Per Common Share Amounts

6 Months Ended

Mar. 31, 2022

Basic earnings per common share reflects net income attributable to RMR Inc. divided by our weighted average Class A Common Shares and our Class B-1 Common Shares outstanding 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 shares outstanding for purposes of calculating basic earnings per common share. Diluted earnings per common share reflects net income divided by our weighted average Class A Common Shares and our Class B-1 Common Shares plus the effect of dilutive common share equivalents during the applicable periods. Diluted common share equivalents reflect the assumed issuance of Class A Common Shares pursuant to our 2016 Plan and the assumed issuance of Class A Common Shares related to the assumed redemption of the 15,000,000 Class A Units using the if-converted method.

Unvested Class A Common Shares awarded to our employees are deemed participating securities for purposes of calculating earnings per common share because 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 and Class B-1 Common Shares outstanding 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 income.

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, the Class B-2 Common Share “paired” with such unit is canceled for no additional consideration. 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 offset by any tax effect, which may be dilutive. For the three and six months ended March 31, 2022 and 2021, the assumed redemption is dilutive to earnings per share as presented in the table below.

The calculation of basic and diluted earnings per share for the three and six months ended March 31, 2022 and 2021, is as follows:


	Three Months Ended March 31,				Six Months Ended March 31,
	2022		2021		2022		2021
Numerators:
Net income attributable to The RMR Group Inc.	$	6,392	$	4,941	$	14,434	$	13,838
Income attributable to unvested participating securities	(62)		(44)		(140)		(121)
Net income attributable to The RMR Group Inc. used in calculating basic EPS	6,330		4,897		14,294		13,717
Effect of dilutive securities:
Add back: income attributable to unvested participating securities	62		44		140		121
Add back: net income attributable to noncontrolling interest	8,197		6,539		18,447		17,395
Add back: income tax expense	2,451		1,992		5,505		4,748
Income tax expense assuming redemption of noncontrolling interest’s Class A Units for Class A Common Shares (1)	(4,894)		(4,113)		(10,909)		(10,547)
Net income used in calculating diluted EPS	$	12,146	$	9,359	$	27,477	$	25,434

Denominators:
Common shares outstanding	16,502		16,413		16,502		16,413
Unvested participating securities	(173)		(157)		(175)		(159)
Weighted average common shares outstanding - basic	16,329		16,256		16,327		16,254
Effect of dilutive securities:
Assumed redemption of noncontrolling interest’s Class A Units for Class A Common Shares	15,000		15,000		15,000		15,000
Add: incremental unvested shares	2		24		1		—
Weighted average common shares outstanding - diluted	31,331		31,280		31,328		31,254

Net income attributable to The RMR Group Inc. per common share - basic	$	0.39	$	0.30	$	0.88	$	0.84
Net income attributable to The RMR Group Inc. per common share - diluted	$	0.39	$	0.30	$	0.88	$	0.81

(1)Income tax expense assumes the hypothetical conversion of the noncontrolling interest, which results in estimated tax rates of 28.7% and 30.5% for the three months ended March 31, 2022 and 2021, respectively, and 28.4% and 29.3% for the six months ended March 31, 2022 and 2021, respectively.