | ||||||||
Diluted EPS | ||||||||||||||||
Numerator: | ||||||||||||||||
Net income attributable to RMR Inc. | $ | 6,857 | $ | 6,698 | $ | 37,250 | $ | 29,866 | ||||||||
Income attributable to unvested participating securities | (25 | ) | — | (135 | ) | — | ||||||||||
Net income attributable to RMR Inc. used in calculating diluted EPS | $ | 6,832 | $ | 6,698 | $ | 37,115 | $ | 29,866 | ||||||||
Denominator: | ||||||||||||||||
Weighted average common shares outstanding - basic | 16,037 | 16,008 | 16,029 | 16,003 | ||||||||||||
Dilutive effect of incremental unvested shares | 21 | — | 15 | — | ||||||||||||
Weighted average common shares outstanding - diluted | 16,058 | 16,008 | 16,044 | 16,003 | ||||||||||||
Net income attributable to RMR Inc. per common share - diluted | $ | 0.43 | $ | 0.42 | $ | 2.31 | $ | 1.87 |
Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Income before income tax expense and equity in earnings (loss) of investee | $ | 22,129 | $ | 21,906 | $ | 120,525 | $ | 123,433 | ||||||||
Add: RMR Inc. franchise tax expense and interest income | 147 | 220 | 456 | 443 | ||||||||||||
Less: equity in earnings (loss) of investee | 4 | — | (161 | ) | — | |||||||||||
Less: incentive fee allocable to ABP Trust(1) | — | — | — | (26,611 | ) | |||||||||||
Net income before noncontrolling interest | 22,280 | 22,126 | 120,820 | 97,265 | ||||||||||||
Less: noncontrolling interest | (10,748 | ) | (10,704 | ) | (58,303 | ) | (47,052 | ) | ||||||||
Net income attributable to RMR Inc. before income tax expense | 11,532 | 11,422 | 62,517 | 50,213 | ||||||||||||
Less: income tax expense attributable to RMR Inc. | (4,528 | ) | (4,504 | ) | (24,811 | ) | (19,904 | ) | ||||||||
Less: RMR Inc. franchise tax expense and interest income | (147 | ) | (220 | ) | (456 | ) | (443 | ) | ||||||||
Net income attributable to RMR Inc. | $ | 6,857 | $ | 6,698 | $ | 37,250 | $ | 29,866 |
(1) | Under the RMR LLC operating agreement, ABP Trust was entitled to receive a pro rata share of any incentive business management fee earned for the 2015 calendar year, based on the number of days in 2015 to June 5, 2015. Accordingly, $26,611 of the incentive business management fee earned on December 31, 2015 was allocated to ABP Trust. |
Three Months Ended June 30, 2017 | ||||||||||||
All Other | ||||||||||||
RMR LLC(1) | Operations | Total | ||||||||||
Revenues: | ||||||||||||
Management services | $ | 44,644 | $ | — | $ | 44,644 | ||||||
Reimbursable payroll and related costs | 9,839 | — | 9,839 | |||||||||
Advisory services | — | 1,019 | 1,019 | |||||||||
Total revenues | 54,483 | 1,019 | 55,502 | |||||||||
Expenses: | ||||||||||||
Compensation and benefits | 24,088 | 681 | 24,769 | |||||||||
General and administrative | 8,057 | 482 | 8,539 | |||||||||
Depreciation and amortization | 321 | 146 | 467 | |||||||||
Total expenses | 32,466 | 1,309 | 33,775 | |||||||||
Operating income (loss) | 22,017 | (290 | ) | 21,727 | ||||||||
Interest and other income | 377 | 25 | 402 | |||||||||
Income before income tax expense and equity in earnings of investee | 22,394 | (265 | ) | 22,129 | ||||||||
Income tax expense | — | (4,528 | ) | (4,528 | ) | |||||||
Equity in earnings of investee | — | 4 | 4 | |||||||||
Net income (loss) | $ | 22,394 | $ | (4,789 | ) | $ | 17,605 |
Nine Months Ended June 30, 2017 | ||||||||||||
All Other | ||||||||||||
RMR LLC(1) | Operations | Total | ||||||||||
Revenues: | ||||||||||||
Management services | $ | 183,036 | $ | — | $ | 183,036 | ||||||
Reimbursable payroll and related costs | 29,023 | — | 29,023 | |||||||||
Advisory services | — | 3,033 | 3,033 | |||||||||
Total revenues | 212,059 | 3,033 | 215,092 | |||||||||
Expenses: | ||||||||||||
Compensation and benefits | 70,842 | 1,708 | 72,550 | |||||||||
General and administrative | 20,539 | 987 | 21,526 | |||||||||
Depreciation and amortization | 1,072 | 478 | 1,550 | |||||||||
Total expenses | 92,453 | 3,173 | 95,626 | |||||||||
Operating income (loss) | 119,606 | (140 | ) | 119,466 | ||||||||
Interest and other income | 657 | 402 | 1,059 | |||||||||
Income before income tax expense and equity in loss of investee | 120,263 | 262 | 120,525 | |||||||||
Income tax expense | — | (24,811 | ) | (24,811 | ) | |||||||
Equity in loss of investee | — | (161 | ) | (161 | ) | |||||||
Net income (loss) | $ | 120,263 | $ | (24,710 | ) | $ | 95,553 |
Three Months Ended June 30, 2016 | ||||||||||||
All Other | ||||||||||||
RMR LLC(1) | Operations | Total | ||||||||||
Revenues | ||||||||||||
Management services | $ | 41,867 | $ | — | $ | 41,867 | ||||||
Reimbursable payroll and related costs | 9,744 | — | 9,744 | |||||||||
Advisory services | — | 600 | 600 | |||||||||
Total revenues | 51,611 | 600 | 52,211 | |||||||||
Expenses | ||||||||||||
Compensation and benefits | 22,445 | 274 | 22,719 | |||||||||
Separation costs | 1,195 | — | 1,195 | |||||||||
General and administrative | 5,778 | 332 | 6,110 | |||||||||
Depreciation and amortization | 349 | — | 349 | |||||||||
Total expenses | 29,767 | 606 | 30,373 | |||||||||
Operating income (loss) | 21,844 | (6 | ) | 21,838 | ||||||||
Interest and other income | 62 | 6 | 68 | |||||||||
Income before income tax expense | 21,906 | — | 21,906 | |||||||||
Income tax expense | — | (4,504 | ) | (4,504 | ) | |||||||
Net income (loss) | $ | 21,906 | $ | (4,504 | ) | $ | 17,402 |
Nine Months Ended June 30, 2016 | ||||||||||||
All Other | ||||||||||||
RMR LLC(1) | Operations | Total | ||||||||||
Revenues | ||||||||||||
Management services | $ | 182,882 | $ | 58 | $ | 182,940 | ||||||
Reimbursable payroll and related costs | 25,993 | — | 25,993 | |||||||||
Advisory services | — | 1,741 | 1,741 | |||||||||
Total revenues | 208,875 | 1,799 | 210,674 | |||||||||
Expenses | ||||||||||||
Compensation and benefits | 64,712 | 872 | 65,584 | |||||||||
Separation costs | 1,358 | — | 1,358 | |||||||||
General and administrative | 18,234 | 876 | 19,110 | |||||||||
Depreciation and amortization | 1,333 | — | 1,333 | |||||||||
Total expenses | 85,637 | 1,748 | 87,385 | |||||||||
Operating income | 123,238 | 51 | 123,289 | |||||||||
Interest and other income | 137 | 7 | 144 | |||||||||
Income before income tax expense | 123,375 | 58 | 123,433 | |||||||||
Income tax expense | (1 | ) | (19,903 | ) | (19,904 | ) | ||||||
Net income (loss) | $ | 123,374 | $ | (19,845 | ) | $ | 103,529 |
Historical Cost of Assets Under Management or | ||||||||||
Total Market Capitalization | ||||||||||
As of June 30, | ||||||||||
REIT | Primary Strategy | 2017 | 2016 | |||||||
GOV | Office buildings majority leased to government tenants | $ | 2,235,767 | $ | 2,062,981 | |||||
HPT | Hotels and travel centers | 8,666,849 | 8,195,406 | |||||||
SIR | Lands and properties primarily leased to single tenants | 4,611,115 | 4,688,539 | |||||||
SNH | Healthcare, senior living and medical office buildings | 8,272,965 | 8,143,399 | |||||||
$ | 23,786,696 | $ | 23,090,325 |
Three Months Ended June 30, 2017 (1) | Three Months Ended June 30, 2016 (1) | |||||||||||||||||||||||||||||||
Incentive | Incentive | |||||||||||||||||||||||||||||||
Base Business | Business | Property | Base Business | Business | Property | |||||||||||||||||||||||||||
Management | Management | Management | Management | Management | Management | |||||||||||||||||||||||||||
REIT | Revenues | Revenues | Revenues | Total | Revenues | Revenues | Revenues | Total | ||||||||||||||||||||||||
GOV | $ | 2,837 | $ | — | $ | 2,584 | $ | 5,421 | $ | 2,617 | $ | — | $ | 2,293 | $ | 4,910 | ||||||||||||||||
HPT | 10,315 | — | 10 | 10,325 | 9,078 | — | 11 | 9,089 | ||||||||||||||||||||||||
SIR | 5,674 | — | 3,302 | 8,976 | 5,539 | — | 3,219 | 8,758 | ||||||||||||||||||||||||
SNH | 9,817 | — | 2,966 | 12,783 | 9,389 | — | 2,717 | 12,106 | ||||||||||||||||||||||||
$ | 28,643 | $ | — | $ | 8,862 | $ | 37,505 | $ | 26,623 | $ | — | $ | 8,240 | $ | 34,863 |
Nine Months Ended June 30, 2017 (1) | Nine Months Ended June 30, 2016 (1) | |||||||||||||||||||||||||||||||
Incentive | Incentive | |||||||||||||||||||||||||||||||
Base Business | Business | Property | Base Business | Business | Property | |||||||||||||||||||||||||||
Management | Management | Management | Management | Management | Management | |||||||||||||||||||||||||||
REIT | Revenues | Revenues | Revenues | Total | Revenues | Revenues | Revenues | Total | ||||||||||||||||||||||||
GOV | $ | 8,317 | $ | — | $ | 7,403 | $ | 15,720 | $ | 7,745 | $ | — | $ | 6,551 | $ | 14,296 | ||||||||||||||||
HPT | 30,341 | 52,407 | 40 | 82,788 | 26,773 | 62,263 | 33 | 89,069 | ||||||||||||||||||||||||
SIR | 16,970 | — | 9,691 | 26,661 | 15,778 | — | 9,501 | 25,279 | ||||||||||||||||||||||||
SNH | 29,188 | — | 8,029 | 37,217 | 26,332 | — | 8,110 | 34,442 | ||||||||||||||||||||||||
$ | 84,816 | $ | 52,407 | $ | 25,163 | $ | 162,386 | $ | 76,628 | $ | 62,263 | $ | 24,195 | $ | 163,086 |
Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||||
Company | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Five Star | $ | 2,354 | $ | 2,315 | $ | 6,972 | $ | 6,913 | ||||||||
Sonesta | 625 | 594 | 1,668 | 1,503 | ||||||||||||
TA | 3,577 | 3,807 | 10,459 | 10,426 | ||||||||||||
AIC | 60 | 60 | 180 | 180 | ||||||||||||
ABP Trust | 410 | 228 | 1,019 | 774 | ||||||||||||
$ | 7,026 | $ | 7,004 | $ | 20,298 | $ | 19,796 |
Three Months Ended June 30, | |||||||||||||||
2017 | 2016 | $ Change | % Change | ||||||||||||
Revenues: | |||||||||||||||
Management services | $ | 44,644 | $ | 41,867 | $ | 2,777 | 6.6 | % | |||||||
Reimbursable payroll and related costs | 9,839 | 9,744 | 95 | 1.0 | % | ||||||||||
Advisory services | 1,019 | 600 | 419 | 69.8 | % | ||||||||||
Total revenues | 55,502 | 52,211 | 3,291 | 6.3 | % | ||||||||||
Expenses: | |||||||||||||||
Compensation and benefits | 24,769 | 22,719 | 2,050 | 9.0 | % | ||||||||||
Separation costs | — | 1,195 | (1,195 | ) | (100.0 | )% | |||||||||
General and administrative | 8,539 | 6,110 | 2,429 | 39.8 | % | ||||||||||
Depreciation and amortization | 467 | 349 | 118 | 33.8 | % | ||||||||||
Total expenses | 33,775 | 30,373 | 3,402 | 11.2 | % | ||||||||||
Operating income | 21,727 | 21,838 | (111 | ) | (0.5 | )% | |||||||||
Interest and other income | 402 | 68 | 334 | 491.2 | % | ||||||||||
Income before income tax expense and equity in earnings of investee | 22,129 | 21,906 | 223 | 1.0 | % | ||||||||||
Income tax expense | (4,528 | ) | (4,504 | ) | (24 | ) | (0.5 | )% | |||||||
Equity in earnings of investee | 4 | — | 4 | 100.0 | % | ||||||||||
Net income | 17,605 | 17,402 | 203 | 1.2 | % | ||||||||||
Net income attributable to noncontrolling interest | (10,748 | ) | (10,704 | ) | (44 | ) | (0.4 | )% | |||||||
Net income attributable to RMR Inc. | $ | 6,857 | $ | 6,698 | $ | 159 | 2.4 | % |
Three Months Ended June 30, | ||||||||||||
Source | 2017 | 2016 | Change | |||||||||
Managed REITs | $ | 37,505 | $ | 34,863 | $ | 2,642 | ||||||
Managed Operators | 6,556 | 6,716 | (160 | ) | ||||||||
Other Client Companies | 583 | 288 | 295 | |||||||||
Total | $ | 44,644 | $ | 41,867 | $ | 2,777 |
Nine Months Ended June 30, | |||||||||||||||
2017 | 2016 | $ Change | % Change | ||||||||||||
Revenues: | |||||||||||||||
Management services | $ | 183,036 | $ | 182,940 | $ | 96 | 0.1 | % | |||||||
Reimbursable payroll and related costs | 29,023 | 25,993 | 3,030 | 11.7 | % | ||||||||||
Advisory services | 3,033 | 1,741 | 1,292 | 74.2 | % | ||||||||||
Total revenues | 215,092 | 210,674 | 4,418 | 2.1 | % | ||||||||||
Expenses: | |||||||||||||||
Compensation and benefits | 72,550 | 65,584 | 6,966 | 10.6 | % | ||||||||||
Separation costs | — | 1,358 | (1,358 | ) | (100.0 | )% | |||||||||
General and administrative | 21,526 | 19,110 | 2,416 | 12.6 | % | ||||||||||
Depreciation and amortization | 1,550 | 1,333 | 217 | 16.3 | % | ||||||||||
Total expenses | 95,626 | 87,385 | 8,241 | 9.4 | % | ||||||||||
Operating income | 119,466 | 123,289 | (3,823 | ) | (3.1 | )% | |||||||||
Interest and other income | 1,059 | 144 | 915 | 635.4 | % | ||||||||||
Income before income tax expense and equity in loss of investee | 120,525 | 123,433 | (2,908 | ) | (2.4 | )% | |||||||||
Income tax expense | (24,811 | ) | (19,904 | ) | (4,907 | ) | (24.7 | )% | |||||||
Equity in loss of investee | (161 | ) | — | (161 | ) | 100.0 | % | ||||||||
Net income | 95,553 | 103,529 | (7,976 | ) | (7.7 | )% | |||||||||
Net income attributable to noncontrolling interest | (58,303 | ) | (73,663 | ) | 15,360 | 20.9 | % | ||||||||
Net income attributable to RMR Inc. | $ | 37,250 | $ | 29,866 | $ | 7,384 | 24.7 | % |
Nine Months Ended June 30, | ||||||||||||
Source | 2017 | 2016 | Change | |||||||||
Managed REITs | $ | 162,386 | $ | 163,086 | $ | (700 | ) | |||||
Managed Operators | 19,099 | 18,842 | 257 | |||||||||
Other Client Companies | 1,551 | 954 | 597 | |||||||||
EQC | — | 58 | (58 | ) | ||||||||
Total | $ | 183,036 | $ | 182,940 | $ | 96 |
• | SUBSTANTIALLY ALL OF OUR REVENUES ARE DERIVED FROM SERVICES TO A LIMITED NUMBER OF CLIENT COMPANIES; |
• | CHANGING MARKET CONDITIONS, INCLUDING RISING INTEREST RATES THAT MAY ADVERSELY IMPACT OUR CLIENT COMPANIES AND OUR BUSINESS WITH THEM; |
• | POTENTIAL TERMINATIONS OF OUR MANAGEMENT AGREEMENTS WITH OUR CLIENT COMPANIES; |
• | OUR ABILITY TO EXPAND OUR BUSINESS DEPENDS UPON THE GROWTH AND PERFORMANCE OF OUR CLIENT COMPANIES AND OUR ABILITY TO OBTAIN OR CREATE NEW CLIENTS FOR OUR BUSINESS AND IS OFTEN DEPENDENT UPON CIRCUMSTANCES BEYOND OUR CONTROL; |
• | LITIGATION RISKS; |
• | ALLEGATIONS OF ANY CONFLICTS OF INTEREST ARISING FROM OUR MANAGEMENT ACTIVITIES; |
• | OUR ABILITY TO RETAIN THE SERVICES OF OUR MANAGING DIRECTORS AND OTHER KEY PERSONNEL; AND |
• | RISKS ASSOCIATED WITH AND COSTS OF COMPLIANCE WITH LAWS AND REGULATIONS, INCLUDING SECURITIES REGULATIONS, EXCHANGE LISTING STANDARDS AND OTHER LAWS AND REGULATIONS AFFECTING PUBLIC COMPANIES. |
• | WE HAVE A LIMITED NUMBER OF CLIENT COMPANIES. WE HAVE LONG TERM CONTRACTS WITH OUR MANAGED REITS; HOWEVER, THE OTHER CONTRACTS UNDER WHICH WE EARN OUR REVENUES ARE FOR SHORTER TERMS, AND THE LONG TERM CONTRACTS WITH OUR MANAGED REITS MAY BE TERMINATED IN CERTAIN CIRCUMSTANCES. THE TERMINATION OR LOSS OF ANY OF OUR MANAGEMENT CONTRACTS MAY HAVE A MATERIAL ADVERSE IMPACT UPON OUR REVENUES, PROFITS AND CASH FLOWS. |
• | OUR MANAGEMENT FEES FROM OUR MANAGED REITS ARE CALCULATED BASED UPON THE LOWER OF EACH REIT’S COST OF ITS APPLICABLE ASSETS AND SUCH REIT’S MARKET CAPITALIZATION. OUR MANAGEMENT FEES FROM OUR MANAGED OPERATORS ARE CALCULATED BASED UPON CERTAIN REVENUES FROM EACH OPERATOR'S BUSINESS. ACCORDINGLY, OUR FUTURE REVENUES, INCOME AND CASH FLOWS WILL DECLINE IF THE BUSINESSES, ASSETS OR MARKET CAPITALIZATION OF OUR CLIENT COMPANIES DECLINE. |
• | THE FACT THAT WE EARNED SIGNIFICANT INCENTIVE BUSINESS MANAGEMENT FEES FROM ONE OF OUR MANAGED REITS FOR THE CALENDAR YEARS 2016 AND 2015, AND THAT WE ESTIMATE THAT WE WOULD HAVE EARNED AGGREGATE INCENTIVE BUSINESS MANAGEMENT FEES FROM THE MANAGED REITS OF $61.1 MILLION AS OF JUNE 30, 2017 IF THAT DATE HAD BEEN THE END OF A MEASUREMENT PERIOD, MAY IMPLY THAT WE WILL EARN AN INCENTIVE BUSINESS MANAGEMENT FEE FOR THE CALENDAR YEAR 2017 OR IN FUTURE YEARS. THE INCENTIVE BUSINESS MANAGEMENT FEES THAT WE MAY EARN FROM OUR MANAGED REITS ARE BASED UPON TOTAL RETURNS REALIZED BY THE REITS' SHAREHOLDERS COMPARED TO THE TOTAL SHAREHOLDERS RETURN OF CERTAIN IDENTIFIED INDICES. WE HAVE ONLY LIMITED CONTROL OVER THE TOTAL RETURNS REALIZED BY SHAREHOLDERS OF THE MANAGED REITS AND EFFECTIVELY NO CONTROL OVER INDEXED TOTAL RETURNS. THERE CAN BE NO ASSURANCE THAT WE WILL EARN INCENTIVE BUSINESS MANAGEMENT FEES IN THE FUTURE. |
• | WE CURRENTLY INTEND TO PAY A REGULAR QUARTERLY DIVIDEND OF $0.25 PER CLASS A COMMON SHARE AND CLASS B-1 COMMON SHARE. OUR DIVIDENDS ARE DECLARED AND PAID AT THE DISCRETION OF OUR BOARD OF DIRECTORS. OUR BOARD MAY CONSIDER MANY FACTORS WHEN DECIDING WHETHER TO DECLARE AND PAY DIVIDENDS, INCLUDING OUR CURRENT AND PROJECTED EARNINGS, OUR CASH FLOWS AND ALTERNATIVE USES FOR ANY AVAILABLE CASH. OUR BOARD MAY DECIDE TO LOWER OR EVEN ELIMINATE OUR DIVIDENDS. THERE CAN BE NO ASSURANCE THAT WE WILL CONTINUE TO PAY ANY REGULAR DIVIDENDS OR WITH REGARD TO THE AMOUNT OF DIVIDENDS WE MAY PAY. |
• | WE WERE THE VICTIM OF A BUSINESS EMAIL COMPROMISE FRAUD WHICH RESULTED IN OUR INCURRING A LOSS OF $590. WE ARE WORKING WITH LAW ENFORCEMENT AUTHORITIES AND THE BANKS INVOLVED IN THE WIRE TRANSFER TO PURSUE RECOVERY OF THE $590, BUT AT THIS TIME WE DO NOT KNOW WHETHER WE WILL BE ABLE TO RECOVER ANY OF THESE FUNDS, AND WE HAVE BEEN ADVISED THAT IT MAY TAKE SEVERAL MONTHS BEFORE WE ARE BETTER ABLE TO EVALUATE OUR RECOVERY PROSPECTS. |
• | ENHANCEMENTS HAVE BEEN MADE TO OUR CONTROLS RELATING TO THE ELECTRONIC PAYMENTS BY OR FOR US THAT WE BELIEVE WILL REDUCE OUR RISK OF BECOMING A VICTIM OF FUTURE FRAUDS RELATED TO OUR PAYMENTS, INCLUDING BY WIRE TRANSFERS. HOWEVER, CYBER- |
• | WE HAVE STATED THAT WE EXPECT THAT THE BUSINESS MANAGEMENT FEES AND PROPERTY MANAGEMENT FEES WE EARN FROM GOV IN THE FUTURE MAY INCREASE IF THE PROPOSED TRANSACTION BETWEEN GOV AND FPO IS COMPLETED AND THAT GOV HAS STATED IT EXPECTS THE TRANSACTION TO CLOSE PRIOR TO CALENDAR YEAR END 2017; HOWEVER, THIS TRANSACTION IS SUBJECT TO CLOSING CONDITIONS, INCLUDING THE APPROVAL OF AT LEAST A MAJORITY OF FPO’s COMMON SHAREHOLDERS, AND MAY NOT BE CONSUMMATED ON TIME OR AT ALL. ALSO, OUR FUTURE MANAGEMENT FEES FROM GOV ARE BASED UPON COMPLEX FORMULAS AND THERE IS NO ASSURANCE THAT OUR FEES FROM GOV WILL INCREASE IF AND AFTER GOV'S ACQUISITION OF FPO IS COMPLETED. |
• | THE STATEMENT IN THIS REPORT THAT WE EXPECT OUR FEES FROM GOV MAY INCREASE IF AND AFTER GOV'S ACQUISITION OF FPO IS COMPLETED MAY IMPLY THAT OUR EARNINGS WILL INCREASE. IN FACT, THE ADDED COSTS WHICH WE INCUR TO MANAGE AN ENLARGED GOV IF AND AFTER GOV ACQUIRES FPO MAY EXCEED ANY INCREASE IN FEES WE RECEIVE AND, AS A RESULT, WE MAY NOT REALIZE ANY INCREASED EARNINGS OR WE MAY INCUR LOSSES. |
• | THIS REPORT STATES THAT A NEWLY FORMED COMMERCIAL MORTGAGE REIT SUBSIDIARY OF TREMONT ADVISORS FILED A REGISTRATION STATEMENT FOR A PROPOSED INITIAL PUBLIC OFFERING, THAT OUR SUBSIDIARY, TREMONT ADVISORS IS RESPONSIBLE TO PAY ALL OF THE COSTS OF THIS PROPOSED OFFERING AND THAT WE HAVE INCURRED APPROXIMATELY $1.4 MILLION OF SUCH COSTS THROUGH JUNE 30, 2017. CREATING A NEW MORTGAGE REIT INVOLVES COMPLEX, EXPENSIVE AND TIME CONSUMING PROCESSES. ALSO, THE SUCCESS OF THIS PROJECT WILL DEPEND LARGELY UPON MARKET CONDITIONS IF AND AFTER THE OFFERING OF SECURITIES BY THE NEW REIT PROCEEDS, AND MARKET CONDITIONS ARE BEYOND OUR CONTROL. ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT THIS NEW MORTGAGE REIT WILL BE CREATED AND IT IS POSSIBLE THAT THE EXPENSE AND EFFORTS DEVOTED TO CREATING THIS NEW REIT WILL BE LOST. |
Maximum | ||||||||||||||
Total Number of | Approximate Dollar | |||||||||||||
Shares Purchased | Value of Shares that | |||||||||||||
Number of | Average | as Part of Publicly | May Yet Be Purchased | |||||||||||
Shares | Price Paid | Announced Plans | Under the Plans or | |||||||||||
Calendar Month | Purchased (1) | Per Share | or Programs | Programs | ||||||||||
June 2017 | 47 | $ | 48.65 | $ | — | $ | — | |||||||
Total | 47 | $ | 48.65 | $ | — | $ | — |
Exhibit Number | Description | |
3.1 | Articles of Amendment and Restatement of the Registrant* | |
3.2 | Articles of Amendment, filed July 30, 2015* | |
3.3 | Articles of Amendment, filed September 11, 2015* | |
3.4 | Articles of Amendment, filed March 9, 2016** | |
3.5 | Third Amended and Restated Bylaws of the Registrant** | |
4.1 | Form of The RMR Group Inc. Share Certificate for Class A Common Stock** | |
4.2 | Registration Rights Agreement, dated as of June 5, 2015, by and between the Registrant and Government Properties Income Trust* | |
4.3 | Registration Rights Agreement, dated as of June 5, 2015, by and between the Registrant and Hospitality Properties Trust* | |
4.4 | Registration Rights Agreement, dated as of June 5, 2015, by and between the Registrant and Select Income REIT* | |
4.5 | Registration Rights Agreement, dated as of June 5, 2015, by and between the Registrant and Senior Housing Properties Trust* | |
4.6 | Registration Rights Agreement, dated as of June 5, 2015, by and between the Registrant and ABP Trust* | |
31.1 | Rule 13a-14(a) Certification. (Filed herewith.) | |
31.2 | Rule 13a-14(a) Certification. (Filed herewith.) | |
32.1 | Section 1350 Certification. (Furnished herewith.) | |
101.1 | The following materials from RMR Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Statement of Shareholders’ Equity, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) related notes to these financial statements, tagged as blocks of text and in detail. (Filed herewith.) |
By: | /s/ Matthew P. Jordan | |
Matthew P. Jordan | ||
Chief Financial Officer and Treasurer (principal financial officer and principal accounting officer) | ||
Dated: August 9, 2017 |
1. | I have reviewed this Quarterly Report on Form 10-Q of The RMR Group Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: August 9, 2017 | /s/ Adam D. Portnoy |
Adam D. Portnoy Managing Director, President and Chief Executive Officer (principal executive officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of The RMR Group Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: August 9, 2017 | /s/ Matthew P. Jordan |
Matthew P. Jordan Chief Financial Officer and Treasurer (principal financial officer and principal accounting officer) |
1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Adam D. Portnoy | /s/ Matthew P. Jordan | |
Adam D. Portnoy Managing Director, President and Chief Executive Officer (principal executive officer) | Matthew P. Jordan Chief Financial Officer and Treasurer (principal financial officer and principal accounting officer) | |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Jun. 30, 2017 |
Aug. 08, 2017 |
|
Entity Registrant Name | RMR Group Inc. | |
Entity Central Index Key | 0001644378 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --09-30 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q3 | |
Class A common shares | ||
Entity Common Stock, Shares Outstanding | 15,094,510 | |
Class B-1 common shares | ||
Entity Common Stock, Shares Outstanding | 1,000,000 | |
Class B-2 common shares | ||
Entity Common Stock, Shares Outstanding | 15,000,000 |
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Jun. 30, 2017 |
Sep. 30, 2016 |
---|---|---|
Class A common shares | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 31,600,000 | 31,600,000 |
Common stock, shares issued | 15,094,510 | 15,082,432 |
Common stock, shares outstanding | 15,094,510 | 15,082,432 |
Class B-1 common shares | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 1,000,000 | 1,000,000 |
Common stock, shares issued | 1,000,000 | 1,000,000 |
Common stock, shares outstanding | 1,000,000 | 1,000,000 |
Class B-2 common shares | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 15,000,000 | 15,000,000 |
Common stock, shares issued | 15,000,000 | 15,000,000 |
Common stock, shares outstanding | 15,000,000 | 15,000,000 |
Condensed Consolidated Statements of Shareholders' Equity - 9 months ended Jun. 30, 2017 - USD ($) $ in Thousands |
Total |
Additional Paid In Capital |
Retained Earnings |
Cumulative Other Comprehensive Income (Loss) |
Cumulative Common Distributions |
Total Shareholders' Equity |
Noncontrolling Interest |
Class A common shares
Common shares
|
Class B-1 common shares
Common shares
|
Class B-2 common shares
Common shares
|
---|---|---|---|---|---|---|---|---|---|---|
Balance beginning at Sep. 30, 2016 | $ 246,391 | $ 94,266 | $ 44,543 | $ 83 | $ (17,209) | $ 121,714 | $ 124,677 | $ 15 | $ 1 | $ 15 |
Increase (Decrease) in Shareholders' Equity | ||||||||||
Share grants, net | 1,001 | 1,001 | 1,001 | |||||||
Net income | 95,553 | 37,250 | 37,250 | 58,303 | ||||||
Tax distributions to Member | (27,133) | (27,133) | ||||||||
Common share distributions | (23,315) | (12,065) | (12,065) | (11,250) | ||||||
Balance ending at Jun. 30, 2017 | $ 292,497 | $ 95,267 | $ 81,793 | $ 83 | $ (29,274) | $ 147,900 | $ 144,597 | $ 15 | $ 1 | $ 15 |
Basis of Presentation |
9 Months Ended |
---|---|
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The RMR Group Inc., or RMR Inc., is a holding company and substantially all of its business is conducted by its majority owned subsidiary The RMR Group LLC, or RMR LLC. RMR Inc. is a Maryland corporation and RMR LLC is a Maryland limited liability company. RMR Inc. serves as the sole managing member of RMR LLC and, in that capacity, operates and controls the business and affairs of RMR LLC. In these financial statements, unless otherwise indicated, “we", "us” and “our” refer to RMR Inc. and its direct and indirect subsidiaries, including RMR LLC. As of June 30, 2017, RMR Inc. owns 15,094,510 class A membership units of RMR LLC, or Class A Units, and 1,000,000 class B membership units of RMR LLC, or Class B Units. The aggregate RMR LLC membership units RMR Inc. owns represent 51.8% of the economic interest of RMR LLC as of June 30, 2017. We refer to economic interest as the right of a holder of a Class A Unit or Class B Unit to share in distributions made by RMR LLC and, upon liquidation, dissolution or winding up of RMR LLC, to share in the assets of RMR LLC after payments to creditors. ABP Trust, a Maryland statutory trust, beneficially owned by Barry M. Portnoy and Adam D. Portnoy, our Managing Directors, owns 15,000,000 redeemable Class A Units, representing 48.2% of the economic interest of RMR LLC as of June 30, 2017, which is presented as a noncontrolling interest within the condensed consolidated financial statements. RMR LLC was founded in 1986 to manage public investments in real estate and, as of June 30, 2017, managed a diverse portfolio of publicly owned real estate and real estate related businesses. RMR LLC manages: Government Properties Income Trust, or GOV, a publicly traded real estate investment trust, or REIT, that primarily owns properties that are majority leased to the U.S. government and state governments; Hospitality Properties Trust, or HPT, a publicly traded REIT that primarily owns hotel and travel center properties; Select Income REIT, or SIR, a publicly traded REIT that primarily owns properties that are leased to single tenants, and Senior Housing Properties Trust, or SNH, a publicly traded REIT that primarily owns healthcare, senior living and medical office buildings. Hereinafter, GOV, HPT, SIR and SNH are collectively referred to as the Managed REITs. RMR LLC also provides management services to other publicly traded and private businesses, including: Five Star Senior Living Inc., or Five Star, a publicly traded operator of senior living communities, many of which are owned by SNH; Sonesta International Hotels Corporation, or Sonesta, a privately owned franchisor and operator of hotels, resorts and cruise ships in the United States, Latin America, the Caribbean and the Middle East, some of whose U.S. hotels are owned by HPT; and TravelCenters of America LLC, or TA, an operator of travel centers along the U.S. Interstate Highway System, many of which are owned by HPT, convenience stores with retail gas stations and restaurants. Hereinafter, Five Star, Sonesta and TA are collectively referred to as the Managed Operators. In addition, RMR LLC also provides management services to certain related private companies, including Affiliates Insurance Company, or AIC, an Indiana insurance company, and ABP Trust and its subsidiaries. During the nine months ended June 30, 2016, RMR LLC provided certain transition services to Equity Commonwealth, or EQC, a publicly traded REIT that primarily owns office properties. RMR Advisors LLC, a Maryland limited liability company, or RMR Advisors, was founded in 2002. RMR Advisors is a wholly owned subsidiary of RMR LLC and is the adviser to RMR Real Estate Income Fund, or RIF. RIF is a closed end investment company focused on investing in real estate securities, including REITs and other dividend paying securities, but excluding our Client Companies, as defined below. On August 5, 2016, we acquired certain assets of Tremont Realty Capital LLC, or the Tremont business, which principally originates and manages real estate debt and debt like financings and serves as adviser to a private fund created for an institutional investor and other separately managed accounts. As part of this transaction, Tremont Realty Advisors LLC, or Tremont Advisors, a wholly owned subsidiary of RMR LLC founded in 2016 and an investment advisor registered with the Securities and Exchange Commission, or SEC, was assigned the investment management contracts of the Tremont business. Tremont Advisors manages a private fund created for an institutional investor and other separately managed accounts that invest in commercial real estate debt, including secured mortgage debt, mezzanine financings and commercial real estate that may become owned by its clients. On November 28, 2016, we were assigned the Tremont business's 0.5% general partnership interest in a private fund created for an institutional investor managed by the Tremont business. We account for this investment under the equity method of accounting and record our share of the investment's earnings or losses each period. RMR International LLC, a Maryland limited liability company, or RMR Intl, was founded in 2012. RMR Intl is a wholly owned subsidiary of RMR LLC whose sole business is holding the equity interests of RMR Australia Asset Management Pty Ltd, or RMR Australia, a company founded in 2012 to manage certain investments of a company then managed by RMR LLC in Australia. RMR Australia continues to hold an Australian financial services license granted by the Australian Securities & Investments Commission but has ceased operations subsequent to the termination of services being provided to EQC as of October 31, 2015. In these financial statements, we refer to the Managed REITs, the Managed Operators, RIF, AIC, ABP Trust and the clients of the Tremont business as our Client Companies. The accompanying condensed consolidated financial statements of RMR Inc. are unaudited. Certain information and disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted. We believe the disclosures made are adequate to make the information presented not misleading. However, the accompanying condensed consolidated financial statements should be read in conjunction with the financial statements and notes contained in our Annual Report on Form 10-K for the fiscal year ended September 30, 2016, or our Annual Report. In the opinion of our management, all adjustments, which include only normal recurring adjustments considered necessary for a fair presentation, have been included. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Our operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. Reclassifications have been made to the prior year's condensed consolidated financial statements to conform to the current year's presentation. Preparation of these financial statements in conformity with GAAP requires our management to make certain estimates and assumptions that may affect the amounts reported in these financial statements and related notes. The actual results could differ from these estimates. |
Recent Accounting Pronouncements |
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Accounting Policies [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2014-09, Revenue from Contracts with Customers. The main provision of ASU No. 2014-09 is to recognize revenue when control of the goods or services transfers to the customer, as opposed to the existing guidance of recognizing revenue when the risk and rewards transfer to the customer. In July 2015, the FASB approved a one year deferral of the effective date for this ASU to interim and annual reporting periods beginning after December 15, 2017. We are continuing to evaluate this guidance; however, we do not expect its adoption to have a material impact on our condensed consolidated financial statements as our revenue recognition is expected to be unchanged under this new guidance, including variable consideration attributable to incentive fees. In February 2016, the FASB issued ASU No. 2016-02, Leases, which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). ASU No. 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease. A lessee is also required to record a right of use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. ASU No. 2016-02 is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. We are currently assessing the potential impact the adoption of ASU No. 2016-02 will have on our condensed consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires that entities use a new forward looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU No. 2016-13 will become effective for fiscal years beginning after December 15, 2019. We are continuing to assess this guidance, but we have not historically experienced credit losses from our Client Companies and do not expect the adoption of ASU No. 2016-13 to have a material impact on our condensed consolidated financial statements. |
Revenue Recognition |
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Revenue Recognition [Abstract] | |||||||||||||||||||||||||
Revenue Recognition | Revenue Recognition Revenues from services that we provide are recognized as earned in accordance with contractual agreements. In the periods presented, management and advisory services revenue consists principally of business management fees, property management fees and advisory fees earned from our Client Companies and EQC. Business Management and Incentive Fees—Managed REITs We earn annual base business management fees from the Managed REITs pursuant to business management agreements equal to the lesser of:
The foregoing base business management fees are paid monthly in arrears, based on the lower of the Managed REIT’s monthly average historical costs of assets under management and average market capitalization during the month. For purposes of these fees, a Managed REIT’s assets under management do not include shares it owns of another Client Company. We also may earn annual incentive business management fees from the Managed REITs under the business management agreements. The incentive business management fees are contingent performance based fees which are only recognized when earned at the end of each respective measurement period. The incentive fees are calculated for each Managed REIT as 12.0% of the product of (a) the equity market capitalization of the Managed REIT, as defined in the applicable business management agreement, and (b) the amount, expressed as a percentage, by which the Managed REIT’s total return per share, as defined in the applicable business management agreement, exceeded the benchmark total return per share, as defined in the applicable business management agreement, of a specified REIT index identified in the applicable business management agreement for the measurement period, subject to caps on the values of the incentive fees. The measurement period for the annual incentive fee in respect of calendar year 2016 was the three year period that ended on December 31, 2016 and in respect of calendar year 2015 was the two year period that ended on December 31, 2015. The measurement period for the annual incentive fee in respect of the current calendar year and calendar years thereafter is the three year period ending on December 31 of the applicable calendar year. We earned aggregate base business management fees from the Managed REITs of $28,643 and $26,623 for the three months ended June 30, 2017 and 2016, respectively, and $84,816 and $76,628 for the nine months ended June 30, 2017 and 2016, respectively. We earned aggregate incentive business management fees from the Managed REITs of $52,407 and $62,263 for the nine months ended June 30, 2017 and 2016, respectively, all of which was earned during the three months ended December 31, 2016 and 2015, respectively. Incentive business management fees recognized as earned in the nine months ended June 30, 2017 and 2016 were earned in respect of the 2016 and 2015 calendar years, respectively. Business Management Fees—Managed Operators, ABP Trust and AIC We earn business management fees from the Managed Operators and ABP Trust pursuant to business management agreements equal to 0.6% of: (i) in the case of Five Star, Five Star’s revenues from all sources reportable under GAAP, less any revenues reportable by Five Star with respect to properties for which it provides management services, plus the gross revenues at those properties determined in accordance with GAAP, (ii) in the case of Sonesta, Sonesta’s revenues from all sources reportable under GAAP, less any revenues reportable by Sonesta with respect to hotels for which it provides management services, plus the gross revenues at those hotels determined in accordance with GAAP, (iii) in the case of TA, the sum of TA’s gross fuel margin, as defined in the applicable agreement, plus TA’s total nonfuel revenues and (iv) in the case of ABP Trust, revenues from all sources reportable under GAAP. These fees are estimated and payable monthly in advance. We earn business management fees from AIC pursuant to a management agreement equal to 3.0% of its total premiums paid under active insurance underwritten or arranged by AIC. We earned aggregate business management fees from the Managed Operators, ABP Trust and AIC of $6,650 and $6,804 for the three months ended June 30, 2017 and 2016, respectively, and $19,372 and $19,121 for the nine months ended June 30, 2017 and 2016, respectively. Property Management Fees We earned property management fees pursuant to property management agreements with certain Client Companies. We generally earn fees under these agreements for property management services equal to 3.0% of gross collected rents. Also, under the terms of the property management agreements, we receive additional property management fees for construction supervision in connection with certain construction activities undertaken at the managed properties equal to 5.0% of the cost of such construction. We earned aggregate property management fees of $9,238 and $8,440 for the three months ended June 30, 2017 and 2016, respectively, and $26,089 and $24,870 for the nine months ended June 30, 2017 and 2016, respectively. Reimbursable Payroll and Related Costs Pursuant to certain of our management agreements, the companies to which we provide management services pay or reimburse us for expenses incurred on their behalf. In accordance with Accounting Standards Codification, or ASC, 605, Revenue Recognition, we present certain payroll and related cost reimbursements we receive as revenue. A significant portion of these reimbursable payroll and related costs arises from services we provide pursuant to our property management agreements that are charged or passed through to and are paid by tenants of our Client Companies. We realized reimbursable payroll and related costs of $9,839 and $9,744 for the three months ended June 30, 2017 and 2016, respectively, and $29,023 and $25,993 for the nine months ended June 30, 2017 and 2016, respectively. Our reimbursable payroll and related costs include grants of common shares from Client Companies directly to certain of our officers and employees in connection with the provision of management services to those companies. The revenue in respect of each grant is based on the fair value as of the grant date for those shares that have vested, with subsequent changes in the fair value of the unvested grants being recognized in the condensed consolidated statements of comprehensive income over the requisite service period. We record an equal offsetting amount as compensation and benefits expense for all of our reimbursable payroll and related cost revenues. We realized equity based compensation expense and related reimbursements of $892 and $2,128 for the three months ended June 30, 2017 and 2016, respectively, and $3,386 and $4,971 for the nine months ended June 30, 2017 and 2016, respectively. We report all other expenses we incur on behalf of our Client Companies on a net basis, as the management agreements provide that reimbursable expenses are to be billed directly to the client. This net basis accounting method is supported by some or all of the following factors, which we have determined define us as an agent rather than a principal with respect to these matters:
Advisory Agreements and Other Services to Advisory Clients RMR Advisors is compensated pursuant to its agreement with RIF at an annual rate of 0.85% of RIF’s average daily managed assets, as defined in the agreement. Average daily managed assets includes the net asset value attributable to RIF’s outstanding common shares, plus the liquidation preference of RIF’s outstanding preferred shares, plus the principal amount of any borrowings, including from banks or evidenced by notes, commercial paper or other similar instruments issued by RIF. RMR Advisors earned advisory fees of $613 and $600 for the three months ended June 30, 2017 and 2016, respectively, and $1,826 and $1,741 for the nine months ended June 30, 2017 and 2016, respectively. Tremont Advisors is compensated pursuant to its agreement with a private fund created for an institutional investor at an annual rate of 1.35% of the weighted average outstanding balance of all strategic investments, as defined in the agreement, of the private fund. Strategic investments include any direct or indirect participating or non-participating debt investment in certain real estate. Tremont Advisors is also party to loan servicing agreements with its other separately managed account clients. Under such agreements, Tremont Advisors is compensated at an annual rate of 0.50% of the outstanding principal balance of the outstanding loans. In certain circumstances, Tremont Advisors is also entitled to performance fees based on exceeding certain performance targets. Performance fees are realized when a separately managed account client’s cumulative returns are in excess of the contractual preferred return. Tremont Advisors did not earn any performance fees for the three and nine months ended June 30, 2017. The Tremont business also acts as transaction originators for non-investment advisory clients for negotiated fees. For the three and nine months ended June 30, 2017, the Tremont business earned between 0.50% and 1.0% of the aggregate principal amounts of any loans so originated. For the three months ended June 30, 2017, the Tremont business earned management services revenue of $113 and advisory services revenue of $406, and for the nine months ended June 30, 2017, we earned management services revenue of $352 and advisory services revenue of $1,207. EQC Termination and Cooperation Agreement We provided certain transition services for EQC in Australia and earned zero and $58 for the three and nine months ended June 30, 2016, respectively, for these services. |
Income Taxes |
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Income Taxes | Income Taxes We are the sole managing member of RMR LLC. RMR LLC is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. RMR Intl, RMR Advisors and Tremont Advisors are wholly owned disregarded subsidiaries of RMR LLC for income tax purposes. As a partnership, RMR LLC is generally not subject to U.S. federal and most state income taxes. Any taxable income or loss generated by RMR LLC is passed through to and included in the taxable income or loss of its members, including RMR Inc. and ABP Trust, based on each member’s respective ownership percentage. We are a corporation subject to U.S. federal and state income tax with respect to our allocable share of any taxable income of RMR LLC and its wholly owned subsidiaries. For the three months ended June 30, 2017 and 2016, we recognized income tax expense of $4,528 and $4,504, respectively, which includes $3,978 and $2,837, respectively, of U.S. federal income tax and $550 and $1,667, respectively, of state income taxes. For the nine months ended June 30, 2017 and 2016, we recognized income tax expense of $24,811 and $19,904, respectively, which includes $21,797 and $16,182, respectively, of U.S. federal income tax and $3,014 and $3,722, respectively, of state income taxes. A reconciliation of the statutory income tax rate to the effective tax rate is as follows:
ASC 740, Income Taxes, provides a model for how a company should recognize, measure and present in its financial statements uncertain tax positions that have been taken or are expected to be taken with respect to all open years and in all significant jurisdictions. We recognize a tax benefit only if it is “more likely than not” that a particular tax position will be sustained upon examination or audit. To the extent the “more likely than not” standard has been satisfied, the benefit associated with a tax position is measured as the largest amount that is greater than 50% likely of being realized upon settlement. As of June 30, 2017 and September 30, 2016, we have no uncertain tax positions. |
Fair Value of Financial Instruments |
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Fair Value of Financial Instruments | Fair Value of Financial Instruments As of June 30, 2017 and September 30, 2016, the fair values of our financial instruments, which include cash and cash equivalents, amounts due from our Client Companies and accounts payable, accrued expenses and deposits, were not materially different from their carrying values, due to the short term nature of these financial instruments. Recurring Fair Value Measures On a recurring basis we measure certain financial assets and financial liabilities at fair value based upon quoted market prices. ASC 820, Fair Value Measurements, establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (Level 1), and the lowest priority to unobservable inputs (Level 3). A financial asset’s or financial liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. Level 1 Estimates The following are our assets and liabilities that all have been measured at fair value using Level 1 inputs in the fair value hierarchy as of June 30, 2017 and September 30, 2016:
Level 3 Estimates Contingent consideration liabilities are re-measured to fair value each reporting period using updated probabilities of payment. Projected contingent payment amounts are discounted back to the current period using a discounted cash flow model. Increases or decreases in probabilities of payment may result in significant changes in the fair value measurements. In August 2016, we acquired the Tremont business for total cash consideration of $2,466, plus a potential obligation to pay up to an additional $1,270 over a two year period following the acquisition date based on a portion of the payments that we receive from a specified part of the historical Tremont business. The contingent consideration is measured at fair value using an income approach valuation technique, specifically with probability weighted and discounted cash flows. The fair value of the contingent consideration as of June 30, 2017 and September 30, 2016 was $715 and $1,257, respectively. |
Related Person Transactions |
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Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Person Transactions | Related Person Transactions As of June 30, 2017, our Managing Directors own in aggregate, directly and indirectly through ABP Trust, (i) 146,213 shares of Class A common stock of RMR Inc., or Class A Common Shares; (ii) all of the outstanding shares of Class B-1 common stock of RMR Inc., or Class B-1 Common Shares; (iii) all of the outstanding shares of Class B-2 common stock of RMR Inc., or Class B-2 Common Shares; and (iv) 15,000,000 Class A Units. Our Managing Directors are also officers of RMR Inc. and of RMR LLC. Our Managing Directors are also managing trustees of each of the Managed REITs. As of June 30, 2017, GOV, HPT, SIR and SNH owned 1,214,225; 2,503,777; 1,586,836 and 2,637,408 Class A Common Shares, respectively, and our Managing Directors beneficially owned, in aggregate, 2.5% of GOV’s common shares, 1.4% of HPT’s outstanding common shares, 1.9% of SIR’s outstanding common shares and 1.3% of SNH’s outstanding common shares. Barry M. Portnoy is a managing director of Five Star and of TA. As of June 30, 2017, our Managing Directors beneficially owned, in aggregate, less than one percent of TA's outstanding common shares and 36.7% of Five Star’s outstanding common shares. Our Managing Directors are also the owners and directors of Sonesta and are directors of AIC. All of the executive officers of the Managed REITs and many of the executive officers of the Managed Operators are also officers and employees of RMR LLC. Additional information about our related person transactions appears in Note 7 below. Revenues from Related Parties For the three and nine months ended June 30, 2017 and 2016, we recognized revenues from related parties as set forth in the following table:
In March 2017, RMR LLC entered into a management agreement with a subsidiary of SNH related to a medical office building located in Boston in connection with a joint venture arrangement for that building. Under that agreement, the SNH subsidiary pays RMR LLC certain business management fees, which fees are credited against the business management fees SNH pays to RMR LLC. We include these fees within the amount of business management fees we report as earned by RMR LLC from SNH. On December 31, 2016, RMR LLC earned a $52,407 incentive business management fee from HPT pursuant to our business management agreement with HPT. HPT paid this incentive fee in January 2017. On December 31, 2015, RMR LLC earned a $62,263 incentive business management fee from HPT pursuant to our business management agreement with HPT. This $62,263 incentive fee was paid in January 2016. Under the RMR LLC operating agreement, ABP Trust was entitled to receive a pro rata share of any incentive business management fee earned by RMR LLC for the 2015 calendar year based on the number of days in 2015 to June 5, 2015; the portion of the $62,263 incentive fee allocated solely to ABP Trust pursuant to this provision was $26,611. Amounts Due From Related Parties The following table represents amounts due from related parties as of the dates listed:
Leases As of June 30, 2017, we leased from ABP Trust and certain Managed REITs office space for use as our headquarters and regional offices. We incurred rental expense under related party leases aggregating $1,056 and $1,077 for the three months ended June 30, 2017 and 2016, respectively, and $3,165 and $3,190 for the nine months ending June 30, 2017 and 2016, respectively. Tax Related Payments Pursuant to our tax receivable agreement with ABP Trust, RMR Inc. pays to ABP Trust 85.0% of the amount of cash savings, if any, in U.S. federal, state and local income tax or franchise tax that RMR Inc. realizes as a result of (a) the increases in tax basis attributable to our dealings with ABP Trust and (b) tax benefits related to imputed interest deemed to be paid by us as a result of the tax receivable agreement. During the nine months ended June 30, 2017, we made no payments to ABP Trust pursuant to this agreement. As of June 30, 2017, our condensed consolidated balance sheet reflects a liability related to the tax receivable agreement of $64,929, including $2,900 classified as a current liability that we expect to pay to ABP Trust during the fourth quarter of fiscal year 2017. Under the RMR LLC operating agreement, RMR LLC is required to make certain pro rata distributions to each member of RMR LLC quarterly on the basis of the assumed tax liabilities of its members. For the nine months ended June 30, 2017, pursuant to the RMR LLC operating agreement, RMR LLC made required quarterly tax distributions to holders of its membership units totaling $56,230, of which $29,097 was distributed to us and $27,133 was distributed to ABP Trust, based on each membership unit holder’s respective ownership percentage. The $29,097 distributed to us was eliminated in our condensed consolidated financial statements, and the $27,133 distributed to ABP Trust was recorded as a reduction of its noncontrolling interest. We used funds from these distributions for payment of certain U.S. federal and state income tax liabilities. We also expect to use funds from these distributions to pay part of our obligations under the tax receivable agreement. Other In June 2017, we became aware that we had been a victim of a criminal fraud that law enforcement authorities refer to as business email compromise fraud. This fraud involved a person pretending to be the representative of the seller in a property acquisition transaction for one of our Managed REITs. The imposter provided fraudulent wire instructions to one of our senior employees. As a result, funds were sent by wire transfer to an account that was believed to be, but in fact was not, the seller’s account, which resulted in our incurring a loss of $590, as well as additional expenses of $95 in connection with this matter for the quarter ended June 30, 2017. We recorded these amounts in general and administrative expense in our condensed consolidated statements of comprehensive income. We are working with law enforcement authorities and the banks involved in the wire transfer to pursue recovery of the $590, but at this time we do not know whether we will be able to recover any of these funds, and we have been advised that it may take several months before we are better able to evaluate our recovery prospects. The Managed REIT did not incur any loss in connection with this matter. |
Shareholders' Equity |
9 Months Ended |
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Jun. 30, 2017 | |
Stockholders' Equity Note [Abstract] | |
Shareholders' Equity | Shareholders’ Equity Issuances On March 29, 2017, under our equity compensation plan, we granted 2,500 of our Class A Common Shares valued at $48.20 per share, the closing price of our Class A Common Shares on the Nasdaq Stock Market LLC on that day, to each of our Managing Directors and Independent Directors as part of their annual compensation. These Class A Common Shares awarded to our Independent Directors vested immediately and are included in general and administrative expense in our condensed consolidated statements of comprehensive income. In connection with the grant of Class A Common Shares to our Managing Directors and Independent Directors, RMR LLC concurrently issued 12,500 Class A Units to RMR Inc., consistent with the terms of the RMR LLC operating agreement. On March 29, 2017, we withheld 375 of the Class A Common Shares awarded to one of our Independent Directors to fund that Independent Director's resulting minimum required tax withholding obligation. The aggregate value of the withheld shares was $18, which is reflected as a decrease to shareholders' equity in our condensed consolidated balance sheet. In connection with the acquisition of 375 Class A Common Shares, and as required by the RMR LLC operating agreement, RMR LLC concurrently acquired 375 Class A Units from RMR Inc. On June 30, 2017, we withheld 47 of the Class A Common Shares awarded to one of our former employees in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of restricted common shares. The aggregate value of the withheld shares was $2, which is reflected as a decrease to shareholders' equity in our condensed consolidated balance sheet. In connection with the acquisition of 47 Class A Common Shares, and as required by the RMR LLC operating agreement, RMR LLC concurrently acquired 47 Class A Units from RMR Inc. Distributions On November 17, 2016, we paid a quarterly dividend on our Class A Common Shares and Class B-1 Common Shares, in the amount of $0.25 per Class A Common Share and Class B-1 Common Share, or $4,021. This dividend was paid to our shareholders of record as of the close of business on October 21, 2016. This dividend was funded by a distribution from RMR LLC to holders of its membership units in the amount of $0.25 per unit, or $7,771, of which $4,021 was distributed to us based on our then aggregate ownership of 16,082,432 membership units of RMR LLC and $3,750 was distributed to ABP Trust based on its ownership of 15,000,000 membership units of RMR LLC. On February 21, 2017, we paid a quarterly dividend on our Class A Common Shares and Class B-1 Common Shares, in the amount of $0.25 per Class A Common Share and Class B-1 Common Share, or $4,020. This dividend was paid to our shareholders of record as of the close of business on January 23, 2017. This dividend was funded by a distribution from RMR LLC to holders of its membership units in the amount of $0.25 per unit, or $7,770, of which $4,020 was distributed to us based on our then aggregate ownership of 16,082,432 membership units of RMR LLC and $3,750 was distributed to ABP Trust based on its ownership of 15,000,000 membership units of RMR LLC. On May 18, 2017, we paid a quarterly dividend on our Class A Common Shares and Class B-1 Common Shares, in the amount of $0.25 per Class A Common Share and Class B-1 Common Share, or $4,024. This dividend was paid to our shareholders of record as of the close of business on April 21, 2017. This dividend was funded by a distribution from RMR LLC to holders of its membership units in the amount of $0.25 per unit, or $7,774, of which $4,024 was distributed to us based on our then aggregate ownership of 16,094,557 membership units of RMR LLC and $3,750 was distributed to ABP Trust based on its ownership of 15,000,000 membership units of RMR LLC. On July 12, 2017, we declared a quarterly dividend on our Class A Common Shares and Class B-1 Common Shares payable to our shareholders of record as of July 24, 2017, in the amount of $0.25 per Class A Common Share and Class B-1 Common Share, or $4,024. This dividend will be funded by a distribution from RMR LLC to holders of its membership units in the amount of $0.25 per unit, or $7,774, of which $4,024 will be distributed to us based on our then aggregate ownership of 16,094,510 membership units of RMR LLC and $3,750 will be distributed to ABP Trust based on its ownership of 15,000,000 membership units of RMR LLC. We expect to pay this dividend on or about August 17, 2017. |
Per Common Share Amounts |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per Common Share Amounts | Per Common Share Amounts Earnings per common share reflects net income attributable to RMR Inc. divided by our weighted average common shares outstanding. Basic and diluted weighted average common shares outstanding represents our outstanding Class A Common Shares and our Class B-1 Common Shares during the applicable periods. Our Class B-2 Common Shares, which are paired with ABP Trust’s Class A Units, have no independent economic interest in RMR Inc. and thus are not included as common stock outstanding for purposes of calculating our net income attributable to RMR Inc. per share. Unvested Class A Common Shares granted to our employees are deemed participating securities for purposes of calculating earnings per common share, as they have dividend rights. We calculate earnings per share using the two-class method. Under the two-class method, we allocate earnings proportionately to vested Class A Common Shares, Class B-1 Common Shares and unvested Class A Common Shares outstanding for the period. Earnings attributable to unvested Class A Common Shares are excluded from earnings per share under the two-class method as reflected in our condensed consolidated statements of comprehensive income. The calculation of basic and diluted earnings per share is as follows:
The 15,000,000 Class A Units that we do not own may be redeemed for our Class A Common Shares on a one for one basis, or upon such redemption, we may elect to pay cash instead of issuing Class A Common Shares. Upon redemption of a Class A Unit, our Class B-2 Common Shares “paired” with such unit is cancelled for no additional consideration. If all outstanding Class A Units that we do not own were redeemed for our Class A Common Shares in the periods presented, our Class A Common Shares outstanding as of June 30, 2017, would have been 30,094,510. In computing the dilutive effect, if any, that the aforementioned redemption would have on earnings per share, we considered that net income available to holders of our Class A Common Shares would increase due to elimination of the noncontrolling interest (including any tax impact). For the periods presented, such redemption is not reflected in diluted earnings per share as the assumed redemption would be anti-dilutive. |
Net Income Attributable to RMR Inc |
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Net Income Attributable to RMR Inc. | Net Income Attributable to RMR Inc. Net income attributable to RMR Inc. for the three and nine months ended June 30, 2017 and 2016, is calculated as follows:
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Segment Reporting |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting | Segment Reporting We have one separately reportable business segment, which is RMR LLC. In the tables below, our All Other Operations includes the operations of RMR Inc., RMR Advisors, Tremont Advisors and RMR Intl.
(1) Intersegment revenues of $221 recognized by RMR LLC for services provided to the All Other Operations segment have been eliminated in the condensed consolidated financial statements.
(1) Intersegment revenues of $872 recognized by RMR LLC for services provided to the All Other Operations segment have been eliminated in the condensed consolidated financial statements.
(1) Intersegment revenues of $192 recognized by RMR LLC for services provided to the All Other Operations segment have been eliminated in the condensed consolidated financial statements.
(1) Intersegment revenues of $737 recognized by RMR LLC for services provided to the All Other Operations segment have been eliminated in the condensed consolidated financial statements. |
Separation Costs |
9 Months Ended |
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Jun. 30, 2017 | |
Separation Costs [Abstract] | |
Separation Costs | Separation Costs. We recognized separation costs of $1,195 and $1,358 for the three and nine months ended June 30, 2016, respectively, in connection with employment termination costs. |
Recent Accounting Pronouncements (Policies) |
9 Months Ended |
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Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2014-09, Revenue from Contracts with Customers. The main provision of ASU No. 2014-09 is to recognize revenue when control of the goods or services transfers to the customer, as opposed to the existing guidance of recognizing revenue when the risk and rewards transfer to the customer. In July 2015, the FASB approved a one year deferral of the effective date for this ASU to interim and annual reporting periods beginning after December 15, 2017. We are continuing to evaluate this guidance; however, we do not expect its adoption to have a material impact on our condensed consolidated financial statements as our revenue recognition is expected to be unchanged under this new guidance, including variable consideration attributable to incentive fees. In February 2016, the FASB issued ASU No. 2016-02, Leases, which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). ASU No. 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease. A lessee is also required to record a right of use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. ASU No. 2016-02 is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. We are currently assessing the potential impact the adoption of ASU No. 2016-02 will have on our condensed consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires that entities use a new forward looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU No. 2016-13 will become effective for fiscal years beginning after December 15, 2019. We are continuing to assess this guidance, but we have not historically experienced credit losses from our Client Companies and do not expect the adoption of ASU No. 2016-13 to have a material impact on our condensed consolidated financial statements. |
Income Taxes (Tables) |
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of reconciliation of the statutory income tax rate to the effective tax rate | A reconciliation of the statutory income tax rate to the effective tax rate is as follows:
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Fair Value of Financial Instruments (Tables) |
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Jun. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of assets and liabilities measured at fair value | The following are our assets and liabilities that all have been measured at fair value using Level 1 inputs in the fair value hierarchy as of June 30, 2017 and September 30, 2016:
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Related Person Transactions (Tables) |
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Jun. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of related party transactions | For the three and nine months ended June 30, 2017 and 2016, we recognized revenues from related parties as set forth in the following table:
The following table represents amounts due from related parties as of the dates listed:
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Per Common Share Amounts (Tables) |
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Diluted, by Common Class, Including Two Class Method | The calculation of basic and diluted earnings per share is as follows:
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Schedule of Earnings Per Share, Basic, by Common Class, Including Two Class Method | The calculation of basic and diluted earnings per share is as follows:
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Net Income Attributable to RMR Inc (Tables) |
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Net Income Attributable to RMR Inc. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of net income attributable to parent | Net income attributable to RMR Inc. for the three and nine months ended June 30, 2017 and 2016, is calculated as follows:
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Segment Reporting (Tables) |
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of segment reporting information |
(1) Intersegment revenues of $221 recognized by RMR LLC for services provided to the All Other Operations segment have been eliminated in the condensed consolidated financial statements.
(1) Intersegment revenues of $872 recognized by RMR LLC for services provided to the All Other Operations segment have been eliminated in the condensed consolidated financial statements.
(1) Intersegment revenues of $192 recognized by RMR LLC for services provided to the All Other Operations segment have been eliminated in the condensed consolidated financial statements.
(1) Intersegment revenues of $737 recognized by RMR LLC for services provided to the All Other Operations segment have been eliminated in the condensed consolidated financial statements. |
Basis of Presentation (Details) - shares |
9 Months Ended | |
---|---|---|
Nov. 28, 2016 |
Jun. 30, 2017 |
|
Class B membership units | ||
Related Party Transaction [Line Items] | ||
Membership units (in units) | 1,000,000 | |
RMR LLC | ||
Related Party Transaction [Line Items] | ||
Ownership percentage | 51.80% | |
Class A common shares | Class A membership units | ||
Related Party Transaction [Line Items] | ||
Membership units (in units) | 15,094,510 | |
Capital Unit Redeemable Class A Units | ABP Trust | ||
Related Party Transaction [Line Items] | ||
Membership units (in units) | 15,000,000 | |
Ownership percentage | 48.20% | |
Tremont Realty Capital LLC | General Partner | ||
Related Party Transaction [Line Items] | ||
Ownership percentage acquired | 0.50% |
Revenue Recognition - Business Management Fees (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Jan. 31, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Managed REITs | |||||||
Related Party Transaction [Line Items] | |||||||
Aggregate base business management fees | $ 28,643 | $ 26,623 | $ 84,816 | $ 76,628 | |||
Aggregate incentive business management fees | $ 52,407 | $ 62,263 | $ 62,263 | $ 52,407 | 62,263 | ||
Managed Operators, ABP Trust and AIC | |||||||
Related Party Transaction [Line Items] | |||||||
Business management fee percent based on management agreements | 0.60% | ||||||
Aggregate business management fees | $ 6,650 | $ 6,804 | $ 19,372 | $ 19,121 | |||
AIC | |||||||
Related Party Transaction [Line Items] | |||||||
Business management fee percent based on total premiums paid | 3.00% |
Revenue Recognition - Property Management Fees (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Deferred Revenue Disclosure [Abstract] | ||||
Property management fee percent based on gross collected rents | 3.00% | |||
Property management fee percent based on the cost of construction | 5.00% | |||
Aggregate property management fees | $ 9,238 | $ 8,440 | $ 26,089 | $ 24,870 |
Revenue Recognition - Reimbursable Payroll and Related Costs (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Deferred Revenue Disclosure [Abstract] | ||||
Reimbursable payroll and related costs | $ 9,839 | $ 9,744 | $ 29,023 | $ 25,993 |
Equity based compensation expense and related reimbursements | $ 892 | $ 2,128 | $ 3,386 | $ 4,971 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Income Tax Disclosure [Abstract] | ||||
Income tax expense | $ 4,528 | $ 4,504 | $ 24,811 | $ 19,904 |
Federal income tax expense | 3,978 | 2,837 | 21,797 | 16,182 |
State income tax expense | $ 550 | $ 1,667 | $ 3,014 | $ 3,722 |
Income Taxes - Reconciliation of Income Tax Rate (Details) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Income Tax Disclosure [Abstract] | ||||
Income taxes computed at the federal statutory rate | 35.00% | 35.00% | 35.00% | 35.00% |
State taxes, net of federal benefit | 2.50% | 2.70% | 2.50% | 2.00% |
Net income attributable to noncontrolling interest | (17.00%) | (17.10%) | (16.90%) | (20.90%) |
Total | 20.50% | 20.60% | 20.60% | 16.10% |
Fair Value of Financial Instruments (Details) - Recurring basis - Level 1 - USD ($) $ in Thousands |
Jun. 30, 2017 |
Sep. 30, 2016 |
---|---|---|
Schedule of assets and liabilities measured at fair value | ||
Money market funds included in cash and cash equivalents | $ 134,398 | $ 57,741 |
Current portion of due from related parties related to share based payment awards | 1,363 | 4,977 |
Long term portion of due from related parties related to share based payment awards | 7,278 | 7,754 |
Current portion of employer compensation liability related to share based payment awards included in accounts payable, accrued expenses and deposits | 1,363 | 4,977 |
Long term portion of employer compensation liability related to share based payment awards | $ 7,278 | $ 7,754 |
Fair Value of Financial Instruments - Additional Information (Details) - Tremont Realty Capital LLC - USD ($) $ in Thousands |
1 Months Ended | ||
---|---|---|---|
Aug. 31, 2016 |
Jun. 30, 2017 |
Sep. 30, 2016 |
|
Business Acquisition [Line Items] | |||
Cash consideration | $ 2,466 | ||
Contingent consideration | $ 1,270 | $ 715 | $ 1,257 |
Duration of potential earn out | 2 years |
Related Person Transactions - Additional Information (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Jan. 31, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Related Party Transaction [Line Items] | |||||||
Incentive fee allocated to related party | $ 26,611 | $ 0 | $ 0 | $ 0 | $ 26,611 | ||
Managed REITs | |||||||
Related Party Transaction [Line Items] | |||||||
Aggregate incentive business management fees | $ 52,407 | $ 62,263 | $ 62,263 | 52,407 | 62,263 | ||
ABP Trust and Managed REIT | |||||||
Related Party Transaction [Line Items] | |||||||
Rental expense | $ 1,056 | $ 1,077 | $ 3,165 | $ 3,190 |
Related Person Transactions - Tax Related Payments (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2017 |
Jun. 30, 2017 |
|
ABP Trust | Up C Transaction | ||
Related Party Transaction [Line Items] | ||
Tax receivable agreement, percent of payment | 85.00% | |
Payments related to Tax Receivable Agreement | $ 0 | |
Liability related to Tax Receivable Agreement | 64,929 | |
Forecast | ABP Trust | Up C Transaction | ||
Related Party Transaction [Line Items] | ||
Payments related to Tax Receivable Agreement | $ 2,900 | |
RMR LLC | ||
Related Party Transaction [Line Items] | ||
Tax distributions | 29,097 | |
RMR LLC | ABP Trust | ||
Related Party Transaction [Line Items] | ||
Tax distributions | 27,133 | |
RMR LLC | RMR Group and ABP Trust | ||
Related Party Transaction [Line Items] | ||
Tax distributions | $ 56,230 |
Related Person Transactions - Other (Details) - Business Email Compromise Fraud Loss $ in Thousands |
3 Months Ended |
---|---|
Jun. 30, 2017
USD ($)
| |
Unusual or Infrequent Item, or Both [Line Items] | |
Loss on business email compromise | $ 590 |
Additional expenses | $ 95 |
Per Common Share Amounts (Details) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2017
shares
|
Jun. 30, 2016
shares
|
Jun. 30, 2017
shares
|
Jun. 30, 2016
shares
|
Sep. 30, 2016
shares
|
|
Class of Stock [Line Items] | |||||
Weighted average common stock shares outstanding diluted (in shares) | 16,058,000 | 16,008,000 | 16,044,000 | 16,003,000 | |
Class A membership units | |||||
Class of Stock [Line Items] | |||||
Conversion ratio | 1 | ||||
Weighted average common stock shares outstanding diluted (in shares) | 30,094,510 | ||||
Capital Unit Redeemable Class A Units | |||||
Class of Stock [Line Items] | |||||
Common stock shares authorized (in shares) | 15,000,000 | 15,000,000 | |||
Class B-1 common shares | |||||
Class of Stock [Line Items] | |||||
Common stock shares authorized (in shares) | 1,000,000 | 1,000,000 | 1,000,000 | ||
Conversion ratio | 1 |
Net Income Attributable to RMR Inc (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Dec. 31, 2015 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Net Income Attributable to RMR Inc. | |||||
Income before income tax expense and equity in earnings (loss) of investee | $ 22,129 | $ 21,906 | $ 120,525 | $ 123,433 | |
Add: RMR Inc. franchise tax expense and interest income | 147 | 220 | 456 | 443 | |
Less: equity in earnings (loss) of investee | 4 | 0 | (161) | 0 | |
Less: incentive fee allocable to ABP Trust | $ (26,611) | 0 | 0 | 0 | (26,611) |
Net income before noncontrolling interest | 22,280 | 22,126 | 120,820 | 97,265 | |
Less: noncontrolling interest | (10,748) | (10,704) | (58,303) | (47,052) | |
Net income attributable to RMR Inc. before income tax expense | 11,532 | 11,422 | 62,517 | 50,213 | |
Less: income tax expense attributable to RMR Inc. | (4,528) | (4,504) | (24,811) | (19,904) | |
Less: RMR Inc. franchise tax expense and interest income | (147) | (220) | (456) | (443) | |
Net income attributable to RMR Inc. | $ 6,857 | $ 6,698 | $ 37,250 | $ 29,866 |
Net Income Attributable to RMR Inc - Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Dec. 31, 2015 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Related Party Transaction [Line Items] | |||||
Incentive fee allocated to related party | $ 26,611 | $ 0 | $ 0 | $ 0 | $ 26,611 |
ABP Trust | |||||
Related Party Transaction [Line Items] | |||||
Incentive fee allocated to related party | $ 26,611 |
Separation Costs (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Separation Costs [Abstract] | ||||
Separation costs | $ 0 | $ 1,195 | $ 0 | $ 1,358 |
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