Investor Presentation March Data presented is as of and for the three months ended December 31, 2017 unless otherwise indicated.

Transcription

1 Investor Presentation March 2018 Data presented is as of and for the three months ended December 31, 2017 unless otherwise indicated.

2 WARNING REGARDING FORWARD LOOKING STATEMENTS AND DISCLAIMERS THIS PRESENTATION CONTAINS FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. OUR FORWARD LOOKING STATEMENTS REFLECT OUR CURRENT VIEWS, INTENTS AND EXPECTATIONS WITH RESPECT TO, AMONG OTHER THINGS, OUR OPERATIONS AND FINANCIAL PERFORMANCE. OUR FORWARD LOOKING STATEMENTS CAN BE IDENTIFIED BY THE USE OF WORDS SUCH AS OUTLOOK, BELIEVE, EXPECT, POTENTIAL, WILL, MAY, ESTIMATE, ANTICIPATE AND DERIVATIVES OR NEGATIVES OF SUCH WORDS OR SIMILAR WORDS. SUCH FORWARD LOOKING STATEMENTS ARE SUBJECT TO VARIOUS RISKS AND UNCERTAINTIES. ACCORDINGLY, THERE ARE OR WILL BE FACTORS THAT COULD CAUSE ACTUAL OUTCOMES OR RESULTS TO DIFFER MATERIALLY FROM THOSE STATED OR IMPLIED IN THESE STATEMENTS. WE BELIEVE THESE FACTORS INCLUDE, BUT ARE NOT LIMITED TO THE FOLLOWING: A) SUBSTANTIALLY ALL OF OUR REVENUES ARE DERIVED FROM SERVICES TO A LIMITED NUMBER OF CLIENT COMPANIES; B) OUR REVENUES ARE HIGHLY VARIABLE; C) CHANGING MARKET CONDITIONS, INCLUDING RISING INTEREST RATES MAY ADVERSELY IMPACT OUR CLIENT COMPANIES AND OUR BUSINESS WITH THEM; D) POTENTIAL TERMINATIONS OF OUR MANAGEMENT AGREEMENTS WITH OUR CLIENT COMPANIES; E) OUR ABILITY TO EXPAND OUR BUSINESS DEPENDS UPON THE GROWTH AND PERFORMANCE OF OUR CLIENT COMPANIES AND OUR ABILITY TO OBTAIN OR CREATE NEW CLIENTS FOR OUR BUSINESS AND IS OFTEN DEPENDENT UPON CIRCUMSTANCES BEYOND OUR CONTROL; F) LITIGATION RISKS; G) ALLEGATIONS, EVEN IF UNTRUE, OF ANY CONFLICTS OF INTEREST ARISING FROM OUR MANAGEMENT ACTIVITIES; H) OUR ABILITY TO RETAIN THE SERVICES OF OUR MANAGING DIRECTORS AND OTHER KEY PERSONNEL; AND I) RISKS ASSOCIATED WITH AND COSTS OF COMPLIANCE WITH LAWS AND REGULATIONS, INCLUDING SECURITIES REGULATIONS, EXCHANGE LISTING STANDARDS AND OTHER LAWS AND REGULATIONS AFFECTING PUBLIC COMPANIES. THERE ARE OR WILL BE ADDITIONAL IMPORTANT FACTORS THAT COULD CAUSE BUSINESS OUTCOMES OR FINANCIAL RESULTS TO DIFFER MATERIALLY FROM THOSE STATED OR IMPLIED IN OUR FORWARD LOOKING STATEMENTS. FOR EXAMPLE, CHANGING MARKET CONDITIONS, INCLUDING RISING INTEREST RATES, MAY LOWER THE MARKET VALUE OF OUR MANAGED EQUITY REITS OR CAUSE THE REVENUES OF OUR MANAGED OPERATORS TO DECLINE AND, AS A RESULT, OUR REVENUES MAY DECLINE. WE HAVE BASED OUR FORWARD LOOKING STATEMENTS ON OUR CURRENT EXPECTATIONS ABOUT FUTURE EVENTS THAT WE BELIEVE MAY AFFECT OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS. BECAUSE FORWARD LOOKING STATEMENTS ARE INHERENTLY SUBJECT TO RISKS AND UNCERTAINTIES, SOME OF WHICH CANNOT BE PREDICTED OR QUANTIFIED, OUR FORWARD LOOKING STATEMENTS SHOULD NOT BE RELIED ON AS PREDICTIONS OF FUTURE EVENTS. THE EVENTS AND CIRCUMSTANCES REFLECTED IN OUR FORWARD LOOKING STATEMENTS MAY NOT BE ACHIEVED OR OCCUR AND ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE PROJECTED OR IMPLIED IN OUR FORWARD LOOKING STATEMENTS. THE MATTERS DISCUSSED IN THIS WARNING SHOULD NOT BE CONSTRUED AS EXHAUSTIVE AND SHOULD BE READ IN CONJUNCTION WITH RMR S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, OR THE SEC, INCLUDING RMR S 10-K FILED ON DECEMBER 12, 2017, ESPECIALLY THE SECTIONS ENTITLED RISK FACTORS AND WARNING CONCERNING FORWARD LOOKING STATEMENTS, FOR OTHER REASONS WHY OUR FORWARD LOOKING STATEMENTS MAY NOT OCCUR. WE UNDERTAKE NO OBLIGATION TO UPDATE ANY FORWARD LOOKING STATEMENT, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE DEVELOPMENTS OR OTHERWISE, EXCEPT AS REQUIRED BY LAW. THIS PRESENTATION INCLUDES ADJUSTED REVENUES, EBITDA, ADJUSTED EBITDA, ADJUSTED EBITDA MARGIN AND ADJUSTED FREE CASH FLOW AMOUNTS FOR RMR, WHICH ARE NOT MEASURES PRESCRIBED BY ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED STATES ( U.S. GAAP ), AND THIS INFORMATION SHOULD NOT BE CONSIDERED AS AN ALTERNATIVE TO NET INCOME, INCOME FROM CONTINUING OPERATIONS, OPERATING PROFIT, CASH FLOW FROM OPERATIONS OR ANY OTHER OPERATING OR LIQUIDITY PERFORMANCE MEASURE PRESCRIBED BY U.S. GAAP. 2

3 Overview 3

4 The RMR Group The RMR Group Inc. (Nasdaq: RMR) is a holding company and substantially all of its business is conducted by its majority owned operating subsidiary, The RMR Group LLC, an alternative asset management company principally engaged in commercial real estate (CRE) businesses. Founded in 1986 to manage CRE companies and related businesses. $30.0 billion of assets under management (AUM). Over 550 CRE professionals in its corporate headquarters in Newton (Boston), MA and more than 35 office locations throughout the U.S. Combined managed companies have approximately $11 billion of annual revenues, over 1,400 properties and approximately 52,000 employees. RMR manages four types of CRE businesses: Publicly traded REITs and private companies that directly invest in CRE. Publicly traded and privately held CRE related operating businesses. Investments in publicly traded securities of real estate companies. (1) CRE debt origination and fund/account management. (2) As of December 31, (1) Managed by RMR Advisors LLC, a wholly owned SEC registered investment adviser subsidiary of The RMR Group LLC. (2) Private funds/accounts that principally make private debt investments in CRE are managed by Tremont Realty Advisors LLC, a wholly owned SEC registered investment adviser subsidiary of The RMR Group LLC. 4

5 Corporate Structure (1) Public Shareholders (7.1 million shares of Class A Common Stock) Managed REITs (HPT, SNH, SIR & GOV) ABP Trust (Barry Portnoy & Adam Portnoy) (3) The RMR Group LLC Indirect Economic Interest (2) 43.7% 49.1% 7.2% The RMR Group Inc. (Nasdaq: RMR) 51.9% 48.1% The RMR Group LLC Public Shareholders (7.1 million shares of Class A Common Stock), 22.6% Managed REITs (HPT, SNH, SIR & GOV), 25.5% ABP Trust (Barry Portnoy & Adam Portnoy), 51.9% (3) 100% 100% RMR Advisors LLC Tremont Realty Advisors LLC As of December 31, (1) Based on 15,164,066 shares of Class A common stock and 1,000,000 million shares of Class B-1 common stock outstanding as of December 31, (2) The indirect economic interest in The RMR Group LLC is held through The RMR Group Inc. (3) ABP Trust is beneficially owned by Barry Portnoy and Adam Portnoy. In addition to ownership of 1,000,000 million shares of Class B-1 Common Stock, ABP Trust, Barry Portnoy and Adam Portnoy collectively own 162,567 shares of Class A common stock of The RMR Group Inc. and 15,000,000 million shares of Class B-2 Common Stock, which collectively provide them voting control of The RMR Group Inc. 5

6 RMR Managed Equity REITs The managed equity REITs have no employees; RMR is responsible for all their day to day operations. Hospitality Properties Trust (Nasdaq: HPT) Senior Housing Properties Trust (Nasdaq: SNH) Government Properties Income Trust (Nasdaq: GOV) Select Income REIT (Nasdaq: SIR) (1) Industrial Logistics Properties Trust (Nasdaq: ILPT) (1) HPT owns 522 hotel and retail properties, located in 45 states, Puerto Rico and Canada. - AUM: $10.0 billion - Investment Grade Rated: Baa2 (Moody s) / BBB- (S&P) SNH owns 440 senior living communities and medical office buildings, located in 42 states and Washington, D.C. - AUM: $8.4 billion - Investment Grade Rated: Baa3 (Moody s) / BBB- (S&P) GOV owns 110 office and industrial properties that are majority leased to the U.S. Government and state governments, located in 31 states and Washington, D.C. - AUM: $3.6 billion - Investment Grade Rated: Baa3 (Moody s) / BBB- (S&P) SIR owns 124 office and industrial properties (366 buildings, leasable land parcels and easements) that are primarily leased to single tenants, located in 36 states. - AUM: $4.9 billion - Investment Grade Rated: Baa3 (Moody s) / BBB- (S&P) ILPT owns 266 industrial and logistics properties, located in 25 states, including 226 properties (buildings, leasable land parcels and easements) located on the island of Oahu, Hawaii. - AUM: $1.4 billion RMR earns fees pursuant to 20 year Business Management Agreements and 20 year Property Management Agreements with the managed equity REITs. Business management revenues principally consist of annual fees based on 50 bps multiplied by the lower of: (1) the historical cost of real estate, or (2) total market capitalization. Property management revenues principally consist of annual fees based on 3.0% of gross rents collected at certain managed properties. Business management incentive fees are equal to 12% of value generated in excess of benchmark index total returns per share, subject to caps. As of December 31, (1) As of December 31, 2017, ILPT owned 266 of SIR s buildings, leasable land parcels and easements. ILPT was SIR s wholly owned subsidiary until January 17, 2018, when ILPT completed an initial public offering, or IPO, of its common shares and became a publicly traded REIT. 6

7 RMR Managed Operating Companies TravelCenters of America LLC (Nasdaq: TA) Five Star Senior Living Inc. (Nasdaq: FVE) Sonesta International Hotels Corporation (Privately Owned) TA operates more than 250 full service travel centers located along the U.S. Interstate Highway System plus over 280 convenience stores and standalone family style restaurants. - Annual revenues of $6.1 billion. (1) - Approximately 24,000 employees. FVE operates more than 280 senior living communities throughout the U.S. - Annual revenues of $1.4 billion. (2) - Approximately 24,500 employees. Sonesta manages or franchises 64 hotels and cruise ships in eight countries. - Annual revenues of $323 million. (2) - Approximately 3,000 employees. Revenues earned from TA, FVE and Sonesta consist of annual fees based on 60 bps multiplied by revenues (as defined). Some, but not all, of the properties operated by TA, FVE and Sonesta are owned by the managed REITs. As of December 31, (1) Actual results for the year ended December 31, (2) Actual results for the year ended December 31,

8 RMR s Closed End Fund and Mortgage REIT Business RMR Advisors LLC RMR Advisors LLC is an SEC registered investment advisor that manages the RMR Real Estate Income Fund (RIF). RMR Advisors is focused on investing in real estate securities, including real estate investment trusts (REITs) and other dividend paying securities. As of December 31, 2017, RMR Advisors had approximately $342 million of assets under management. RMR Advisors LLC is a wholly owned subsidiary of The RMR Group LLC. Tremont Realty Advisors LLC Tremont Realty Advisors LLC is an SEC registered investment advisor that manages Tremont Mortgage Trust (TRMT). Since the Tremont business was founded in 2000, Tremont s originations team has originated for its clients over 400 real estate financing transactions totaling approximately $4.6 billion. Tremont Advisors LLC is now a wholly owned subsidiary of The RMR Group LLC. RMR Real Estate Income Fund RMR Real Estate Income Fund (NYSE American: RIF) is a closed-end fund that invests primarily in common and preferred securities issued by REITs and other real estate companies (other than companies managed by or affiliated with RMR). Tremont Mortgage Trust Tremont Mortgage Trust (Nasdaq: TRMT) is a real estate finance company focusing primarily on originating and investing in first mortgage loans secured by middle market and transitional commercial real estate (CRE). Revenues earned from RIF consist of annual fees based on 85 bps multiplied by average assets under management. Revenues earned from TRMT consist of an annual base management fee based on 1.5% of equity, and an incentive fee based on 20% of core earnings over a 7% hurdle rate. As of December 31,

9 Management and Operating Platform 9

10 Management Team 1. Adam Portnoy Managing Director, President & Chief Executive Officer 20. Bill Myers Senior Vice President 2. David Blackman* Executive Vice President 21. Barry Richards Senior Vice President 3. Jennifer Clark* Executive Vice President, General Counsel & Secretary 22. Richard Siedel Senior Vice President 4. David Hegarty* Executive Vice President 23. Mark Young Senior Vice President 5. Matthew Jordan* Executive Vice President, Chief Financial Officer & Treasurer 24. Jacquelyn Anderson Vice President, Legal & Assistant General Counsel 6. Mark Kleifges* Executive Vice President 25. Diane Bastianelli Vice President, Acquisitions Diligence & Dispositions 7. Bruce Mackey* Executive Vice President 26. Christopher Bilotto Vice President, Asset Management 8. John Murray* Executive Vice President 27. Scott Bloomfield Vice President, Accounting Information Systems 9. John Popeo* Executive Vice President 28. Fernando Diaz Vice President, RMR Funds 10. Andrew Rebholz* Executive Vice President 29. Todd Hargreaves Vice President, Acquisitions 11. Timothy Bonang Senior Vice President 30. Douglas Lanois Vice President, Tremont Realty Capital 12. Ethan Bornstein Senior Vice President 31. George Martin Vice President, Tax 13. David Campoli Senior Vice President 32. Daniel Melia Vice President, RMR Real Estate Services 14. Richard Doyle Senior Vice President 33. Steve Miano Vice President, Accounting 15. Carlos Flores Senior Vice President 34. Katherine Potter Vice President, Legal & Assistant General Counsel 16. Jennifer Francis Senior Vice President 35. David SanClemente Vice President, Information Technology & CIO 17. Richard Gallitto Senior Vice President 36. Lynn Schemmel Vice President, RMR Real Estate Services 18. Eileen Kiley Senior Vice President 37. Vern Larkin Director of Internal Audit 19. Daniel Mee Senior Vice President Some of the RMR Managed Businesses: RMR s Operations Include: Accounting Acquisitions Administration Building Operations Compliance/Internal Audit Construction Development Dispositions Engineering Finance Financial Planning Human Resources Information Services Investor Relations Leasing Marketing Market Research Risk Management Tax As of December 31, * Member of the RMR Executive Operating Committee 10

11 RMR Operates a Nationwide Real Estate Platform Seattle Ontario, Canada Sacramento San Jose Denver Minneapolis Newton (Boston) Hartford Philadelphia New York / Long Island Chicago (2) Cleveland Baltimore / Annapolis Washington D.C. (4) Kansas City (2) Indianapolis Richmond Los Angeles Newport Beach San Diego Phoenix Albuquerque Dallas Atlanta (2) Columbia Honolulu (2) Austin Houston Puerto Rico RMR corporate headquarters. RMR offices. Where RMR managed properties or real estate businesses are located. RMR has over 550 CRE professionals in its corporate headquarters in Newton (Boston), MA and more than 35 office locations throughout the U.S. As of December 31,

12 Financials 12

13 Revenue Base Recurring Revenues by Client Recurring Revenues by Contract Five Star 1% TA 2% Sonesta 0% Other (RIF, TRMT, AIC, Tremont, ABP Trust) 1% GOV 4% SNH 33% SIR 17% HPT 42% Incentive Management 76% Property Management 5% Advisory Business 1% Management 18% ($ in 000s) Three Months Ended December 31, 2017 Business Incentive Property Advisory Management Management Management Services Total Client Company Revenues Revenue Revenues Revenues $ % HPT $ 10,587 $ 74,572 $ 12 $ - $ 85, % SNH 9,878 55,740 2,917-68, % SIR 5,828 25,569 3,147-34, % GOV 4,309-4,287-8, % Managed Equity REITs 30, ,881 10, , % TA 3, , % Five Star 2, , % Sonesta % Managed Operators 6, , % Other (RIF, TRMT, AIC, Tremont, ABP Trust) ,382 2, % Total $ 37,712 $ 155,881 $ 10,858 $ 1,382 $ 205, % 13

14 Sources of Revenues Industrial, 5.9% $30.0 billion (1) Private Debt Funds/Accounts and Publicly Traded Securities, 2.0% (3) Properties (2) Office Properties 305 Hotels 327 Senior Living, 17.0% Office, 35.7% Senior Living Communities (4) 330 Retail Properties 446 Retail, 17.8% Industrial Properties 67 Hotels, 21.6% Total 1,475 RMR managed properties are located throughout North America, including 48 states, Washington, D.C., Puerto Rico and Canada. (1) Total AUM of RMR as of December 31, (2) Total properties of combined RMR managed companies as of December 31, (3) Private debt funds/accounts and publicly traded securities managed by RMR s wholly owned SEC registered investment adviser subsidiaries. (4) Includes one multifamily property. 14

15 Demonstrated History of Growth RMR has grown by working with its clients to expand their businesses and by creating new clients. Since 1986, RMR has assisted its clients in completing over $34 billion of financing in over 160 capital raising transactions. Managed Assets (1) and Management Services Revenues ($ in thousands) As of and for the Fiscal Years Ended September 30, Total managed assets $ 21,825,608 $ 24,301,810 $ 26,179,819 $ 27,538,146 $ 25,539,125 $ 26,858,438 $ 28,469,147 Annual growth 11% 8% 5% (7%) 5% 6% Total managed assets (excluding EQC) (2) $ 13,770,118 $ 16,753,940 $ 18,489,429 $ 20,594,951 $ 25,539,125 $ 26,858,438 $ 28,469,147 Annual growth 22% 10% 11% 24% 5% 6% Total management services revenues $ 157,023 $ 181,692 $ 197,504 $ 218,753 $ 162,326 $ 226,660 $ 227,294 Annual growth 16% 9% 11% (26%) 40% 0% Total management services revenues (excluding EQC) (2) $ 89,964 $ 110,633 $ 125,882 $ 137,121 $ 156,046 $ 226,602 $ 227,294 Annual growth 23% 14% 9% 14% 45% 0% (1) The calculation of total assets under management includes: (i) the gross book value of real estate and related assets, excluding depreciation, amortization, impairment charges or other non-cash reserves, of the Managed Equity REITs and ABP Trust, plus (ii) the gross book value of real estate assets, property and equipment of the Managed Operators, excluding depreciation, amortization, impairment charges or other non-cash reserves, plus (iii) the fair value of investments of Affiliates Insurance Company, the managed assets of RMR Real Estate Income Fund and the equity of Tremont Mortgage Trust, plus (iv) the contributed capital and outstanding principal of loans serviced for certain private clients. This calculation of total assets under management may include amounts in respect of the Managed Equity REITs that are higher than the calculations of assets under management used for purposes of calculating fees under the terms of the business management agreements, which are based, in part, upon the lesser of the historical cost of real estate assets or total market capitalization. (2) Equity Commonwealth ( EQC ) is a publicly traded REIT that primarily owns office properties. EQC was an RMR client for the periods presented until The RMR Group LLC and EQC terminated their business management agreement as of September 30, 2014; thereafter The RMR Group LLC provided only limited transition services. 15

16 Recurring Cash Flow and Dividend Coverage As of and for the Three Months Ended ($ in 000s, except per share data) December 31, 2017 Contractual Management and Advisory Fees (1) $ 52,306 Net Income $ 159,324 Adjusted EBITDA (2) $ 30,540 As a % of Adjusted Revenues 58.4% Anticipated Dividends (3) $ 7,791 As a % of Adjusted EBITDA 25.5% Fully diluted weighted average adjusted shares outstanding (4) 31,084 Per share data: Contractual Management and Advisory Fees (1) $ 1.68 Adjusted EBITDA (2) $ 0.98 Anticipated Dividends (3) $ 0.25 (1) Contractual Management and Advisory Fees exclude incentive business management fees, if any. (2) See exhibit herein for a reconciliation to nearest GAAP measure. (3) The RMR Group Inc. intends to pay a cash dividend equal to $0.25 per share of Class A Common Stock per quarter ($1.00 per share per year). Anticipated Dividends presented assumes all of the membership units of The RMR Group LLC owned by ABP Trust are converted into Class A Common Stock of The RMR Group Inc. The declaration and payment of dividends is at the discretion of The RMR Group Inc. s Board of Directors, which may change RMR s dividend policy or discontinue dividends at any time. (4) Fully diluted weighted average adjusted shares outstanding assume all membership units of The RMR Group LLC owned by ABP Trust are converted into Class A Common Stock of The RMR Group Inc. 16

17 Summary Balance Sheet As of ($ in 000s) December 31, 2017 Cash and cash equivalents $ 125,966 Other assets 403,821 Total assets $ 529,787 Total debt $ - Total liabilities 103,308 Total equity 426,479 Total liabilities and equity $ 529,787 $30.5 million of recurring Adjusted EBITDA per quarter. No current outstanding debt. We expect to principally use operating cash flow to fund growth. Flexibility to use debt and/or equity to finance expansion, including possible acquisitions. 17

18 Investment Highlights 18

19 Investment Highlights 1) Stable revenue base from recurring management fees, anchored by 20 year agreements with the managed REITs. 2) Diverse sources of revenues from multiple businesses and a wide range of real estate properties located throughout the U.S. 3) Proven ability to grow fee revenues historically and a balance sheet with zero debt positions RMR well for possible future expansion. 4) Robust cash flow available to fund dividend; current cash and cash equivalents of $126 million. 5) Significant insider ownership provides a strong alignment of interests with public shareholders. 6) Experienced and deep management team with proven ability to manage and grow business. 19

20 Appendix 20

21 Reconciliation of Non-GAAP Financial Metrics For the Three Months Ended ($ in 000s) December 31, 2017 Reconciliation of EBITDA and Adjusted EBITDA: (1) Net income $ 159,324 Plus: income tax expense 48,343 Plus: depreciation and amortization 380 EBITDA 208,047 Plus: Members' profit sharing - Plus: other asset amortization 2,354 Plus: operating expenses paid in RMR Inc. common shares 566 Plus: transaction costs related to the initial public offering of TRMT 142 Plus: business compromise fraud costs 225 Plus: equity in losses of investees 222 Less: certain other adjustments (425) Less: tax receivable agreement remeasurement due to the Tax Cuts and Jobs Act (24,710) Less: incentive business management fees earned (155,881) Adjusted EBITDA $ 30,540 Calculation of Adjusted EBITDA Margin: (1) Contractual management and advisory fees (2) $ 52,306 Adjusted EBITDA $ 30,540 Adjusted EBITDA Margin 58.4% (1) EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are non-gaap financial measures calculated as presented in the tables above. The RMR Group Inc. considers EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin to be appropriate supplemental measures of its operating performance, along with net income, net income attributable to The RMR Group Inc. and operating income. The RMR Group Inc. believes that EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin provide useful information to investors because by excluding the effects of certain amounts, such as income tax expense, depreciation and amortization, incentive business management fees earned, other asset amortization, operating expenses paid in The RMR Group Inc.'s common shares, transaction costs related to the initial public offering of TRMT, business compromise fraud costs, equity in losses of investees, tax receivable agreement remeasurement due to the Tax Cuts and Jobs Act and certain other adjustments, EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin may facilitate a comparison of current operating performance with The RMR Group Inc. s historical operating performance and with the performance of other asset management businesses. In addition, The RMR Group Inc. believes that providing Adjusted EBITDA Margin may help investors assess The RMR Group Inc. s performance of its business by providing the margin that Adjusted EBITDA represents to its contractual management and advisory fees (excluding any incentive business management fees). EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin do not represent cash generated by operating activities in accordance with GAAP and should not be considered as alternatives to net income, net income attributable to The RMR Group Inc. or operating income as an indicator of The RMR Group Inc. s financial performance or as a measure of The RMR Group Inc. s liquidity. These measures should be considered in conjunction with net income, net income attributable to The RMR Group Inc. and operating income as presented in The RMR Group Inc.'s condensed consolidated statements of income. Also, other asset management businesses may calculate EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin differently than The RMR Group Inc. does. (2) These contractual management fees are the base business management fees, property management fees and advisory fees The RMR Group Inc. earns pursuant to its management and investment advisory agreements with its client companies. These amounts are calculated pursuant to the contractual formulas and do not deduct other asset amortization of $2,354 for each of the three months ended December 31, 2017 and 2016, required to be recognized as a reduction to management services revenues in accordance with GAAP and do not include the incentive business management fees of $155,881 and $52,407 that The RMR Group Inc. recognized under GAAP during the three months ended December 31, 2017 and 2016, respectively, which were earned for the calendar years 2017 and 2016, respectively. 21

22 March 2018 The RMR Group Two Newton Place 255 Washington Street, Suite 300 Newton, Massachusetts Phone: (617) Investor Relations Phone: (617)