The RMR Group Inc. Annual Report 2023

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FY2023 Annual Report · The RMR Group Inc.

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The RMR Group Inc.
2023 Annual Report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 2023
or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-37616
THE RMR GROUP INC.
(Exact Name of Registrant as Specified in Its Charter)

Maryland
(State of Organization)

47-4122583
(IRS Employer Identification No.)

Two Newton Place, 255 Washington Street, Suite 300, Newton, MA 02458-1634

(Zip Code)
(Address of Principal Executive Offices)
Registrant’s Telephone Number, Including Area Code 617-796-8230
Securities registered pursuant to Section 12(b) of the Act:

Title Of Each Class

Trading Symbol

Name Of Each Exchange On Which Registered

Class A common stock, $0.001 par
value per share

RMR

The Nasdaq Stock Market LLC
(Nasdaq Capital Market)

Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes ☐ No ☒

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted

pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to
submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting
company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer ☐

Non-accelerated filer ☐

Accelerated filer ☒

Smaller reporting company ☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for

complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the

effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the
registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the

registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-
based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The aggregate market value of the voting shares of Class A common stock, $0.001 par value, of the registrant held by non-affiliates
was approximately $399.6 million based on the $26.24 closing price per common share on The Nasdaq Stock Market LLC, on March 31,
2023. For purposes of this calculation, an aggregate of 391,754 shares of Class A common stock, held directly by, or by affiliates of,
the directors and executive officers of the registrant have been included in the number of common shares held by affiliates.

As of November 9, 2023, there were 15,711,047 shares of Class A common stock, par value $0.001 per share, 1,000,000 shares

of Class B-1 common stock, par value $0.001 per share, and 15,000,000 shares of Class B-2 common stock, par value $0.001 per
share, outstanding.

Portions of the Registrant’s definitive proxy statement for its 2024 annual meeting of shareholders are incorporated by reference in

Part III of this Annual Report on Form 10-K.

DOCUMENTS INCORPORATED BY REFERENCE

WARNING CONCERNING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 and other securities laws that are subject to risks and
uncertainties. These statements may include words such as “believe”, “expect”, “anticipate”, “intend”,
“plan”, “estimate”, “will”, “may” and negatives or derivatives of these or similar expressions. These
statements include, among others, statements about: our business strategy; the CARROLL Acquisition,
as defined below; economic and industry conditions; the impact and opportunities for our and our
clients’ businesses from business cycles in the U.S. real estate industry as well as economic and industry
conditions; our belief that it is possible to grow real estate based businesses in selected property
types or geographic areas despite general national trends; our cash and cash equivalents, including
their sufficiency to pursue a range of capital allocation strategies and fund our operations and enhance
our technology infrastructure and risk exposure; and our sustainability practices.

Forward-looking statements reflect our current expectations, are based on judgments and
assumptions, are inherently uncertain and are subject to risks, uncertainties and other factors, which
could cause our actual results, performance or achievements to differ materially from expected future
results, performance or achievements expressed or implied in those forward-looking statements. Some
of the risks, uncertainties and other factors that may cause actual results, performance or achievements
to differ materially from those expressed or implied by forward-looking statements include, but are not
limited to the following:

• The dependence of our revenues on a limited number of clients;

• The variability of our revenues;

• Risks related to supply chain constraints, commodity pricing and inflation, including inflation

impacting wages and employee benefits;

• Changing market conditions, practices and trends, which may adversely impact our clients and

the fees we receive from them;

• Potential terminations of the management agreements with our clients;

• Increases in or sustained high market interest rates, which may significantly reduce our revenues

or impede our growth;

• Our dependence on the growth and performance of our clients;

• Our ability to obtain or create new clients for our business and other circumstances beyond our

control;

• The ability of our clients to operate their businesses profitably, optimize their capital structures

and to grow and increase their market capitalizations and total shareholder returns;

• Our ability to successfully provide management services to our clients;

• Our ability to maintain or increase the distributions we pay to our shareholders;

• Our ability to successfully pursue and execute capital allocation strategies;

• Our ability to prudently invest in our business to enhance our operations, services and competitive

positioning;

• Our ability to complete the acquisition of MPC Partnership Holdings LLC, a Georgia limited
liability company which does business as CARROLL, or the CARROLL Acquisition, and if
completed, our ability to successfully integrate the CARROLL business and realize our expected
returns on our investment;

• Changes to our operating leverage or client diversity;

• Litigation risks;

• Risks related to acquisitions, dispositions and other activities by or among our clients;

• Allegations, even if untrue, of any conflicts of interest arising from our management activities;

• Our ability to retain the services of our managing directors and other key personnel;

• Our and our clients’ risks associated with our and our clients’ costs of compliance with laws and

regulations, including securities regulations, exchange listing standards and other laws and
regulations affecting public companies; and

• other risks described under “Risk Factors” beginning on page 13.

These risks, uncertainties and other factors are not exhaustive and should be read in conjunction
with other cautionary statements that are included in this Annual Report on Form 10-K and our other
filings with the Securities and Exchange Commission, or SEC. Our filings with the SEC are available on
the SEC’s website at www.sec.gov.

You should not place undue reliance upon our forward-looking statements.

Except as required by law, we do not intend to update or change any forward-looking statements

as a result of new information, future events or otherwise.

THE RMR GROUP INC.

2023 FORM 10-K ANNUAL REPORT

Table of Contents

Part I

Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1.
Item 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 2.
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 3.
Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 4.

Item 5.

Item 6.
Item 7.

Part II
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[Reserved]
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Management’s Discussion and Analysis of Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 7A. Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . .
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 8.
Changes in and Disagreements with Accountants on Accounting and Financial
Item 9.
Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections . . . . . . . . . . . .

Part III

Item 10. Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . .
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 11.
Security Ownership of Certain Beneficial Owners and Management and Related
Item 12.
Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 13. Certain Relationships and Related Person Transactions, and Director

Independence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 14.

Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 15.

Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 16.

Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part IV

iii

Page

1
13
30
30
30
30

31
31

31
40
40

40
40
41
41

42
42

PART I

Item 1. Business

Our Company

The RMR Group Inc., or RMR Inc., is a holding company incorporated as a Maryland corporation

and substantially all of its business is conducted by its majority owned subsidiary, The RMR Group
LLC, or RMR LLC. 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 this Annual Report on Form 10-K, unless otherwise indicated, “we”, “us” and “our” refers
to RMR Inc. and its direct and indirect subsidiaries, including RMR LLC.

As of September 30, 2023, RMR Inc. owned 15,712,007 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 approximately 52.7% of the economic interest
of RMR LLC. A subsidiary of ABP Trust owns 15,000,000 redeemable Class A Units, representing
approximately 47.3% of the economic interest of RMR LLC.

Adam D. Portnoy, the Chair of our Board, one of our Managing Directors and our President and

Chief Executive Officer, is the sole trustee, an officer and the controlling shareholder of our controlling
shareholder, ABP Trust, and owns all of ABP Trust’s voting securities and a majority of the economic
interest of ABP Trust. As of September 30, 2023, Adam D. Portnoy beneficially owned (including
through ABP Trust), in aggregate, (i) 200,502 shares of Class A common stock of RMR Inc., or Class A
Common Shares; (ii) all the outstanding shares of Class B-1 common stock of RMR Inc., or Class B-1
Common Shares; and (iii) all the outstanding shares of Class B-2 common stock of RMR Inc., or
Class B-2 Common Shares.

Since its founding in 1986, RMR LLC has substantially grown assets under management and the

number of real estate businesses it manages. As of September 30, 2023, we had $35.9 billion of assets
under management.

We provide management services to four publicly traded equity real estate investment trusts, or
REITs, whose securities are listed on The Nasdaq Stock Market LLC, or Nasdaq: Diversified Healthcare
Trust, a Maryland REIT, including its subsidiaries, or DHC; Industrial Logistics Properties Trust, a
Maryland REIT, including its subsidiaries, or ILPT; Office Properties Income Trust, a Maryland REIT,
including its subsidiaries, or OPI; and Service Properties Trust, a Maryland REIT, including its subsidiaries,
or SVC. DHC, ILPT, OPI and SVC are collectively referred to as the Managed Equity REITs.

As manager of the Managed Equity REITs, we are responsible for implementing investment
strategies and managing day to day operations, subject to supervision and oversight by each Managed
Equity REIT’s board of trustees. The Managed Equity REITs have no employees, and we provide the
personnel and services necessary for each Managed Equity REIT to conduct its business. The Managed
Equity REITs invest in diverse income producing properties across multiple real estate asset classes
as follows:

• DHC (Nasdaq: DHC) owns medical office and life science properties, senior living communities

and other healthcare related properties. As of September 30, 2023, DHC owned 376 properties
located in 36 states and the District of Columbia.

• ILPT (Nasdaq: ILPT) owns and leases industrial and logistics properties. As of September 30,

2023, ILPT owned 413 properties, including 226 buildings, leasable land parcels and easements
in Oahu, Hawaii and 187 properties located in 38 other states.

• OPI (Nasdaq: OPI) owns office properties primarily leased to single tenants and those with high
credit quality characteristics. As of September 30, 2023, OPI owned 154 properties located in
30 states and the District of Columbia.

• SVC (Nasdaq: SVC) owns a diverse portfolio of hotels and service-focused retail net lease

properties. As of September 30, 2023, SVC owned 982 properties (221 hotels and 761 net lease
properties) located in 46 states, the District of Columbia, Canada and Puerto Rico.

RMR LLC’s wholly owned subsidiary, Tremont Realty Capital LLC, or Tremont, an investment
adviser registered with the SEC, provides advisory services for Seven Hills Realty Trust, or SEVN.
SEVN is a publicly traded mortgage REIT that focuses on originating and investing in first mortgage
loans secured by middle market and transitional commercial real estate. Tremont also provided advisory
services to Tremont Mortgage Trust, or TRMT, until it merged with and into SEVN on September 30,
2021, or the Tremont Merger, with SEVN continuing as the surviving company.

RMR LLC also provided management services to TravelCenters of America Inc., or TA, until it was

acquired by BP Products North America Inc., or BP, on May 15, 2023. TA is a real estate operating
company that operates and franchises travel centers primarily along the U.S. interstate highway system,
many of which are owned by SVC, and standalone truck service facilities.

The Managed Equity REITs, SEVN, TRMT until September 30, 2021, and TA until May 15, 2023,

are collectively referred to as the Perpetual Capital clients.

In addition, RMR LLC provides management services to private capital vehicles, including ABP

Trust and its subsidiaries, or collectively ABP Trust, AlerisLife Inc., or AlerisLife, Sonesta International
Hotels Corporation, or Sonesta, and other private entities that own commercial real estate, of which
certain of our Managed Equity REITs own minority equity interests. AlerisLife is an operator of senior
living communities, many of which are owned by DHC, and was a publicly traded company until March 20,
2023 when it was acquired by a subsidiary of ABP Trust. Sonesta is a privately owned franchisor and
operator of hotels, resorts and cruise ships in the United States, Latin America, the Caribbean and the
Middle East, and many of the U.S. hotels that Sonesta operates are owned by SVC. These clients
are collectively referred to as the Private Capital clients.

Our Business Strategy

Our business strategy is to provide an expanded range of management services to our existing
clients, as well as to diversify the number of clients to which we provide services and the sources of
capital upon which those clients may rely for growth.

We believe we have several strengths that distinguish our business from other alternative asset

managers:

• Revenue Base. Our revenues are primarily earned from long term agreements with credit quality
companies, many of which are permanent capital vehicles. Our agreements with the Managed
Equity REITs are 20 year term evergreen contracts with significant termination fees payable in
certain circumstances. For the fiscal year ended September 30, 2023, revenues earned from
the Managed Equity REITs represented 73.2% of our total management and advisory services
revenue, excluding termination fee revenue.

• Strong Operating Margins and Resulting Cash Flows. For the fiscal year ended September 30,
2023, we continued to generate strong operating margins resulting in net cash from operating
activities of $109.2 million and net income of $127.8 million. We have no debt outstanding. Our
regular dividend of $0.40 per share per quarter ($1.60 per share per year) has been well
covered by our cash flows.

• Diverse Portfolio of Managed Real Estate. We provide management services to a wide range of

real estate assets and businesses that include healthcare facilities, senior living and other
apartments, hotels, office buildings, industrial buildings, leased lands, net-lease service-focused
retail, including travel centers, and various specialized properties such as properties leased to
government tenants and properties specially designed for medical and biotech research. The
properties and businesses we managed as of September 30, 2023, are located throughout the
United States in 46 states and Washington D.C., and in Puerto Rico and Canada. The diversity
of our managed portfolio helps provide balance throughout economic cycles, as the impacts to
each respective real estate sector can vary.

• Growth. Since the founding of RMR LLC in 1986, we have substantially grown our assets under

management and the number and variety of real estate businesses we manage. As of
September 30, 2023, we had $35.9 billion of assets under management, including over 2,000

properties. The synergies among our clients may also facilitate their and our growth. We assist
our clients in realizing investment opportunities by working together to make acquisitions, obtain
financing, identifying possible joint venture partners, completing redevelopment activities,
facilitating capital recycling from strategic property dispositions and assisting in portfolio
repositioning and other business arrangements and strategic restructurings.

In addition, we expect to use cash on hand, future operating cash flows and may issue equity or
incur debt to fund our growth and diversify our operations through possible acquisition
opportunities or seeding new clients. In recent years, we sought to expand the sources of
capital underlying our assets under management, with our Private Capital clients representing
$7.7 billion of our assets under management as of September 30, 2023, an increase of $6.0 billion
from September 30, 2021. If the CARROLL Acquisition is completed, our Private Capital
assets under management are expected to increase by approximately $7 billion. For more
information about the CARROLL Acquisition, see Note 1, Organization, to our consolidated
financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

• Quality and Depth of Management. Our highly qualified and experienced management team
provides a broad base of deep expertise to our clients. Our senior management has worked
together through several business cycles in which they acquired, financed, managed and disposed
of real estate assets and started real estate businesses. We are a vertically integrated manager
and as of September 30, 2023, we employed over 600 real estate professionals in more than
30 offices throughout the United States. We have also assisted our clients to grow by successfully
accessing the capital markets; since our founding in 1986, our clients have successfully
completed over $42.0 billion of financing in approximately 185 capital raising transactions.

• Alignment of Interests. We believe our structure fosters strong alignment of interests between
our principal executive officer and our shareholders because our principal executive officer,
Adam D. Portnoy, has a 51.1% economic interest in RMR LLC. Alignment of interests also exists
between us and our Managed Equity REITs due to the manner upon which we earn base
management fees and incentive management fees under our management agreements with the
Managed Equity REITs, as described in more detail below.

We can provide no assurance that we will be able to implement our business strategy or achieve
our desired growth. Our business and the businesses of our clients are subject to a number of risks
and uncertainties. See “Risk Factors” beginning on page 13.

Our Management Agreements with the Managed Equity REITs

RMR LLC is party to a business management agreement and a property management agreement
with each Managed Equity REIT. The following is a summary of the terms of our business and property
management agreements with the Managed Equity REITs. The summary does not purport to be
complete and is subject to, and qualified in its entirety by, reference to the actual agreements, copies of
which are filed or incorporated as exhibits to this Annual Report on Form 10-K.

Business Management Agreements

Each business management agreement requires RMR LLC to use its reasonable best efforts to

present the Managed Equity REIT with a continuing and suitable real estate investment program
consistent with the REIT’s real estate investment policies and objectives.

Subject to the overall management, direction and oversight of the Board of Trustees of each

Managed Equity REIT, RMR LLC has the responsibility to:

• provide research and economic and statistical data in connection with the Managed Equity

REIT’s real estate investments and recommend changes in the Managed Equity REIT’s real
estate investment policies when appropriate;

• investigate, evaluate and negotiate contracts for the investment in, or the acquisition or disposition

of, real estate and related interests, financing and refinancing opportunities and make

recommendations concerning specific real estate investments to the Board of Trustees of the
Managed Equity REIT;

• investigate, evaluate, prosecute and negotiate any of the Managed Equity REIT’s claims in

connection with its real estate investments or otherwise in connection with the conduct of the
Managed Equity REIT’s business;

• administer bookkeeping and accounting functions as required for the Managed Equity REIT’s

business and operation, contract for audits and prepare or cause to be prepared reports and filings
required by a governmental authority in connection with the conduct of the Managed Equity
REIT’s business, and otherwise advise and assist the Managed Equity REIT with its compliance
with applicable legal and regulatory requirements;

• advise and assist in the preparation of all equity and debt offering documents and all registration
statements, prospectuses or other documents filed by the Managed Equity REIT with the SEC
or any state;

• retain counsel, consultants and other third party professionals on behalf of the Managed Equity

REIT;

• provide internal audit services;

• advise and assist with the Managed Equity REIT’s risk management and business oversight

function;

• advise and assist the Managed Equity REIT with respect to the Managed Equity REIT’s public
relations, preparation of marketing materials, internet website and investor relations services;

• provide communication facilities for the Managed Equity REIT and its officers and trustees and

provide meeting space as required;

• provide office space, equipment and experienced and qualified personnel necessary for the

performance of the foregoing services; and

• to the extent not covered above, advise and assist the Managed Equity REIT in the review and

negotiation of the Managed Equity REIT’s contracts and agreements, coordination and supervision
of all third party legal services and oversight for processing of claims by or against the Managed
Equity REIT.

Property Management Agreements

Under each property management agreement, subject to the overall management and supervision
of the Board of Trustees of each Managed Equity REIT, RMR LLC is required to act as managing agent
for each Managed Equity REIT’s properties and devote such time, attention and effort as may be
appropriate to operate and manage the Managed Equity REIT’s properties in a diligent, orderly and
efficient manner.

Term and Termination

The business and property management agreements with each Managed Equity REIT automatically

extend on December 31st of each year and have terms thereafter that end on the 20th anniversary of
the date of each extension. A Managed Equity REIT has the right to terminate its management
agreements with RMR LLC: (1) at any time upon 60 days’ written notice for convenience, (2) immediately
upon written notice for cause, as defined in the agreements, (3) upon written notice given within
60 days after the end of an applicable calendar year for a performance reason, as defined in the
agreements, and (4) by written notice during the 12 months following a manager change of control, as
defined in the agreements. RMR LLC has the right to terminate the management agreements for good
reason, as defined in the agreements.

If a Managed Equity REIT terminates a management agreement for convenience, or if RMR LLC

terminates a management agreement with a Managed Equity REIT for good reason, the Managed
Equity REIT is obligated to pay RMR LLC a termination fee equal to the sum of the present values of

the monthly future fees, as defined in the agreement, payable for the remaining term of the agreement,
assuming it had not been terminated. If a Managed Equity REIT terminates a management agreement
for a performance reason, as defined in the agreement, the Managed Equity REIT is obligated to pay
RMR LLC the termination fee calculated as described above, but assuming a remaining term of
ten years.

The management agreements provide for certain adjustments to the termination fees if a Managed

Equity REIT merges with another REIT to which RMR LLC is providing management services or if the
Managed Equity REIT spins off a subsidiary to which it contributed properties and to which RMR LLC is
providing management services both at the time of the spin off and on the date of the expiration or
termination of either of the management agreements.

A Managed Equity REIT is not required to pay any termination fee if it terminates its business or
property management agreements for cause, or as a result of a manager change of control, in each
case as defined in such agreements.

Business Management Agreement Fees and Expense Reimbursement

Each business management agreement between RMR LLC and a Managed Equity REIT provides
for (i) an annual base management fee, payable monthly in arrears, and (ii) an annual incentive business
management fee.

The annual base management fee generally is calculated as the lesser of:

• 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 $250.0 million, plus (c) 0.5% of the average invested capital
exceeding $250.0 million; and

• the sum of (a) 0.7% of the average market capitalization, as defined in the applicable business

management agreement, up to $250.0 million, plus (b) 0.5% of the average market capitalization
exceeding $250.0 million.

The annual incentive business management fee payable by each Managed Equity REIT, if any, is

calculated as follows:

• The incentive business management fee is calculated as an amount equal to 12.0% of the

product of (a) the equity market capitalization of the Managed Equity REIT, as defined in the
applicable business management agreement, on the last trading day of the year immediately prior
to the measurement period, and (b) the amount, expressed as a percentage, by which the
Managed Equity REIT’s total return per share realized by its common shareholders (i.e. share
price appreciation plus dividends) or the “total return per share,” exceeds the total shareholder
return of a specified REIT index, the “benchmark return per share,” for the relevant measurement
period, with each of (a) and (b) subject to adjustments for net common shares issued by the
Managed Equity REIT during the measurement period.

• The measurement period for an annual incentive business management fee is defined as the
three year period ending on December 31 of the year for which such fee is being calculated.

• The specified REIT index utilized to calculate the benchmark return per share for each of our

Managed Equity REITs when calculating the incentive business management fees is as follows:

DHC

ILPT
OPI
SVC

MSCI U.S. REIT/Health Care Index

MSCI U.S. REIT/Industrial REIT Index
MSCI U.S. REIT/Office REIT Index
MSCI U.S. REIT/Hotel & Resort REIT Index

• No incentive business management fee is payable by the Managed Equity REIT unless its total

return per share during the measurement period is positive.

• If the Managed Equity REIT’s total return per share exceeds 12% per year in the measurement

period, the benchmark return per share is adjusted to be the lesser of the total shareholder return
of the specified REIT index for such measurement period and 12% per year, or the “adjusted
benchmark return per share.” In instances where the adjusted benchmark return per share
applies, the incentive fee will be reduced if the Managed Equity REIT’s total return per share is
between 200 basis points and 500 basis points below the specified REIT index in any year, by a
low return factor, as defined in the applicable business management agreement, and there will
be no incentive business management fee paid if, in these instances, the Managed Equity REIT’s
total return per share is more than 500 basis points below the specified REIT index in any year,
determined on a cumulative basis (i.e., between 200 basis points and 500 basis points per year
multiplied by the number of years in the measurement period and below the applicable market
index).

• The incentive business management fee payable by the Managed Equity REIT is subject to a

cap equal to the value of the number of its common shares which would, after issuance, represent
(a) 1.5% of the number of its common shares outstanding on December 31 of the year for
which such fee is being calculated multiplied by (b) the average closing price of its common
shares during the 10 consecutive trading days having the highest average closing prices during
the final 30 trading days of the relevant measurement period.

• Incentive fees paid by the Managed Equity REIT for any measurement period may be subject to
certain “clawback” if the financial statements of the Managed Equity REIT for that measurement
period are restated due to material non-compliance with any financial reporting requirements
under the securities laws as a result of the bad faith, fraud, willful misconduct or gross
negligence of RMR LLC and the amount of the incentive fee paid by the Managed Equity REIT
was greater than the amount it would have paid based on the restated financial statements.

If the business management agreement is terminated, the base business management fee and
incentive business management fee due in respect of any partial period prior to the date of termination
will be prorated as provided in the agreement.

Under each business management agreement: the Managed Equity REIT pays or reimburses
RMR LLC for all of the expenses relating to the Managed Equity REIT’s activities, including the costs
and expenses of investigating, acquiring, owning and disposing of its real estate (third party property
diligence costs, appraisal, reporting, audit and legal fees), its costs of borrowing money, its costs of
securities listing, transfer, registration and compliance with reporting requirements and its costs of
third party professional services, including legal and accounting fees, and as otherwise agreed; and
RMR LLC bears its general and administrative expenses relating to its performance of its obligations
under the agreement, including expenses of its personnel, rent and other office expenses. Also, the
allocable cost of internal audit services is reimbursed by each Managed Equity REIT to RMR LLC.

Property Management Agreement Fees and Expense Reimbursement

Each property management agreement between RMR LLC and a Managed Equity REIT provides

for the following:

(i) a management fee equal to 3.0% of the gross rents collected from tenants, which is not
applicable to any hotels, senior living communities or travel centers which are leased to, or managed
by, AlerisLife, Sonesta or another operating business such as a hotel management company or a
senior living or healthcare services provider; and

(ii) a construction supervision fee equal to 5.0% of the cost of any construction, renovation or

repair activities at the Managed Equity REIT’s properties, other than ordinary maintenance and
repairs, and 3% of the cost of any major capital project or repositionings at DHC’s senior living
communities and SVC’s hotels.

Also, under each property management agreement, the Managed Equity REIT pays certain
allocable expenses of RMR LLC in the performance of its duties, including wages for onsite property
management personnel and allocated costs of centralized property management services.

Other Provisions

Under both the business and property management agreements, each Managed Equity REIT has
agreed to indemnify RMR LLC, its members, officers, employees and affiliates against liabilities relating
to acts or omissions of RMR LLC with respect to the provision of services by RMR LLC, except to the
extent such provision of services was in bad faith or fraudulent, constituted willful misconduct or was
grossly negligent. In addition, each management agreement provides that any disputes, as defined
in those agreements, arising out of or relating to the agreement or the provision of services pursuant
thereto, upon the demand of a party to the dispute, will be subject to mandatory arbitration in accordance
with procedures provided in the agreement.

Other Management Agreements

RMR LLC provides services and earns fees pursuant to management agreements with ABP Trust

regarding AlerisLife; with Sonesta; and until May 15, 2023, with TA. Under these agreements, RMR
LLC provides services to these clients relating to, or assists them with, among other things, their
compliance with various laws and rules applicable to them, capital markets and financing activities,
maintenance of their properties, selection of new business sites and evaluation of other business
opportunities, accounting and financial reporting, internal audit, investor relations and general oversight
of the company’s daily business activities, including legal and tax matters, human resources, insurance
programs and management information systems.

Each of these clients pay RMR LLC a fee under its management agreement in an amount equal to

0.6% of: (i) in the case of AlerisLife, AlerisLife’s revenues from all sources reportable under U.S.
Generally Accepted Accounting Principles, or GAAP, less any revenues reportable by AlerisLife 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; and (iii) in the case of TA, the sum of TA’s gross fuel margin, determined as
TA’s fuel sales revenues less its cost of fuel sales, plus TA’s total nonfuel revenues. In addition, the
management agreement with each of these clients provides that the compensation of their senior
executives, who are also employees or officers of RMR LLC, is the responsibility of the party to or on
behalf of which the individual renders services. In the past, because at least 80.0% of each of these
executives’ business time was devoted to services to these clients, 80.0% of these executives’ total cash
compensation was paid by these clients and the remainder was paid by RMR LLC.

The terms of the management agreements with ABP Trust regarding AlerisLife and with Sonesta
end on December 31st of each year, and automatically extend for successive one year terms, unless
RMR LLC, or ABP Trust or Sonesta, as applicable, gives notice of non-renewal before the expiration of
the applicable term. Any party may terminate the applicable management agreement at any time on
30 days notice. In connection with BP’s acquisition of TA on May 15, 2023, TA terminated its management
agreement with us and paid us a termination fee of $45,282.

ABP Trust and Sonesta have each agreed to indemnify RMR LLC, its members, officers, employees
and affiliates against liabilities relating to acts or omissions of RMR LLC with respect to the provision of
services by RMR LLC, except to the extent such provision of services was in bad faith or was grossly
negligent. In addition, each of ABP Trust’s and Sonesta’s agreement provides that any disputes, as
defined in those agreements, arising out of or relating to the agreement or the provision of services
pursuant thereto, upon the demand of a party to the dispute, shall be subject to mandatory arbitration
in accordance with procedures provided in the agreement.

RMR LLC provides management services to other Private Capital clients for which we receive,
depending upon the services provided, a management fee based on a percentage of average invested
capital, as defined in the applicable management agreements, a property management fee in an
amount equal to 3.0% of rents collected from managed properties and a construction supervision fee
in an amount up to 5.0% of the cost of any construction, renovation or repair activities at the managed
properties, other than ordinary maintenance and repairs.

Our Management Agreements with Advisory Clients

Tremont is party to a management agreement with SEVN. Pursuant to this agreement, Tremont

provides SEVN with a continuous investment program, makes day to day investment decisions and
generally manages the business affairs of SEVN in accordance with SEVN’s investment objectives and
policies.

Tremont is compensated pursuant to its management agreement with SEVN at an annual rate of

1.5% of equity, as defined in the agreement. Tremont may also earn an incentive fee under this
management agreement equal to the difference between: (a) the product of (i) 20% and (ii) the difference
between (A) core earnings, as defined in the agreement, for the most recent 12 month period (or such
lesser number of completed calendar quarters, if applicable), including the calendar quarter (or part
thereof) for which the calculation of the incentive fee is being made, and (B) the product of (1) equity
in the most recent 12 month period (or such lesser number of completed calendar quarters, if applicable),
including the calendar quarter (or part thereof) for which the calculation of the incentive fee is being
made, and (2) 7% per year and (b) the sum of any incentive fees paid to Tremont with respect to the first
three calendar quarters of the most recent 12 month period (or such lesser number of completed
calendar quarters preceding the applicable period, if applicable). No incentive fee shall be payable with
respect to any calendar quarter unless core earnings for the 12 most recently completed calendar
quarters in the aggregate is greater than zero. The incentive fee may not be less than zero.

The initial term of the management agreement with SEVN ends on December 31, 2023, and the
agreement will automatically renew for successive one year terms beginning January 1, 2024 and each
January 1 thereafter, unless it is sooner terminated upon written notice delivered no later than 180 days
prior to a renewal date by the affirmative vote of at least two-thirds (2/3) of the independent trustees of
SEVN based upon a determination that (a) Tremont’s performance is unsatisfactory and materially
detrimental to SEVN or (b) the base management fee and incentive fee, taken as a whole, payable to
Tremont under the management agreement is not fair to SEVN (provided that in the instance of (b),
Tremont will be afforded the opportunity to renegotiate the base management fee and incentive fee prior
to termination). The management agreement may be terminated by Tremont before each annual
renewal upon written notice delivered to the board of trustees of SEVN no later than 180 days prior to
an annual renewal date.

In the event the management agreement is terminated by SEVN without a cause event or by

Tremont for a material breach, SEVN will be required to pay Tremont a termination fee equal to
(a) three times the sum of (i) the average annual base management fee and (ii) the average annual
incentive fee, in each case paid or payable to Tremont during the 24 month period immediately preceding
the most recently completed calendar quarter prior to the date of termination, plus (b) $1.6 million. In
addition, the initial organizational costs related to TRMT’s formation and the costs of its initial public
offering and the concurrent private placement that Tremont had paid pursuant to its management
agreement with TRMT will be included in the “Termination Fee” under and as defined in SEVN’s
management agreement with Tremont. No termination fee will be payable if the management agreement
is terminated by SEVN for a cause event or by Tremont without SEVN’s material breach.

Our Organizational Structure

Our organizational structure has not materially changed since September 30, 2019. For a discussion
of our organizational structure, see Part I, Item 1 “Business—Our Organizational Structure” in our Annual
Report on Form 10-K for the fiscal year ended September 30, 2019.

Regulation

We and our clients are subject to supervision and regulation by state, federal and non-U.S.
governmental authorities and are subject to various laws and judicial and administrative decisions
imposing various requirements and restrictions upon the ways in which we and our clients do business
including various requirements for public disclosure of our and their activities.

The Managed Equity REITs and SEVN, or the Managed REITs, have qualified and expect to
continue to qualify to be taxed as REITs under Sections 856 through 860 of the Internal Revenue Code

of 1986, as amended, or the Code. In addition, the Managed REITs generally distribute 100.0% of their
taxable income to avoid paying corporate federal income taxes; and as REITs, such companies must
currently distribute, at a minimum, an amount equal to 90.0% of their taxable income. REITs are also
subject to a number of organizational and operational requirements in order to elect and maintain REIT
status, including share ownership tests and assets and gross income composition tests. If a Managed
REIT fails to continue to qualify as a REIT under Sections 856 through 860 of the Code in any taxable
year, it will be subject to federal income tax (including any applicable alternative minimum tax) on its
taxable income at regular corporate tax rates. Even if a Managed REIT qualifies for taxation as a REIT,
it may be subject to state and local income taxes and to federal income tax and excise tax on its
undistributed income.

Certain of our clients own or operate healthcare and senior living properties. These companies

are subject to numerous federal, state and local laws and regulations that are subject to frequent and
material changes (sometimes applied retroactively) resulting from legislation, adoption of rules and
regulations and administrative and judicial interpretations of existing laws. Some of the revenues
received by these companies are paid by governmental programs which are also subject to periodic
and material changes.

Certain of our clients own and operate hotels and some provide dining, food and beverage

services, including the sale of alcoholic beverages. The operation of such properties is subject to
numerous regulations by various governmental entities.

Tremont is registered with the SEC as an investment adviser under the Investment Advisers Act of

1940, as amended, or the Investment Advisers Act. Tremont provides investment advisory and
administrative services to SEVN, and may, in the future, provide such services to private funds that
invest in commercial real estate debt. Employees of Tremont may also act as transaction originators for
its non-investment advisory clients, which we refer to as the Tremont business. These activities result
in certain aspects of our asset management business being supervised by the SEC and requires our
compliance with numerous obligations, including record keeping requirements, operational procedures
and disclosure obligations. SEVN intends to conduct its business in a manner that does not require its
registration under the Investment Company Act of 1940, or the 1940 Act, and to do so, may rely on any
available exemption from registration, or exclusion from the definition of “investment company,” under
the 1940 Act. To maintain this exemption from registration, SEVN will be required to ensure the
composition of its portfolio complies with certain tests.

The ownership and operation of real estate properties are subject to various federal, state and
local laws and regulations concerning the protection of the environment, including air and water quality,
hazardous or toxic substances and health and safety. Certain of our clients own real estate, and we
may be responsible for compliance with some of these environmental protection laws.

While we incur significant expense to comply with the various regulations to which we and our
clients are subject, we do not believe that existing statutes and regulations have had a material adverse
effect on our business. However, it is not possible to forecast the nature of future legislation, regulations,
judicial decisions, orders or interpretations, nor their impact upon our future business, financial
condition, results of operations or prospects.

Competition

The asset management industry is intensely competitive, and we expect it to remain so. Our
continued growth will depend upon our ability to manage or assist our clients in an effective manner
and identify and execute on opportunities to expand our services to new clients and new sources of
capital.

Our existing clients face significant competition in their respective sectors or industries. The
Managed Equity REITs compete on a national and regional basis with many third parties engaged in
real estate investment activities including other publicly traded REITs, non-traded REITs, commercial and
investment banking firms, private institutional funds, private equity funds and other investors. AlerisLife
competes with numerous other companies that provide senior living services, including home

healthcare companies and other real estate based service providers. Sonesta competes with other
hotel operators and franchisors. SEVN competes on a national and regional basis with a variety of
institutional investors, including other REITs, specialty finance companies, public and private funds
(including funds or investors that we or our affiliates may sponsor, advise or manage), banks, credit
unions, insurance companies and other financial institutions.

We compete with other businesses in the real estate management and asset management
businesses. Many of these competitors may have greater financial, technical, marketing and other
resources than we or our clients have. Such competitors may also enjoy significant competitive
advantages that result from, among other things, a lower cost of capital, greater business scale and
enhanced operating efficiencies. Certain competitors may also be subject to different regulatory regimes
or rules that may allow them more flexibility or better access to pursue potential investments and raise
capital for themselves or their managed companies. In addition, certain competitors may have higher risk
tolerance, different risk assessments or lower return thresholds, which could allow them to consider a
broader range of investments and to bid more aggressively for investment opportunities. Our ability and
the ability of our clients to continue to compete effectively will depend in large part upon the ability to
attract, retain and motivate employees.

Corporate Sustainability

Over our more than three decades in business, we and our clients have been guided by
Environmental, Social and Governance, or ESG, principles. Given the magnitude of our platform, we
believe corporate sustainability must be a strategic focus alongside our focus on economic performance.
Our sustainability practices—minimizing our impact on the environment, embracing the communities
where we operate and attracting top professionals—are critical elements supporting our long-term
success.

Environmental Focus

We recognize our responsibility to minimize the impact of our business on the environment. We
seek to preserve natural resources and maximize efficiencies in order to reduce the impact the properties
we manage have on the planet. Our environmental sustainability strategies and best practices help to
mitigate our managed properties’ environmental footprint, optimize operational efficiency and enhance
our competitiveness in the marketplace.

We remain committed to our “Zero Emissions Promise” announced in 2022, which is our

organization’s goal of net zero by 2050 and a 50% reduction by 2030 from a 2019 baseline as it relates
to scope 1 and 2 emissions, for all properties where we directly manage energy. We anticipate
emissions reductions will occur through a combination of strategic capital investments in energy
efficiency by the Managed Equity REITs, stakeholder engagement to promote sustainable behavior, the
deployment of on site solar and the purchase of energy from renewable sources. We believe our
efforts toward these goals will add value to our clients’ properties, benefit tenants by lowering their
operating costs, drive sustainable economic returns and address investor demands that our clients have
viable strategies to mitigate climate risk. We have made significant progress to date, achieving an
overall reduction in emissions and energy of 35% and 28%, respectively.

In 2023, with an active pipeline of commercial real estate development projects, we introduced a
new green and energy-efficient equipment purchasing guideline which mandates the use of high energy
efficiency equipment and environmentally friendly materials for new developments and major asset
refurbishments. Our risk mitigation practices, such as energy management programs, green purchasing
and high-efficiency equipment guidelines, performance benchmarking, and policy tracking and climate-
related emergency preparedness, are well-established, while the data we obtain to assess future
climate change exposure continues to evolve.

We drive value, manage risk and benchmark the performance of our managed properties by
effectively capturing and managing data through real-time energy monitoring, or RTM. Our cloud-based
system connects building automation systems to a central supervisor. RTM facilitates advanced data
analytics and access to detect faults and inefficiencies in equipment operations faster, meanwhile

enhancing building system control in a cost-effective and scalable way. We launched this program in
2017 and it is now deployed in 63 managed properties, totaling approximately 53% of our managed
annual electricity spend. We continue to expand our RTM program and in 2023, we committed to a goal
of monitoring 90% of our managed energy spend through RTM over the next five years, resulting in
operational savings and reduced equipment wear and tear, while maintaining high tenant comfort.

Our energy performance programs drive down energy consumption and reduce carbon emissions of

our managed properties. Lower energy use and emissions reduce our managed properties’ potential
exposure to policies that call for a carbon tax or other emissions-based penalties.

Our existing business practices align with the Task Force on Climate-related Financial Disclosures,
or TCFD, framework across both physical and transition risks and opportunities. In 2023, we strengthened
our alignment with the TCFD by advancing the depth of our alignment with all four pillars of the TCFD
framework and we developed a tool to help assess building energy and emissions performance standards
across the U.S. This tool overlays property locations, size and use profiles with laws requiring energy,
water and emissions reporting or energy and emissions performance standards, and forecasts future
compliance risks. We continue to refine our long-standing engineering, operating and management
practices that incorporate environmental resilience and risk mitigation with activities and technology
related to management oversight, enhanced data gathering, assessing risks and opportunities, and
adopting science-based emissions targets.

As a result of our sustainability initiatives, we and our managed properties have received honors
from The Building Owners and Managers Association, or BOMA, The Environmental Protection Agency,
or EPA, and the U.S. Green Building Council, or USGBC, amongst others. In 2022, the honors achieved
by our Managed Equity REITs, included 55 BOMA 360 Certified Properties, 77 ENERGY STAR
Certified Properties and 58 LEED Certified Properties. Finally, for the fifth year in a row, we received
the 2023 ENERGY STAR Partner of the Year Award, and for the sixth year in a row, OPI received the
2023 ENERGY STAR Partner of the Year Award.

Human Capital Resources and Governance

We are led by an experienced management team with proven ability to manage and grow a
resilient business. Moreover, significant insider ownership and the structure of the contracts with our
clients provide a strong alignment of interests with our clients and with public shareholders. Our
organization is focused on the assets of our clients and we blend long-term strategic vision with careful
execution of day-to-day operations to optimize efficiency and foster the sustainable growth of our
clients.

Employees and Equal Opportunity

As of September 30, 2023, RMR LLC employed over 600 real estate professionals, including 46%

in our corporate office and 54% across our more than 30 offices throughout the United States. The
average tenure of our employees was 6.5 years. Our employees are the foundation of our success and
in many ways our most critical asset. Our strength lies in the collective experience of a diverse and
inclusive workplace. We ensure employees receive competitive salaries and benefits and we aim to
attract professionals who will uphold our values of social and environmental stewardship.

We are an equal opportunity employer, with all qualified applicants receiving consideration for
employment without regard to race, color, religion, sex, sexual orientation, gender identity, national
origin, disability or protected veteran status. Throughout our organization, including our Board, we are
committed to racial equality and fostering a culture of diversity and inclusion. We have made diversity and
inclusion an important part of our hiring, retention and development programs. As of September 30,
2023, 37% of our employees were women and 30% were members of minority communities
underrepresented in commercial real estate.

Board Diversity

As of September 30, 2023, our Board of Directors composition included 50% of members from

underrepresented communities, including 33% female and 17% African American.

Employee Engagement, Education and Training

Our employee engagement initiatives align with our goal of being an employer of choice with a

thriving workforce that encourages career enrichment and positions us for growth. Our programs are
carefully designed for hiring, developing and retaining the best talent in the real estate industry. Our
compensation is designed to motivate and retain employees and align their interests with those of our
clients. We believe our compensation and benefits are best in class and are consistent with companies
in the alternative asset management industry. We periodically review the effectiveness and
competitiveness of our compensation program.

Our recruiting programs, on-boarding and retention programs and our development and on-going

training programs currently include the following:

• Managing with Impact: Since 2016, we hosted Managing with Impact workshops for managers
throughout the company to expand their perspectives and increase their confidence as a new
manager. Within their first year, managers complete the workshop and learn how to effectively
delegate, solve problems and give meaningful performance feedback.

• Tuition Reimbursement Program: We offer tuition assistance up to $20,000 annually for work-

related education from accredited colleges and universities in order to deepen employees’ skillsets
and support personal enrichment.

• Analyst Accelerator Internship Program: We established a new Analyst Accelerator Internship
Program which is designed to attract early career talent to our industry from backgrounds
underrepresented in real estate. The 10-week program is built upon the premise that hands on
exposure as an analyst is an ideal way to provide rising juniors or seniors with a solid first step
toward a successful and lasting career in real estate. We actively recruit talent from college
campuses and student communities interested in real estate who are traditionally
underrepresented in the sector, including women and people of color. Relationships with
programs like the University of Massachusetts Amherst Real Estate Program, involvement with
Historically Black Colleges and Universities, and engagement with women’s career forums all
amplify our outreach efforts to develop a robust and diverse talent pipeline.

• Engineering Development Program: Given the increasing challenges within the real estate

industry of attracting qualified engineers throughout the country, we made it a strategic focus to
develop the next generation of qualified building engineers. Our Engineering Development
Program standardizes the recruitment and development of engineering candidates to prepare
them for open positions and to plan for future engineering needs. We recruit from various trade
schools and job fairs to identify candidates for the two-year program with a curriculum that includes
specific onboarding plans for training in electrical, HVAC, or plumbing trades and covers a
range of essential engineering staff development topics.

• Industry Associations & Credentials: In order to further their professional development, many of
our employees seek out credentials and association memberships, with any membership costs
reimbursed by us. Examples of credentials and association memberships include: BOMA
membership, Certified Property Manager, Certified Public Accountant and National Association
of Industrial and Office Properties.

Cybersecurity

Our cybersecurity program is led by our Chief Information Officer, who works closely with our

senior management to develop and advance our cybersecurity strategy and regularly reports to our
Audit Committee on cybersecurity matters. Our program is aligned with the National Institute of Standards
and Technology five phase Cybersecurity Framework (Identify-Protect-Detect-Respond-Recover). We
use industry leading security tools, regularly update our technology roadmaps, conduct simulated attacks,
provide custom-built training for high-risk departments and mandate cybersecurity awareness and
training a requirement for all employees. We have a detailed incident response plan in place in the event
of a cybersecurity incident for contacting authorities and informing key stakeholders to ensure that
any non-routine events are properly escalated. These plans are validated regularly to consider the types
of decisions that would need to be made in the event of a cyber incident.

Internet Website

Our internet website address is www.rmrgroup.com. We make available, free of charge, through
the “Investors & Media” section of our website, our Annual Reports on Form 10-K, Quarterly Reports
on Form 10-Q, Current Reports on Form 8-K and amendments to these reports filed or furnished pursuant
to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act,
as soon as reasonably practicable after these forms are filed with, or furnished to, the SEC. Any material
we file with or furnish to the SEC is also maintained on the SEC website (sec.gov).

The information on or accessible through our website is not incorporated by reference into this
Annual Report on Form 10-K or other documents we file with, or furnish to, the SEC. We intend to use
our website as a means of disclosing material non-public information and for complying with our
disclosure obligations under Regulation FD. Such disclosures will be included on our website in the
“Investors & Media” section. Accordingly, investors should monitor such portions of our website, in
addition to following our press releases, SEC filings and public conference calls and webcasts.

Item 1A. Risk Factors

Summary of Risk Factors

Our business is subject to a number of risks and uncertainties. The following is a summary of the

principal risk factors described in this section:

• unfavorable market and industry conditions may have a material adverse effect on our and our

clients’ results of operations, financial condition and ability to pay dividends;

• most of our revenues are derived from services to a limited number of clients;

• our management fees from our clients are based, in general, on cost of assets, enterprise

values, shareholder returns, rent receipts, capital projects or certain revenues, as applicable,
and, accordingly our future revenues, income and cash flows will decline if the business activities,
assets, enterprise values, shareholder returns, rent receipts, capital projects or certain revenues
of our clients decline;

• our revenues may be highly variable;

• potential terminations of our management agreements with our clients;

• our ability to complete the CARROLL Acquisition, and if completed, our ability to successfully

integrate the CARROLL business and realize our expected returns on our investment;

• additional increases in interest rates and sustained high interest rates may significantly impact

our clients and in turn adversely impact our revenues or impede our growth;

• our ability to expand our business depends upon the growth and performance of our clients and
our ability to obtain or create new clients for our business, including through our acquisition of
new businesses, and is often dependent upon circumstances beyond our control;

• our ability to continue to pay a regular quarterly dividend is dependent on many factors, including
current and expected earnings and alternative uses for available cash and our Board of Directors
may decide to lower our dividends;

• our and our operating company clients’ ability to attract, retain and motivate sufficient qualified

personnel in a challenging labor market and to effectively manage our and our operating company
clients’ labor costs;

• our ability to retain the services of our controlling shareholder and other key and talented

personnel;

• our and our clients’ risks associated with our and their costs of compliance with laws and

regulations, including securities regulations, exchange listing standards and other laws and
regulations affecting public companies;

• our ESG initiatives, federal and state regulations, other requirements and investor expectations

may impose additional costs and expose us and our clients to new risks;

• risks related to the security of our network and information technology;

• risks related to inflation, including inflation impacting wages and employee benefits;

• risks related to acquisitions, dispositions and other activities by or among our clients;

• allegations, even if untrue, of any conflicts of interest arising from our management activities;

and

• risks to holders of our Class A Common Shares as a result of our dual class capital structure.

Prospective investors should carefully consider the risks described in this section, together with all
of the other information in this Annual Report on Form 10-K. These risks may not be the only risks we
face but are risks we believe may be material at this time. Additional risks and uncertainties that we do not
yet know of, or that we currently think are immaterial, may also impair our business operations or
financial results. If any of the events or circumstances described in this section occur, our business,
financial condition or results of operations and the trading price of our securities could decline. Investors
and prospective investors should consider these risks, the information contained under the heading
“Warning Concerning Forward-Looking Statements” and the risks described elsewhere in this Annual
Report on Form 10-K before deciding whether to invest in our securities. We may update these risk
factors in our future periodic reports.

Risks Related to Our Business

Unfavorable market and industry conditions may have a material adverse effect on our and our
clients’ results of operations, financial condition and ability to pay dividends.

Our business and operations may be adversely affected by market and economic volatility
experienced by the U.S. and global economies, the commercial real estate industry and/or the local
economies in the markets in which our clients’ properties are located. Unfavorable economic and industry
conditions may be due to, among other things, rising or sustained high interest rates, prolonged high
inflation, labor market challenges, supply chain disruptions, volatility in the public equity and debt markets,
pandemics, geopolitical instability and tensions (such as the ongoing wars in Ukraine and the Middle
East), possible economic recession, changes in real estate utilization and other conditions beyond our
control. These current conditions, or similar conditions existing in the future, have adversely affected, and
may continue to adversely affect, our and our clients’ and their tenants and managers’ results of
operations, financial condition and ability to pay dividends. Unfavorable market conditions and the
impact on the commercial real estate industry have reduced, and may continue to reduce, our clients’
market capitalizations, revenues and capital projects, which may reduce the fees we earn from them.
These conditions may also give rise to an increase in tenant defaults under our clients’ leases, defaults
of SEVN’s loans, decreased market capitalizations, shareholder returns, rent receipts and capital projects
for the Managed Equity REITs and decreased financial performance of and lower returns for our
Private Capital clients. Higher interest rates may reduce the value of our clients’ properties, increase
the cost of their capital and reduce their ability to make acquisitions, and have increased their debt
service costs. Higher interest rates also may reduce dispositions by the Managed Equity REITs due to
their forgoing property sales because of depressed asset valuations and reduced buyer demand or
more costly acquisition financing for buyers, which could limit our clients’ ability to reduce leverage and
recycle capital. Further, unfavorable market conditions have negatively impacted the stock price of
some of the Managed Equity REITs, which in turn has negatively impacted the fees we earn from them.
In addition, some of our clients may be negatively impacted by an economic downturn and a
corresponding reduction in economic activity that reduces business and leisure travel, commerce, hotel
occupancy and demand for office, retail and industrial space, and may also limit the ability of residents
and potential residents to pay for senior living community services.

Most of our revenues are derived from our provision of management services to a limited
number of companies. The loss or failure, or decline in business or assets, of any of the Managed
Equity REITs or clients comprising a significant part of our Private Capital business could
substantially reduce our revenues.

The fees we earn from providing management services to, and the reimbursable fees we receive

from, the Managed Equity REITs comprise most of our revenues. Further, our Private Capital clients
have comprised an increasing portion of our assets under management and revenues, and our current
business plans contemplate that trend continuing. A decline in the business or assets of our Private
Capital clients could reduce our revenue. Our operating results and our ability to maintain and grow our
revenues depend upon the ability of our Managed Equity REITs, and increasingly, our Private Capital
clients to raise or contribute capital to invest in real estate assets, to maintain and grow their investments
and, as applicable, market capitalizations, and to achieve positive shareholder returns in excess of
applicable REIT total shareholder return indexes. Reduced business activities, market capitalizations,
shareholder returns, rents or capital projects of the Managed Equity REITs or Private Capital clients may
materially reduce our revenues and our profitability.

Our revenues may be highly variable.

RMR LLC’s business management agreement with each Managed Equity REIT provides for a

base business management fee that is based on the lower of the average historical costs of the
Managed Equity REIT’s assets under management or its average market capitalization, as calculated
in accordance with the applicable business management agreement, and an incentive business
management fee that is based on the Managed Equity REIT’s relative outperformance of a specified
REIT total shareholder return index. The management fees we earn under these agreements are highly
variable.

The base business management fee payable by a Managed Equity REIT may increase or decrease

materially as the Managed Equity REIT acquires or disposes of real estate assets or its market
capitalization increases or decreases. In addition, we generally only earn an incentive business
management fee under our business management agreement with a Managed Equity REIT if it
outperforms an identified REIT total shareholder return index during the measurement period and certain
other conditions are satisfied, as measured at the end of the applicable measurement period. The
shareholder returns realized by a Managed Equity REIT, its market capitalization and its ability to raise
capital or make investments may be impacted by trends in the Managed Equity REIT’s portfolio, the U.S.
commercial real estate industry generally, the Managed Equity REIT’s industry specifically or other
factors that are outside of our or its control, including prolonged high inflation, rising and sustained high
interest rates, supply chain challenges and economic downturns or recessions. Whether we earn an
incentive fee, and the amount of any incentive fee we may earn, may have a significant impact on the
amount of revenues we earn. For example, in the fiscal year ended September 30, 2019, our incentive
business management fees earned from the Managed Equity REITs was 39.9% of our total
management and advisory services revenues, and we have not subsequently earned any incentive
business management fees from the Managed Equity REITs. Further, the fees we earn under our
property management agreements with the Managed Equity REITs and certain of our Private Capital
clients are based on a percentage of the rents they receive and a percentage of the costs of construction,
in each case, at properties we manage for them. To the extent the Managed Equity REITs or certain
Private Capital clients receive reduced rent or incur lower construction costs, our property management
fee revenues would be negatively impacted. Also, the fees under our management agreements with
respect to AlerisLife and Sonesta are based on a percentage of revenues earned by them or generated
at the properties they operate. AlerisLife and Sonesta experienced high revenue volatility in the past,
and given the nature of AlerisLife and Sonesta’s businesses (i.e., senior living communities and hotels),
may continue to experience revenue volatility for the reasonably foreseeable future.

Our management agreements with our clients are subject to termination.

Our management agreements with our clients may be terminated by a client or by us in certain
circumstances. For example, if we do not satisfy the applicable measures for calendar year 2023 under

our management agreements with DHC or ILPT, as applicable, such company will have the right to
terminate its management agreement by prior written notice to us within 60 days following December 31,
2023, and in which case, it would be required to pay us the applicable termination fee. If any of our
management agreements with a client is terminated, we may be unable to replace the lost revenue. Even
if we receive a termination fee upon the termination of a management agreement with a client, we
may be unable to invest the after tax proceeds from the termination fee we receive in opportunities that
earn returns equal to or greater than the revenues lost as a result of the terminated management
agreement. The termination of our management agreement with any of our clients could have a material
adverse impact on our business, results of operations and financial condition.

We may be unable to complete the CARROLL Acquisition and if completed we may not be able
to successfully integrate the CARROLL business and achieve the anticipated benefits of the
transaction.

The closing of the CARROLL Acquisition is subject to the satisfaction or waiver of customary

conditions, including the seller obtaining required consents with respect to managed funds, joint
venture partners and applicable lenders with respect to its managed properties. If these conditions are
not satisfied, as applicable, or waived, or if an event, change or other circumstance occurs that could
give rise to the termination of our agreement to acquire the CARROLL business, the transaction may not
close on the contemplated terms or at all or it may be delayed. If the CARROLL Acquisition is
completed, we may not be able to successfully integrate the business or the integration may be more
costly or more time-consuming and complex than anticipated, and cost savings, synergies and anticipated
future financial performance may not be realized or may take longer to realize than expected. In
addition, the closing of the CARROLL Acquisition and the integration of the CARROLL business may
divert our management’s attention from our other business operations, and onboarding and integration
of a large number of new employees may pose enhanced operational risks and costs. Further, if the
CARROLL Acquisition is completed, we will enter into the multifamily real estate sector. We do not have
significant experience in this commercial real estate sector, and there can be no assurance that we
will be successful in this business, that we will achieve our expected objectives, operate successfully or
that we will earn fees from the CARROLL business that provide returns on our investment that meet
our underwriting expectations. In addition, because the CARROLL business involves certain joint venture
arrangements, investment funds and limited partnerships, if the CARROLL Acquisition is completed,
we may have limited flexibility and discretionary authority with respect to certain assets acquired, or
management of assets assumed. Further, in order to grow the CARROLL business, we may need to raise
additional capital from third party investors and our ability to raise additional capital depends on many
factors, some of which are outside of our control. If the CARROLL Acquisition is completed, the failure
to raise capital in sufficient amounts and on satisfactory terms could result in a decrease in our
assets under management and our management fees or could result in our being unable to grow the
CARROLL business. Any of the foregoing risks could have a material adverse effect on our ability to
complete the CARROLL Acquisition and to successfully integrate the CARROLL business and achieve
the anticipated benefits of the transaction.

Additional increases in market interest rates and sustained high interest rates may significantly
reduce our revenues or impede our growth.

Additional increases in market interest rates and sustained high interest rates may significantly

reduce our revenues or impede our growth. In response to significant and prolonged increases in
inflation, the Federal Reserve has raised interest rates multiple times since the beginning of 2022, and
it may continue to do so. The timing, number and amount of any future interest rate increases are
uncertain.

Increases in market interest rates may materially and negatively affect us. One of the factors that

investors typically consider important in deciding whether to buy or sell the common shares of our
Managed REITs is the distribution rate with respect to such shares relative to prevailing market interest
rates. If market interest rates go up, investors may expect a higher distribution rate before investing in
a Managed REIT or they may sell the Managed REITs’ common shares and seek alternate investments
with a higher distribution rate. Sales of common shares of the Managed Equity REITs may cause a

decline in the market prices of such shares, which reduces the market capitalizations and total
shareholder returns of the Managed Equity REITs, which, in turn, may materially reduce the fees we
earn under our business management agreements with them. Moreover, the increases in interest rates
has led to increased borrowing costs for our clients and may negatively impact their access to capital
to fund future growth, reduce their earnings and total shareholder returns and cause the Managed REITs’
and our real estate business Private Capital vehicles’ tenants and operators and SEVN’s borrowers to
default on their rent and debt obligations, which may materially reduce the fees we earn under our
management agreements with our clients. Further, during periods of increased borrowing costs, real
estate transaction volumes often slow along with real estate valuation growth which may impact the
results of operation of our clients and the fees we earn from those clients.

If we cannot retain and motivate our key and talented personnel and recruit, retain and motivate
new talented personnel, our business, operating results and financial condition could be
adversely affected.

Our people are the foundation of our success and in many ways our most critical asset. Our
continued success depends to a great extent on our ability to retain and motivate our key and talented
personnel and strategically recruit, retain and motivate new talented personnel. However, we may not be
successful in these efforts as the market for qualified employees in the asset management industry is
highly competitive. We do not have employment agreements with our key employees. Our ability to
recruit, retain and motivate our personnel is dependent on our ability to offer attractive compensation,
opportunities for professional growth and a desirable work environment. In addition, the Managed REITs
have historically granted equity awards to our officers and certain other employees of ours. If our
clients reduce the amount of, or stop making, similar grants in the future, or if the value of any equity
awards they may grant are lower than anticipated, we may need to increase other compensation or
incentives for our employees. Likewise, if competition for employees increases, in order to recruit and
retain existing and future personnel, we may need to increase the level of compensation that we pay.

We depend on our controlling shareholder and other key and talented personnel.

We depend on the efforts, skills, reputations and business contacts of our controlling shareholder,

Adam D. Portnoy, and other key and talented personnel. The extent and nature of the experience of
our executive officers and of the relationships they have with real estate professionals and financial
institutions, although not a guarantee of positive results, are critical to the success of our business. The
loss of the services of any of them or the loss of investor confidence in such personnel could have a
material adverse effect on our revenues, operating income and cash flows and could impair our ability to
maintain or grow assets under management in our clients or otherwise maintain or grow our business.

We are subject to substantial regulation and numerous contractual obligations and internal
policies, and failure to comply with these provisions could have a material adverse effect on our
business, financial condition and results of operations.

We are subject to substantial regulation and numerous contractual obligations and internal
policies. We are subject to regulation by the SEC, Nasdaq, and other federal, state and local or
international governmental bodies and agencies or self-regulatory organizations. Our subsidiary,
Tremont, is registered with the SEC as an investment adviser under the Investment Advisers Act. The
Investment Advisers Act requires registered investment advisers to comply with numerous obligations,
including compliance, record keeping, operating and marketing requirements, disclosure obligations
and limitations on certain activities. Investment advisers also may owe fiduciary duties to certain of their
clients.

We are also responsible for managing or assisting with the regulatory aspects of certain of our
clients, including the Managed REITs’ compliance with applicable REIT rules and SEVN’s maintenance
of its exemption from registration under the 1940 Act. The level of regulation and supervision to
which we and our clients are subject varies from jurisdiction to jurisdiction and is based on the type of
business activity involved. For example, we and SEVN may also be subject to state licensing requirements
to conduct lending activities. The regulations to which we and our clients are subject are extensive,

complex and require substantial management time and attention. In addition, regulatory oversight and
enforcement may increase and become more rigorous. Our or our clients’ failure to comply with any of the
regulations, contractual obligations or policies applicable to it may subject us to litigation, extensive
investigations, enforcement actions, as well as substantial fines, penalties and reputational risk, and our
business and operations could be materially adversely affected.

Our lack of compliance with applicable law could result in, among other things, our inability to
enforce contracts, our default under contracts (including our management agreements with our clients)
and our ineligibility to contract with, and receive revenue from, governmental authorities and agencies,
our clients or other third parties.

We have numerous contractual obligations with which we must comply on a continuous basis to
operate our business, the default of which could have a material adverse effect on our business and
financial condition. We have established internal policies designed to ensure that we manage our business
in accordance with applicable law and regulation and in accordance with our contractual obligations.
These internal policies may not be effective in all regards; and, if we fail to comply with our internal
policies, we could be subjected to additional risk and liability.

ESG initiatives, requirements and market expectations may impose additional costs and expose
us and our clients to new risks.

There is an increasing focus from regulators, investors, certain of our clients’ tenants, managers,

borrowers, customers, employees, and other stakeholders concerning corporate sustainability. For
example, California recently enacted a climate focused disclosure law and the SEC is considering
climate change related regulations, both of which will require us to focus significant time and resources
on behalf of ourselves and our clients to comply with these new requirements, and we and these
clients may incur significant costs in compliance with such rules. Some investors may use ESG factors
to guide their investment strategies and, in some cases, may choose not to invest in us or our clients,
or otherwise do business with us or our clients, if they believe our or their policies relating to corporate
responsibility are inadequate. Third party providers of corporate responsibility ratings and reports on
companies have increased in number, resulting in varied and in some cases inconsistent standards. In
addition, the criteria by which companies’ corporate responsibility practices are assessed are evolving,
which could result in greater expectations of us and our clients and cause us and our clients to
undertake costly initiatives to satisfy such new criteria. Alternatively, if we or our clients elect not to or
are unable to satisfy such new criteria or do not meet the criteria of a specific third party provider, some
investors may conclude that our or their policies with respect to corporate responsibility are inadequate.
Pursuant to our zero emissions goal, we have pledged to reduce our scope 1 and 2 emissions to net zero
by 2050 with a 50% reduction commitment by 2030 from a 2019 baseline. We and our clients may
face reputational damage in the event that our or their corporate responsibility procedures or standards
do not meet the goals we or they have set or the standards set by various constituencies. If we and
our clients fail to comply with ESG related regulations and to satisfy the expectations of investors and
our clients’ tenants, managers, borrowers, customers, employees and other stakeholders or our or our
clients’ announced goals and other initiatives are not executed as planned, our and our clients’
reputation and financial results could be adversely affected, the management fees we may earn from
our clients may decline, and our revenues, results of operations and ability to grow our business may be
negatively impacted. In addition, we or our clients may incur significant costs in attempting to comply
with regulatory requirements, ESG policies or third party expectations or demands.

We and our clients are subject to risks from adverse weather, natural disasters and adverse
impact from global climate change.

We and our clients are subject to risks and could be exposed to additional costs from adverse
weather, natural disasters and adverse impact from global climate change. For example, the properties
owned or operated by our clients could be severely damaged or destroyed by physical climate risks
that could materialize as either singular extreme weather events (for example floods, storms and
wildfires) or through long-term impacts of climatic conditions (such as precipitation frequency, weather
instability and rise of sea levels). Such events could also adversely impact our clients and cause significant

losses if our clients or their tenants, managers or borrowers are unable to operate their businesses
due to damage resulting from such events. Insurance may not sufficiently cover all losses sustained by
our clients and their tenants, managers or borrowers. If we or our clients fail to adequately prepare
for such events, our and our clients’ revenues, results of operations and financial condition may be
impacted.

We rely on information technology and systems in our operations, and any material failure,
inadequacy, interruption or security breach of that technology or those systems could materially
harm our business.

We rely on information technology and systems, including the Internet and cloud-based

infrastructures and services, commercially available software and our internally developed applications,
to process, transmit, store and safeguard information and to manage or support a variety of our
business processes, including financial transactions and maintenance of records, which may include
personal identifying information of employees, tenants, borrowers and guarantors and lease data. If we
experience material failures, inadequacies or interruptions or security breaches of our information
technology, we could incur material costs and losses. Further, third party vendors have experienced
and could experience similar events with respect to their information technology and systems that impact
the products and services they provide to us or our clients. We rely on commercially available systems,
software, tools and monitoring, as well as our internally developed applications and internal procedures
and personnel, to provide security for processing, transmitting, storing and safeguarding confidential
tenant, customer, borrower, guarantor and vendor information, such as personally identifiable
information related to our employees and others and information regarding our and our clients’ financial
accounts. We take various actions, and we incur significant costs, to maintain and protect the operation
and security of our information technology and systems, including the data maintained in those systems.
However, it is possible that these measures will not prevent the systems’ improper functioning or a
compromise in security, such as in the event of a cyberattack or the improper disclosure of personally
identifiable information. Security breaches, computer viruses, attacks by hackers, online fraud schemes
and similar breaches have created and can create significant system disruptions, shutdowns, fraudulent
transfer of assets or unauthorized disclosure of confidential information. The risk of a security breach
or disruption, particularly through cyberattack or cyber intrusion, including by computer hackers, foreign
governments and cyber terrorists, has generally increased as the number, intensity and sophistication
of attempted attacks and intrusions from around the world have increased.

The cybersecurity risks to us, our clients and third party vendors are heightened by, among other
things, the evolving nature of the threats faced, advances in computer capabilities, new discoveries in
the field of cryptography and new and increasingly sophisticated methods used to perpetrate illegal or
fraudulent activities against us, including cyberattacks, email or wire fraud and other attacks exploiting
security vulnerabilities in our or other third parties’ information technology networks and systems or
operations. Although most of our staff returned to our offices during the pandemic, flexible working
arrangements have resulted in a higher extent of remote working than we experienced prior to the
pandemic. This and other possible changing work practices have adversely impacted, and may in the
future adversely impact, our ability to maintain the security, proper function and availability of our
information technology and systems since remote working by our employees could strain our technology
resources and introduce operational risk, including heightened cybersecurity risk. Remote working
environments may be less secure and more susceptible to hacking attacks, including phishing and social
engineering attempts that have sought, and may seek, to exploit remote working environments. In
addition, our data security, data privacy, investor reporting and business continuity processes could be
impacted by a third party’s inability to perform in a remote work environment or by the failure of, or attack
on, their information systems and technology. Any failure to maintain the security, proper function and
availability of our information technology and systems, or certain third party vendors’ failure to similarly
protect their information technology and systems that are relevant to our or our clients’ operations, or
to safeguard our or our clients’ business processes, assets and information could result in financial
losses, interrupt our operations, damage our reputation, cause us to be in default of material contracts
and subject us to liability claims or regulatory penalties, any of which could materially and adversely
affect us.

Inflation may continue to negatively impact us and our clients and our and their businesses,
results of operations and ability to grow.

The global economy continues to experience commodity pricing and other inflation, including
inflation impacting wages and employee benefits. Although inflation rates have recently declined, they
remain higher than pre-COVID-19 pandemic levels. It is uncertain whether inflation will decline further,
remain relatively steady or increase; however, some market forecasts indicate that inflation rates may
remain elevated for a prolonged period. These conditions have increased the costs for materials, other
goods and labor, and these rising costs are impacting us and our clients. For example, various
construction supplies and materials have experienced significant price increases as have other
commodities, such as food and fuel. These pricing increases as well as increases in labor costs have
increased the operating costs for certain of our clients and tenants, operators and borrowers of our
clients. If these inflationary pressures continue, our clients may reduce or delay construction projects that
we oversee and may realize decreased earnings, negative impacts on their ability to increase or
maintain dividends that they pay to their shareholders and reduced market capitalizations. In that case,
the management fees we earn may decline and our revenues, results of operations and ability to
grow our business may be negatively impacted.

Employee misconduct could harm us by subjecting us to significant legal liability, reputational
harm and loss of business.

As an asset manager, our business, and our ability to retain and attract new clients, is dependent
upon our maintaining a positive reputation in the marketplace. There is a risk that our employees could
engage in misconduct that adversely affects our reputation and, hence, our business. We are subject
to a number of obligations and standards arising from our business and our authority over the companies
and assets we manage. The violation of these obligations and standards by any of our employees
may adversely affect our clients and us. Our business often requires that we deal with confidential
matters of great significance to our clients. If our employees improperly use or disclose confidential
information, we and the concerned client could suffer serious harm to our and its reputation, financial
position and current and future business relationships and face potentially significant litigation. It is not
always possible to detect or deter employee misconduct, and the precautions we take to detect and
prevent this activity may not be effective in all cases. If any of our employees were to engage in or be
accused of misconduct, our business and our reputation could be adversely affected. Misconduct by an
employee might rise to the level of a default that would permit a client to terminate its management
agreements with us for cause and without paying a termination fee, which could materially adversely
affect our business, results of operations and financial condition.

RMR LLC’s required quarterly tax distributions may limit our ability to implement our business
or pursue growth opportunities.

Under the RMR LLC operating agreement, RMR LLC is required to make certain pro rata

distributions to each member of RMR LLC, including RMR Inc., quarterly on the basis of the assumed
tax liabilities of the members. If and when federal, state or local governments impose higher income tax
rates or increase the taxable base, RMR LLC’s quarterly tax distributions would generally increase
accordingly. From time to time, RMR LLC’s cash flows from operations may be insufficient to enable it
to make required minimum tax distributions to its members. RMR LLC may have to borrow funds or sell
assets to fund its distribution requirements, and thereby materially adversely affect our liquidity and
financial condition. Further, by making cash distributions rather than investing that cash in our businesses,
we might risk slowing the pace of our growth, or not having a sufficient amount of cash to fund our
operations, new investments or unanticipated capital expenditures, should the need arise. In such event,
we may not be able to implement our business and growth strategy to the extent intended.

Risks Related to the Businesses of Our Clients

Risks associated with our clients’ businesses could adversely affect their respective abilities to

grow, generate revenue, increase their market capitalizations and pay management fees.

We have presented in this Annual Report on Form 10-K historical fees that we have earned from

our clients. The historical fees earned from our clients, including those presented in this Annual Report
on Form 10-K, should not be considered as indicative of the future results of our clients or of our
future results. The risks associated with each client’s business could adversely affect its ability to carry
out its business plans and objectives, and, as a result, could adversely impact its ability to pay us
management fees or cause the amounts of those fees to decline. For more information see
“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview.”
Risks to our clients, in addition to the risks noted elsewhere in this Annual Report on Form 10-K,
include, but are not limited to, the following:

• adverse economic and market conditions;

• the inability of our clients’ tenants, managers and borrowers to weather the ongoing adverse

economic conditions, including rising and sustained high interest rates, prolonged high inflation,
economic downturn and possible recession and thereby impair their ability to pay rent and returns
and make loan payments;

• the inability of our clients to access debt and equity capital on attractive terms, or at all which

could reduce our clients’ ability to pursue acquisition and development opportunities and refinance
existing debt, and reduce our clients’ returns from acquisition and development activities and
increase their future interest expense;

• our clients face competition for tenants and customers at substantially all of their properties and

competing properties may be more attractive to tenants and customers;

• our clients face significant competition for investment opportunities from other investors, some of

which have greater financial resources, including publicly traded REITs, non-traded REITs,
insurance companies, banking firms, private institutional funds, private equity funds and other
investors;

• a sustained period of high interest rates and high inflation may increase operating costs, reduce
the value of properties, increase cost of capital and make raising capital difficult for our clients
whereas low interest rates may increase the amount of debt capital available, which may result in
declining capitalization rates for property acquisitions and impede the growth of our clients’
businesses;

• changing general economic and financial market conditions could significantly reduce the value

of the real estate, loans and other investments of our clients and reduce the amounts earned on
those investments;

• changing market, consumer and workplace practices and trends could result in decreased

demand for business travel, hotel stays, conference facilities and office space;

• the real estate and real estate related investments of our clients may be less liquid than other
investments and the ability of our clients to adjust their portfolios in response to changes in
economic or other conditions may be limited;

• our operating company clients’ ability to attract, retain and motivate sufficient qualified personnel

in a challenging labor market and to effectively manage their labor costs;

• changes in investor preferences or market conditions could limit our clients’ ability to raise
capital to competitively maintain their properties and operations or make new investments;

• geopolitical instability and tensions (such as the ongoing wars in Ukraine and the Middle East);

• shareholder activism, complaints about management strategies and structures, corporate

governance and other matters may divert management attention and be disruptive to our clients’
operations;

• ESG initiatives, requirements and market expectations may impose additional costs and expose

our clients to new risks;

• changes in tax laws, regulation or accounting rules may make certain types of investments in or

by our clients less valuable;

• our clients are exposed to environmental, building and other laws, natural disasters, adverse
impacts from global climate change and other factors beyond their control as a result of their
investment in real estate;

• public health safety events, such as pandemics, may adversely impact our clients’ business,

operating results, financial condition and value;

• our clients have significant investments in certain types of assets, such as hotels, senior living

communities and office, industrial and healthcare properties, and market changes which impact
these specific types of assets (e.g., a reduction in levels of business travel and occupancy at
hotels and senior living communities as a result of adverse economic and market conditions,
tenant and customer trends, new competition for short term accommodations, changes in Medicare
and Medicaid rates and other regulatory matters, an insufficient recovery or a further reduction
in the demand for office space as a result of remote, hybrid and other flexible working
arrangements, and declining economic activity, oversupply of industrial buildings or technological
or market practice changes, such as offshoring, reducing the demand for industrial properties)
may adversely impact certain of the clients’ ability to maintain or grow their businesses;

• the failure of a Managed REIT to continue to qualify as a REIT would subject it to U.S. federal

income tax and reduce cash available for distributions to its shareholders, adversely impacting its
ability to raise capital and operate its business;

• the failure of our clients to comply with applicable laws and regulations could result in legal

liability, regulatory fines and the loss of, or an inability to obtain, licenses required to operate their
businesses; and

• complying with REIT requirements may cause a Managed REIT to forgo otherwise attractive

opportunities or liquidate otherwise attractive investments.

Many of our clients are SEC registrants and file reports with the SEC as required by the Exchange
Act. A discussion of the businesses and the risks associated with the businesses of our clients that are
SEC registrants is contained in the reports filed by our clients, including in the section captioned “Risk
Factors” in each Managed REIT’s Annual Report on Form 10-K for the year ended December 31, 2022,
as those Risk Factors may have been updated or supplemented in those companies’ Quarterly
Reports on Form 10-Q filed subsequently. Copies of these reports are available at the SEC’s website,
www.sec.gov.

Risks Related to Our Securities

A trading market that provides adequate liquidity may not be sustained for our Class A Common
Shares and the market price of our Class A Common Shares may fluctuate widely.

Our public float represents about 48.9% of the economic interest in RMR LLC. As a result, a
significant amount of the economic interest in RMR LLC is not represented in our public float, which
may adversely impact trading in our Class A Common Shares. There can be no assurance that an active
trading market for our Class A Common Shares will be sustained in the future.

The market price of our Class A Common Shares may fluctuate widely, depending upon many

factors, some of which are beyond our control, including, but not limited to, the following:

• market and economic volatility due to adverse economic, geopolitical and public health conditions

and the resulting market disruption on us and our clients;

• declines in the market prices of our clients’ common shares;

• a relatively thin trading market for our Class A Common Shares could cause trades of small
blocks of shares to have a significant impact on the price of our Class A Common Shares;

• our quarterly or annual earnings, or those of other comparable companies;

• actual or anticipated fluctuations in our operating results;

• changes in accounting standards, policies, guidance, interpretations or principles;

• announcements by us, our clients or our competitors of significant investments, acquisitions or

dispositions;

• the inclusion, exclusion, or deletion of our Class A Common Shares from any trading indices;

• the failure of securities analysts to cover our Class A Common Shares;

• changes in earnings estimates by securities analysts or in our ability to meet those estimates;

• the operating and stock price performance of other comparable companies;

• overall market fluctuations; and

• general economic conditions.

Stock markets in general often experience volatility that is unrelated to the operating performance
of a particular company. These broad market fluctuations may adversely affect the trading price of our
Class A Common Shares. Our shareholders may not be able to resell their Class A Common Shares
following periods of volatility because of the market’s adverse reaction to volatility.

Some investors may not invest in our Class A Common Shares as a result of our dual class
capital structure, which may adversely affect the trading price of our Class A Common Shares.

Although S&P Dow Jones, a provider of widely followed stock indices, recently reversed its prior

decision to exclude companies with multiple share classes, such as ours, in certain of their indices,
there is no guarantee that our Class A Common Shares will be included in an S&P index, despite their
eligibility. The Council on Institutional Investors remains strongly opposed to dual class structures and
some investors may continue to avoid investing in companies with dual class shares, particularly
companies that do not include time limits with respect to such dual class structures. In addition, several
stockholder advisory firms oppose the use of multiple class structures. As a result, our Class A
Common Shares may not be included in certain stock indices and may cause stockholder advisory
firms to publish negative commentary about our corporate governance practices or otherwise seek to
cause us to change our capital structure. FTSE Russell, another provider of widely followed stock indices,
adopted rules requiring new constituents of its indices to have at least five percent of their voting
rights in the hands of public stockholders. Many investment funds are precluded from investing in
companies that are not included in such indices, and these funds would be unable to purchase our
Class A Common Shares. We cannot assure you that other stock indices will not take a similar approach
to FTSE Russell in the future. Exclusion from indices could make our Class A Common Shares less
attractive to investors and, as a result, the market price of our Class A Common Shares could be
adversely affected. Additionally, any actions or publications by stockholder advisory firms critical of our
corporate governance practices or capital structure could also adversely affect the value of our
Class A Common Shares.

Our dividend policy is subject to change.

RMR Inc. currently plans to pay a regular quarterly cash dividend equal to $0.40 per share ($1.60

per share per year) to holders of its Class A Common Shares. However, the amount of distributions
RMR LLC may make in the future is not certain, and there is no assurance that future distributions will
be made. The declaration and payment of any dividends to our shareholders will be at the discretion of
our Board of Directors which considers many factors when setting dividend rates including RMR
Inc.’s current and expected earnings and the availability of cash to fund dividends as compared to
alternative uses of such cash. Our Board of Directors may change the distribution policy or discontinue
the payment of dividends at any time. Accordingly, any future dividends may be increased or decreased
and there is no assurance as to the rate at which any future dividends will be paid, and they could decline
in amount or be suspended or discontinued. Any change in our dividend policy could have a material
adverse effect on the market price of our Class A Common Shares.

Risks Related to Our Relationships with Our Controlling Shareholder and Our Clients

Our controlling shareholder controls our voting power, and our other shareholders will have
less influence over our business than shareholders of most other publicly traded companies.

Substantially all of the voting power in RMR Inc. and a majority of the economic interest in RMR

LLC is held by ABP Trust, an entity controlled by its sole trustee, Adam D. Portnoy. Mr. Portnoy is Chair
of our Board of Directors and one of our Managing Directors and is our President and Chief Executive
Officer. RMR Inc. is the managing member of RMR LLC. As of September 30, 2023, Adam D. Portnoy
beneficially owned in aggregate, directly and indirectly through ABP Trust, a combined direct and
indirect 51.1% economic interest in RMR LLC and controlled 91.2% of the aggregate voting power of
our outstanding capital stock. As a result of this voting control, Adam D. Portnoy is effectively able to
determine the outcome of all matters requiring shareholder approval, including, but not limited to, election
of our directors. Adam D. Portnoy is able to cause or prevent a change of control of RMR Inc., and
this voting control could preclude any unsolicited acquisition of RMR Inc. The voting control of Adam D.
Portnoy could deprive our shareholders of an opportunity to receive a premium for their Class A
Common Shares as part of a sale of us and may affect the market price of our Class A Common
Shares.

Our management agreements with the Managed Equity REITs may discourage our change of
control.

Each Managed Equity REIT may terminate its management agreements with us if we experience
a change of control, as defined in those agreements, without payment of any termination fee. We may
be unable to duplicate the long term management arrangements we have with each of the Managed
Equity REITs if the management agreements were terminated following our change of control. As a
result, the management agreements may discourage a change of control of us, including a change of
control which might result in payment of a premium for our Class A Common Shares.

The registration of Tremont under the Investment Advisers Act may discourage our change of
control.

Our subsidiary, Tremont, is registered as an investment adviser under the Investment Advisers Act.

Any change in control of Tremont, as defined in and interpreted pursuant to the Investment Advisers
Act, would trigger a shareholder approval right by SEVN shareholders or other advisory clients of
Tremont as applicable, under that Act. The need for such approval may discourage a change of control
of us, including a change of control which might result in payment of a premium for our Class A
Common Shares.

The ability of ABP Trust to sell its ownership stake in us and speculation about any such sale
may adversely affect the market price of our Class A Common Shares.

ABP Trust controls 100.0% of our Class B-1 Common Shares (which are exchangeable for

Class A Common Shares) and Class B-2 Common Shares, some of our currently outstanding Class A
Common Shares and approximately 48.8% of our Class A Units of RMR LLC (which ABP Trust may
cause RMR LLC to redeem for, at our election, Class A Common Shares on a one for one basis or cash).
Thus, a significant portion of our ownership is not trading in the public markets. ABP Trust may sell
any or all of its Class A Common Shares at any time without approval by our other shareholders.
Speculation by the press, stock analysts, our shareholders or others regarding the intention of ABP Trust
to dispose of Class A Common Shares could adversely affect the market price of our Class A Common
Shares. Moreover, the market price of our Class A Common Shares may be adversely impacted by
the fact that a significant amount of our outstanding shares are not included in the public float of our
Class A Common Shares and by our dual-stock structure. Accordingly, our Class A Common Shares may
be worth less than they would be if the Class A Common Shares that ABP Trust controls or has a
right to acquire were trading in the public markets.

We and our clients are party to transactions with related parties that may increase the risk of
allegations of conflicts of interest.

We and our clients are party to transactions with related parties, including with entities controlled

by Adam D. Portnoy and entities that we manage. For example, because of the relationships among
us, Adam D. Portnoy, and our clients, the agreements we are party to with them, including our
management agreements, are among related parties. Our and our clients’ agreements with related
parties or in respect of transactions among related parties may not be on terms as favorable to us as
they would have been if they had been negotiated among unrelated parties. Our shareholders or the
shareholders of one or more of our clients may challenge such related party transactions. Although all
past challenges have been unsuccessful, if any future challenges to related party transactions were to
be successful, we or our clients might not realize the benefits expected from the transactions being
challenged. Moreover, any such challenge could result in substantial costs and a diversion of our
management’s attention, could have a material adverse effect on our or our clients’ reputation, business
and growth and could adversely affect our or our clients’ ability to realize the benefits expected from
the transactions, whether or not the allegations have merit or are substantiated.

Declines in revenue, business or assets of a client may result in a corresponding decline or
reduced market capitalizations for another client due to their business relationships with each
other.

Some of our clients have or have had significant interests in other clients of ours, including
ownership interests and business arrangements, and some of our clients may in the future have such
interests in other clients. For example: Sonesta manages most of SVC’s hotels and SVC owns
approximately 34% of Sonesta’s outstanding common stock; and AlerisLife manages many of the
senior living communities owned by DHC. Accordingly, a decline in the performance or prospects of
AlerisLife would be expected to adversely impact DHC, and any similar decline of Sonesta would be
expected to adversely impact SVC.

Our management responsibilities to each of our clients and any future companies we may
manage may give rise to actual, potential or perceived conflicts of interest.

Some of our clients have overlapping investment objectives, and if and as we expand our
management services to include additional private real estate capital clients, additional overlapping
investment objectives may result. Additionally, some of our clients have material business relationships
with, and in some instances have engaged in material transactions with, other of our clients that
could give rise to conflicting interests. Our controlling shareholder’s investment in some of our clients
also could give rise to conflicting interests. Our clients rely on information and management services we
provide to them. While we and our clients have policies and procedures in place that are intended to
mitigate the risks of conflicts of interest, our allocation of investment opportunities and cost
reimbursements, advice, recommendations and commitments of our management team across our
clients might be perceived to favor one client at the expense of another.

In addition to serving as the Chair and a member of our Board of Directors and on our executive
team, Adam D. Portnoy serves as the chair of the board and as a managing trustee of each Managed
REIT, as a director of Sonesta (and its parent) and as the sole director of AlerisLife; certain of our other
officers serve as managing trustees or directors of our clients; and all of the executive officers of the
Managed REITs, one of the executive officers of AlerisLife and one of the executive officers of Sonesta
is an officer and employee of ours. In addition, some of the independent trustees of the Managed
REITs also serve as independent trustees of other Managed REITs. These multiple responsibilities and
varying interests could create competition for the time and efforts of Adam D. Portnoy and RMR LLC
and its subsidiaries and their officers and employees, and actual, potential or perceived conflicts of
interest may arise.

Shareholder litigation, dissident shareholder director nominations and dissident shareholder
proposals have often been instituted against companies alleging conflicts of interest in business
dealings with affiliated and related persons and entities. The various relationships noted above may
precipitate such activities. In addition, certain proxy advisory firms which have significant influence over

the voting by shareholders of public companies, have, in the past, recommended that shareholders
vote against, or withhold votes for, the election of board members at annual meetings of shareholders
of our clients and vote against certain proposals at special meetings of shareholders, and they may
advocate for similar voting actions for future meetings. These actions may affect the outcome of
those shareholder votes and impact the governance of those clients, which may increase the risk of
shareholder activism and litigation at those clients. These activities could result in substantial costs and
diversion of our management’s attention and could have a material adverse effect on our and our
clients’ reputations and businesses.

Risks Related to Our Organization and Structure

We are a “controlled company” within the meaning of the Nasdaq listing rules and, as a result,
qualify for, and may rely on, exemptions from certain corporate governance requirements. Our
shareholders will not have the same protections afforded to shareholders of companies that
are subject to such requirements.

Adam D. Portnoy, as sole trustee of ABP Trust, holds more than 50.0% of the voting power of our

shares eligible to vote. As a result, we are a “controlled company” under the Nasdaq listing rules. Under
these rules, a company of which more than 50.0% of the voting power in the election of directors is
held by an individual, group or another company is a “controlled company” and may elect not to comply
with certain listed company governance requirements, including the requirements that the board of
directors be comprised of a majority of independent directors and that we have a compensation
committee and a nominating and corporate governance committee composed entirely of independent
directors. Although we are not currently availing ourselves of these exceptions, the fact that we could in
the future may cause our Class A Common Shares to trade at a lower price than if we were required
to afford these protections.

Our rights and the rights of our shareholders to take action against our directors and officers
are limited.

Our governing documents limit the liability of our directors and officers to us and our shareholders
for money damages to the maximum extent permitted under Maryland law. Under current Maryland law,
our directors and officers will not have any liability to us and our shareholders for money damages
other than liability resulting from:

• actual receipt of an improper benefit or profit in money, property or services; or

• active and deliberate dishonesty by the director or officer that was established by a final judgment

as being material to the cause of action adjudicated.

Additionally, our governing documents require us to indemnify, to the maximum extent permitted by
Maryland law, any of our present or former directors or executive officers who is made or threatened to
be made a party or otherwise involved in a proceeding by reason of his, her or their service in that
capacity and to pay his, her or their expenses in advance of final disposition of a proceeding upon our
receipt of an undertaking by or on behalf of such person to repay such amount if it is ultimately
determined that such person is not entitled to be indemnified by us. We also entered into separate
agreements with our directors and executive officers providing for indemnification and advancement of
expenses in addition to any rights such person may have under our governing documents.

As a result of these limitations on liability and indemnification obligations, we and our shareholders
may have more limited rights against our present and former directors and officers than might exist with
other companies, which could limit shareholder recourse in the event of actions which some
shareholders may believe are not in our best interest.

Our bylaws designate the Circuit Court for Baltimore City, Maryland or, if that court does not
have jurisdiction, the United States District Court for the District of Maryland, Baltimore Division,
as the sole and exclusive forum for certain actions and proceedings that may be initiated by
our shareholders, which could limit our shareholders’ ability to obtain a favorable judicial forum
for disputes with us or our directors, officers, manager, agents or employees.

Our bylaws currently provide that, unless the dispute has been referred to binding arbitration, the
Circuit Court for Baltimore City, Maryland or, if that court does not have jurisdiction, the United States
District Court for the District of Maryland, Baltimore Division, will be the sole and exclusive forum for:
(1) any derivative action or proceeding brought on our behalf; (2) any action asserting a claim for breach
of a fiduciary duty owed by any director, officer, agent or employee of ours to us or our shareholders;
(3) any action asserting a claim against us or any director, officer, agent or employee of ours arising
pursuant to Maryland law or our charter or bylaws brought by or on behalf of a shareholder either on such
shareholder’s own behalf, on our behalf or on behalf of any series or class of our stock or our
shareholders against us or any of our directors, officers, agents or employees, including any disputes,
claims or controversies relating to the meaning, interpretation, effect, validity, performance or enforcement
of our charter or bylaws; or (4) any action asserting a claim against us or any director, officer, agent or
employee of ours that is governed by the internal affairs doctrine of the State of Maryland. The exclusive
forum provision of our bylaws does not apply to any dispute that has been referred to binding arbitration
in accordance with our bylaws. The exclusive forum provision of our bylaws does not establish
exclusive jurisdiction in the Circuit Court for Baltimore City, Maryland for claims that arise under the
Securities Act, the Exchange Act or other federal securities laws if there is exclusive or concurrent
jurisdiction in the federal courts. Any person or entity purchasing or otherwise acquiring or holding any
interest in our shares of stock shall be deemed to have notice of and to have consented to these provisions
of our bylaws, as they may be amended from time to time. The arbitration and exclusive forum provisions
of our bylaws may limit a shareholder’s ability to bring a claim in a judicial forum that the shareholder
believes is favorable for disputes with us or our directors, officers, employees or agents, which may
discourage lawsuits against us and our directors, officers, employees or agents.

Shareholder litigation against us or our directors, officers, employees or other agents may be
referred to mandatory arbitration proceedings, which follow different procedures than in-court
litigation and may be more restrictive to shareholders asserting claims than in-court litigation.

Our shareholders agree, by virtue of becoming shareholders, that they are bound by our governing
documents, including the arbitration provisions of our bylaws, as they may be amended from time to time.
Our bylaws provide that certain actions by one or more of our shareholders against us or any of our
directors, officers, employees or other agents will be referred to mandatory, binding and final arbitration
proceedings if we, or any other party to such dispute, including any of our directors, officers, employees
or other agents, unilaterally so demands. As a result, we and our shareholders would not be able to
pursue litigation in state or federal court against us or our directors, officers, employees or other
agents, including, for example, claims alleging violations of federal securities laws or breach of fiduciary
duties or similar director or officer duties under Maryland Law, if we or any of our directors, officers,
employees, agents or other parties against whom the claim is made unilaterally demands the matter be
resolved by arbitration. Instead, our shareholders would be required to pursue such claims through
binding and final arbitration.

Our bylaws provide that such arbitration proceedings would be conducted in accordance with the

procedures of the Commercial Arbitration Rules of the American Arbitration Association, as modified in
our bylaws. These procedures may provide materially more limited rights to our shareholders than
litigation in a federal or state court. For example, arbitration in accordance with these procedures does
not include the opportunity for a jury trial, document discovery is limited, arbitration hearings generally
are not open to the public, there are no witness depositions in advance of arbitration hearings and
arbitrators may have different qualifications or experiences than judges. In addition, although our bylaws’
arbitration provisions contemplate that arbitration may be brought in a representative capacity or on
behalf of a class of our shareholders, the rules governing such representation or class arbitration may
be different from, and less favorable to shareholders than, the rules governing representative or class
action litigation in courts. Our bylaws also generally provide that each party to such an arbitration is

required to bear its own costs in the arbitration, including attorneys’ fees, and that the arbitrators may
not render an award that includes shifting of such costs or, in a derivative or class proceeding, award any
portion of our or any other party’s award to any shareholder or such shareholder’s attorneys. The
arbitration provisions of our bylaws may discourage our shareholders from bringing, and attorneys from
agreeing to represent our shareholders wishing to bring, litigation against us or our directors, officers,
employees or other agents. A number of our contracts with Adam D. Portnoy, ABP Trust and our clients
have similar arbitration provisions to those in our bylaws.

We believe that the arbitration provisions in our bylaws are enforceable under both state and
federal law, including with respect to federal securities laws claims. We are a Maryland corporation and
Maryland courts have upheld the enforceability of arbitration bylaws. In addition, the United States
Supreme Court has repeatedly upheld agreements to arbitrate other federal statutory claims, including
those that implicate important federal policies. However, some academics, legal practitioners and
others are of the view that charter or bylaw provisions mandating arbitration are not enforceable with
respect to federal securities laws claims. It is possible that the arbitration provisions of our bylaws may
ultimately be determined to be unenforceable.

By agreeing to the arbitration provisions of our bylaws, shareholders will not be deemed to have

waived compliance by us with federal securities laws and the rules and regulations thereunder.

RMR Inc. is required to pay ABP Trust for certain tax benefits it claims as a result of the tax
basis step up we received as part of the RMR LLC reorganization on June 5, 2015 and will receive
upon future redemptions by ABP Trust for Class A Common Shares or for cash. In certain
circumstances, payments under the tax receivable agreement may be accelerated and/or
significantly exceed the actual tax benefits RMR Inc. realizes.

ABP Trust may redeem Class A Units it owns for Class A Common Shares or cash. See “Business—

Our Organizational Structure-The RMR LLC Operating Agreement-Redemption rights of holders of
Class A Units” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2019. Both
ABP Trust’s initial purchase of Class A Units and any future redemptions that ABP Trust may effect may
result in increases in our tax basis of our assets that otherwise would not have been available. Such
increases in tax basis are likely to increase (for tax purposes) depreciation and amortization deductions
and therefore reduce the amount of income tax we otherwise would be required to pay in the future.
These increases in tax basis may also decrease gain (or increase loss) on future dispositions of certain
capital assets to the extent the increased tax basis is allocated to those assets. The Internal Revenue
Service, or the IRS, may challenge all or part of these tax basis increases, and a court might sustain such
a challenge.

We have entered into a tax receivable agreement, dated June 5, 2015, by and among RMR Inc.,

RMR LLC and ABP Trust that provides for the payment by RMR Inc. to ABP Trust of 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. actually realizes as a result of (a) the increases in tax basis attributable to its 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. See “Business-Our Organizational Structure-Tax Receivable Agreement” in our Annual
Report on Form 10-K for the fiscal year ended September 30, 2019 for further information regarding the
tax receivable agreement. While the actual increase in tax basis, as well as the amount and timing of
any payments under the tax receivable agreement, will vary depending upon a number of factors,
including the timing of redemptions, the price of our Class A Common Shares at the time of the
redemption, the extent to which such redemptions are taxable, and the amount and timing of our income,
we expect that, as a result of the size of the increases in the tax basis of the tangible and intangible
assets of RMR LLC attributable to RMR Inc.’s interests in RMR LLC, during the expected term of the tax
receivable agreement, the payments that RMR Inc. makes to ABP Trust may be substantial. ABP
Trust generally will not reimburse RMR Inc. for any payments that may have been made under the tax
receivable agreement. As a result, in certain circumstances RMR Inc. could make payments to ABP Trust
under the tax receivable agreement in excess of cash tax savings. Our ability to achieve benefits from
any tax basis increase, and the payments to be made under the tax receivable agreement, will depend
upon a number of factors, including the timing and amount of our future income.

In addition, the tax receivable agreement provides that, upon certain changes of control and
certain breaches of the agreement that we fail to cure in accordance with the terms of the agreement,
our obligations with respect to Class A Units will be accelerated. In those circumstances, our obligations
under the tax receivable agreement would be based on certain assumptions, including that we would
have sufficient taxable income to fully utilize the deductions arising from the increased tax deductions and
tax basis and other benefits described in the tax receivable agreement, and that any Class A Units
that have not been redeemed will be deemed redeemed for the market value of the Class A Common
Shares at the time of the change of control or breach, as applicable. Consequently, it is possible, in these
circumstances, that the actual cash tax savings realized by RMR Inc. may be significantly less than
the corresponding tax receivable agreement payments.

Our governing documents permit our directors and officers, our clients and ABP Trust to retain
corporate opportunities for their own benefit.

Under RMR Inc.’s governing documents and RMR LLC’s operating agreement, no director or
officer of ours who is also serving as an officer, employee or agent of a client or ABP Trust or any of its
affiliates is required to present, communicate or offer any business opportunity to us, and such
person shall have the right to hold any business opportunity for themselves or transfer it to any other
person to the maximum extent permitted by Maryland law. If any of these persons fails to present an
opportunity to us or takes the opportunity for themselves, to the maximum extent permitted under
Maryland law they will not be liable to us. We have renounced all potential interest or expectation in
certain business opportunities which may fit our growth objectives in the future or otherwise have value
to us. These opportunities may be directed to the clients or other persons or entities to which RMR
LLC may have a relationship. Additionally, under our governing documents, our directors, officers,
employees and agents are permitted to engage in other business activities that are similar to, or even
competitive with, our own. If such persons engage in competitive business activities, we may have no
remedy under our governing documents in these circumstances.

Our governing documents do not limit our ability to enter into new lines of businesses and
doing so may result in additional risks and uncertainties in our businesses.

Our governing documents do not limit our business to the management of commercial real estate

assets or businesses related thereto. Accordingly, we may pursue other business initiatives. To the extent
we enter into a new line of business, we will face numerous risks and uncertainties, including risks
associated with: (i) the required investment of capital and other resources; (ii) the possibility that we
have insufficient expertise to engage in such activities competently or profitably; (iii) combining or
integrating operational and management systems and controls; and (iv) the broadening of our geographic
footprint, including the risks associated with conducting operations in non-U.S. jurisdictions. Entry into
certain lines of business may subject us to new laws and regulations with which we are not familiar, or
from which we are currently exempt, and may lead to increased litigation and regulatory risk. During
the past two years, we expanded our Private Capital through the execution of new business ventures;
our Private Capital assets under management increased from approximately $1.7 billion as of
September 30, 2021 to approximately $7.7 billion as of September 30, 2023 and if the CARROLL
Acquisition is completed, our Private Capital assets under management are expected to increase by
approximately $7 billion. In addition, our strategic initiatives may include joint ventures or partnerships,
in which case we will be subject to additional risks and uncertainties because we may be dependent
upon, and subject to liability, losses or reputational damage relating to systems, controls and personnel
that are not under our control. There can be no assurance that our increased focus on private real estate
capital or any other business initiative we decide to pursue will be successful in the future or that we
will achieve our performance objectives.

Our only material asset is our interest in RMR LLC, and we are accordingly dependent upon
distributions from RMR LLC to pay our taxes and expenses.

RMR Inc. is organized as a holding company of RMR LLC and its only material asset is its limited
liability company membership units of RMR LLC. RMR Inc. has no independent means of generating
revenue. Pursuant to RMR Inc.’s agreements with RMR LLC, RMR Inc., as the managing member of

RMR LLC, intends to cause RMR LLC to make distributions in an amount that is at least sufficient to
cover applicable taxes payable by its members, other expenses and some or all of the dividends, if any,
declared by us.

Deterioration in the financial condition, earnings or cash flow of RMR LLC for any reason could
limit or impair its ability to pay such distributions to us. Additionally, to the extent that RMR Inc. requires
funds and RMR LLC is restricted from making such distributions under applicable law or regulation or
under the terms of financing or other arrangements, or is otherwise unable to provide such funds, our
liquidity and financial condition could be materially adversely affected.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

Our principal executive offices are located at Two Newton Place, 255 Washington Street, Newton,

MA 02458-1634. These offices are leased from an affiliate of ABP Trust through 2030. A copy of the
lease is incorporated by reference as an exhibit to this Annual Report on Form 10-K.

We also lease other ancillary and local office space from ABP Trust, from certain Managed Equity
REITs and from third parties. We consider these leased premises suitable and adequate for our business.
For more information about our leased facilities, see Note 10, Leases, to our consolidated financial
statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

Item 3. Legal Proceedings

From time to time, we may become involved in litigation matters incidental to the ordinary course
of our business. Although we are unable to predict with certainty the eventual outcome of any litigation,
we are currently not a party to any litigation which we expect to have a material adverse effect on our
business.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer

Purchases of Equity Securities

Our Class A Common Shares are traded on Nasdaq (symbol: RMR). There is no publicly traded
market for our Class B-1 Common Shares or our Class B-2 Common Shares, all of which are held by
ABP Trust.

As of November 9, 2023, there were 2,202 shareholders of record of our Class A Common

Shares.

Issuer purchases of equity securities.

The following table provides information about our purchases of our equity securities during the

fiscal year ended September 30, 2023:

Calendar Month

October 1, 2022—October 31, 2022 . . . . . . . . . .
December 1, 2022—December 31, 2022 . . . . . .
January 1, 2023—January 31, 2023 . . . . . . . . . .
March 1, 2023—March 31, 2023 . . . . . . . . . . . .
May 1, 2023—May 31, 2023 . . . . . . . . . . . . . . . .
June 1, 2023—June 30, 2023 . . . . . . . . . . . . . . .
July 1, 2023—July 31, 2023 . . . . . . . . . . . . . . . .
September 1, 2023—September 30, 2023 . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Number of
Shares
Purchased(1)

Average
Price Paid
per Share

134
761
758
1,238
2,785
1,707
873
21,372

29,628

$24.25
28.25
28.38
26.08
21.46
23.76
23.69
24.99

$24.76

Total
Number of
Shares
Purchased
as Part of
Publicly
Announced
Plans or
Programs

Maximum
Approximate
Dollar Value
of Shares that
May Yet Be
Purchased
Under the
Plans or
Programs

N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A

N/A

N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A

N/A

(1) These Class A Common Share withholdings and purchases were made to satisfy tax withholding

and payment obligations of certain of our Directors, officers and employees in connection with the
vesting of awards of our Class A Common Shares. We withheld and purchased these shares at
their fair market values based upon the trading prices of our Class A Common Shares at the close
of trading on Nasdaq on the purchase dates.

Item 6.

[Reserved]

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of

Operations

The following information should be read in conjunction with our consolidated financial statements

and accompanying notes included in Part IV, Item 15 of this Annual Report on Form 10-K.

OVERVIEW (dollars in thousands)

RMR Inc. is a holding company and substantially all of its business is conducted by RMR LLC.
RMR Inc. has no employees, and the personnel and various services it requires to operate are provided
by RMR LLC. RMR LLC manages a diverse portfolio of real estate and real estate related businesses.
As of September 30, 2023, RMR LLC managed over 2,000 properties in 46 states, Washington, D.C.,
Puerto Rico and Canada that are principally owned by the Managed Equity REITs.

Business Environment and Outlook

The continuation and growth of our business depends upon our ability to operate the Managed
Equity REITs, our private capital clients and SEVN so as to maintain, grow and increase the value of
their businesses, to assist AlerisLife and Sonesta to grow their businesses and operate profitably, and
to successfully expand our business through the execution of new business ventures and additional
investments, such as the CARROLL Acquisition. Our business and the businesses of our clients
generally follow the business cycle of the U.S. real estate industry, but with certain property type and
regional geographic variations. Typically, as the general U.S. economy expands, commercial real estate
occupancies increase and new real estate development occurs; new development frequently leads to
increased real estate supply and reduced occupancies; and then the cycle repeats. These general trends
can be impacted by property type characteristics or regional factors; for example, demographic
factors such as the aging U.S. population, the growth of e-commerce retail sales or net population
migration across different geographic regions can slow, accelerate, overwhelm or otherwise impact
general cyclical trends. Because of such multiple factors, we believe it is often possible to grow real
estate based businesses in selected property types or geographic areas despite general national trends.

Beyond general real estate industry trends, we also take into account general economic factors

impacting our clients. More specifically, in the U.S., the Federal Reserve has increased the federal
funds rate multiple times since the beginning of calendar 2022 in an attempt to slow inflation, contributing
to macroeconomic uncertainty and market volatility in the U.S. and in the commercial real estate
markets. Increased borrowing costs and concerns of a possible or pending economic recession have
resulted in an overall decline in commercial real estate transactions. Additionally, concerns about the
capital adequacy and liquidity of the banking sector caused by the bank failures in 2023, as well as
stricter lending standards, have resulted in decreased lending activity from traditional sources such as
banks and life insurance companies and may negatively impact the businesses of our clients and our
clients’ tenants. Rising or sustained high interest rates also adversely impact our clients with floating
rate debt, which they, in some instances, attempt to address with interest rate caps and other strategic
actions to reduce leverage. Further, while the Federal Reserve is looking to slow inflation, its efforts may
not be successful or fully achieve targeted results and they may take longer to achieve. The impact of
rising costs, both for goods and services, insurance and human capital, are impacting us and our clients
and we and our clients are continuing to implement mitigation strategies to minimize the impact of
increased costs on our and our clients’ earnings, where possible.

When providing services to our clients, we consider industry and general economic factors and
attempt to take advantage of opportunities when they arise. For example: (i) since March 2020, ILPT
and DHC have completed several joint venture transactions with institutional investors and subsequently
grown some of those ventures by acquiring additional properties; (ii) SVC transitioned over 200 hotels
from other hotel operators to Sonesta, which on March 17, 2021, completed its acquisition of RLH
Corporation, establishing it as one of the largest hotel companies in the U.S. and expanding its
franchising capabilities; and (iii) on February 25, 2022, ILPT completed its acquisition of 126 new,
Class A, single tenant, net leased, e-commerce focused industrial properties as a result of its acquisition
of Monmouth Real Estate Investment Corporation, or MNR, in an all-cash transaction valued at
approximately $4,000,000. More recently, (i) on March 20, 2023, a subsidiary of ABP Trust completed
its acquisition of AlerisLife; and (ii) on July 29, 2023, we entered into a definitive agreement to acquire
100% of the equity interest in CARROLL for up to $100,000, which will add multifamily capabilities to
RMR LLC. In addition, we balance our pursuit of growth of our and our clients’ businesses by executing,
on behalf of our clients, prudent capital recycling or business arrangement restructurings in an
attempt to help our clients prudently manage leverage and increased operating costs. We also look to
reposition their portfolios and businesses when circumstances warrant such changes or when other more
desirable opportunities are identified.

For a discussion of some of the circumstances that may adversely affect us and our business, see

elsewhere in this Annual Report on Form 10-K, including “Warning Concerning Forward-Looking
Statements”, Part I, Item 1 “Business” and Part I, Item 1A “Risk Factors”.

Managed Equity REITs

The base business management fees we earn from the Managed Equity REITs are calculated

monthly in accordance with the applicable business management agreement and are based on
a percentage of the lower of (i) the average historical cost of each REIT’s properties and (ii) each
REIT’s average market capitalization. The property management fees we earn from the Managed Equity
REITs are principally based on a percentage of the gross rents collected at certain managed properties
owned by the Managed Equity REITs, excluding rents or other revenues from hotels, travel centers,
senior living properties and wellness centers, which are separately managed by AlerisLife, Sonesta or
a third party. Also under the terms of the property management agreements, we receive construction
supervision fees in connection with certain construction activities undertaken at the properties owned
by the Managed Equity REITs based on a percentage of the cost of such construction. For further
information regarding the fees we earn, see Note 2, Summary of Significant Accounting Policies, to
our consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

The following table presents for each Managed Equity REIT a summary of its primary strategy and

the lesser of the historical cost of its assets under management and its market capitalization as of
September 30, 2023 and 2022, as applicable:

REIT

Primary Strategy

2023

2022

DHC . . . . . . Medical office and life science properties, senior living

$ 3,280,149

$ 3,328,069

Lesser of Historical Cost of Assets
Under Management or
Total Market Capitalization as of
September 30,

communities and other healthcare related properties

Industrial and logistics properties

. . . . . . Office properties primarily leased to single tenants

ILPT . . . . . .
OPI

4,520,662
2,789,224

4,656,472
3,102,253

and those with high credit quality characteristics

SVC . . . . . . Hotels and service-focused retail net lease properties

7,083,845

6,653,706

$17,673,880

$17,740,500

A Managed Equity REIT’s historical cost of assets under management includes the real estate it

owns and its consolidated assets invested directly or indirectly in equity interests in or loans secured by
real estate and personal property owned in connection with such real estate (including acquisition
related costs which may be allocated to intangibles or are unallocated), all before reserves for
depreciation, amortization, impairment charges or bad debts or other similar non-cash reserves. A
Managed Equity REIT’s average market capitalization includes the average value of the Managed Equity
REIT’s outstanding common equity value during the period, plus the daily weighted average of each
of the aggregate liquidation preference of preferred shares and the principal amount of consolidated
indebtedness during the period.

The table above presents for each Managed Equity REIT, the lesser of the historical cost of its
assets under management and its market capitalization as of the end of each period. The basis on
which our base business management fees are calculated for the fiscal years ended September 30, 2023
and 2022 may differ from the basis at the end of the periods presented in the table above. As of
September 30, 2023, the market capitalization was lower than the historical cost of assets under
management for each of the Managed Equity REITs; the historical cost of assets under management
for DHC, ILPT, OPI and SVC as of September 30, 2023, were $7,569,714, $5,710,946, $6,012,246 and
$11,260,528, respectively.

The fee revenues we earned from the Managed Equity REITs for the fiscal years ended

September 30, 2023 and 2022 are set forth in the following table:

Fiscal Year Ended September 30,

2023

2022

Base
Business
Management
Revenues

Base
Property
Management
Revenues

Construction
Supervision
Revenues

Total

Base
Business
Management
Revenues

Base
Property
Management
Revenues

Construction
Supervision
Revenues

Total

REIT

DHC . .

$14,388

$ 5,921

$ 3,366

$ 23,675

$19,408

$ 6,365

$ 4,570

$ 30,343

ILPT . . .

OPI

. . .

SVC . . .

23,428

14,133

33,654

12,690

13,909

3,794

716

10,121

3,095

36,834

38,163

40,543

20,810

17,369

38,444

9,738

15,936

3,998

806

8,899

1,751

31,354

42,204

44,193

$85,603

$36,314

$17,298

$139,215

$96,031

$36,037

$16,026

$148,094

Other Clients

We provide business management services to AlerisLife, Sonesta and until May 15, 2023, TA.
AlerisLife operates senior living communities throughout the United States, many of which are owned
by and managed for DHC. Sonesta manages and franchises hotels, resorts and cruise ships in the United
States, Latin America, the Caribbean and the Middle East; many of the U.S. hotels that Sonesta
operates are owned by SVC. TA operates, leases and franchises travel centers along the U.S. interstate
highway system, many of which are owned by SVC, and standalone truck service facilities. Generally,
our fees earned from business management services to AlerisLife, Sonesta and until May 15, 2023, TA,
are based on a percentage of certain revenues. In connection with BP’s acquisition of TA on May 15,
2023, TA terminated its business management agreement with us and in accordance with its terms paid
us the applicable termination fee of $45,282.

In addition, we also provide management services to certain other Private Capital clients and earn

fees based on a percentage of average invested capital, as defined in the applicable agreements,
property management fees based on a percentage of rents collected from managed properties and
construction supervision fees based on a percentage of the cost of construction activities.

Our management fee revenues from services to these clients for the fiscal years ended
September 30, 2023 and 2022, are set forth in the following table and exclude termination fee revenue
earned from TA of $45,282 for the fiscal year ended September 30, 2023:

Fiscal Year Ended September 30,

2023

2022

Base
Business
Management
Revenues

Base
Property
Management
Revenues

Construction
Supervision
Revenues

Total

Base
Business
Management
Revenues

Base
Property
Management
Revenues

Construction
Supervision
Revenues

Total

AlerisLife . . . .

$ 5,414

$ —

$ — $ 5,414

$ 4,908

$ —

$ 4,908

Sonesta . . . . .

9,456

Other private . .

12,013

SEVN . . . . . . .

—

TA . . . . . . . . .

9,932

—

8,388

—

9,471

8,717

1,130

21,531

10,102

—

9,932

15,926

—

6,887

—

708

—

8,726

17,697

—

15,926

$36,815

$8,396

$1,145

$46,356

$39,653

$6,887

$717

$47,257

Advisory Business

Tremont provides advisory services to SEVN, a publicly traded mortgage REIT that focuses on
originating and investing in first mortgage loans secured by middle market and transitional commercial

real estate. Tremont is primarily compensated pursuant to its management agreement with SEVN
based on a percentage of equity, as defined in the applicable agreement.

For the fiscal years ended September 30, 2023 and 2022, Tremont earned advisory services

revenue of $4,520 and $4,530, respectively, and incentive fees of $660 and $0, respectively.

The Tremont business acts as a transaction broker for non-investment advisory clients for negotiated
fees. The Tremont business earned fees for such brokerage services of $131 and $99 for the fiscal years
ended September 30, 2023 and 2022, respectively, which amounts are included in management
services revenue in our consolidated statements of income.

RESULTS OF OPERATIONS (dollars in thousands)

The following table presents the changes in our operating results for the fiscal year ended

September 30, 2023 compared to the fiscal year ended September 30, 2022:

Fiscal Year Ended September 30,

2023

2022

$ Change % Change

Revenues:

Management services . . . . . . . . . . . . . . . . . . . . . . . . . $185,702 $195,450 $ (9,748)
45,942
Termination and incentive business management fees . .
(10)
Advisory services . . . . . . . . . . . . . . . . . . . . . . . . . . . .

45,942
4,520

—
4,530

Total management and advisory services revenues . .

236,164

199,980

Reimbursable compensation and benefits . . . . . . . . . .
Reimbursable equity based compensation . . . . . . . . . .
Other reimbursable expenses . . . . . . . . . . . . . . . . . . .

59,925
9,826
656,401

56,684
7,072
568,767

Total reimbursable costs . . . . . . . . . . . . . . . . . . . . .

726,152

632,523

36,184

3,241
2,754
87,634

93,629

Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

962,316

832,503

129,813

Expenses:

Compensation and benefits . . . . . . . . . . . . . . . . . . . . .
Equity based compensation . . . . . . . . . . . . . . . . . . . . .
Separation costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total compensation and benefits expense . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . .
Other reimbursable expenses . . . . . . . . . . . . . . . . . . .
Transaction and acquisition related costs . . . . . . . . . . .

136,355
12,488
2,002

150,845
36,019
656,401
4,221

129,872
10,136
1,315

141,323
32,919
568,767
132

Depreciation and amortization . . . . . . . . . . . . . . . . . . .

1,102

993

6,483
2,352
687

9,522
3,100
87,634
4,089

109

Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

848,588

744,134

104,454

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

113,728

88,369

25,359

(5.0)%
n/m
(0.2)%

18.1%

5.7%
38.9%
15.4%

14.8%

15.6%

5.0%
23.2%
52.2%

6.7%
9.4%
15.4%
n/m

11.0%

14.0%

28.7%

Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10,574

1,322

9,252

n/m

Gain on equity method investments accounted for under

the fair value option . . . . . . . . . . . . . . . . . . . . . . . . . . .

25,237

1,010

Income before income tax expense . . . . . . . . . . . . . . . . .

149,539

90,701

24,227

58,838

n/m

64.9%

Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(21,768)

(13,233)

(8,535)

(64.5)%

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . .
Net income attributable to noncontrolling interest

127,771
(70,624)

77,468
(43,464)

50,303
(27,160)

64.9%
(62.5)%

Net income attributable to The RMR Group Inc.

. . . . . . . . $ 57,147 $ 34,004 $ 23,143

68.1%

n/m—not meaningful

References to changes in the income and expense categories below relate to the comparison of
consolidated results for the fiscal year ended September 30, 2023, compared to the fiscal year ended
September 30, 2022. For a comparison of consolidated results for the fiscal year ended September 30,
2022 compared to the fiscal year ended September 30, 2021, see Part II, Item 7 “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on
Form 10-K for the fiscal year ended September 30, 2022.

Management services revenue. Management services revenue decreased $9,748 primarily due

to (i) a decline in base business management fees earned from DHC, OPI and SVC of $13,046 in
aggregate, due to declines in the enterprise values of these clients during the current fiscal year, and
(ii) declines in management fees earned from TA of $5,994 as a result of the termination of its business
management agreement with us on May 15, 2023, partially offset by (i) growth in base business
management fees of $2,618 and property management fees of $2,952 earned from ILPT, primarily due
to its acquisition of MNR in February 2022, and (ii) increases in construction supervision fees across
all of our clients aggregating $1,700 primarily due to increased development costs.

Termination and incentive business management fees revenue. Termination and incentive
business management fees for the current fiscal year include a termination fee of $45,282 received
from TA and incentive fees of $660 earned by Tremont from SEVN. For further information about these
fees, see Note 2, Summary of Significant Accounting Policies, and Note 5, Related Person
Transactions, to our consolidated financial statements included in Part IV, Item 15 of this Annual
Report on Form 10-K.

Advisory services revenue. Advisory services revenue was relatively unchanged from the prior

fiscal year.

Reimbursable compensation and benefits. Reimbursable compensation and benefits include
reimbursements, at cost, that arise primarily from services our employees provide pursuant to our
property management agreements at the properties of our clients. A significant portion of these
compensation and benefits are charged or passed through to and paid by tenants of our clients.
Reimbursable compensation and benefits increased $3,241 primarily due to annual merit increases
effective October 1, 2022.

Reimbursable equity based compensation. Reimbursable equity based compensation includes
awards of common shares by our clients directly to certain of our officers and employees in connection
with the provision of management services to those clients. We record an equal offsetting amount as
equity based compensation expense for the value of these awards. Reimbursable equity based
compensation revenue increased $2,754 primarily as a result of the acceleration of unvested shares in
connection with the sale of TA to BP in May 2023 and increases in certain of our client’s respective
share prices.

Other reimbursable expenses. For further information about these reimbursements, see Note 2,

Summary of Significant Accounting Policies, to our consolidated financial statements included in Part IV,
Item 15 of this Annual Report on Form 10-K.

Compensation and benefits. Compensation and benefits consist of employee salaries and other

employment related costs, including health insurance expenses and contributions related to our
employee retirement plan. Compensation and benefits expense increased $6,483 primarily due to annual
merit and benefit increases.

Equity based compensation. Equity based compensation consists of the value of vested shares

awarded to certain of our employees under our and our clients’ equity compensation plans. Equity based
compensation increased $2,352 primarily as a result of the acceleration of unvested shares in
connection with the sale of TA to BP in May 2023 and increases in certain of our clients’ respective
share prices.

Separation costs. Separation costs consist of employment termination costs. For further

information about these costs, see Note 5, Related Person Transactions, to our consolidated financial
statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

General and administrative. General and administrative expenses consist of office related
expenses, information technology related expenses, employee training, travel, professional services
expenses, director compensation and other administrative expenses. General and administrative costs
increased $3,100 primarily due to strategic technology investments and increases in third-party costs
related to our expanded role in construction oversight.

Transaction and acquisition related costs. Transaction and acquisition related costs in the current

fiscal year relate to costs incurred with our evaluation of various strategic initiatives, primarily for the
CARROLL Acquisition.

Depreciation and amortization. Depreciation and amortization was relatively unchanged from the

prior fiscal year.

Interest income.

Interest income increased $9,252 primarily due to higher interest earned during

the current fiscal year primarily as a result of higher interest rates and higher average cash balances
invested compared to the prior fiscal year.

Gain on equity method investments accounted for under the fair value option. Gain on equity

method investments accounted for under the fair value option represents the unrealized and realized
gains on our investments in SEVN and TA common shares. For further information, see Note 2, Summary
of Significant Accounting Policies, to our consolidated financial statements included in Part IV, Item 15
of this Annual Report on Form 10-K.

Income tax expense. The increase in income tax expense of $8,535 is primarily attributable to

higher taxable income during the current fiscal year compared to the prior fiscal year.

LIQUIDITY AND CAPITAL RESOURCES (dollars in thousands, except per share amounts)

Our current assets have historically been comprised predominantly of cash, cash equivalents and

receivables for business management, property management and advisory services fees. As of
September 30, 2023 and 2022, we had cash and cash equivalents of $267,989 and $189,088,
respectively, of which $26,802 and $21,492, respectively, was held by RMR Inc., with the remainder
being held at RMR LLC. Cash and cash equivalents include all short term, highly liquid investments that
are readily convertible to known amounts of cash and have original maturities of three months or less
from the date of purchase. As of September 30, 2023 and 2022, $265,800 and $181,219, respectively, of
our cash and cash equivalents were invested in money market bank accounts. We believe that our
cash and cash equivalents leave us well positioned to pursue a range of capital allocation strategies,
with a focus on the growth of our private capital business, to fund our operations and enhance our
technology infrastructure, in the next twelve months.

Our liquidity is highly dependent upon our receipt of fees from the businesses we manage.

Historically, we have funded our working capital needs with cash generated from our operating activities
and we currently do not maintain any credit facilities. We expect that our future working capital needs
will relate largely to our operating expenses, primarily consisting of employee compensation and benefits
costs, our obligation to make quarterly tax distributions to the members of RMR LLC, our plan to
make quarterly distributions on our Class A Common Shares and Class B-1 Common Shares and our
plan to pay quarterly distributions to the members of RMR LLC in connection with the quarterly dividends
to RMR Inc. shareholders. Our management fees are typically payable to us within 30 days of the end
of each month or, in the case of annual incentive business management fees earned from the Managed
Equity REITs, if any, within 30 days following each calendar year end. Quarterly incentive fees earned
from SEVN, if any, are payable generally within 30 days following the end of the applicable quarter.
Historically, we have not experienced losses on collection of our fees and have not recorded any
allowances for bad debts.

On July 29, 2023, RMR LLC entered into a definitive agreement to acquire 100% of the equity
interest in CARROLL for $80,000, subject to customary purchase price adjustments, with the potential
for incremental earnout consideration of up to $20,000 based on the deployment of future capital. The
transaction is expected to be funded entirely with cash on hand. The closing of the acquisition is

subject to customary closing conditions; accordingly, we cannot be sure that this acquisition will close
on the contemplated terms or at all or it may be delayed.

During the fiscal year ended September 30, 2023, we paid cash distributions to the holders of our

Class A Common Shares, Class B-1 Common Shares and to the other owner of RMR LLC
membership units in the aggregate amount of $45,776. On October 12, 2023, we declared a quarterly
dividend on our Class A Common Shares and Class B-1 Common Shares to our shareholders of record
as of October 23, 2023 in the amount of $0.40 per Class A Common Share and Class B-1 Common
Share, or $6,684. This dividend will be partially funded by a distribution from RMR LLC to holders of its
membership units in the amount of $0.32 per unit, or $10,148, of which $5,348 will be distributed to
us based on our aggregate ownership of 16,711,047 membership units of RMR LLC and $4,800 will be
distributed to ABP Trust based on its ownership of 15,000,000 membership units of RMR LLC. The
remainder of this dividend will be funded with cash accumulated at RMR Inc. We expect the total dividend
will amount to approximately $11,484 and we expect to pay this dividend on or about November 16,
2023. See Note 6, Shareholders’ Equity, to our consolidated financial statements included in Part IV,
Item 15 of this Annual Report on Form 10-K for more information regarding these distributions.

For the fiscal year ended September 30, 2023, pursuant to the RMR LLC operating agreement, RMR
LLC made required quarterly tax distributions to its holders of its membership units totaling $65,486, of
which $34,541 was distributed to us and $30,945 was distributed to ABP Trust, based on each
membership unit holder’s then respective ownership percentage in RMR LLC. The $34,541 distributed
to us was eliminated in our consolidated financial statements included in Part IV, Item 15 of this Annual
Report on Form 10-K, and the $30,945 distributed to ABP Trust was recorded as a reduction of their
noncontrolling interest. We used a portion of these funds distributed to us to pay our tax liabilities and
amounts due under the tax receivable agreement.

Tax Receivable Agreement

We are party to a tax receivable agreement which provides for the payment by RMR Inc. to ABP

Trust of 85.0% of the amount of 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 RMR Inc.’s
dealings with ABP Trust and (b) tax benefits related to imputed interest deemed to be paid by it as a
result of the tax receivable agreement. See Note 5, Related Person Transactions, to our consolidated
financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K. As of September 30,
2023, our consolidated balance sheet reflects a liability related to the tax receivable agreement of
$23,229, of which we expect to pay $2,343 to ABP Trust during the fourth quarter of fiscal year 2024.

Cash Flows

The $7,945 increase in net cash from operating activities for the fiscal year ended September 30,

2023 compared to the prior fiscal year primarily reflects increases in net income, primarily due to
increases in termination fees, offset by unfavorable changes in working capital. The $60,086 increase
in net cash provided by investing activities for the fiscal year ended September 30, 2023 compared to the
prior fiscal year was primarily due to the proceeds from the sale of TA’s common shares in the current
fiscal year and the purchase of SEVN common shares in the prior fiscal year. The $18,383 increase in net
cash used in financing activities for the fiscal year ended September 30, 2023 compared to the prior
fiscal year was primarily due to higher tax distributions based on current estimates for taxable income
and increased distributions paid to shareholders of our Class A Common Shares and Class B-1 Common
Shares in the current fiscal year.

As of September 30, 2023, we had no off-balance sheet arrangements that have had or that we
expect would be reasonably likely to have a material effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital
resources.

Market Risk and Credit Risk

We have not invested in derivative instruments, borrowed through issuing debt securities or
transacted in foreign currencies. As a result, we are not subject to significant direct market risk related

to interest rate changes, changes to the market standard for determining interest rates, commodity
price changes or credit risks; however, if any of these risks were to negatively impact our clients’
businesses or market capitalization, our revenues would likely decline. To the extent we change our
approach on the foregoing activities, or engage in other activities, our market and credit risks could
change. See Part I, Item 1A “Risk Factors” of this Annual Report on Form 10-K for the risks to us and our
clients.

Risks Related to Cash and Short Term Investments

Our cash and cash equivalents include short term, highly liquid investments readily convertible to

known amounts of cash that have original maturities of three months or less from the date of purchase.
We invest a substantial amount of our cash in money market bank accounts. The majority of our cash
is maintained in U.S. bank accounts. Some U.S. bank account balances exceed the Federal Deposit
Insurance Corporation insurance limit. We believe our cash and short term investments are not
subject to any material interest rate risk, equity price risk, credit risk or other market risk.

Related Person Transactions

We have relationships and historical and continuing transactions with Adam D. Portnoy, the Chair
of our Board and one of our Managing Directors, as well as our clients. For further information about
these and other such relationships and related person transactions, see Note 2, Summary of Significant
Accounting Policies and Note 5, Related Person Transactions, to our consolidated financial statements
included in Part IV, Item 15 of this Annual Report on Form 10-K, which is incorporated herein by
reference, the section captioned “Business” above in Part I, Item 1 of this Annual Report on Form 10-K,
our other filings with the SEC and our definitive Proxy Statement for our 2024 Annual Meeting of
Shareholders, or the 2024 Proxy Statement, to be filed within 120 days after the close of the fiscal year
ended September 30, 2023. In addition, for more information about these transactions and relationships
and about the risks that may arise as a result of these and other related person transactions and
relationships, see elsewhere in this Annual Report on Form 10-K, including “Warning Concerning
Forward-Looking Statements” and Part I, Item 1A “Risk Factors.” We may engage in additional
transactions with related persons, including businesses to which RMR LLC or its subsidiaries provide
management services.

Critical Accounting Estimates

An understanding of our accounting policies is necessary for a complete analysis of our results,
financial position, liquidity and trends. The preparation of our consolidated financial statements requires
our management to make certain critical accounting estimates and judgments that impact (i) the
revenue recognized during the reporting periods and (ii) our principles of consolidation. These
accounting estimates are based on our management’s judgment. We consider them to be critical
because of their significance to our consolidated financial statements and the possibility that future
events may cause differences from current judgments or because the use of different assumptions could
result in materially different estimates. We review these estimates on a periodic basis to test their
reasonableness. Although actual amounts likely differ from such estimated amounts, we believe such
differences are not likely to be material.

Revenue Recognition. Our principal sources of revenue are:

• business management fees, including base and incentive business management fees; and

• property management fees, including construction supervision fees and reimbursement for

certain compensation and benefits related expenses.

We recognize revenue from business management and property management fees as earned in
accordance with our management agreements. We consider the incentive business management fees
earned from the REITs that we manage to be contingent performance based fees, which we recognize as
revenue when earned at the end of each measurement period. We also recognize as revenue certain
compensation and benefits reimbursements in our capacity as property manager, at cost, when we incur
the related reimbursable compensation and benefits and other costs on behalf of our clients. See the

“Revenue Recognition” section of Note 2, Summary of Significant Accounting Policies, to our
consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K for a
detailed discussion of our revenue recognition policies and our contractual arrangements.

Consolidation. Our consolidated financial statements included in Part IV, Item 15 of this Annual

Report on Form 10-K include only the accounts of the entities we control. We continually assess whether
our existing contractual rights give us the ability to direct the activities of the entities we manage that
most significantly affect the results of that entity. The activities and factors we consider include, but are
not limited to:

• our representation on the entity’s governing body;

• the size of our investment in each entity compared to the size of the entity and the size of other

investors’ interests; and

• the ability and rights to participate in significant policy making decisions and to replace our

manager of those entities.

Based on our historical assessments, we have not consolidated the entities we manage. We will
reassess these conclusions if and when facts and circumstances indicate that there are changes to the
elements evidencing control.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative disclosures about market risk are set forth above in “Item 7—

Management’s Discussion and Analysis of Financial Condition and Results of Operation—Market Risk
and Credit Risk.”

Item 8.

Financial Statements and Supplementary Data

The information required by this item is included in Item 15 of this Annual Report on Form 10-K.

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure

None.

Item 9A. Controls and Procedures

As of the end of the period covered by this Annual Report on Form 10-K, our management carried
out an evaluation, under the supervision and with the participation of our President and Chief Executive
Officer and our Executive Vice President, Chief Financial Officer and Treasurer, of the effectiveness of
our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 under the Exchange Act.
Based upon that evaluation, our President and Chief Executive Officer and our Executive Vice
President, Chief Financial Officer and Treasurer concluded that our disclosure controls and procedures
are effective.

There have been no changes in our internal control over financial reporting during the quarter
ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.

Management Report on Assessment of Internal Control Over Financial Reporting

We are responsible for establishing and maintaining adequate internal control over financial

reporting. Our internal control system is designed to provide reasonable assurance to our management
and Board of Directors regarding the preparation and fair presentation of published financial
statements. All internal control systems, no matter how well designed, have inherent limitations.
Therefore, even those systems determined to be effective can provide only reasonable assurance with
respect to financial statement preparation and presentation.

Our management assessed the effectiveness of our internal control over financial reporting as of

September 30, 2023. In making this assessment, it used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (2013 framework) in Internal Control—
Integrated Framework. Based on this assessment, we believe that, as of September 30, 2023, our
internal control over financial reporting is effective.

Deloitte & Touche LLP, the independent registered public accounting firm that audited our 2023
Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K,
has issued an attestation report on our internal control over financial reporting. Its report appears
elsewhere herein.

Item 9B. Other Information

None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information required by this Item 10 of Form 10-K will be included in the 2024 Proxy Statement

and is incorporated herein by reference.

Item 11. Executive Compensation

The information required by this Item 11 of Form 10-K will be included in the 2024 Proxy Statement

and is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related

Stockholder Matters

Equity Compensation Plan Information. We may award our Class A Common Shares to our
officers and employees under the Amended and Restated 2016 Omnibus Equity Plan, or the 2016
Plan. In addition, each of our Directors receives Class A Common Shares under the 2016 Plan as part
of his or her annual compensation for serving as a Director. The terms of awards made under the
2016 Plan are determined by the Compensation Committee of our Board of Directors, at the time of
the award. The following table is as of September 30, 2023.

Plan category

Equity compensation plans approved by security holders—2016 Plan . .

Equity compensation plans not approved by security holders . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Number of
securities to be
issued upon
exercise of
outstanding
options,
warrants
and rights

Weighted-
average
exercise
price of
outstanding
options,
warrants
and rights

(a)

None.

(b)

None.

Number of
securities
remaining
available for
future issuance
under equity
compensation
plans
(excluding
securities
reflected
in column (a))

(1) Consists of shares available for issuance pursuant to the terms of the 2016 Plan. Share awards

that are repurchased or forfeited will be added to the shares available for issuance under the 2016
Plan.

Other information required by this Item 12 of Form 10-K will be included in the 2024 Proxy

Statement and is incorporated herein by reference.

Item 13. Certain Relationships and Related Person Transactions, and Director Independence

The information required by this Item 13 of Form 10-K will be included in the 2024 Proxy Statement

and is incorporated herein by reference.

Item 14. Principal Accountant Fees and Services

The information required by this Item 14 of Form 10-K will be included in the 2024 Proxy Statement

and is incorporated herein by reference.

Item 15. Exhibits and Financial Statement Schedules

(a)

Index to Financial Statements and Financial Statement Schedules

PART IV

The following consolidated financial statements of The RMR Group Inc. are included on the pages

indicated:

Reports of Independent Registered Public Accounting Firm (PCAOB ID No. 34) . . . . . . . . . . . . . F-1
Consolidated Balance Sheets as of September 30, 2023 and 2022 . . . . . . . . . . . . . . . . . . . . . . F-4
Consolidated Statements of Income for the fiscal years ended September 30, 2023, 2022 and

2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-5

Consolidated Statements of Shareholders’ Equity for the fiscal years ended September 30,

2023, 2022 and 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-6

Consolidated Statements of Cash Flows for the fiscal years ended September 30, 2023, 2022

and 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-7
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-8

All other schedules for which provision is made in the applicable accounting regulations of the

SEC are not required under the related instructions, or are inapplicable, and therefore have been
omitted.

(b) Exhibits

Exhibits to our Annual Report on Form 10-K for the fiscal year ended September 30, 2023 have

been included only with the version of that Annual Report on Form 10-K filed with the SEC.

A copy of our Annual Report on Form 10-K for the fiscal year ended September 30, 2023, including
a list of exhibits, is available free of charge upon written request to: Investor Relations, The RMR Group
Inc., Two Newton Place, 255 Washington Street, Suite 300, Newton, MA 02458-1634, telephone
(617) 796-8230.

Item 16. Form 10-K Summary

None.

(This page has been left blank intentionally.)

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of The RMR Group Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of The RMR Group Inc. (the
“Company”) as of September 30, 2023, and 2022, the related consolidated statements of income,
shareholders’ equity, and cash flows for each of the three years in the period ended September 30, 2023,
and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial
statements present fairly, in all material respects, the financial position of the Company as of
September 30, 2023 and 2022, and the results of its operations and its cash flows for each of the
three years in the period ended September 30, 2023, in conformity with accounting principles generally
accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting

Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of
September 30, 2023, based on criteria established in Internal Control—Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report
dated November 15, 2023, expressed an unqualified opinion on the Company’s internal control over
financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility

is to express an opinion on the Company’s financial statements based on our audits. We are a public
accounting firm registered with the PCAOB and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. Our audits included
performing procedures to assess the risks of material misstatement of the financial statements, whether
due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the financial statements. We
believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of
the financial statements that was communicated or required to be communicated to the audit committee
and that (1) relates to accounts or disclosures that are material to the financial statements and
(2) involved our especially challenging, subjective, or complex judgments. The communication of
critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole,
and we are not, by communicating the critical audit matter below, providing a separate opinion on the
critical audit matter or on the accounts or disclosures to which it relates.

Identification of related parties and related party transactions—Refer to Notes 1, 2 and 5 to the
financial statements

Critical Audit Matter Description

As discussed in Notes 1 and 2 to the financial statements, the Company generates its revenue by

providing management services to four publicly traded equity real estate investment trusts, three real
estate operating companies, and private capital vehicles, as well as providing advisory services to a

F-1

publicly traded mortgage real estate investment trust, all of which are related parties. These entities
are considered to be related parties for the reasons discussed in Note 5 to the financial statements. In
addition, the Company has also entered into a number of other arrangements with its related persons
and related parties (collectively, “related parties”), as further discussed in Note 5.

Given the number of related parties and related party transactions, we determined the identification
of related parties and related party transactions to be a critical audit matter. Auditor judgment and effort
was involved in assessing the sufficiency of the procedures the Company performed to identify
related parties and related party transactions for disclosure within the financial statements.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the identification of related parties and related party transactions

included the following, among others:

• We tested the effectiveness of controls over the Company’s identification of related party

relationships and transactions.

• We evaluated the process used by management to identify related parties and related party

transactions by:

◦

Inspecting the Company’s minutes from meetings of the Board of Directors and related
committees to determine whether there were any related parties or transactions not
previously identified.

Inspecting questionnaires completed by the Company’s directors and officers to identify
potential related party transactions.

Inquiring with executive officers, key members of management, and the Audit Committee
of the Board of Directors regarding their knowledge of the Company’s related party
transactions.

◦ Reading public filings made by the Company, in addition to external news sources for

information related to transactions between the Company and related parties to compare
to the Company’s detail of related party transactions.

◦

Listening to the Company’s quarterly earnings investor calls to identify any undisclosed
related parties, transactions, or agreements.

Inspecting new and amended agreements between the Company and related parties to
ensure they were properly disclosed.

Inspecting the Company’s check register and accounts payable sub-ledger to determine
whether there were any payments made or to be made to related parties for transactions
not previously identified.

• We compared the related parties and related party transactions disclosed in the financial

statements to the listing of related parties compiled by the Company.

/s/ Deloitte & Touche LLP

Boston, Massachusetts
November 15, 2023

We have served as the Company’s auditor since 2020.

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of The RMR Group Inc.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of The RMR Group Inc. (the “Company”)

as of September 30, 2023, based on criteria established in Internal Control—Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In
our opinion, the Company maintained, in all material respects, effective internal control over financial
reporting as of September 30, 2023, based on criteria established in Internal Control—Integrated
Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting

Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year
ended September 30, 2023, of the Company and our report dated November 15, 2023, expressed an
unqualified opinion on those financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial
reporting and for its assessment of the effectiveness of internal control over financial reporting, included
in the accompanying Management Report on Assessment of Internal Control Over Financial Reporting.
Our responsibility is to express an opinion on the Company’s internal control over financial reporting
based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require

that we plan and perform the audit to obtain reasonable assurance about whether effective internal
control over financial reporting was maintained in all material respects. Our audit included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness
exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed 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. A company’s internal
control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only
in accordance with authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect

misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the
risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.

/s/ Deloitte & Touche LLP

Boston, Massachusetts
November 15, 2023

F-3

The RMR Group Inc.
Consolidated Balance Sheets
(dollars in thousands, except per share amounts)

September 30,

2023

2022

Assets
Current assets:

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due from related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment, net
Due from related parties, net of current portion . . . . . . . . . . . . . . . . . . . . . .
Equity method investments accounted for under the fair value option . . . . . .
Goodwill and intangible assets, net of amortization . . . . . . . . . . . . . . . . . . .
Operating lease right of use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets, net of amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 267,989
111,323
6,997
386,309
5,446
7,261
18,651
2,026
29,032
18,220
115,479
$ 582,424

$ 189,088
108,821
5,372
303,281
2,495
14,557
49,114
2,057
28,894
17,112
124,895
$ 542,405

Liabilities and Equity
Current liabilities:

Reimbursable accounts payable and accrued expenses . . . . . . . . . . . . . .
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employer compensation liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease liabilities, net of current portion . . . . . . . . . . . . . . . . . . . . .
Amounts due pursuant to tax receivable agreement, net of current portion . .
Employer compensation liability, net of current portion . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commitments and contingencies
Equity:

Class A common stock, $0.001 par value; 31,950,000 and 31,600,000
shares authorized, respectively; 15,712,007 and 15,606,115 shares
issued and outstanding, respectively . . . . . . . . . . . . . . . . . . . . . . . . . .

Class B-1 common stock, $0.001 par value; 1,000,000 shares authorized,

issued and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Class B-2 common stock, $0.001 par value; 15,000,000 shares authorized,
issued and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional paid in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cumulative common distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Noncontrolling interest

$ 77,924
19,144
5,068
3,434
105,570
25,044
20,886
7,261
158,761

$ 80,221
16,745
4,693
7,516
109,175
25,626
23,308
14,557
172,666

15
116,010
413,096
(289,072)
240,066
183,597
423,663
$ 582,424

15
113,136
355,949
(262,496)
206,621
163,118
369,739
$ 542,405

See accompanying notes.

F-4

The RMR Group Inc.
Consolidated Statements of Income
(amounts in thousands, except per share amounts)

Revenues:

Management services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Termination and incentive business management fees . . . . . . .
Advisory services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total management and advisory services revenues . . . . . . . .
Reimbursable compensation and benefits . . . . . . . . . . . . . . . .
Reimbursable equity based compensation . . . . . . . . . . . . . . . .
Other reimbursable expenses . . . . . . . . . . . . . . . . . . . . . . . . .
Total reimbursable costs . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expenses:

Compensation and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . .
Separation costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total compensation and benefits expense . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other reimbursable expenses . . . . . . . . . . . . . . . . . . . . . . . . .
Transaction and acquisition related costs . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . .
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on Tremont Mortgage Trust investment
. . . . . . . . . . . . . . . .
Equity in earnings of investees . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on equity method investments accounted for under the fair

value option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before income tax expense . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to noncontrolling interest
. . . . . . . . . . . . .
Net income attributable to The RMR Group Inc. . . . . . . . . . . . . . .

Weighted average common shares outstanding—basic . . . . . . . .

Weighted average common shares outstanding—diluted . . . . . . .

Net income attributable to The RMR Group Inc. per common

share—basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net income attributable to The RMR Group Inc. per common

share—diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fiscal Year Ended September 30,

2023

2022

2021

$185,702
45,942
4,520
236,164
59,925
9,826
656,401
726,152
962,316

$195,450
—
4,530
199,980
56,684
7,072
568,767
632,523
832,503

$171,102
620
3,956
175,678
52,369
9,154
370,037
431,560
607,238

136,355
12,488
2,002
150,845
36,019
656,401
4,221
1,102
848,588
113,728
10,574
—
—

129,872
10,136
1,315
141,323
32,919
568,767
132
993
744,134
88,369
1,322
—
—

119,644
12,022
4,525
136,191
26,961
370,037
984
973
535,146
72,092
760
2,059
443

25,237
149,539
(21,768)
127,771
(70,624)
$ 57,147

1,010
90,701
(13,233)
77,468
(43,464)
$ 34,004

18,811
94,165
(13,152)
81,013
(45,317)
$ 35,696

16,426

16,338

31,348

16,266

31,282

3.44

2.06

2.04

2.18

2.15

Substantially all revenues are earned from related parties. See accompanying notes.

F-5

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F-6

The RMR Group Inc.
Consolidated Statements of Cash Flows
(dollars in thousands)

Cash Flows from Operating Activities:

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income to net cash from operating

activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . .
Straight line office rent
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization expense related to other assets . . . . . . . . . . . .
Provision (benefit) for deferred taxes . . . . . . . . . . . . . . . . . .
Operating expenses paid in The RMR Group Inc. common

shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of investees . . . . . . . . . . . . . . . . . . . . . .
Distributions from equity method investments . . . . . . . . . . . .
Gain on Tremont Mortgage Trust investment
. . . . . . . . . . . .
Gain on equity method investments accounted for under the

Fiscal Year Ended September 30,
2021
2022
2023

$127,771

$ 77,468

$ 81,013

1,102
(345)
9,416
(1,108)

3,608
—
2,221
—

993
(352)
9,416
1,559

3,774
—
841
—

973
3
9,416
5,229

4,122
(443)
1,456
(2,059)

fair value option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(25,237)

(1,010)

(18,811)

Changes in assets and liabilities:

Due from related parties . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid and other current assets . . . . . . . . . . . . . . . . . . .
Reimbursable accounts payable and accrued expenses . .
Accounts payable and accrued expenses . . . . . . . . . . . . .
Net cash from operating activities . . . . . . . . . . . . . . . . . . . .

(6,584)
(1,625)
(2,297)
2,293
109,215

(18,720)
649
25,106
1,546
101,270

Cash Flows from Investing Activities:
Purchase of property and equipment
. . . . . . . . . . . . . . . . . . .
Equity method investment in Seven Hills Realty Trust . . . . . . . .
Proceeds from sale of TravelCenters of America Inc. common

(3,983)
—

(1,121)
(9,469)

shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by (used in) investing activities . . . . . . . . .

53,479
49,496

—
(10,590)

(4,278)
(2,144)
(964)
(1,719)
71,794

(1,142)
—

—
(1,142)

Cash Flows from Financing Activities:

Distributions to noncontrolling interest . . . . . . . . . . . . . . . . . . .
Distributions to common shareholders . . . . . . . . . . . . . . . . . . .
Repurchase of common shares . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . .
Payments under the tax receivable agreement
Net cash used in financing activities . . . . . . . . . . . . . . . . . . .
Increase (decrease) in cash and cash equivalents . . . . . . . . . . . .
Cash and cash equivalents at beginning of period . . . . . . . . . . . .
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . .
Supplemental Cash Flow Information and Non-Cash

Activities:
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recognition of right of use assets and related lease liabilities . .
Equity method investment in Seven Hills Realty Trust . . . . . . . .
. . . . . . .
Equity method investment in Tremont Mortgage Trust

See accompanying notes.

F-7

(50,145)
(26,576)
(734)
(2,355)
(79,810)
78,901
189,088
$267,989

(32,941)
(25,730)
(547)
(2,209)
(61,427)
29,253
159,835
$189,088

(137,705)
(139,783)
(834)
(2,158)
(280,480)
(209,828)
369,663
$ 159,835

$ 21,233
$ 5,057
$
$

— $
— $

$ 9,555
$ 1,295

$ 10,047
2,249
$
(8,513)
— $
6,454
— $

The RMR Group Inc.

Notes to Consolidated Financial Statements

(dollars in thousands, except per share amounts)

Note 1. Organization

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 September 30, 2023, RMR Inc. owned 15,712,007 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 represented 52.7% of the economic interest of RMR LLC
as of September 30, 2023. 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. A wholly owned
subsidiary of ABP Trust, a Maryland statutory trust, owns 15,000,000 redeemable Class A Units,
representing 47.3% of the economic interest of RMR LLC as of September 30, 2023, which is presented
as a noncontrolling interest within the consolidated financial statements. Adam D. Portnoy, the Chair
of our Board, one of our Managing Directors and our President and Chief Executive Officer, is the sole
trustee of ABP Trust, and owns all of ABP Trust’s voting securities.

RMR LLC provides management services to four publicly traded equity real estate investment
trusts, or REITs: Diversified Healthcare Trust, or DHC, which owns medical office and life science
properties, senior living communities and other healthcare related properties; Industrial Logistics
Properties Trust, or ILPT, which owns and leases industrial and logistics properties; Office Properties
Income Trust, or OPI, which owns and leases office properties primarily to single tenants and those with
high credit quality characteristics; and Service Properties Trust, or SVC, which owns a diverse portfolio
of hotels and service-focused retail net lease properties. DHC, ILPT, OPI and SVC are collectively
referred to as the Managed Equity REITs.

RMR LLC’s wholly owned subsidiary, Tremont Realty Capital LLC, or Tremont, an investment
adviser registered with the Securities and Exchange Commission, or SEC, provides advisory services
for Seven Hills Realty Trust, or SEVN. SEVN is a publicly traded mortgage REIT that focuses on
originating and investing in first mortgage loans secured by middle market and transitional commercial
real estate. Tremont also provided advisory services to Tremont Mortgage Trust, or TRMT, until it merged
with and into SEVN on September 30, 2021, or the Tremont Merger, with SEVN continuing as the
surviving company. Tremont has in the past and may in the future manage additional accounts that
invest in commercial real estate debt. Tremont may also act as a transaction broker for non-investment
advisory clients for negotiated fees, which we refer to as the Tremont business.

RMR LLC also provided management services to TravelCenters of America Inc., or TA, until it was

acquired by BP Products North America Inc., or BP, on May 15, 2023. TA, a publicly traded operating
company until the time BP acquired it, operates and franchises travel centers primarily along the U.S.
interstate highway system, many of which are owned by SVC, and standalone truck service facilities.

The Managed Equity REITs, SEVN, TRMT until September 30, 2021, and TA until May 15, 2023,

are collectively referred to as the Perpetual Capital clients.

In addition, RMR LLC provides management services to private capital vehicles, including ABP
Trust, AlerisLife Inc., or AlerisLife, Sonesta International Hotels Corporation, or Sonesta, and other
private entities that own commercial real estate, of which certain of our Managed Equity REITs own
minority equity interests. These clients are collectively referred to as the Private Capital clients. AlerisLife
is an operator of senior living communities, many of which are owned by DHC, and as discussed in
Note 5, Related Person Transactions, was a publicly traded company until March 20, 2023 when it was

F-8

The RMR Group Inc.

Notes to Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

Note 1. Organization (Continued)

acquired by a subsidiary of ABP Trust. As a result of this transaction, amounts relating to AlerisLife are
characterized as Private Capital for all periods presented. Sonesta is a privately owned franchisor
and operator of hotels, resorts and cruise ships in the United States, Latin America, the Caribbean and
the Middle East, and many of the U.S. hotels that Sonesta operates are owned by SVC.

Acquisition of MPC Partnership Holdings LLC

On July 29, 2023, RMR LLC entered into an equity purchase agreement, or the Purchase
Agreement, with MPC Partnership Holdings LLC, a Georgia limited liability company, or MPC. MPC,
which does business as CARROLL, is a vertically-integrated platform focused on multifamily properties
in the Sun Belt region of the United States.

Pursuant to the Purchase Agreement, and upon the terms and subject to the conditions thereof,
RMR LLC will acquire all of the issued and outstanding equity interests of MPC for $80,000 in cash,
subject to customary adjustments for cash, debt, transaction expenses, working capital and property
management revenue at closing, plus up to an additional $20,000 of contingent consideration subject to
the deployment of capital remaining in investment funds managed by MPC prior to the end of such
fund’s investment period.

Consummation of the acquisition is subject to customary conditions, including, among others,
(i) MPC obtaining all required consents with respect to managed funds, joint-venture investors and
applicable lenders with respect to its managed properties, (ii) MPC’s revenues from its property
management agreements at the time the acquisition is consummated being not less than 85% of an
agreed upon baseline property management revenue and (iii) the absence of any Material Adverse
Effect (as defined in the Purchase Agreement).

Note 2. Summary of Significant Accounting Policies

Basis of Presentation

All intercompany transactions and balances with or among our consolidated entities have been

eliminated.

Use of Estimates

Preparation of these financial statements in conformity with U.S. Generally Accepted Accounting
Principles, or GAAP, requires our management to make certain estimates and assumptions that may
affect the amounts reported in these consolidated financial statements and related notes. The actual
results could differ from these estimates.

Revenue Recognition

Revenues from services we provide are recognized as earned over time as the services provided

represent performance obligations that are satisfied over time.

Management Agreements with the Managed Equity REITs

We are party to a business management and a property management agreement with each
Managed Equity REIT. The following is a summary of the fees we earn pursuant to our business
management agreements with the Managed Equity REITs. For a summary of the fees we earn pursuant
to our property management agreements with the Managed Equity REITs, see Property Management
Agreements, below.

F-9

The RMR Group Inc.

Notes to Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

Note 2. Summary of Significant Accounting Policies (Continued)

Base Business Management Fees—We earn annual base business management fees from the
Managed Equity REITs by providing continuous services pursuant to business management agreements
equal to the lesser of:

• 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.

The foregoing base business management fees are paid in cash monthly in arrears.

For the fiscal years ended September 30, 2023, 2022 and 2021, we earned aggregate base

business management fees from the Managed Equity REITs of $85,603, $96,031 and $93,153,
respectively.

Incentive Business Management Fees—We also may earn annual incentive business management

fees from the Managed Equity REITs under the business management agreements. The incentive
business management fees, which are payable in cash, are contingent performance based fees
recognized only when earned at the end of each respective measurement period. Incentive business
management fees are excluded from the transaction price until it becomes probable that there will not be
a significant reversal of cumulative revenue recognized.

The incentive business management fees are calculated for each Managed Equity REIT as 12.0%

of the product of (a) the equity market capitalization of the Managed Equity REIT, as defined in the
applicable business management agreement, on the last trading day of the year immediately prior to
the relevant measurement period, and (b) the amount, expressed as a percentage, by which the Managed
Equity REIT’s total return per share, as defined in the applicable business management agreement,
exceeded the applicable 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, as adjusted for net share issuances during the period and
subject to caps on the values of the incentive fees. The measurement period for the annual incentive
business management fees is defined as the three year period ending on December 31 of the year for
which such fee is being calculated.

We did not earn incentive business management fees from the Managed Equity REITs for

calendar years 2022, 2021 or 2020.

Term and Termination—Our management agreements with the Managed Equity REITs automatically

extend on December 31st of each year and have terms thereafter that end on the 20th anniversary of
the date of each extension. Each of the Managed Equity REITs has the right to terminate each
management agreement: (i) at any time upon 60 days’ written notice for convenience, (ii) immediately
upon written notice for cause, as defined in the agreements, (iii) upon written notice given within 60 days
after the end of an applicable calendar year for a performance reason, as defined in the agreements,
and (iv) by written notice during the 12 months following a change of control of RMR LLC, as defined in
the agreements. We have the right to terminate the management agreements for good reason, as
defined therein.

F-10

The RMR Group Inc.

Notes to Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

Note 2. Summary of Significant Accounting Policies (Continued)

Under our management agreements with the Managed Equity REITs, if a Managed Equity REIT

terminates our management agreements for convenience, or if we terminate one or both of our
management agreements with a Managed Equity REIT for good reason, the Managed Equity REIT is
obligated to pay us a termination fee in an amount equal to the sum of the present values of the Managed
Equity REIT’s monthly future fees, as defined therein, for the terminated management agreement(s)
for the remaining term, assuming it had not been terminated. If a Managed Equity REIT terminates one
or both of our management agreements for a performance reason, as defined therein, the Managed
Equity REIT has agreed to pay to us the termination fee calculated as described above, but assuming
a remaining term of 10 years. No termination fee is payable by a Managed Equity REIT if it terminates
one or both of our management agreements for cause or as a result of a change of control of us, as
defined in the applicable management agreement.

Other Management Agreements

We earn management fees by providing continuous services pursuant to the management
agreements with ABP Trust regarding AlerisLife; with Sonesta; and until May 15, 2023, with TA; equal
to 0.6% of: (i) in the case of AlerisLife, AlerisLife’s revenues from all sources reportable under GAAP, less
any revenues reportable by AlerisLife 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; and (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. These
management fees are estimated and payable in cash monthly in advance.

We also earn management fees from certain other Private Capital clients based on a percentage

of average invested capital, as defined in the applicable management agreements. These management
fees are payable in cash monthly in arrears.

For the fiscal years ended September 30, 2023, 2022 and 2021, we earned aggregate base
business management fees from TA and the Private Capital clients of $36,815, $39,653 and $30,105,
respectively. In addition, in connection with BP’s acquisition of TA on May 15, 2023, TA terminated its
business management agreement with us and paid us the applicable termination fee of $45,282.

Property Management Agreements

We earn property management fees by providing continuous services pursuant to property
management agreements with the Managed Equity REITs, SEVN and certain Private Capital clients.
We generally earn fees under these agreements equal to 3.0% of gross collected rents. Also, under the
terms of the property management agreements, we receive additional fees for construction supervision
services up to 5.0% of the cost of such construction.

For the fiscal years ended September 30, 2023, 2022 and 2021, we earned aggregate property
management fees of $63,153, $59,667 and $47,377, respectively, including construction supervision
fees of $18,443, $16,743 and $8,476, respectively.

Management Agreements with Advisory Clients

Tremont is primarily compensated pursuant to its management agreements with SEVN beginning
on January 6, 2021, and until September 30, 2021, TRMT, when it was terminated in connection with
the Tremont Merger, at an annual rate of 1.5% of equity, as defined in the applicable agreements.

F-11

The RMR Group Inc.

Notes to Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

Note 2. Summary of Significant Accounting Policies (Continued)

For the fiscal years ended September 30, 2023, 2022 and 2021, we earned advisory services

revenue of $4,520, $4,530 and $3,956, respectively.

Tremont may also earn an incentive fee under its management agreements equal to the difference
between: (a) the product of (i) 20% and (ii) the difference between (A) core earnings, as defined in the
applicable agreements, for the most recent 12 month period (or such lesser number of completed
calendar quarters, if applicable), including the calendar quarter (or part thereof) for which the
calculation of the incentive fee is being made, and (B) the product of (1) equity in the most recent 12
month period (or such lesser number of completed calendar quarters, if applicable), including the
calendar quarter (or part thereof) for which the calculation of the incentive fee is being made, and
(2) 7% per year and (b) the sum of any incentive fees paid to Tremont with respect to the first three
calendar quarters of the most recent 12 month period (or such lesser number of completed calendar
quarters preceding the applicable period, if applicable). No incentive fee shall be payable with respect to
any calendar quarter unless core earnings for the 12 most recently completed calendar quarters in
the aggregate is greater than zero. The incentive fee may not be less than zero. For the fiscal years ended
September 30, 2023, 2022 and 2021, Tremont earned incentive fees of $660, $0 and $620, respectively.

The Tremont business earns between 0.5% and 1.0% of the aggregate principal amounts of any

loans it brokers for its non-investment advisory clients. For the fiscal years ended September 30, 2023,
2022 and 2021, the Tremont business earned fees for such brokerage services of $131, $99 and
$467, respectively, which amounts are included in management services revenue in our consolidated
statements of income.

Reimbursable Costs

We determined we control the services provided by third parties for certain of our clients and

therefore account for the cost of these services and the related reimbursement revenue on a gross
basis.

Reimbursable Compensation and Benefits—Reimbursable compensation and benefits include
reimbursements, at cost, that arise primarily from services our employees provide pursuant to our
property management agreements at the properties of our clients. A significant portion of these
compensation and benefits are charged or passed through to and paid by tenants of our clients. We
recognize the revenue for reimbursements when we incur the related reimbursable compensation and
benefits expense on behalf of our clients.

Reimbursable Equity Based Compensation—Reimbursable equity based compensation includes

awards of common shares by our clients directly to certain of our officers and employees in connection
with the provision of management services to those clients. The revenue in respect of each award is
based on the fair value as of the award date for those shares that have vested, with subsequent changes
in the fair value of the unvested awards being recognized in our consolidated statements of income
over the requisite service periods. We record an equal, offsetting amount as equity based compensation
expense for the value of these awards.

Other Reimbursable Expenses—Other reimbursable expenses include reimbursements that arise
from services we provide pursuant to our property management agreements, which include third party
costs related to matters such as maintenance and repairs, development costs, security and cleaning
services, a significant portion of which are charged or passed through to and paid by tenants of our
clients.

F-12

The RMR Group Inc.

Notes to Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

Note 2. Summary of Significant Accounting Policies (Continued)

Equity Method Investments

Seven Hills Realty Trust

As of September 30, 2023, Tremont owned 1,708,058, or approximately 11.5%, of SEVN’s
outstanding common shares. We account for our investment in SEVN using the equity method of
accounting because we are deemed to exert significant influence, but not control, over SEVN’s most
significant activities. We elected the fair value option to account for our equity method investment in
SEVN and determine fair value using the closing price of SEVN’s common shares as of the end of the
period, which is a Level 1 fair value input. The aggregate market value of our investment in SEVN as
of September 30, 2023 and 2022, based on quoted market prices, was $18,651 and $15,577, respectively.
The unrealized gain (loss) in our consolidated statements of income related to our investment in
SEVN was $5,295 and ($1,564) for the fiscal years ended September 30, 2023 and 2022, respectively.
During the fiscal years ended September 30, 2023 and 2022, we received distributions from SEVN of
$2,221 and $841, respectively.

Immediately prior to the consummation of the Tremont Merger, Tremont owned 1,600,100, or
approximately 19.3%, of TRMT’s then outstanding common shares which were accounted for under
the equity method of accounting. Pursuant to the equity method, we recorded our share of earnings from
our investment in TRMT in equity in earnings of investees in our consolidated statements of income
which totaled $443 for the fiscal year ended September 30, 2021. We received aggregate distributions
from TRMT of $1,456 during the fiscal year ended September 30, 2021. Pursuant to the Tremont Merger,
each common share of TRMT converted into 0.516 common shares of SEVN. Upon completion of
the conversion, we elected the fair value option to account for our equity method investment in the
surviving entity, SEVN. As a result, we recorded a gain of $2,059 equal to the difference between the
cost basis of our investment in TRMT and the fair value of our investment in SEVN at the time of the
Tremont Merger.

TravelCenters of America Inc.

We previously owned 621,853, or approximately 4.1%, of TA’s outstanding common shares, that

had a cost of $13,701 and were accounted for using the equity method of accounting under the fair
value option. As discussed in Note 5, Related Person Transactions, BP acquired TA on May 15, 2023
for $86.00 per share in cash. In connection with that acquisition, we received $53,479 for the TA common
shares we owned and realized a gain of $39,778. We previously accounted for our investment in TA
using the equity method of accounting because we were deemed to exert significant influence, but not
control, over TA’s most significant activities. Under the fair value option, we determined fair value using
the closing price of TA’s common shares as of the end of the period, which was a Level 1 fair value
input, and recorded changes in fair value in earnings in our consolidated statements of income. We
recorded gains in our consolidated statements of income related to our investment in TA of $19,942,
$2,574 and $18,811 for the fiscal years ended September 30, 2023, 2022 and 2021, respectively.

Variable Interest Entities

We regularly evaluate our relationships and investments to determine if they constitute variable
interests. A variable interest is an investment or interest that will absorb portions of an entity’s expected
losses or receive portions of an entity’s expected returns. If we determine we have a variable interest
in an entity, we evaluate whether such interest is in a variable interest entity, or VIE. Under the VIE model,
we would be required to consolidate a VIE we manage if we are determined to be the primary
beneficiary of the entity. We continuously assess whether we must consolidate any of the entities we
manage. Consideration of factors included, but was not limited to, our representation on the entity’s

F-13

The RMR Group Inc.

Notes to Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

Note 2. Summary of Significant Accounting Policies (Continued)

governing body, the size of our investment in each entity compared to the size of the entity and the size
of other investors’ interests, the ability and rights to participate in significant policy making decisions
and to replace the manager of those entities. Based on this assessment, we concluded that we are not
required to consolidate any of our clients.

Cash and Cash Equivalents

We consider highly liquid investments with original maturities of three months or less on the date
of purchase to be cash equivalents, the majority of which is held at major commercial banks. Certain
cash account balances exceed Federal Deposit Insurance Corporation insurance limits of $250,000 per
account and, as a result, there is a concentration of credit risk related to amounts in excess of the
insurance limits. We regularly monitor the financial stability of these financial institutions and believe
that we are not exposed to any significant credit risk in cash and cash equivalents.

Property and Equipment

Property and equipment are stated at cost. Depreciation of furniture and equipment is computed
using the straight line method over estimated useful lives ranging from three to ten years. Depreciation
for leasehold improvements is computed using the straight line method over the term of the lesser of their
useful lives or related lease agreements. Capitalized software costs, information technology labor and
other personnel costs, are depreciated using the straight line method over useful lives ranging between
three and five years.

The following is a summary of property and equipment presented in our consolidated balance

sheets:

September 30,

2023

2022

Furniture and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capitalized software costs . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 7,681
581
396

$ 4,620
244
251

Total property and equipment . . . . . . . . . . . . . . . . . . . . . . . .

8,658

5,115

Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3,212)

(2,620)

Property and equipment, net

. . . . . . . . . . . . . . . . . . . . . . . .

$ 5,446

$ 2,495

Depreciation expense related to property and equipment and capitalized software costs for the
fiscal years ended September 30, 2023, 2022 and 2021, was $1,071, $956 and $931, respectively.

Goodwill and Intangible Assets

Goodwill represents the costs of business acquisitions in excess of the fair value of identifiable
net assets acquired. We evaluate the recoverability of goodwill annually in the fourth quarter of each
fiscal year, or more frequently, if events or changes in circumstances indicate that goodwill might be
impaired. If our review indicates that the carrying amount of goodwill exceeds its fair value, we would
reduce the carrying amount of goodwill to fair value.

F-14

The RMR Group Inc.

Notes to Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

Note 2. Summary of Significant Accounting Policies (Continued)

The following is a summary of goodwill and intangible assets, net of amortization, presented in

our consolidated balance sheets:

Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets, net of amortization . . . . . . . . . . . . . . . . . . . . .

$1,859
167

$1,859
198

Goodwill and intangible assets, net of amortization . . . . . . . . .

$2,026

$2,057

September 30,

2023

2022

Equity-Based Compensation

The awards made under our share award plan to our Directors, officers and employees to date,
have been shares of Class A common stock of RMR Inc., or Class A Common Shares. Shares issued
to Directors vest immediately. Shares issued to our officers and employees vest in five equal, consecutive,
annual installments, with the first installment vesting on the date of award. We recognize share
forfeitures as they occur. Compensation expense related to share awards is determined based on the
market value of our shares on the date of award, with the aggregate value of the awarded shares
amortized to expense over the related vesting period. Expense recognized for shares awarded to
Directors are included in general and administrative expenses and for shares awarded to employees
are included in equity based compensation expenses in our consolidated statements of income.

Other Assets

On June 5, 2015, in connection with the formation of RMR Inc., each of DHC, OPI (then Government
Properties Income Trust, or GOV, and Select Income REIT, or SIR) and SVC contributed cash and shares
with a combined value of $167,764. The consideration received from such Managed Equity REITs for
our Class A Common Shares represented a discount to the fair value of RMR Inc.’s Class A Common
Shares in the amount of $193,806, which we recorded in other assets. The other assets are being
amortized against revenue recognized related to the management agreements using the straight line
method through the period ended December 31, 2035. For the fiscal years ended September 30, 2023,
2022 and 2021, we reduced revenue by $9,416 each year, related to the amortization of these other
assets. As of September 30, 2023, the remaining amount of these other assets to be amortized was
$115,479.

Transaction and Acquisition Related Costs

Transaction and acquisition related costs include costs related to acquisitions and other strategic

transactions. Such costs include legal, accounting, valuation, other professional or consulting fees.
Transaction and acquisition related costs are expensed as incurred.

Segment Reporting

We report our results in a single reportable segment, which reflects how our chief operating

decision maker allocates resources and evaluates our financial results. Because we have a single
reportable segment, all required financial segment information can be found directly in our consolidated
financial statements.

Note 3. Income Taxes

We are the sole managing member of RMR LLC. 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 tax

F-15

The RMR Group Inc.

Notes to Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

Note 3. Income Taxes (Continued)

consolidated subsidiaries. RMR LLC is treated as a partnership for U.S. federal and most applicable
state and local 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. During the fiscal years ended September 30,
2023, 2022 and 2021, all of our income before taxes was derived solely from domestic operations.

We had a provision (benefit) for income taxes which consists of the following:

Fiscal Year Ended September 30,
2022

2021

2023

Current:

Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$16,922
5,954

$ 8,553
3,121

$ 5,820
2,103

Deferred:

Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(940)
(168)
$21,768

1,176
383
$13,233

3,834
1,395
$13,152

A reconciliation of the statutory income tax rate to the effective tax rate is as follows:

Income taxes computed at the federal statutory rate . . . . .
State taxes, net of federal benefit . . . . . . . . . . . . . . . . . . .
Permanent items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to noncontrolling interest . . . . . . . .
Other(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2021

Fiscal Year Ended September 30,
2022

2023
21.0% 21.0% 21.0%
3.1%
3.0%
3.0%
0.5%
0.6%
0.7%
(9.9)% (10.1)% (10.1)%
(0.6)%
—%
14.6% 14.6% 14.0%

—%

(1)

In December 2020, the Internal Revenue Service and Department of Treasury released final
regulations which, among other clarifications, established the effective date as it relates to limitations
on the deductibility of certain executive compensation. The final regulations provide that the
application of the limit applies to deductions after December 18, 2020. As such, during the
three months ended December 31, 2020, we reduced our provision for income taxes for limitations
applied prior to the effective date by $520, or $0.02 per diluted share.

The components of the deferred tax assets as of September 30, 2023 and 2022 are entirely

comprised of the outside basis difference in our partnership interest in RMR LLC.

We remain subject to income tax examinations for our U.S. federal, state and local income taxes

generally for fiscal years ended September 30, 2020 through September 30, 2022.

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. Pursuant to this topic, 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 50.0% likely to be
realized upon settlement. As of September 30, 2023, 2022 and 2021, we had no uncertain tax
positions.

F-16

The RMR Group Inc.

Notes to Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

Note 4. Fair Value of Financial Instruments

As of September 30, 2023 and 2022, the fair values of our financial instruments, which include
cash and cash equivalents, amounts due from related parties, accounts payable and accrued expenses
and reimbursable accounts payable and accrued expenses, were not materially different from their
carrying values due to the short term nature of these financial instruments.

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.

The following table presents our assets and liabilities that have been measured at fair value using

Level 1 inputs in the fair value hierarchy as of September 30, 2023 and 2022:

September 30,

2023

2022

Current portion of due from related parties related to share based payment

awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 3,434

$ 7,516

Long term portion of due from related parties related to share based payment

awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity method investment in SEVN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity method investment in TA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of employer compensation liability related to share based

7,261
18,651

14,557
15,577
— 33,537

payment awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,434

7,516

Long term portion of employer compensation liability related to share based

payment awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7,261

14,557

Note 5. Related Person Transactions

Adam D. Portnoy, Chair of our Board, one of our Managing Directors and our President and Chief

Executive Officer, is the sole trustee, an officer and the controlling shareholder of our controlling
shareholder, ABP Trust, and owns all of ABP Trust’s voting securities and a majority of the economic
interests of ABP Trust. RMR Inc.’s executive officers are officers and employees of RMR LLC, and
Jennifer B. Clark, our other Managing Director, and Matthew P. Jordan, our Executive Vice President,
Chief Financial Officer and Treasurer, are also officers of ABP Trust.

Mr. Portnoy is the chair of the board and a managing trustee of each of the Perpetual Capital
clients, the controlling shareholder and a director of Sonesta (and its parent) and was the chair of the
board and a managing director of AlerisLife until March 20, 2023 when AlerisLife was acquired by ABP
Trust. Since March 20, 2023, Mr. Portnoy is the sole director of AlerisLife. Mr. Portnoy was the chair
of the board and a managing director of TA until May 15, 2023 when TA was acquired by BP. Ms. Clark
is a managing trustee of OPI and a director of Sonesta (and its parent), and she previously served
as a managing director of AlerisLife until March 20, 2023. Ms. Clark also serves as the secretary of all
the Perpetual Capital clients, Sonesta and AlerisLife.

As of September 30, 2023, Adam D. Portnoy beneficially owned, 13.4% of SEVN’s outstanding

common shares (including through Tremont and ABP Trust) and 9.8% of DHC’s outstanding common

F-17

The RMR Group Inc.

Notes to Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

Note 5. Related Person Transactions (Continued)

shares (including through ABP Trust). In addition, Mr. Portnoy beneficially owns shares of ILPT, OPI,
SVC, and prior to May 15, 2023, TA, comprising less than 5.0% of the outstanding shares of each of
those respective companies.

The Managed Equity REITs and SEVN have no employees. RMR LLC provides or arranges for all

the personnel, overhead and services required for the operation of the Managed Equity REITs pursuant
to management agreements with them. The officers of the Managed Equity REITs are officers or
employees of RMR LLC. All the officers, overhead and required office space of SEVN are provided or
arranged by Tremont, and prior to the Tremont Merger, Tremont provided or arranged for the officers,
overhead and required office space for TRMT. All of SEVN’s officers are officers or employees of
Tremont or RMR LLC. Some of the executive officers of TA (prior to May 15, 2023), one of the executive
officers of AlerisLife and one of the executive officers of Sonesta are (or were with respect to TA)
officers or employees of RMR LLC. Our executive officers are also managing trustees of certain of the
Perpetual Capital clients.

Revenues from Related Parties

For the fiscal years ended September 30, 2023, 2022 and 2021, we recognized revenues from

related parties as set forth in the following tables:

Fiscal Year Ended September 30, 2023

Total
Management and Advisory
Services Revenues

Total
Reimbursable
Costs

Total
Revenues

Perpetual Capital:

DHC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ILPT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OPI
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SVC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Managed Equity REITs . . . . . . . . . . . . .
SEVN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TA(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Private Capital:

AlerisLife . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sonesta . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other private entities . . . . . . . . . . . . . . . . . . . .

Total revenues from related parties . . . . . . . . . . .
Revenues from unrelated parties . . . . . . . . . . . . .
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 23,675
36,834
38,163
40,543
139,215
5,188
55,214
199,617

5,414
9,471
21,531
36,416
236,033
131
$236,164

$156,224
40,438
334,208
117,421
648,291
4,865
3,476
656,632

97
544
68,879
69,520
726,152
—
$726,152

$179,899
77,272
372,371
157,964
787,506
10,053
58,690
856,249

5,511
10,015
90,410
105,936
962,185
131
$962,316

(1) On May 15, 2023, BP acquired TA and TA terminated its management agreement with us. In
connection with the termination of TA’s management agreement, we received the applicable
termination fee of $45,282. For further information, see “TA Merger” below.

F-18

The RMR Group Inc.

Notes to Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

Note 5. Related Person Transactions (Continued)

Perpetual Capital:(1)

DHC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ILPT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OPI
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SVC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total Managed Equity REITs . . . . . . . . . . . . .
SEVN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Private Capital:(1)

AlerisLife . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sonesta . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other private entities . . . . . . . . . . . . . . . . . . . .

Total revenues from related parties . . . . . . . . . . .
Revenues from unrelated parties . . . . . . . . . . . . .

Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . .

Fiscal Year Ended September 30, 2022

Total
Management and Advisory
Services Revenues

Total
Reimbursable
Costs

Total
Revenues

$ 30,343
31,354
42,204
44,193

148,094
4,530
15,926

168,550

4,908
8,726
17,697

31,331

199,881
99

$199,980

$157,770
33,593
308,139
67,844

567,346
5,692
2,060

575,098

309
396
56,720

57,425

632,523
—

$188,113
64,947
350,343
112,037

715,440
10,222
17,986

743,648

5,217
9,122
74,417

88,756

832,404
99

$632,523

$832,503

(1) On December 23, 2021, DHC sold a 35% equity interest in its existing joint venture with an

institutional investor. Following this sale, DHC owned a 20% equity interest in this joint venture. As
a result, the revenues earned with respect to this joint venture are characterized as Private Capital
for periods on and after December 23, 2021 and as Perpetual Capital for periods prior to
December 23, 2021. On June 29, 2022, DHC sold an additional 10% equity interest in this joint
venture. Following this additional sale, DHC owns a 10% equity interest in this joint venture.

F-19

The RMR Group Inc.

Notes to Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

Note 5. Related Person Transactions (Continued)

Fiscal Year Ended September 30, 2021

Total
Management and Advisory
Services Revenues

Total
Reimbursable
Costs

Total
Revenues

Perpetual Capital:

Total Managed Equity REITs . . . . . . . . . . . . .
SEVN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TRMT(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Private Capital:

AlerisLife . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sonesta . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other private entities . . . . . . . . . . . . . . . . . . . .

Total revenues from related parties . . . . . . . . . . .
Revenues from unrelated parties . . . . . . . . . . . . .

$ 36,372
17,745
37,251
45,854

137,222
2,798
1,778
13,727

155,525

7,123
4,497
8,066

19,686

175,211
467

$135,146
20,094
206,351
33,552

395,143
2,129
3,620
774

401,666

368
196
29,330

29,894

431,560
—

$171,518
37,839
243,602
79,406

532,365
4,927
5,398
14,501

557,191

7,491
4,693
37,396

49,580

606,771
467

Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . .

$175,678

$431,560

$607,238

(1) As discussed in Note 1, Organization, TRMT merged with and into SEVN on September 30, 2021,
with SEVN continuing as the surviving company. This table presents revenues for the fiscal year
ended September 30, 2021, for TRMT separately as they relate to a period prior to the Tremont
Merger.

For additional information regarding our management or advisory agreements with these related

parties, see Note 2, Summary of Significant Accounting Policies.

F-20

The RMR Group Inc.

Notes to Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

Note 5. Related Person Transactions (Continued)

Amounts Due From Related Parties

The following table presents amounts due from related parties as of the dates indicated:

September 30,

2023

2022

Accounts
Receivable

Reimbursable
Costs

Total

Accounts
Receivable

Reimbursable
Costs

Total

Perpetual Capital:

DHC . . . . . . . . . . . . . . . .
ILPT . . . . . . . . . . . . . . . .
OPI . . . . . . . . . . . . . . . . .
SVC . . . . . . . . . . . . . . . .

$ 5,953
4,597
7,427
5,528

$13,434
5,869
51,912
8,423

$ 19,387
10,466
59,339
13,951

$ 8,098
3,235
335
5,627

$ 14,148
13,717
47,943
5,357

$ 22,246
16,952
48,278
10,984

Total Managed Equity

REITs . . . . . . . . . . . .
SEVN . . . . . . . . . . . . . . .
TA . . . . . . . . . . . . . . . . . .

Private Capital:

AlerisLife . . . . . . . . . . . . .
Sonesta . . . . . . . . . . . . . .
Other private entities . . . .

Leases

23,505
1,663
—

25,168

74
89
4,634

4,797

79,638
1,921
—

81,559

—
—
7,060

7,060

103,143
3,584
—

106,727

74
89
11,694

11,857

17,295
1,768
124

19,187

112
127
1,658

1,897

81,165
1,262
11,635

94,062

492
290
7,450

8,232

98,460
3,030
11,759

113,249

604
417
9,108

10,129

$29,965

$88,619

$118,584

$21,084

$102,294

$123,378

As of September 30, 2023, RMR LLC leased from ABP Trust and certain Managed Equity REITs
office space for use as our headquarters and local offices. During the fiscal years ended September 30,
2023, 2022 and 2021, we incurred rental expense under related party leases aggregating $5,329,
$5,859 and $5,667, respectively. Our related party leases have various termination dates and many
have renewal options. Some of our related party leases are terminable on 30 days’ notice and many allow
us to terminate early if our management agreements for the buildings in which we lease space are
terminated. For additional information regarding these leases, see Note 10, Leases.

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 fiscal years ended September 30, 2023, 2022 and 2021, we paid $2,355,
$2,209 and $2,158, respectively, to ABP Trust pursuant to the tax receivable agreement. As of
September 30, 2023, our consolidated balance sheet reflects a liability related to the tax receivable
agreement of $23,229, including $2,343 classified as a current liability in accounts payable and accrued
expenses that we expect to pay to ABP Trust during the fourth quarter of fiscal year 2024.

F-21

The RMR Group Inc.

Notes to Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

Note 5. Related Person Transactions (Continued)

Under the RMR LLC operating agreement, RMR LLC is also required to make certain pro rata

distributions to each member of RMR LLC quarterly on the basis of the estimated tax liabilities of its
members, subject to future adjustment based on actual results. For the fiscal years ended September 30,
2023, 2022 and 2021, pursuant to the RMR LLC operating agreement, RMR LLC made required
quarterly tax distributions to holders of its membership units totaling $65,486, $30,281 and $31,469,
respectively, of which $34,541, $15,940 and $16,764, respectively, was distributed to us and $30,945,
$14,341 and $14,705, respectively, was distributed to ABP Trust, based on each membership unit holder’s
respective ownership percentage. The amounts distributed to us were eliminated in our consolidated
financial statements, and the amounts distributed to ABP Trust were recorded as a reduction of its
noncontrolling interest. We use funds from these distributions to pay certain of our U.S. federal and state
income tax liabilities and to pay part of our obligations under the tax receivable agreement.

Purchase of SEVN Shares

On May 11, 2022, Tremont purchased 882,407 SEVN common shares of beneficial interest from

Diane Portnoy, the mother of Adam D. Portnoy, for an aggregate purchase price of $9,469.

ABP Trust’s Acquisition of AlerisLife

On March 20, 2023, ABP Trust acquired AlerisLife, or the AlerisLife Acquisition. In connection with

the AlerisLife Acquisition, AlerisLife terminated its management agreement with RMR LLC and RMR
LLC waived its right to receive payment of the termination fee that would have otherwise resulted due to
such termination. In consideration of this waiver, RMR LLC and ABP Trust amended and restated
their management agreement to provide that (i) RMR LLC will also provide services to AlerisLife at
ABP Trust’s request, (ii) ABP Trust will pay to RMR LLC management fees with respect to AlerisLife,
which fees are calculated based upon AlerisLife’s revenues in the same manner as such fees would have
been calculated under AlerisLife’s terminated management agreement with RMR LLC, and
(iii) AlerisLife’s properties will not be subject to ABP Trust’s property management agreement with
RMR LLC.

TA Merger

On May 15, 2023, BP acquired TA for $86.00 per TA common share in cash, or the TA Merger.

RMR LLC received $53,479 for its TA common shares in the transaction. Upon consummation of the
acquisition, TA terminated its business management agreement with us and in accordance with its terms
paid us the applicable termination fee of $45,282.

Termination of OPI’s Merger Agreement with DHC

On September 1, 2023, DHC and OPI mutually agreed to terminate the Agreement and Plan of

Merger, dated April 11, 2023, or the DHC-OPI Merger Agreement. Contemporaneously with the
execution of the DHC-OPI Merger Agreement, we, DHC and OPI entered into a letter agreement,
pursuant to which, we and DHC acknowledged and agreed that, effective upon the consummation of
the transactions contemplated by the DHC-OPI Merger Agreement, or the DHC-OPI Merger, DHC shall
have terminated its business and property management agreements with us for convenience, and we
shall have waived our right to receive payment of the termination fee pursuant to each such agreement
upon such termination. Since the DHC-OPI Merger was not consummated, DHC’s business and
property management agreements with us were not terminated and remain in effect. Contemporaneously
with the execution of the DHC-OPI Merger Agreement, RMR LLC and OPI entered into a Third
Amended and Restated Property Management Agreement, or the OPI Amended Property Management
Agreement. The effectiveness of the OPI Amended Property Management Agreement was conditioned

F-22

The RMR Group Inc.

Notes to Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

Note 5. Related Person Transactions (Continued)

upon the consummation of the DHC-OPI Merger. Since the DHC-OPI Merger was not consummated,
the OPI Amended Property Management Agreement did not become effective, and OPI’s existing
property management agreement with us remains in effect.

Registration and Lock-up Agreements

The following registration rights and lock-up agreements are in effect:

• ABP Trust Registration Rights Agreement. RMR Inc. is party to a registration rights agreement
with ABP Trust pursuant to which RMR Inc. has granted ABP Trust demand and piggyback
registration rights, subject to certain limitations, covering the Class A Common Shares ABP Trust
owns, including the shares received on conversion of Class B-1 Common Shares or redemption
of the paired Class B-2 Common Shares and Class A Units of RMR LLC.

• Founders Registration Rights and Lock-Up Agreements. Adam D. Portnoy and ABP Trust are
parties to a registration rights and lock-up agreement with each of DHC, OPI and SVC with
respect to each such Managed Equity REITs’ common shares. Pursuant to that agreement, ABP
Trust and Adam D. Portnoy agreed not to transfer the Managed Equity REITs’ common shares
they acquired in connection with RMR LLC’s reorganization in June 2015 for a period of ten years,
subject to certain exceptions, and each of those Managed Equity REITs has granted ABP Trust
and Adam D. Portnoy demand and piggyback registration rights, subject to certain limitations.

Separation Arrangements

We enter into retirement agreements with certain of our former executive officers. Pursuant to
these agreements, we make various cash payments and accelerate the vesting of unvested shares of
RMR Inc. previously awarded to these retiring officers. We also enter into separation arrangements from
time to time with executive and nonexecutive officers and employees of ours. All costs associated with
separation arrangements, for which there remain no substantive performance obligations, are recorded
in our consolidated statements of income as separation costs.

RMR LLC entered into a letter agreement, or the Separation Agreement, dated March 27, 2023,
with Jonathan M. Pertchik, a former Executive Vice President of RMR LLC. Mr. Pertchik also served as
chief executive officer and was a managing director of TA. Mr. Pertchik resigned as our Executive
Vice President, effective 11:59 p.m. on May 14, 2023, the date prior to the closing of the TA Merger, or
the Separation Date. Pursuant to the Separation Agreement, RMR LLC paid Mr. Pertchik $211 following
the TA Merger and our Compensation Committee approved the acceleration of vesting of Mr. Pertchik’s
unvested shares of RMR Inc., effective as of the Separation Date. The Separation Agreement contains
other customary terms and conditions, including confidentiality, non-solicitation, and other covenants and
a waiver and release.

For the fiscal years ended September 30, 2023, 2022 and 2021, we recognized separation costs

of $2,002, $1,315 and $4,525, respectively, including cash separation costs of $1,520, $1,152 and
$4,042, respectively, and equity based separation costs of $482, $163 and $483, respectively.

SEVN Property Management Agreement

We entered into a property management agreement with SEVN in July 2023 with respect to an
office property SEVN owns. Pursuant to this agreement, we provide property management services
and SEVN pays us fees equal to 3.0% of gross collected rents. Also under the terms of this property
management agreement, SEVN pays us additional fees for construction supervision services equal to

F-23

The RMR Group Inc.

Notes to Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

Note 5. Related Person Transactions (Continued)

5.0% of the cost of such construction. Either we or SEVN may terminate this agreement upon 30 days’
prior notice. No termination fee would be payable as a result of terminating the agreement.

Other

The Managed Equity REITs and SEVN award, and during calendar years 2021 and 2022, AlerisLife

and TA awarded, common shares directly to certain of our officers and employees in connection with
the provision of services to those companies. For a description of the accounting implications to us of
these share awards, see Note 2, Summary of Significant Accounting Policies, and Note 6, Shareholders’
Equity.

The compensation of certain senior executives of TA (prior to May 15, 2023), one senior executive

of AlerisLife and one senior executive of Sonesta, who are also employees or officers of RMR LLC, is
the sole responsibility of the party to or on behalf of which the individual renders services. In the past,
because at least 80.0% of each of these executives’ business time was devoted to services to TA,
AlerisLife or Sonesta, as applicable, 80.0% of their total cash compensation was paid by TA, AlerisLife
or Sonesta, as applicable, and the remainder was paid by RMR LLC.

Note 6. Shareholders’ Equity

Common Shares

Class A Common Shares—Class A Common Shares entitle holders to one vote for each share

held of record on all matters submitted to a vote of shareholders.

Class B-1 Common Shares—Class B-1 Common Shares entitle holders to ten votes for each
share on all matters submitted to a vote of shareholders. Each Class B-1 Common Share may, at the
option of its holder, be converted into a Class A Common Share, on a one for one basis.

Class B-2 Common Shares—ABP Trust owns 15,000,000 Class B-2 Common Shares, which are

paired with the 15,000,000 RMR LLC Class A Units and have no independent economic interest in
RMR Inc. The Class A Units may, at the option of the holder, be redeemed for Class A Common Shares
on a one to one basis, and upon such redemption our Class B-2 Common Shares that are paired with
the Class A Units are automatically canceled. RMR Inc. has the option to settle the redemption in cash.
Each Class B-2 Common Share entitles the holder to ten votes per share, and, accordingly, the
issuance of additional Class B-2 Common Shares would have a significant dilutive effect on the voting
power of the then current holders of our Class A Common Shares.

Except as otherwise required in the charter or by applicable law, all holders of Class A Common

Shares, Class B-1 Common Shares, and Class B-2 Common Shares shall vote together as a single
class on all matters on which shareholders are generally entitled to vote. The holders of a class of
common shares shall each be entitled to vote separately as a single class with respect to (and only with
respect to) amendments to the charter that alter or change the powers or rights of the shares of such
class of common shares so as to affect them materially and adversely; provided, however, if such
amendments affect all holders of common shares materially and adversely in the same manner, the
separate voting requirement shall not be applicable and all holders of common shares shall vote together
as a single class.

Issuances and Repurchases

We award our Class A Common Shares to our officers and employees under the Amended and

Restated 2016 Omnibus Equity Plan, or the 2016 Plan. In addition, each of our Directors receives

F-24

The RMR Group Inc.

Notes to Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

Note 6. Shareholders’ Equity (Continued)

Class A Common Shares under the 2016 Plan as part of his or her annual compensation for serving
as a Director. During the fiscal years ended September 30, 2023, 2022 and 2021, we awarded to our
Managing Directors, in their capacities as our officers and employees, and to certain of our other officers
and employees, an aggregate of 121,200, 125,700 and 96,300, respectively, of our Class A Common
Shares. We also awarded to each of our Managing Directors and Independent Directors, 3,000 of our
Class A Common Shares during each of the fiscal years ended September 30, 2023, 2022 and
2021, as part of his or her annual compensation for serving as a Director.

The Class A Common Shares awarded to our Independent Directors and Managing Directors, in
their capacities as Directors, vest immediately and are included in general and administrative expense
in our consolidated statements of income. The Class A Common Shares awarded to our Managing
Directors, in their capacities as our officers and employees, and to our other officers and employees
vest in five equal, consecutive, annual installments beginning on the date of the award and are included
in equity based compensation expense in our consolidated statements of income. We recognize
forfeitures as they occur. During the fiscal years ended September 30, 2023, 2022 and 2021, we
recognized forfeitures of $93, $55 and $22, respectively. During the fiscal years ended September 30,
2023, 2022 and 2021, we recorded general and administrative expenses of $464, $547 and $771,
respectively, and equity based compensation expenses of $2,662, $3,064 and $2,868, respectively,
related to awards we made under the 2016 Plan.

In connection with the vesting and issuance of awards of our Class A Common Shares to our

Directors, officers and employees, we provide for the ability to repurchase our Class A Common
Shares to satisfy tax withholding and payment obligations for those eligible to do so. The repurchase
price is based on the closing price of our Class A Common Shares on The Nasdaq Stock Market LLC,
or Nasdaq. The aggregate value of Class A Common Shares repurchased during the fiscal years ended
September 30, 2023, 2022 and 2021, was $734, $547 and $834, respectively, which is recorded as a
decrease to additional paid in capital included in shareholders’ equity in our consolidated balance sheets.

In connection with the issuances and repurchases of our Class A Common Shares, and as
required by the RMR LLC operating agreement, RMR LLC concurrently issues or acquires an identical
number of Class A Units from RMR Inc.

A summary of shares awarded and vested, including shares withheld, repurchased or forfeited,
under the terms of the 2016 Plan for the fiscal years ended September 30, 2023, 2022 and 2021 is as
follows:

2023

2022

2021

Number
of
Shares

Weighted
Average
Award Date
Fair Value

Number
of
Shares

Weighted
Average
Award Date
Fair Value

Number
of
Shares

Weighted
Average
Award Date
Fair Value

Unvested shares, beginning of year . . 202,740

$30.14

160,310

$37.36

143,990

$44.10

Shares awarded . . . . . . . . . . . . . . . . 139,200

$24.92

143,700

$26.82

114,300

$35.23

Vested shares withheld and

repurchased . . . . . . . . . . . . . . . . .

(29,628) $24.76

(20,911) $26.15

(24,125) $34.57

Shares vested . . . . . . . . . . . . . . . . .
Shares forfeited . . . . . . . . . . . . . . . .

(104,012) $24.82
(3,680) $25.40

(78,449) $26.85
(1,910) $28.96

(73,275) $36.13
(580) $37.65

Unvested shares, end of year

. . . . . . 204,620

$26.90

202,740

$30.14

160,310

$37.36

The 204,620 unvested shares as of September 30, 2023 are scheduled to vest as follows: 73,760

shares in 2024, 60,780 shares in 2025, 45,840 shares in 2026 and 24,240 shares in 2027. As of

F-25

The RMR Group Inc.

Notes to Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

Note 6. Shareholders’ Equity (Continued)

September 30, 2023, the estimated future compensation expense for the unvested shares was $5,505
based on the award date fair value of these shares. The weighted average period over which this
compensation expense will be recorded is approximately 25 months.

As of September 30, 2023, 237,993 of our Class A Common Shares remained available for award

under the 2016 Plan.

Distributions

During the fiscal years ended September 30, 2023, 2022 and 2021, we declared and paid dividends

on our Class A Common Shares and Class B-1 Common Shares as follows:

Declaration Date

Fiscal Year Ended September 30, 2023

Record
Date

Paid
Date

Distributions
Per Common Share

Total
Distributions

10/13/2022 . . . . . . . . . . . . . . . . . . . .
1/12/2023 . . . . . . . . . . . . . . . . . . . . .
4/13/2023 . . . . . . . . . . . . . . . . . . . . .
7/13/2023 . . . . . . . . . . . . . . . . . . . . .

10/24/2022
1/23/2023
4/24/2023
7/24/2023

11/17/2022
2/16/2023
5/18/2023
8/17/2023

Fiscal Year Ended September 30, 2022

10/14/2021 . . . . . . . . . . . . . . . . . . . .
1/13/2022 . . . . . . . . . . . . . . . . . . . . .
4/14/2022 . . . . . . . . . . . . . . . . . . . . .
7/14/2022 . . . . . . . . . . . . . . . . . . . . .

10/25/2021
1/24/2022
4/25/2022
7/25/2022

11/18/2021
2/17/2022
5/19/2022
8/18/2022

Fiscal Year Ended September 30, 2021

10/15/2020 . . . . . . . . . . . . . . . . . . . .
1/14/2021 . . . . . . . . . . . . . . . . . . . . .
4/15/2021 . . . . . . . . . . . . . . . . . . . . .

10/26/2020
1/25/2021
4/26/2021

11/19/2020
2/18/2021
5/20/2021

7/15/2021 . . . . . . . . . . . . . . . . . . . . .

7/26/2021

8/19/2021

8/25/2021 . . . . . . . . . . . . . . . . . . . . .

9/6/2021

9/16/2021

$0.40
0.40
0.40
0.40

$1.60

$0.38
0.38
0.40
0.40

$1.56

$0.38
0.38
0.38

0.38

7.00

$8.52

$ 6,642
6,641
6,648
6,645

$ 26,576

$ 6,264
6,265
6,601
6,600

$ 25,730

$ 6,230
6,230
6,237

6,235

114,851

$139,783

F-26

The RMR Group Inc.

Notes to Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

Note 6. Shareholders’ Equity (Continued)

These dividends were funded in part by distributions from RMR LLC to holders of its membership

units as follows:

Declaration Date

Fiscal Year Ended
September 30,
2023

Record
Date

Paid
Date

Distributions Per
RMR LLC
Membership Unit

Total
RMR LLC
Distributions

RMR LLC
Distributions
to RMR Inc.

RMR LLC
Distributions
to ABP Trust

10/13/2022 . . . . . 10/24/2022 11/17/2022
2/16/2023
1/12/2023 . . . . . .
5/18/2023
4/13/2023 . . . . . .
8/17/2023
7/13/2023 . . . . . .

1/23/2023
4/24/2023
7/24/2023

Fiscal Year Ended
September 30,
2022

10/14/2021 . . . . . 10/25/2021 11/18/2021
2/17/2022
1/13/2022 . . . . . .
5/19/2022
4/14/2022 . . . . . .
8/18/2022
7/14/2022 . . . . . .

1/24/2022
4/25/2022
7/25/2022

Fiscal Year Ended
September 30,
2021

10/15/2020 . . . . . 10/26/2020 11/19/2020
2/18/2021
1/14/2021 . . . . . .
5/20/2021
4/15/2021 . . . . . .
8/19/2021
7/15/2021 . . . . . .

1/25/2021
4/26/2021
7/26/2021

8/25/2021 . . . . . .

9/6/2021

9/16/2021

$0.32
0.32
0.32
0.32

$1.28

$0.30
0.30
0.32
0.32

$1.24

$0.30
0.30
0.30
0.30

7.00

$8.20

$ 10,114
10,113
10,118
10,116

$ 5,314
5,313
5,318
5,316

$ 4,800
4,800
4,800
4,800

$ 40,461

$ 21,261

$ 19,200

$ 9,446
9,446
10,080
10,080

$ 4,946
4,946
5,280
5,280

$ 4,500
4,500
4,800
4,800

$ 39,052

$ 20,452

$ 18,600

$ 9,419
9,419
9,424
9,422

$ 4,919
4,919
4,924
4,922

$ 4,500
4,500
4,500
4,500

219,851

114,851

105,000

$257,535

$134,535

$123,000

The remainder of the dividends noted above were funded with cash accumulated at RMR Inc.

On October 12, 2023, we declared a quarterly dividend on our Class A Common Shares and
Class B-1 Common Shares to our shareholders of record as of October 23, 2023, in the amount of
$0.40 per Class A Common Share and Class B-1 Common Share, or $6,684. This dividend will be
partially funded by a distribution from RMR LLC to holders of its membership units in the amount of $0.32
per unit, or $10,148, of which $5,348 will be distributed to us based on our aggregate ownership of
16,711,047 membership units of RMR LLC and $4,800 will be distributed to ABP Trust based on its
ownership of 15,000,000 membership units of RMR LLC. The remainder of this dividend will be funded
with cash accumulated at RMR Inc. We expect to pay this dividend on or about November 16, 2023.

F-27

The RMR Group Inc.

Notes to Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

Note 7. Per Common Share Amounts

We calculate basic earnings per share using the two-class method. Unvested Class A Common

Shares awarded to our employees are deemed participating securities for purposes of calculating
basic earnings per common share because they have dividend rights. 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. Accordingly, earnings
attributable to unvested Class A Common Shares are excluded from basic earnings per share under
the two-class method. 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 share is calculated using the treasury stock method for unvested Class A
Common Shares and the if-converted method for Class B-2 Common Shares. 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, the assumed redemption would have on
earnings per share, we considered 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 fiscal year ended September 30, 2023, such redemption is not reflected in diluted earnings
per share as the assumed redemption would be anti-dilutive. For the fiscal years ended September 30,
2022 and 2021, the assumed redemption is dilutive to earnings per share.

F-28

The RMR Group Inc.

Notes to Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

Note 7. Per Common Share Amounts (Continued)

The calculation of basic and diluted earnings per share for the fiscal years ended September 30,

2023, 2022 and 2021, is as follows (amounts in thousands, except per share amounts):

Fiscal Year Ended September 30,
2021
2022
2023

Numerators:

Net income attributable to The RMR Group Inc. . . . . . . . . . . . . . .
Less: income attributable to unvested participating securities . . . .
Net income attributable to The RMR Group Inc. used in calculating
basic EPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$57,147
(651)

$ 34,004
(329)

$ 35,696
(309)

56,496

33,675

35,387

Effect of dilutive securities:

Add back: income attributable to unvested participating

securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Add back: net income attributable to noncontrolling interest . . . .
Add back: income tax expense . . . . . . . . . . . . . . . . . . . . . . . .
Less: income tax expense assuming redemption of

noncontrolling interest’s Class A Units for Class A Common
Shares(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income used in calculating diluted EPS . . . . . . . . . . . . . . . . .

Denominators:

Common shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: unvested participating securities and incremental impact of

weighted average . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted average common shares outstanding—basic . . . . . . . .
Effect of dilutive securities:

Add: assumed redemption of noncontrolling interest’s Class A

Units for Class A Common Shares . . . . . . . . . . . . . . . . . . . .
Add: incremental unvested shares . . . . . . . . . . . . . . . . . . . . . .
Weighted average common shares outstanding—diluted . . . . . . .
Net income attributable to The RMR Group Inc. per common

share—basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net income attributable to The RMR Group Inc. per common

share—diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—
—
—

329
43,464
13,233

309
45,317
13,152

— (26,732)
$ 63,969

$56,496

(27,061)
$ 67,104

16,712

16,606

16,485

(286)
16,426

(268)
16,338

(219)
16,266

—
—
16,426

15,000
10
31,348

15,000
16
31,282

3.44

2.06

2.04

2.18

2.15

(1)

Income tax expense assumes the hypothetical conversion of the noncontrolling interest, which
results in estimated tax rates of 29.5% and 28.7% for the fiscal years ended September 30, 2022
and 2021, respectively.

F-29

The RMR Group Inc.

Notes to Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

Note 8. Net Income Attributable to RMR Inc.

Net income attributable to RMR Inc. for the fiscal years ended September 30, 2023, 2022 and

2021, is calculated as follows:

Net income before noncontrolling interest

Net income attributable to noncontrolling interest

Income before income tax expense . . . . . . . . . . . . . . . . . . . . . . . .
RMR Inc. franchise tax expense and interest income . . . . . . . . .
. . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . .
Net income attributable to RMR Inc. before income tax expense . . .
Income tax expense attributable to RMR Inc.
. . . . . . . . . . . . . . .
RMR Inc. franchise tax expense and interest income . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . .

Net income attributable to RMR Inc.

Fiscal Year Ended September 30,
2021
2022
2023
$ 94,165
$ 90,701
$149,539
763
568
(755)
94,928
91,269
148,784
(45,317)
(43,464)
(70,624)
49,611
47,805
78,160
(13,152)
(13,233)
(21,768)
(763)
(568)
755
$ 35,696
$ 34,004
$ 57,147

Note 9. Employee Benefits

We have established a defined contribution savings plan for eligible employees under the provisions
of U.S. Internal Revenue Code Section 401(k) whereby we contribute 100.0% of the first 3.0% and 50.0%
of the next 2.0% of an employee’s cash compensation contributed to the plan up to stated maximums.
All employees are eligible to participate in the plan and are entitled, upon termination or retirement,
to receive their vested portion of the plan assets. Employees’ contributions and our related matching
contributions are fully vested when made. Our plan contributions and expenses for the fiscal years ended
September 30, 2023, 2022 and 2021, were $2,992, $2,726 and $2,633, respectively.

Note 10. Leases

We enter into operating leases, as the lessee, for office space and vehicles and determine if an

arrangement is a lease at inception of the arrangement. Operating lease liabilities and right of use
assets are recognized on our consolidated balance sheet for leases with an initial term greater than
12 months based on the present value of the future minimum lease payments over the lease term using
our estimated incremental borrowing rate. Operating lease expense associated with minimum lease
payments is recognized on a straight-line basis over the lease term. When additional payments are based
on usage or vary based on other factors, they are expensed when incurred as variable lease expense.
Certain leases include lease and non-lease components, which we account for as a single lease
component. Minimum lease payments for leases with an initial term of 12 months or less are not recorded
on our consolidated balance sheet. As of September 30, 2023, we had 48 leases that expire at
various dates through 2031, with a weighted average remaining lease term of 6.1 years and a weighted
average discount rate of 3.7%.

For the fiscal years ended September 30, 2023, 2022 and 2021, the components of operating

lease costs were as follows:

Fixed rent expense(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Variable lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total cash portion of rent expense . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash straight line rent expense . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total operating lease costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fiscal Year Ended September 30,
2022
$6,144
1,001
7,145
(352)
$6,793

2023
$6,272
907
7,179
(345)
$6,834

2021
$5,757
727
6,484
3
$6,487

(1)

Includes expense for leases with an initial term of 12 months or less of $76, $83 and $138 for the
fiscal years ended September 30, 2023, 2022 and 2021, respectively.

F-30

The RMR Group Inc.

Notes to Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

Note 10. Leases (Continued)

The following table presents the undiscounted cash flows on an annual fiscal year basis for our

operating lease liabilities as of September 30, 2023:

Fiscal Year

2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total lease payments(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: imputed interest(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Present value of operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . .
Less: current portion of operating lease liabilities . . . . . . . . . . . . . . . . . .

Amount

$ 6,305
5,980
5,353
4,917
4,313
6,650

33,518
(3,406)

30,112
(5,068)

Operating lease liabilities, net of current portion . . . . . . . . . . . . . . . . . . .

$25,044

(1) Excludes $690 of lease payments for signed leases that have not yet commenced.

As of September 30, 2023, $25,446 of total lease payments and $2,524 of imputed interest are for

our principal executive offices, which are leased from an affiliate of ABP Trust pursuant to a lease
agreement that expires in 2030.

F-31

RMR Performance Chart

The graph below shows the cumulative total shareholder returns on our common shares (assuming
a $100 investment on September 30, 2018) as compared with (a) the Standard & Poor’s 500 Index and
(b) a self-constructed peer group composed of the following alternative asset management companies:
Apollo Global Management, Inc., Ares Management Corporation, Blackstone Inc., The Carlyle Group Inc.
and KKR & Co. Inc. and (c) a self-constructed peer group composed of the following Real Estate
Managers: Ashford Inc., Brookfield Corporation, Cohen & Steers, Inc. and DigitalBridge Group, Inc.
The graph assumes reinvestment of all cash distributions.

Note: Factset is the data source.

$450

$400

$350

$300

$250

$200

$150

$100

$50

9/30/2018

12/31/2018

3/31/2019

6/30/2019

9/30/2019

12/31/2019

3/31/2020

6/30/2020

9/30/2020

12/31/2020

3/31/2021

6/30/2021

9/30/2021

12/31/2021

3/31/2022

6/30/2022

9/30/2022

12/31/2022

3/31/2023

6/30/2023

9/30/2023

RMR

S&P 500

Alternative Asset Manager Peer Average

Real Estate Manager Peer Average

ANNUAL MEETING
Our annual meeting of shareholders will
be held virtually on March 27, 2024 at
9:30 a.m.

AVAILABLE INFORMATION
A copy of our 2023 Annual Report on
Form 10-K, including the financial
statements and schedules (excluding
exhibits), as filed with the Securities
and Exchange Commission, can be
obtained without charge through our
website at www.rmrgroup.com or by
writing to Investor Relations at our
executive offices address.

CORPORATE INFORMATION

EXECUTIVE OFFICES
The RMR Group Inc.
Two Newton Place
255 Washington Street, Suite 300
Newton, MA 02458-1634
(617) 796-8390
www.rmrgroup.com

OFFICERS
Adam D. Portnoy

Chair of the Board,

Managing Director, President and
Chief Executive Officer; and

President and Chief Executive Officer

of RMR LLC
Christopher J. Bilotto

Executive Vice President of

RMR LLC

Jennifer B. Clark

Managing Director, Executive Vice
President, General Counsel and
Secretary; and

Executive Vice President, General

Counsel and Secretary of
RMR LLC
Matthew P. Jordan

Chief Financial Officer and

Treasurer; and

Executive Vice President, Chief

Financial Officer and Treasurer of
RMR LLC

John G. Murray

Executive Vice President of

RMR LLC

SENIOR DIRECTOR, INVESTOR
RELATIONS
Kevin Barry

BOARD OF DIRECTORS
Ann Logan*

Independent Director;
Former Chair of the Board of

Trustees of
Bryn Mawr College;
retired executive of Fannie Mae

Rosen Plevneliev*

Lead Independent Director;
Former President of the
Republic of Bulgaria

Jonathan Veitch*

Independent Director;
President Emeritus of Occidental

College

Walter C. Watkins, Jr.*

Independent Director;
Principal of WCW Enterprises, LLC;
retired executive of Bank One
Corporation
Jennifer B. Clark

Managing Director;
Executive Vice President, General
Counsel and Secretary of the
Company and RMR LLC

Adam D. Portnoy

Chair of the Board,

Managing Director;

President and Chief Executive
Officer of the Company and
RMR LLC

INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
200 Berkeley Street
Boston, MA 02116

COUNSEL
Skadden, Arps, Slate, Meagher &
Flom LLP
500 Boylston Street
Boston, MA 02116

STOCK TRANSFER AGENT AND
REGISTRAR
Equiniti Trust Company, LLC
EQ Shareowner Services
1110 Centre Pointe Curve, Suite 101
Mendota Heights, MN 55120-4100
(877) 602-7398
www.shareowneronline.com

Member of Audit, Compensation and Nominating and Governance Committees

The RMR Group Inc.

Two Newton Place

255 Washington Street, Suite 300

Newton, Massachusetts 02458-1634

(617) 796-8390