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•	As of September 30, 2019, The RMR Group Inc. had $32.8 billion of gross assets under management compared to gross assets under management of $30.1 billion as of September 30, 2018. Fee paying assets under management was $26.0 billion on September 30, 2019 compared to $28.0 billion on September 30, 2018.

•	Total management and advisory services revenues for the quarter ended September 30, 2019 were $45.2 million, compared to $50.0 million for the quarter ended September 30, 2018.

•	The RMR Group Inc. earned management services revenues from the following sources (dollars in thousands):

(1)	Managed Equity REITs for the periods presented includes: Industrial Logistics Properties Trust (ILPT), Office Properties Income Trust (OPI), Select Income REIT (SIR), until its merger with OPI on December 31, 2018, Senior Housing Properties Trust (SNH) and Service Properties Trust (SVC) (formerly known as Hospitality Properties Trust).

(2)	Managed Operators collectively refers to: Five Star Senior Living Inc. (FVE), Sonesta International Hotels Corporation (Sonesta) and TravelCenters of America Inc. (TA).

•	For the three months ended September 30, 2019, net income was $18.9 million and net income attributable to The RMR Group Inc. was $8.4 million, or $0.51 per diluted share, compared to net income of $19.0 million and net income attributable to The RMR Group Inc. of $8.2 million, or $0.50 per diluted share, for the three months ended September 30, 2018.

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For the three months ended September 30, 2019, adjusted net income attributable to The RMR Group Inc. was $9.6 million, or $0.59 per diluted share, compared to $9.9 million, or $0.61 per diluted share, for the three months ended September 30, 2018. The adjustments to net income attributable to The RMR Group Inc. this quarter included $0.7 million, or $0.04 per diluted share, of unrealized losses on an equity method investment accounted for under the fair value option, $0.4 million, or $0.03 per diluted share, related to certain compensation adjustments, net of reimbursements and $0.2 million, or $0.01 per diluted share, of transaction and acquisition related costs.

•	For the three months ended September 30, 2019, Adjusted EBITDA was $28.6 million, Operating Margin was 46.1% and Adjusted EBITDA Margin was 60.2%, compared to Adjusted EBITDA of $31.2 million, Operating Margin of 50.6% and Adjusted EBITDA Margin of 59.7% for the three months ended September 30, 2018.

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On December 22, 2017, the U.S government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act, or the Tax Act. The Tax Act significantly revised the U.S. corporate income tax system by, among other things, lowering corporate income tax rates. Since The RMR Group Inc. has a September 30 fiscal year end, its corporate income tax rates were phased in for its 2018 fiscal year, resulting in a federal statutory tax rate of approximately 24.5% for the fiscal year 2018. The federal statutory tax rate for fiscal year 2019 was 21.0%.

•	As of September 30, 2019, The RMR Group Inc. had $358.4 million in cash and cash equivalents with no outstanding debt obligations. Cash and cash equivalents as of September 30, 2019 reflect the payment of annual cash bonuses to officers and employees during the fiscal fourth quarter.

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(1)

Includes business management fees earned from the Managed Equity REITs monthly based upon the lower of (i) the average historical cost of each REIT’s properties and (ii) each REIT’s average market capitalization. The following table presents a summary of each Managed Equity REIT’s primary strategy and the lesser of the historical cost of its assets under management and its market capitalization as of September 30, 2019 and 2018, as applicable:

(a)

The basis on which base business management fees are calculated for the three months and fiscal years ended September 30, 2019 and 2018 may differ from the basis at the end of the periods presented in the table above. As of September 30, 2019, the market capitalization was lower than the historical costs of assets under management for OPI, SNH and SVC; the historical costs of assets under management for OPI, SNH and SVC as of September 30, 2019, were $6,114,931, $8,670,173 and $12,787,009, respectively. For ILPT, the historical costs of assets under management were lower than their market capitalization of $2,790,848 as of September 30, 2019.

(b)	SIR merged with and into OPI (formerly named Government Properties Income Trust) on December 31, 2018 with OPI continuing as the surviving entity.

(2)

Reflects the prospective adoption of Accounting Standards Update, or ASU, No. 2014-09, Revenue from Contracts with Customers, which has been codified as Accounting Standard Codification, or ASC, 606, effective October 1, 2018. Under ASC 606, beginning October 1, 2018, The RMR Group Inc. accounts for the costs of services provided by third parties to its Client Companies, and the related reimbursement, on a gross basis.

(3)	Equity based compensation expense for the three months ended September 30, 2019 consists of $1,183 related to shares granted by The RMR Group Inc. to certain of its officers and employees and $3,508 related to Client Companies' shares granted to certain of The RMR Group Inc.’s officers and employees.

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(4)	The RMR Group Inc. calculates earnings per share using the two-class method as calculated below:

(a)	For the three months ended September 30, 2019, incremental unvested common shares were antidilutive.

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(1)	Includes $1,722 in unrealized losses on The RMR Group Inc.’s investment in TA common shares, adjusted to reflect amounts attributable to the noncontrolling interest and income tax expense at a rate of approximately 13.7%.

(2)	Includes $966 of certain compensation adjustments related to annual bonus estimates, adjusted to reflect amounts attributable to the noncontrolling interest and income tax expense at a rate of approximately 13.7%.

(3)	Includes $425 of transaction and acquisition related costs, adjusted to reflect amounts attributable to the noncontrolling interest and income tax expense at a rate of approximately 13.7%.

(1)	Includes $4,359 in impairment losses on The RMR Group Inc.’s Tremont Mortgage Trust investment, adjusted to reflect amounts attributable to the noncontrolling interest and income tax expense at a rate of approximately 15.1%.

(2)	Includes $1,847 of certain compensation adjustments related to annual bonus estimates, adjusted to reflect amounts attributable to the noncontrolling interest and income tax expense at a rate of approximately 15.1%.

(3)	Includes $1,372 of separation costs adjusted to reflect amounts attributable to the noncontrolling interest and income tax expense at a rate of approximately 15.1%.

(4)	Includes $780 of transaction and acquisition related costs, adjusted to reflect amounts attributable to the noncontrolling interest and income tax expense at a rate of approximately 15.1%.

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(1)

EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial measures calculated as presented in the tables above. The RMR Group Inc. considers EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin to be appropriate supplemental measures of its operating performance, along with net income, net income attributable to The RMR Group Inc., operating income and operating margin. The RMR Group Inc. believes that EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin provide useful information to investors because by excluding the effects of certain amounts, such as those outlined in the tables above, EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin may facilitate a comparison of current operating performance with The RMR Group Inc.’s historical operating performance and with the performance of other asset management businesses. In addition, The RMR Group Inc. believes that providing Adjusted EBITDA Margin may help investors assess The RMR Group Inc.’s performance of its business by providing the margin that Adjusted EBITDA represents to its contractual management and advisory fees (excluding any incentive business management fees). EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin do not represent cash generated by operating activities in accordance with GAAP and should not be considered as alternatives to net income, net income attributable to The RMR Group Inc., operating income or operating margin as an indicator of The RMR Group Inc.’s financial performance or as a measure of The RMR Group Inc.’s liquidity. Other asset management businesses may calculate EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin differently than The RMR Group Inc. does.

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(2)

Contractual management and advisory fees are the base business management fees, property management fees and advisory fees The RMR Group Inc. or its subsidiaries earns pursuant to its management and investment advisory agreements with its client companies. These amounts are calculated pursuant to the contractual formulas and do not deduct other asset amortization of $2,354 for each of the three months ended September 30, 2019 and 2018 or $9,416 for each of the fiscal years ended September 30, 2019 and 2018, required to be recognized as a reduction to management services revenues in accordance with GAAP and do not include the incentive business management fees of $120,094 and $155,881 that The RMR Group Inc. recognized under GAAP during the fiscal years ended September 30, 2019 and 2018, respectively, which were earned for the calendar years 2018 and 2017, respectively.

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Mr. Portnoy states that in the fiscal fourth quarter, The RMR Group Inc. generated net income of $18.9 million, Adjusted EBITDA of $28.6 million, a sequential quarter increase of 8.0%, Operating Margin of 46.1% and Adjusted EBITDA Margin of 60.2%, a sequential quarter increase of 360 basis points. He also states that Adjusted EBITDA Margin of 60.2% represents The RMR Group Inc.’s highest Adjusted EBITDA Margin level since becoming a public company, reflecting sequential quarter revenue growth and the related impact of economies of scale across The RMR Group Inc.’s platform. These statements may imply that The RMR Group Inc.’s Adjusted EBITDA Margin and revenue may continue to increase in future periods and that The RMR Group Inc. may continue to benefit from economies of scale across its platform. However, The RMR Group Inc.’s business is subject to various risks, including risks outside its control. Accordingly, The RMR Group Inc. may not continue to benefit from economies of scale across its platform and its Adjusted EBITDA and Adjusted EBITDA Margin may not grow in future periods and could decline;

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Mr. Portnoy also states that, in late September, SVC completed its acquisition of a large portfolio of net leased retail properties for $2.4 billion, which is expected to result in approximately $12 million in incremental annual management services revenues for The RMR Group Inc. on a run-rate basis after planned strategic dispositions within the acquired portfolio. The expected increase in annual management services revenues may not be realized at the amounts expected, or at all. Further, The RMR Group Inc. expects to incur additional costs to provide management services for these properties and those costs may limit or offset any increased fees it may earn;

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Mr. Portnoy states that The RMR Group Inc. has made significant progress on repositioning efforts at its Client Companies. He also states that since beginning their repositioning efforts, OPI has sold or has under agreement to sell $731.5 million of properties and SNH has sold or has under agreement to sell approximately $564 million of properties. These statements may imply that the on-going repositioning efforts at OPI and SNH will be successful and that they will benefit those companies and The RMR Group Inc. as a result. However, the pending sales are subject to conditions and may not occur, may be delayed or their terms may change. In addition, the on-going repositioning efforts at the applicable Client Companies may not be successful and the fees The RMR Group Inc. earns from the Client Companies may decline or not meet expectations as a result; and

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Mr. Portnoy states that The RMR Group Inc. continues to explore strategic opportunities for growth. This statement may imply that The RMR Group Inc. will successfully explore and act upon strategic opportunities for future growth and that The RMR Group Inc.’s business will grow and that its operating performance and financial results will improve as a result. However, The RMR Group Inc. may not identify growth opportunities it wishes to pursue and any growth opportunities it may pursue may not be successful and may not result in The RMR Group Inc. improving its operating performance or its financial results, and The RMR Group Inc. may realize losses as a result.