•	As of June 30, 2020, The RMR Group LLC had $32.0 billion of gross assets under management compared to gross assets under management of $30.6 billion as of June 30, 2019. Fee paying assets under management was $20.8 billion on June 30, 2020 compared to $23.5 billion on June 30, 2019.

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•	Total management and advisory services revenues for the quarter ended June 30, 2020 were $39.3 million, compared to $44.4 million for the quarter ended June 30, 2019.

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

(1)	Managed Equity REITs for the periods presented includes: Diversified Healthcare Trust (DHC), Industrial Logistics Properties Trust (ILPT), Office Properties Income Trust (OPI) and Service Properties Trust (SVC).

(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 June 30, 2020, net income was $15.4 million and net income attributable to The RMR Group Inc. was $6.7 million, or $0.41 per diluted share, compared to net income of $13.4 million and net income attributable to The RMR Group Inc. of $5.8 million, or $0.36 per diluted share, for the three months ended June 30, 2019.

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For the three months ended June 30, 2020, adjusted net income attributable to The RMR Group Inc. was $6.2 million, or $0.38 per diluted share, compared to $8.6 million, or $0.53 per diluted share, for the three months ended June 30, 2019. The adjustments to net income attributable to The RMR Group Inc. this quarter included $0.2 million, or $0.01 per diluted share, of transaction and acquisition related costs, offset by $0.6 million, or $0.04 per diluted share, of unrealized gains on an equity method investment accounted for under the fair value option.

•	For the three months ended June 30, 2020, Adjusted EBITDA was $19.6 million, Operating Margin was 38.6% and Adjusted EBITDA Margin was 47.1%, compared to Adjusted EBITDA of $26.5 million, Operating Margin of 44.9% and Adjusted EBITDA Margin of 56.6% for the three months ended June 30, 2019.

•	As of June 30, 2020, The RMR Group Inc. had $393.7 million in cash and cash equivalents with no outstanding debt obligations.

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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 June 30, 2020 and 2019, as applicable:

(a)

The basis on which base business management fees are calculated for the three months ended June 30, 2020 and 2019 may differ from the basis at the end of the periods presented in the table above. As of June 30, 2020, the market capitalization was lower than the historical costs of assets under management for DHC, OPI and SVC. The historical costs of assets under management for DHC, OPI and SVC as of June 30, 2020, were $8,492,240, $5,735,039 and $12,440,349, respectively. For ILPT, the historical costs of assets under management were lower than their market capitalization of $2,717,046 as of June 30, 2020.

(2)	Equity based compensation expense for the three months ended June 30, 2020 consists of $563 related to shares granted by The RMR Group Inc. to certain of its officers and employees and $736 related to Client Companies' shares granted to certain of The RMR Group Inc.’s officers and employees.

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(3)

The RMR Group Inc. calculates earnings per share, or EPS, using the two-class method. As such, earnings attributable to unvested participating shares are excluded from earnings before calculating per share amounts. In addition, diluted EPS includes the assumed issuance of Class A Common Shares pursuant to The RMR Group Inc.’s equity compensation plan and the issuance of Class A Common Shares related to the assumed redemption of the noncontrolling interest’s 15,000 Class A Units using the if-converted method. The calculation of basic and diluted EPS is as follows:

(a)	The assumed redemption of the noncontrolling interest’s Class A Units for Class A Common Shares was antidilutive for the three and nine months ended June 30, 2019.

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(1)	Includes $1,678 in unrealized gains 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 14.5%.

(2)	Includes $427 of transaction and acquisition related costs, adjusted to reflect amounts attributable to the noncontrolling interest and income tax expense at a rate of approximately 14.5%.

(1)	Includes $6,213 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 a rate of approximately 14.3%.

(2)	Includes $731 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 14.3%.

(3)	Includes $239 of separation costs, adjusted to reflect amounts attributable to the noncontrolling interest and income tax expense at a rate of approximately 14.3%.

(4)	Includes $42 of transaction and acquisition related costs, adjusted to reflect amounts attributable to the noncontrolling interest and income tax expense at a rate of approximately 14.3%.

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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.

(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 June 30, 2020 and 2019, or $7,062 for each of the nine months ended June 30, 2020 and 2019, 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 that The RMR Group Inc. recognized under GAAP during the three months ended December 31, 2018, which were earned for the calendar year 2018.

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Mr. Portnoy states that The RMR Group Inc. generated net income of $15.4 million, Adjusted EBITDA of $19.6 million and Adjusted EBITDA Margin of 47.1%. He also states that while these results reflect the adverse impact of the pandemic on the Managed Equity REITs share prices, The RMR Group Inc.’s fee paying assets under management increased sequentially and management services revenues increased each successive month in the quarter. These statements may imply that The RMR Group Inc.’s fee paying assets under management and management services revenues will continue to grow in future periods. However, The RMR Group Inc.’s business is subject to various risks, including risks outside of its control. Further, the impact and duration of the COVID-19 pandemic is not known and the current different economic conditions may continue and could deteriorate further and such adverse conditions may continue for a prolonged period. Accordingly, The RMR Group Inc.’s fee paying assets under management and management services revenues may not grow in future periods and could decline;

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Mr. Portnoy also states that The RMR Group Inc. is encouraged by the overall high rent collection levels and waning tenant rent relief requests across the retail, office and industrial assets it manages on behalf of its Client Companies. These statements may imply that tenant rent collections and tenant relief requests will continue at current levels or improve and that tenant requests for rent relief will further decline. However, tenant rent collections may decline and tenant rent relief requests may increase in the future. In addition, these tenants may be unable to repay those amounts when due. Further, these and other tenants of the Client Companies may be unable to pay other rent amounts and they may default on those payments or the Client Companies may grant them relief, any of which may reduce or delay the fees The RMR Group Inc. earns; and

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Mr. Portnoy states that The RMR Group Inc.’s dividend remains secure and its balance sheet leaves it well positioned to take advantage of potential strategic opportunities. 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. In addition, The RMR Group Inc.’s ability to continue to pay dividends is subject to a number of factors and there are no assurances that The RMR Group Inc. will be able to continue paying dividends in the future or that such dividends will not be reduced or suspended due to unforeseen circumstances, including, but not limited to, economic conditions due to the COVID-19 pandemic and its aftermath.