The RMR Group (NASDAQ:RMR) reported fiscal first-quarter 2026 results that management said came in above or at the high end of expectations, supported by incentive fee income and continued strategic activity across its managed real estate platforms.
On the company’s Feb. 5 earnings call, President and CEO Adam Portnoy highlighted quarterly distributable earnings of $0.47 per share, adjusted net income of $0.20 per share, and adjusted EBITDA of $19.5 million. Chief Financial Officer Matt Brown added that all three measures exceeded or were at the high end of the company’s prior guidance.
Incentive fees and client activity
Portnoy also cited total shareholder return performance, stating DHC and ILPT were the number one and number three best-performing REITs in the United States in 2025 as measured by total shareholder return.
While noting the company is limited in what it can discuss because it reports ahead of its publicly traded client companies, Portnoy outlined updates across several managed entities:
- DHC: Continued efforts to improve SHOP NOI margins and sell non-core assets to deleverage. Portnoy said DHC sold 37 properties for about $250 million in the fourth quarter and 69 properties for about $605 million for the full year. He added that DHC used proceeds in part to fully repay its zero-coupon senior secured notes due 2026, leaving no debt maturities until 2028, and unencumbering 45 collateral properties representing $850 million in gross book value. He also said DHC completed the transition of 116 SHOP communities from AlerisLife to new operators and anticipates material SHOP NOI improvements.
- SVC: Continued sales of non-core hotels aimed at deleveraging. Portnoy said SVC sold 66 hotels for about $534 million during the quarter and 112 hotels for $859 million in 2025. He said SVC also announced the early redemption of $300 million of senior unsecured notes due February 2027 using sale proceeds. Portnoy noted ongoing renovation-related revenue displacement and said RMR remains focused on helping drive EBITDA growth. He also pointed to Sonesta’s announcement of Keith Pierce and Jeff Leer as co-CEOs effective April 1.
- ILPT: Portnoy said ILPT had a successful year of leasing activity, refinanced over $1.2 billion of debt in 2025, and “materially increased” its dividend. He added ILPT is exploring refinancing for its remaining $1.4 billion of floating-rate debt with a final maturity date of March 2027.
- Seven Hills Realty Trust: Portnoy said the mortgage REIT completed a rights offering in December raising $65.2 million in gross proceeds, which he said should allow for over $200 million in gross loan investments. RMR backstopped the offering, purchasing 2 million shares for $17.4 million after subscriptions covered about 73.2% of shares offered.
- OPI: Portnoy reiterated that Office Properties Income Trust filed for Chapter 11 bankruptcy on Oct. 30, 2025. He said the process remains ongoing, RMR is hopeful it will conclude by the summer, and the company remains committed to supporting OPI’s assets, vendors, and tenants.
Leasing results and private capital expansion
Chief Operating Officer Matt Jordan said that despite economic uncertainty, RMR arranged nearly 10 million square feet of leasing for the full year at rental rates approximately 13% higher than previous rents for the same space.
Jordan also discussed investments to scale private capital fundraising and reduce reliance on third-party placement agents. He highlighted the hiring of Peter Welch to lead international capital formation, complementing Mary Smendzuik, who leads North American capital formation. On the Q&A, management said the hire is meant to bolster existing efforts, with Welch focused ex-U.S., including Asia and the Middle East, and the firm now having four dedicated people focused wholly on raising private capital.
Jordan said current fundraising efforts are focused on residential and select development opportunities, though the firm can pivot based on investor feedback. He also described RMR Residential as representing $4.5 billion in value-add residential real estate across over 18,000 owned and managed units, with the managed portfolio about 93% occupied, resident retention over 70%, and delinquencies at nominal levels.
Balance sheet investments: residential, retail, and credit
Jordan said RMR’s “enhanced growth venture” fundraising initiative, launched in September, is targeting approximately $250 million and is designed to allow investors to share in property-level and general partner economics.
On retail, Jordan said RMR is underwriting investment opportunities with the goal of building a value-add retail portfolio on its balance sheet to establish a track record for future fundraising. He said the company’s first investment, a previously disclosed $21 million shopping center outside Chicago, is ahead of its business plan due to leasing efforts.
On the credit strategy, Jordan said RMR closed on the sale of two loans totaling $61.7 million, netting $16.6 million in proceeds after repaying the associated secured financing facility. He said the loans generated returns of just over 14% over about a year and a half.
In response to analyst questions, management said future loan activity is expected primarily at Seven Hills, and there is “no plan” to put additional loans on RMR’s balance sheet after prior seeding efforts. Management also said it continues to have conversations about managing a credit strategy for private capital, but believes seeding on the RMR balance sheet is less necessary.
Financial details and outlook
Brown said recurring service revenues were approximately $43 million, down about $2.5 million sequentially, driven primarily by the wind down of AlerisLife’s business and a decrease in SVC’s enterprise value as proceeds from hotel sales were used to repay debt.
Looking ahead, Brown guided that next quarter recurring service revenues are expected to decrease to approximately $41 million, citing lower construction supervision fees due to typical seasonal spending patterns, as well as lower enterprise values and property management fees related to strategic asset sales and debt repayment at managed REITs.
On expenses, Brown said recurring cash compensation was $37.4 million, down about $1 million sequentially, reflecting cost containment and alignment of compensation with results. Recurring G&A was $10.5 million, modestly higher sequentially due to legal and professional fees. Interest expense increased to $2.6 million due to a full quarter of interest on two leveraged residential properties acquired last quarter, and Brown said it is expected to remain at current levels.
Brown also noted RMR’s effective tax rate was 14.8% this quarter due to incentive fees, and for modeling purposes he expects the tax rate to rise to about 17% in the second quarter.
In addition, Brown said RMR sold two existing loan investments to Seven Hills; and after participating in the rights offering, RMR’s ownership increased to 20.3%. Beginning next quarter, he expects an increase of $800,000 in quarterly adjusted EBITDA from additional dividends on the increased investment.
For the next quarter, management guided:
- Adjusted EBITDA: approximately $17 million to $19 million
- Distributable earnings: $0.41 to $0.43 per share
- Adjusted net income: $0.12 to $0.14 per share
During Q&A, Brown attributed the sequential decline in adjusted net income guidance to several factors, including the loss of approximately $400,000 of quarterly fees from the AlerisLife contract, the sale of loan investments that previously contributed about $400,000, seasonally lower construction management fees, management fee impacts from debt paydowns at managed REITs, and annual trustee share grants typically made in March.
RMR ended the quarter with nearly $150 million of total liquidity, including nearly $50 million of cash and $100 million of capacity on its undrawn revolving credit facility, and Brown said the January collection of incentive fees further supports its ability to execute strategic objectives.
On private capital timing, management said its primary focus for 2026 is launching a multifamily fund or separate account, and it would like to move residential assets currently on RMR’s balance sheet into that vehicle. While noting timing is difficult to pinpoint, management said it expects that to happen during fiscal 2026.
About The RMR Group (NASDAQ:RMR)
The RMR Group, Inc (NASDAQ: RMR) is a publicly traded asset management company that specializes in providing comprehensive real estate and investment management services to both public and private entities. Acting as an external manager, RMR offers a range of services encompassing property management, asset management, fund administration, accounting, investor relations and compliance oversight. Its client base includes real estate investment trusts (REITs), real estate operating companies (REOCs), closed-end real estate funds and institutional investors.
Founded in 1986, RMR Group has built a business model centered on recurring fee revenue generated through long-term service agreements with its managed entities.
