---

---

---

---

---

---

---

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 June 30, 2020, RMR Inc. owned 15,315,445 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 52.1% of the economic interest of RMR LLC as of June 30, 2020. 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 47.9% of the economic interest of RMR LLC as of June 30, 2020, which is presented as a noncontrolling interest within the condensed consolidated financial statements. Adam D. Portnoy, one of our Managing Directors, is the sole trustee of ABP Trust, and owns all of ABP Trust’s voting securities.

RMR LLC was founded in 1986 to manage public investments in real estate and, as of June 30, 2020, managed a diverse portfolio of publicly owned real estate and real estate related businesses. RMR LLC provides management services to four publicly traded real estate investment trusts, or REITs: Diversified Healthcare Trust, or DHC, which owns medical office and life science properties, senior living communities and wellness centers; Industrial Logistics Properties Trust, or ILPT, which owns and leases industrial and logistics properties; Office Properties Income Trust, or OPI, which owns office properties primarily leased to single tenants and those with high quality credit characteristics, including the government; and Service Properties Trust, or SVC, which owns a diverse portfolio of hotels and net lease service and necessity-based retail properties. Until December 31, 2018, RMR LLC provided management services to Select Income REIT, or SIR. On December 31, 2018, SIR merged with and into a subsidiary of OPI (then named Government Properties Income Trust, or GOV), or the GOV/SIR Merger, which then merged with and into OPI, with OPI as the surviving entity. The combined company continues to be managed by RMR LLC pursuant to OPI’s business and property management agreements with RMR LLC. DHC, ILPT, OPI, SVC and, until December 31, 2018, SIR, are collectively referred to as the Managed Equity REITs.

RMR LLC also provides management services to other publicly traded and private businesses, including: Five Star Senior Living Inc., or Five Star, a publicly traded operator of senior living communities, many of which are owned by DHC; Sonesta International Hotels Corporation, or Sonesta, a privately owned franchisor and operator of hotels, resorts and cruise ships in the United States, Latin America, the Caribbean and the Middle East, many of whose U.S. hotels are owned by SVC; and TravelCenters of America Inc., or TA, an operator and franchisor of travel centers along the U.S. Interstate Highway System, many of which are owned by SVC, standalone truck service facilities and restaurants. Hereinafter, Five Star, Sonesta and TA are collectively referred to as the Managed Operators. In addition, RMR LLC also provides management services to certain related private companies, including ABP Trust and its subsidiaries, or collectively ABP Trust, and provided management services to Affiliates Insurance Company, or AIC, an Indiana insurance company, until its dissolution on February 13, 2020, and RMR Office Property Fund LP, or the Open End Fund, until its dissolution on July 28, 2020.

RMR Advisors LLC, or RMR Advisors, is an investment adviser registered with the Securities and Exchange Commission, or SEC. RMR Advisors is a wholly-owned subsidiary of RMR LLC and is the adviser to RMR Mortgage Trust (formerly known as RMR Real Estate Income Fund), or RMRM. RMRM is currently a closed-end investment company. On April 16, 2020, shareholders of RMRM approved its conversion from a registered investment company to a commercial mortgage REIT and amended RMRM’s fundamental investment policies and restrictions to permit RMRM to pursue its new business. RMRM is focused on realigning its portfolio so that it is no longer an “investment company” under the Investment Company Act of 1940, or the 1940 Act, and has applied to the SEC to deregister as an investment company under the 1940 Act.

Tremont Realty Advisors LLC, or Tremont Advisors, an investment adviser registered with the SEC, was formed in connection with the acquisition of certain assets of Tremont Realty Capital LLC, or the Tremont business. Tremont Advisors is a wholly owned subsidiary of RMR LLC that manages Tremont Mortgage Trust, or TRMT, a publicly traded mortgage real estate investment trust, and, as of December 18, 2019, Centre Street Finance LLC, or Centre Street, a private fund. Both TRMT and Centre Street focus primarily on originating and investing in first mortgage whole loans secured by middle market and transitional commercial real estate. Centre Street is a direct wholly owned subsidiary of ABP Trust. TRMT, together with

---

Centre Street, are referred to as the Tremont Advisory Clients. The Tremont business also acts as a transaction originator for non-investment advisory clients for negotiated fees.

In these financial statements, we refer to the Managed Equity REITs, the Managed Operators, RMRM, TRMT, AIC, ABP Trust, the Open End Fund, Centre Street and the clients of the Tremont business as our Client Companies. We refer to the Managed Equity REITs and TRMT collectively as the Managed REITs.

The accompanying condensed consolidated financial statements of RMR Inc. are unaudited. Certain information and disclosures required by U.S. Generally Accepted Accounting Principles, or GAAP, for complete financial statements have been condensed or omitted. We believe the disclosures made are adequate to make the information presented not misleading. However, the accompanying condensed consolidated financial statements should be read in conjunction with the financial statements and notes contained in our Annual Report on Form 10-K for the fiscal year ended September 30, 2019, or our 2019 Annual Report. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of results for the interim period have been included. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Our operating results for interim periods are not necessarily indicative of the results that may be expected for the full year.

Preparation of these financial statements in conformity with GAAP requires our management to make certain estimates and assumptions that may affect the amounts reported in these financial statements and related notes. The actual results could differ from these estimates.

Recently Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2016-02, Leases, as amended, or ASU No. 2016-02, which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). ASU No. 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification determines whether the lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right of use asset and a lease liability for all leases with a term of greater than twelve months regardless of their classification.

On October 1, 2019, we adopted ASU No. 2016-02 along with certain allowable practical expedients using the modified retrospective transition approach. We elected to apply the guidance to each lease that had commenced as of the adoption date. We also elected a package of practical expedients that allowed us not to reassess (i) whether any expired or existing contracts are or contain leases, (ii) the lease classification for any expired or existing leases and (iii) the recognition requirements for initial direct costs for any expired or existing leases. Additionally, we elected to account for the lease and non-lease components as a single lease component.

The adoption of ASU No. 2016-02 did not affect our condensed consolidated statements of income and cash flows. See Note 10, Leases, for further information regarding the adoption of ASU No. 2016-02.

Recent Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, or ASU No. 2016-13, which requires that entities use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU No. 2016-13 will become effective for fiscal years beginning after December 15, 2019. The effective date for us is the first day of fiscal year 2021 (October 1, 2020). We have not historically experienced credit losses from our Client Companies and do not expect the adoption of ASU No. 2016-13 to have a material impact on our condensed consolidated financial statements.

---

Base Business Management Fees—Managed Equity REITs

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 monthly in arrears. For purposes of these fees, a Managed Equity REIT’s assets under management do not include shares it owns of another Client Company.

For the three months ended June 30, 2020 and 2019, we earned aggregate base business management fees from the Managed Equity REITs of $21,010 and $24,833, respectively. For the nine months ended June 30, 2020 and 2019, we earned aggregate base business management fees from the Managed Equity REITs of $72,928 and $78,640, respectively.

Incentive Business Management Fees—Managed Equity REITs

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, except for ILPT, whose annual incentive business management fee is based on a shorter period from its initial public offering on January 12, 2018 through the applicable calendar year end. On December 31, 2018, RMR LLC’s business management agreements with ILPT and OPI were amended to provide that, for periods beginning on and after January 1, 2019, the SNL U.S. Industrial REIT Index and the SNL U.S. Office REIT Index will be used by ILPT and OPI, respectively, rather than the SNL U.S. REIT Equity Index, to calculate the benchmark return per share, as defined, for purposes of determining the incentive business management fee, if any, payable thereunder.

For the nine months ended June 30, 2020 and 2019, we recognized aggregate incentive business management fees earned from the Managed Equity REITs of zero and $120,094, respectively.

Management Agreements—Managed Operators, ABP Trust, AIC and the Open End Fund

We earn management fees by providing continuous services pursuant to the management agreements from the Managed Operators and until December 31, 2019, ABP Trust, equal to 0.6% of: (i) in the case of Five Star, Five Star’s revenues from all sources reportable under GAAP, less any revenues reportable by Five Star 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; (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; and (iv) in the case of ABP Trust, revenues from all sources reportable under GAAP. Effective January 1, 2020,

---

management fees earned from ABP Trust are equal to 0.5% of ABP Trust’s average invested capital, as defined in the management agreement. These fees are estimated and payable monthly in advance.

Until June 30, 2019, we earned fees from AIC pursuant to a management agreement equal to 3.0% of its total premiums paid under active insurance underwritten or arranged by AIC. AIC’s property insurance program expired on June 30, 2019 and was not continued. As a result, we have not earned any management fees from AIC since that date through AIC’s dissolution on February 13, 2020.

We earn fees from the Open End Fund by providing a continuing and suitable real estate investment program consistent with the Open End Fund’s real estate investment policies and objectives pursuant to an administration services agreement. We earn fees equal to 1.0% of the Open End Fund’s net asset value, as defined, annually. These fees are payable quarterly in arrears. The Open End Fund was dissolved on July 28, 2020. As a result, we will not earn any fees subsequent to that date.

We earned aggregate fees from the Managed Operators, ABP Trust, AIC and the Open End Fund of $5,963 and $7,145 for the three months ended June 30, 2020 and 2019, respectively, and $19,626 and $21,292 for the nine months ended June 30, 2020 and 2019, respectively.

Property Management Fees

We earn property management fees by providing continuous services pursuant to property management agreements with certain Client Companies. 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 in connection with certain construction activities undertaken at the managed properties equal to 5.0% of the cost of such construction. We earned aggregate property management fees of $11,618 and $11,626 for the three months ended June 30, 2020 and 2019, respectively, and $35,851 and $33,603 for the nine months ended June 30, 2020 and 2019, respectively.

Advisory Services and Other Agreements

RMR Advisors is compensated pursuant to its agreement with RMRM at an annual rate of 0.85% of RMRM’s average daily managed assets. Average daily managed assets includes the net asset value attributable to RMRM’s outstanding common shares, plus the liquidation preference of RMRM’s outstanding preferred shares, plus the principal amount of any borrowings, including from banks or evidenced by notes, commercial paper or other similar instruments issued by RMRM. RMR Advisors earned advisory services revenue of $585 and $767 for the three months ended June 30, 2020 and 2019, respectively, and $2,139 and $2,225 for the nine months ended June 30, 2020 and 2019, respectively.

Tremont Advisors is primarily compensated pursuant to its management agreements with TRMT and Centre Street at an annual rate of 1.5% of TRMT’s and Centre Street’s equity, respectively, as defined in the applicable agreements. Tremont Advisors may also earn an incentive fee under these management agreements for TRMT and (beginning the first full calendar quarter of 2021) Centre Street. Tremont Advisors has waived any business management and incentive fees otherwise due and payable by TRMT pursuant to the management agreement for the period beginning July 1, 2018 until December 31, 2020.

Tremont Advisors earned advisory services revenue from the Tremont Advisory Clients of $40 and $35 for the three months ended June 30, 2020 and 2019, respectively, and $113 and $120 for the nine months ended June 30, 2020 and 2019, respectively, in each case net of the fee waiver referenced above, as applicable.

The Tremont business earns between 0.5% and 1.0% of the aggregate principal amounts of any loans it originates for non-investment advisory clients. The Tremont business earned fees for such origination services of $34 and $37 for the three months ended June 30, 2020 and 2019, respectively, and $816 and $194 for the nine months ended June 30, 2020 and 2019, respectively, which amounts are included in management services revenue in our condensed consolidated statements of income.

Reimbursable Compensation and Benefits

Reimbursable compensation and benefits include reimbursements, at cost, that arise primarily from services we provide pursuant to our property management agreements, a significant portion of which are charged or passed through to and were paid by tenants of our Client Companies. We recognize the revenue for reimbursements when we incur the related reimbursable compensation and benefits and other costs on behalf of our Client Companies. We realized reimbursable compensation and benefits of $13,749 and $13,583 for the three months ended June 30, 2020 and 2019, respectively, and $40,077 and $40,868 for the nine months ended June 30, 2020 and 2019, respectively. Included in reimbursable compensation

---

and benefits are shared services fees we earn from the Tremont Advisory Clients for compensation and other costs related to the operation of the Tremont business. We earned shared services fees from the Tremont Advisory Clients of $250 and $370 for the three months ended June 30, 2020 and 2019, respectively, and $964 and $1,076 for the nine months ended June 30, 2020 and 2019, respectively.

Reimbursable compensation and benefits also includes grants of common shares from Client Companies directly to certain of our officers and employees in connection with the provision of management services to those companies. The revenue in respect of each grant is based on the fair value as of the grant date for those shares that have vested, with subsequent changes in the fair value of the unvested grants being recognized in our condensed consolidated statements of income over the requisite service periods. We record an equal offsetting amount as equity based compensation expense for the value of the grants of common shares from our Client Companies to certain of our officers and employees. We realized equity based compensation expense and related reimbursements of $736 and $882 for the three months ended June 30, 2020 and 2019, respectively, and $1,394 and $2,954 for the nine months ended June 30, 2020 and 2019, respectively.

Other Client Company Reimbursable Expenses

Other client company reimbursable expenses include reimbursements that arise from services we provide pursuant to our property management agreements, a significant portion of which are charged or passed through to and were paid by tenants of our Client Companies. We have determined that we control the services provided by third parties for certain of our Client Companies and therefore we account for the cost of these services and the related reimbursement revenue on a gross basis.

We realized other client company reimbursable expenses reflecting corresponding amounts in revenue and expense of $85,650 and $85,689 for the three months ended June 30, 2020 and 2019, respectively, and $267,852 and $257,088 for the nine months ended June 30, 2020 and 2019, respectively.

Equity Method Investments

As of June 30, 2020, Tremont Advisors owned 1,600,100, or approximately 19.4%, of TRMT’s outstanding common shares. We account for our investment in TRMT using the equity method of accounting because we are deemed to exert significant influence, but not control, over TRMT’s most significant activities. Our share of earnings from our investment in TRMT included in equity in earnings of investees in our condensed consolidated statements of income was $458 and $174 for the three months ended June 30, 2020 and 2019, respectively, and $1,037 and $318 for the nine months ended June 30, 2020 and 2019, respectively. We received aggregate distributions from TRMT of $16 and $132 during the three months ended June 30, 2020 and 2019, respectively, and $721 and $198 during the nine months ended June 30, 2020 and 2019, respectively.

Equity Method Investment Accounted for Under the Fair Value Option

As of June 30, 2020, we owned 298,538, or approximately 3.6%, of TA’s outstanding common shares. We purchased these shares on October 10, 2018 for $8,382. On July 6, 2020, in conjunction with a public offering of TA’s common shares, we purchased an additional 218,577 shares for $3,060, maintaining our approximately 3.6% ownership of TA’s outstanding common shares. We account for our investment in TA using the equity method of accounting because we are deemed to exert significant influence, but not control, over TA’s most significant activities. We elected the fair value option to account for our equity method investment in TA and determine fair value using the closing price of TA’s common shares, which is a Level 1 fair value input. The market value of our investment in TA as of June 30, 2020 and September 30, 2019, based on quoted market prices, was $4,598 and $3,682, respectively. The unrealized gain (loss) in our condensed consolidated statements of income related to our investment in TA was $1,678 and ($731) for the three months ended June 30, 2020 and 2019, respectively, and $916 and ($2,978) for the nine months ended June 30, 2020 and 2019, respectively.

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 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.

---

For the three months ended June 30, 2020 and 2019, we recognized estimated income tax expense of $2,608 and $2,226, respectively, which includes $1,900 and $1,624, respectively, of U.S. federal income tax and $708 and $602, respectively, of state income taxes. For the nine months ended June 30, 2020 and 2019, we recognized estimated income tax expense of $8,944 and $24,335, respectively, which includes $6,578 and $17,756, respectively, of U.S. federal income tax and $2,366 and $6,579, respectively, of state income taxes.

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

		Three Months Ended June 30,						Nine Months Ended June 30,
		2020			2019			2020			2019
Income taxes computed at the federal statutory rate		21.0	%		21.0	%		21.0	%		21.0	%
State taxes, net of federal benefit		3.6	%		2.8	%		3.7	%		3.0	%
Permanent items		0.1	%		0.6	%		0.1	%		0.1	%
Net income attributable to noncontrolling interest		(10.2	)%		(10.1	)%		(10.1	)%		(10.1	)%
Total		14.5	%		14.3	%		14.7	%		14.0	%

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 June 30, 2020, we had no uncertain tax positions.

As of June 30, 2020 and September 30, 2019, the fair values of our financial instruments, which include cash and cash equivalents, amounts due from related parties and accounts payable and accrued expenses, which include liabilities related to other Client Company reimbursable expenses, were not materially different from their carrying values due to the short term nature of these financial instruments.

Recurring Fair Value Measures

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. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

Level 1 Estimates

The following are our assets and liabilities that all have been measured at fair value using Level 1 inputs in the fair value hierarchy as of June 30, 2020 and September 30, 2019:

		June 30,				September 30,
		2020				2019
Money market funds included in cash and cash equivalents		$	344,063			$	357,526
Current portion of due from related parties related to share based payment awards		998				4,814
Long term portion of due from related parties related to share based payment awards		5,837				9,238
Current portion of employer compensation liability related to share based payment awards		998				4,814
Long term portion of employer compensation liability related to share based payment awards		5,837				9,238

---

Adam D. Portnoy, one of our Managing Directors, is the sole trustee 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. As of June 30, 2020, Adam D. Portnoy beneficially owned, in aggregate, (i) 147,502 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; (iii) all the outstanding shares of Class B-2 common stock of RMR Inc., or Class B-2 Common Shares; and (iv) 15,000,000 Class A Units of RMR LLC. Adam D. Portnoy and Jennifer B. Clark, our other Managing Director, are also officers of ABP Trust and RMR Inc. and officers and employees of RMR LLC. Matthew P. Jordan, our Executive Vice President, Chief Financial Officer and Treasurer is also an officer of ABP Trust and an officer and employee of RMR LLC.

Adam D. Portnoy is also the chair of the board of trustees of each of the Managed Equity REITs, the chair of the board of directors of each of Five Star and TA, a managing trustee or managing director of each of the Managed REITs, Five Star, RMRM and TA, a director of Sonesta (and its parent) and is a controlling shareholder of Sonesta. Jennifer B. Clark, our other Managing Director, is a managing trustee of DHC and RMRM, a managing director of FVE and a director of Sonesta, and she serves as the secretary of all the publicly traded Client Companies and Sonesta and as an officer of ABP Trust. Prior to its dissolution on February 13, 2020, Mr. Portnoy was a director of AIC and Ms. Clark was the president and chief executive officer of AIC. As of June 30, 2020, Adam D. Portnoy beneficially owned, in aggregate, 6.4% of Five Star’s outstanding common shares, 1.1% of SVC’s outstanding common shares, 1.2% of ILPT’s outstanding common shares, 1.5% of OPI’s outstanding common shares, 1.1% of DHC’s outstanding common shares, 4.0% of TA’s outstanding common shares (including through RMR LLC), 2.3% of RMRM’s outstanding common shares, and 19.5% of TRMT’s outstanding common shares (including through Tremont Advisors). Until its dissolution on February 13, 2020, ABP Trust owned 14.3% of AIC.

The Managed Equity REITs, the Open End Fund, TRMT and RMRM all have no employees. RMR LLC provides or arranges for all the personnel, overhead and services required for the operation of the Managed Equity REITs, the Open End Fund (until its dissolution on July 28, 2020) and AIC (until its dissolution on February 13, 2020), pursuant to management agreements with them. All the officers of the Managed Equity REITs and the Open End Fund are officers or employees of RMR LLC. All the officers, overhead and required office space of TRMT are provided or arranged by Tremont Advisors. All of TRMT’s officers are officers or employees of Tremont Advisors or RMR LLC. All officers, overhead and required office space of RMRM are provided or arranged by RMR Advisors. All of RMRM’s officers are officers or employees of RMR Advisors or RMR LLC. Many of the executive officers of the Managed Operators are officers or employees of RMR LLC. Some of our executive officers are also managing directors or managing trustees of certain of the Managed REITs, the Managed Operators and RMRM.

As of June 30, 2020, ABP Trust owned 100% of Centre Street and 206,300 limited partnership units, or 100%, of the Open End Fund. RMR LLC owned no limited partnership units of the Open End Fund, but as of June 30, 2020, had committed to contributing $100,000 to, the Open End Fund. The general partner of the Open End Fund is a subsidiary of ABP Trust and is not entitled to any compensation for services rendered to the Open End Fund in its capacity as general partner. On July 28, 2020, the Open End Fund was dissolved and RMR LLC’s $100,000 commitment was terminated as a result. In connection with the dissolution of the Open End Fund, the Transaction Agreement, dated as of July 31, 2018, between ABP Trust and RMR LLC was terminated.

Additional information about our related person transactions appears in Note 8, Shareholders’ Equity, below and in our 2019 Annual Report.

---

Revenues from Related Parties

For the three and nine months ended June 30, 2020 and 2019, we recognized revenues from related parties as set forth in the following table:

		Three Months Ended June 30,														Nine Months Ended June 30,
		2020							2019							2020							2019
		$				%			$				%			$				%			$				%
Managed Equity REITs:
DHC (1)		$	43,472			31.4	%		$	43,483			30.3	%		$	128,076			29.1	%		$	166,313			30.0	%
ILPT		10,034				7.2			12,664				8.8			36,649				8.3			27,998				5.1
OPI (2)		58,443				42.1			57,374				39.9			179,895				41.0			171,731				31.0
SIR (1) (2)		—				—			—				—			—				—			47,843				8.6
SVC (1)		12,156				8.8			11,887				8.3			48,341				11.0			89,731				16.2
		124,105				89.5			125,408				87.3			392,961				89.4			503,616				90.9
Managed Operators:
Five Star		2,227				1.6			2,466				1.7			6,953				1.6			7,318				1.3
Sonesta		209				0.2			881				0.6			1,477				0.3			2,420				0.4
TA		3,130				2.3			3,455				2.4			10,021				2.3			10,536				1.9
		5,566				4.1			6,802				4.7			18,451				4.2			20,274				3.6
Other Client Companies:
ABP Trust		3,024				2.2			3,476				2.5			9,195				2.2			10,746				1.9
AIC		2				—			187				0.1			98				—			307				0.1
Open End Fund		4,738				3.4			5,583				3.9			13,653				3.1			13,693				2.5
RMRM		585				0.4			767				0.5			2,139				0.5			2,225				0.4
TRMT		577				0.4			1,283				0.9			1,932				0.4			2,857				0.5
Centre Street		18				—			—				—			108				—			—				—
		8,944				6.4			11,296				7.9			27,125				6.2			29,828				5.4
Total revenues from related parties		138,615				100.0			143,506				99.9			438,537				99.8			553,718				99.9
Revenues from unrelated parties		34				—			209				0.1			865				0.2			406				0.1
		$	138,649			100.0	%		$	143,715			100.0	%		$	439,402			100.0	%		$	554,124			100.0	%

(1)	The amounts for the nine months ended June 30, 2019 include incentive business management fees of $40,642, $25,817 and $53,635, which RMR LLC earned for the 2018 calendar year from DHC, SIR and SVC, respectively, and which were paid in January 2019.

(2)	OPI acquired SIR by merger on December 31, 2018. This table presents revenues for the nine months ended June 30, 2019 from SIR separately as they relate to a period prior to this merger.

---

Amounts Due From Related Parties

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

		June 30,				September 30,
		2020				2019
Managed Equity REITs:
DHC		$	28,374			$	25,505
ILPT		5,835				10,630
OPI		35,640				39,233
SVC		10,089				18,933
		79,938				94,301
Managed Operators:
Five Star		361				136
Sonesta		69				37
TA		454				392
		884				565
Other Client Companies:
ABP Trust		1,108				2,580
AIC		7				7
Open End Fund		2,161				4,567
RMRM		165				75
TRMT		877				664
Centre Street		9				—
		4,327				7,893
		$	85,149			$	102,759

Leases

As of June 30, 2020, RMR LLC leased from ABP Trust and certain Managed Equity REITs office space for use as our headquarters and local offices. We incurred rental expense under related party leases of $1,367 and $1,366 for the three months ended June 30, 2020 and 2019, respectively, and $4,230 and $4,224 for the nine months ended June 30, 2020 and 2019, respectively.

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. As of June 30, 2020, our condensed consolidated balance sheet reflects a liability related to the tax receivable agreement of $32,061, including $2,111 classified as a current liability that we expect to pay to ABP Trust during the fourth quarter of fiscal year 2020.

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 nine months ended June 30, 2020 and 2019, pursuant to the RMR LLC operating agreement, RMR LLC made required quarterly tax distributions to holders of its membership units totaling $23,062 and $59,279, respectively, of which $12,127 and $30,807, respectively, was distributed to us and $10,935 and $28,472, 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 condensed consolidated financial statements, and the amounts distributed to ABP Trust were recorded as a reduction of

---

its noncontrolling interest. We used 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.

Separation Arrangements

We entered into retirement agreements with each of Mark L. Kleifges, Bruce J. Mackey Jr. and John C. Popeo, each a former Executive Vice President of RMR LLC, between October 25, 2018 and December 11, 2018 in connection with their retirements. Pursuant to these agreements, we made various cash payments and accelerated the vesting of unvested shares RMR Inc. previously awarded to these retiring officers. We also enter into separation arrangements from time to time with other nonexecutive officers and employees of ours. There remains no further substantive performance obligations with respect to any such arrangements, and we in turn recognized all applicable provisions in our condensed consolidated statements of income as separation costs.

In December 2019, we entered into a retirement agreement with TA and a former executive officer of RMR LLC, Andrew J. Rebholz. Mr. Rebholz was also a managing director and chief executive officer of TA. Pursuant to his retirement agreement, Mr. Rebholz served as an employee of RMR LLC through June 30, 2020. Under Mr. Rebholz’s retirement agreement, RMR LLC paid Mr. Rebholz an annual base salary of $75 until June 30, 2020 and RMR LLC paid him a cash bonus in respect of 2019 of $250 in December 2019. RMR LLC also paid Mr. Rebholz an additional cash payment of $250 in 2020. In addition, in January 2020, we accelerated the vesting of all 7,300 unvested shares of RMR Inc. owned by Mr. Rebholz as of his retirement date, June 30, 2020. We recorded approximately $281 of equity based separation costs related to the acceleration of these shares for the nine months ended June 30, 2020.

For the three and nine months ended June 30, 2020 and 2019, we recognized cash and equity based separation costs as set forth in the following table:

		Three Months Ended June 30,								Nine Months Ended June 30,
		2020				2019				2020				2019
Former executive officers:
Cash separation costs		$	—			$	—			$	260			$	5,312
Equity based separation costs		—				—				281				1,488
		—				—				541				6,800
Former nonexecutive officers:
Cash separation costs		—				142				80				153
Equity based separation costs		—				97				24				97
		—				239				104				250
Total separation costs		$	—			$	239			$	645			$	7,050

Issuances and Repurchases

We grant our Class A Common Shares to our Directors, officers and employees under the 2016 Omnibus Equity Plan adopted in 2016, or the 2016 Plan. Shares issued to Directors vest immediately. Shares issued to employees vest in five equal, consecutive, annual installments, with the first installment vesting on the date of grant. We recognize share forfeitures as they occur. Compensation expense related to share grants is determined based on the market value of our shares on the date of grant, with the aggregate value of the granted shares amortized to expense over the related vesting period. Expense recognized for shares granted to Directors are included in general and administrative expenses and for shares granted to employees are included in equity based compensation in our condensed consolidated statements of income.

On March 11, 2020, we granted 3,000 of our Class A Common Shares, valued at $31.28 per share, the closing price of our Class A Common Shares on The Nasdaq Stock Market LLC, or Nasdaq, on that day, to each of our Managing Directors and Independent Directors as part of his or her annual compensation for serving as a Director. On June 23, 2020, in connection with the election of one of our Independent Directors, we awarded to such Director 3,000 of our common shares, valued at $31.66 per share, the closing price of our common shares on the Nasdaq on that day. For the three and nine months ended June 30, 2020, we recorded general and administrative expense of $95 and $564, respectively, for Director grants.

---

Equity based compensation expense related to shares granted to certain officers and employees was $563 and $452 for the three months ended June 30, 2020 and 2019, respectively, and $1,789 and $1,395 for the nine months ended June 30, 2020 and 2019, respectively. As of June 30, 2020, we had 109,210 unvested shares outstanding which are scheduled to vest as follows: 39,910 shares in 2020, 31,940 shares in 2021, 23,280 shares in 2022 and 14,080 in 2023.

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. The repurchase price is based on the closing price of our Class A Common Shares on the Nasdaq on the repurchase date. During the nine months ended June 30, 2020, we withheld and repurchased 4,455 of our Class A Common Shares for an aggregate value of $155, which is reflected as a decrease to shareholders’ equity in our condensed 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.

Distributions

During the nine months ended June 30, 2020 and 2019, we declared and paid dividends on our Class A Common Shares and Class B-1 Common Shares as follows:

Declaration		Record		Paid		Distributions				Total
Date		Date		Date		Per Common Share				Distributions
Nine Months Ended June 30, 2020
10/17/2019		10/28/2019		11/14/2019		$	0.38			$	6,195
1/16/2020		1/27/2020		2/20/2020		0.38				6,194
4/16/2020		4/27/2020		5/21/2020		0.38				6,200
						$	1.14			$	18,589
Nine Months Ended June 30, 2019
10/18/2018		10/29/2018		11/15/2018		$	0.35			$	5,680
1/18/2019		1/28/2019		2/21/2019		0.35				5,680
4/18/2019		4/29/2019		5/16/2019		0.35				5,684
						$	1.05			$	17,044

These dividends were funded in part by distributions from RMR LLC to holders of its membership units as follows:

						Distributions Per				Total				RMR LLC				RMR LLC
Declaration		Record		Paid		RMR LLC				RMR LLC				Distributions				Distributions
Date		Date		Date		Membership Unit				Distributions				to RMR Inc.				to ABP Trust
Nine Months Ended June 30, 2020
10/17/2019		10/28/2019		11/14/2019		$	0.30			$	9,391			$	4,891			$	4,500
1/16/2020		1/27/2020		2/20/2020		0.30				9,390				4,890				4,500
4/16/2020		4/27/2020		5/21/2020		0.30				9,394				4,894				4,500
						$	0.90			$	28,175			$	14,675			$	13,500
Nine Months Ended June 30, 2019
10/18/2018		10/29/2018		11/15/2018		$	0.30			$	9,369			$	4,869			$	4,500
1/18/2019		1/28/2019		2/21/2019		0.30				9,369				4,869				4,500
4/18/2019		4/29/2019		5/16/2019		0.30				9,372				4,872				4,500
						$	0.90			$	28,110			$	14,610			$	13,500

The remainder of the above noted dividends that were paid were funded with cash accumulated at RMR Inc.

On July 16, 2020, we declared a quarterly dividend on our Class A Common Shares and Class B-1 Common Shares to our shareholders of record as of July 27, 2020, in the amount of $0.38 per Class A Common Share and Class B-1 Common Share, or $6,200. This dividend will be partially funded by a distribution from RMR LLC to holders of its membership units in the

---

amount of $0.30 per unit, or $9,395, of which $4,895 will be distributed to us based on our aggregate ownership of 16,315,445 membership units of RMR LLC and $4,500 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 August 20, 2020.

Basic earnings per common share reflects net income attributable to RMR Inc. divided by our weighted average Class A Common Shares and our Class B-1 Common Shares outstanding during the applicable periods. 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 common share reflects net income divided by our weighted average Class A Common Shares and our Class B-1 Common Shares plus the effect of dilutive common share equivalents during the applicable periods. Diluted common share equivalents reflect the assumed issuance of Class A Common Shares pursuant to our 2016 Plan and the assumed issuance of Class A Common Shares related to the assumed redemption of the 15,000,000 Class A Units using the if-converted method.

Unvested Class A Common Shares granted to our employees are deemed participating securities for purposes of calculating earnings per common share because they have dividend rights. We calculate earnings per share using the two-class method. 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. Earnings attributable to unvested Class A Common Shares are excluded from earnings per share under the two-class method as reflected in our condensed consolidated statements of income.

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, that the aforementioned redemption would have on earnings per share, we considered that 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 three and nine months ended June 30, 2019, such redemption is not reflected in diluted earnings per share as the assumed redemption would be anti-dilutive. For the three and nine months ended June 30, 2020, the assumed redemption is dilutive to earnings per share as presented in the table below. The calculation of basic and diluted earnings per share for the three and nine months ended June 30, 2020 and 2019, is as follows:

---

		Three Months Ended June 30,								Nine Months Ended June 30,
		2020				2019				2020				2019
Numerators:
Net income attributable to The RMR Group Inc.		$	6,717			$	5,849			$	22,634			$	66,226
Income attributable to unvested participating securities		(48		)		(37		)		(166		)		(437		)
Net income attributable to The RMR Group Inc. used in calculating basic EPS		6,669				5,812				22,468				65,789
Effect of dilutive securities:
Add back: net income attributable to noncontrolling interest		8,678				—				29,306				—
Add back: income tax expense		2,608				—				8,944				—
Income tax expense at enacted tax rates assuming redemption of noncontrolling interest’s Class A Units for Class A Common Shares		(5,313		)		—				(18,114		)		—
Net income attributable to The RMR Group Inc. used in calculating diluted EPS		$	12,642			$	5,812			$	42,604			$	65,789
Denominators:
Weighted average common shares outstanding - basic		16,198				16,137				16,187				16,126
Effect of dilutive securities:
Assumed redemption of noncontrolling interest’s Class A Units for Class A Common Shares		15,000				—				15,000				—
Incremental unvested shares		—				12				—				16
Weighted average common shares outstanding - diluted		31,198				16,149				31,187				16,142
Net income attributable to The RMR Group Inc. per common share - basic		$	0.41			$	0.36			$	1.39			$	4.08
Net income attributable to The RMR Group Inc. per common share - diluted		$	0.41			$	0.36			$	1.37			$	4.08

We enter into operating leases, as the lessee, for office space and determine if an arrangement is a lease at inception of the arrangement. Operating lease liabilities and right of use assets are recognized based on the present value of the future minimum lease payments over the lease term using our estimated incremental borrowing rate. Operating lease costs totaled $1,568 and $4,794 for the three and nine months ended June 30, 2020, respectively, including variable lease payments of $143 and $504, respectively, and straight-line rent amounts of $52 and $124, respectively. Minimum lease payments for leases with an initial term of twelve months or less are not recorded on our condensed consolidated balance sheet. Lease expense for leases with an initial term of twelve months or less was $11 and $44 for the three and nine months ended June 30, 2020, respectively. As of June 30, 2020, our operating leases expire on various dates through 2030, the weighted average remaining lease term was 9.1 years and the determination of the present value of the remaining lease payments utilized a weighted average discount rate of 3.1%.

---

The following table presents the undiscounted cash flows on an annual basis for our operating lease liabilities as of June 30, 2020:

2020		$	1,349
2021		5,480
2022		5,555
2023		4,926
2024		4,428
Thereafter		21,400
Total lease payments (1)		43,138
Less: imputed interest		(5,639		)
Present value of operating lease liabilities		37,499
Less: current portion of operating lease liabilities		(4,343		)
Operating lease liabilities, net of current portion		$	33,156

(1)	Excludes $771 of lease payments for signed leases that have not yet commenced.

---

We have one reportable business segment, which is RMR LLC. In the tables below, our All Other Operations includes the operations of RMR Inc., RMR Advisors and Tremont Advisors.

		Three Months Ended June 30, 2020
						All Other
		RMR LLC (1)				Operations				Total
Revenues:
Management services		$	38,590			$	35			$	38,625
Advisory services		—				625				625
Total management and advisory services revenues		38,590				660				39,250
Reimbursable compensation and benefits		13,479				270				13,749
Other client company reimbursable expenses		85,650				—				85,650
Total reimbursable costs		99,129				270				99,399
Total revenues		137,719				930				138,649
Expenses:
Compensation and benefits		28,203				1,366				29,569
Equity based compensation		1,255				44				1,299
Total compensation and benefits expense		29,458				1,410				30,868
General and administrative		5,292				1,043				6,335
Other client company reimbursable expenses		85,650				—				85,650
Transaction and acquisition related costs		317				110				427
Depreciation and amortization		217				12				229
Total expenses		120,934				2,575				123,509
Operating income (loss)		16,785				(1,645		)		15,140
Interest and other income		667				60				727
Equity in earnings of investees		—				458				458
Unrealized gain on equity method investment accounted for under the fair value option		1,678				—				1,678
Income (loss) before income tax expense		19,130				(1,127		)		18,003
Income tax expense		—				(2,608		)		(2,608		)
Net income (loss)		$	19,130			$	(3,735	)		$	15,395
Total assets		$	655,413			$	49,310			$	704,723

(1)	Intersegment revenues of $988 recognized by RMR LLC for services provided to our All Other Operations segment have been eliminated in the condensed consolidated financial statements.

---

		Nine Months Ended June 30, 2020
						All Other
		RMR LLC (1)				Operations				Total
Revenues:
Management services		$	128,404			$	817			$	129,221
Advisory services		—				2,252				2,252
Total management and advisory services revenues		128,404				3,069				131,473
Reimbursable compensation and benefits		38,684				1,393				40,077
Other client company reimbursable expenses		267,852				—				267,852
Total reimbursable costs		306,536				1,393				307,929
Total revenues		434,940				4,462				439,402
Expenses:
Compensation and benefits		84,401				5,487				89,888
Equity based compensation		3,079				104				3,183
Separation costs		645				—				645
Total compensation and benefits expense		88,125				5,591				93,716
General and administrative		17,731				2,947				20,678
Other client company reimbursable expenses		267,852				—				267,852
Transaction and acquisition related costs		366				1,230				1,596
Depreciation and amortization		696				35				731
Total expenses		374,770				9,803				384,573
Operating income (loss)		60,170				(5,341		)		54,829
Interest and other income		3,753				349				4,102
Equity in earnings of investees		—				1,037				1,037
Unrealized gain on equity method investment accounted for under the fair value option		916				—				916
Income (loss) before income tax expense		64,839				(3,955		)		60,884
Income tax expense		—				(8,944		)		(8,944		)
Net income (loss)		$	64,839			$	(12,899	)		$	51,940
Total assets		$	655,413			$	49,310			$	704,723

(1)	Intersegment revenues of $4,153 recognized by RMR LLC for services provided to our All Other Operations segment have been eliminated in the condensed consolidated financial statements.

---

		Three Months Ended June 30, 2019
						All Other
		RMR LLC (1)				Operations				Total
Revenues:
Management services		$	43,604			$	37			$	43,641
Advisory services		—				802				802
Total management and advisory services revenues		43,604				839				44,443
Reimbursable compensation and benefits		12,982				601				13,583
Other client company reimbursable expenses		85,689				—				85,689
Total reimbursable costs		98,671				601				99,272
Total revenues		142,275				1,440				143,715
Expenses:
Compensation and benefits		26,864				1,666				28,530
Equity based compensation		1,310				24				1,334
Separation costs		239				—				239
Total compensation and benefits expense		28,413				1,690				30,103
General and administrative		6,746				924				7,670
Other client company reimbursable expenses		85,689				—				85,689
Transaction and acquisition related costs		42				—				42
Depreciation and amortization		237				13				250
Total expenses		121,127				2,627				123,754
Operating income (loss)		21,148				(1,187		)		19,961
Interest and other income		2,185				223				2,408
Impairment loss on Tremont Mortgage Trust investment		—				(6,213		)		(6,213		)
Equity in earnings of investees		—				174				174
Unrealized loss on equity method investment accounted for under the fair value option		(731		)		—				(731		)
Income (loss) before income tax expense		22,602				(7,003		)		15,599
Income tax expense		—				(2,226		)		(2,226		)
Net income (loss)		$	22,602			$	(9,229	)		$	13,373
Total assets		$	606,164			$	54,275			$	660,439

(1)	Intersegment revenues of $909 recognized by RMR LLC for services provided to our All Other Operations segment have been eliminated in the condensed consolidated financial statements.

---

		Nine Months Ended June 30, 2019
						All Other
		RMR LLC (1)				Operations				Total
Revenues:
Management services		$	133,535			$	194			$	133,729
Incentive business management fees		120,094				—				120,094
Advisory services		—				2,345				2,345
Total management and advisory services revenues		253,629				2,539				256,168
Reimbursable compensation and benefits		39,103				1,765				40,868
Other client company reimbursable expenses		257,088				—				257,088
Total reimbursable costs		296,191				1,765				297,956
Total revenues		549,820				4,304				554,124
Expenses:
Compensation and benefits		80,800				4,723				85,523
Equity based compensation		4,270				79				4,349
Separation costs		7,050				—				7,050
Total compensation and benefits expense		92,120				4,802				96,922
General and administrative		19,298				2,814				22,112
Other client company reimbursable expenses		257,088				—				257,088
Transaction and acquisition related costs		273				—				273
Depreciation and amortization		723				39				762
Total expenses		369,502				7,655				377,157
Operating income (loss)		180,318				(3,351		)		176,967
Interest and other income		5,650				752				6,402
Impairment loss on Tremont Mortgage Trust investment		—				(6,213		)		(6,213		)
Equity in earnings of investees		—				318				318
Unrealized loss on equity method investment accounted for under the fair value option		(2,978		)		—				(2,978		)
Income (loss) before income tax expense		182,990				(8,494		)		174,496
Income tax expense		—				(24,335		)		(24,335		)
Net income (loss)		$	182,990			$	(32,829	)		$	150,161
Total assets		$	606,164			$	54,275			$	660,439

(1)	Intersegment revenues of $2,696 recognized by RMR LLC for services provided to our All Other Operations segment have been eliminated in the condensed consolidated financial statements.

---

•	the adverse impact of volatility in our Managed Equity REITs’ share prices and the adverse impacts to our business management fee revenues, as the majority of our Managed Equity REITs are currently paying business management fees on a total market capitalization basis,

•	tenants of our Client Companies’ ability to withstand the current economic conditions and continue as going concerns, including possible adverse impacts to our future property management fee revenues due to declines in our Client Companies’ tenant rental receipts,

•	our Client Companies’ operations, liquidity and capital needs and resources, including reductions in our construction management fees as a result of the Managed Equity REITs reducing or delaying their capital spending in order to conserve capital or because of construction moratoriums issued by governments in response to the COVID-19 pandemic,

•	our Client Companies’ ability to comply with financial covenants under their debt agreements,

•	our Client Companies’ ability to access debt and equity capital, and

•	possible government relief funding sources and other programs that may be available to us and our Client Companies.

---

•	installing signage throughout our managed properties with social distancing reminders;

•	changes to certain building HVAC systems and equipment, including adjusting outdoor air control programs to increase the amount of outside air delivered to interior spaces and to adjust control sequences to maintain space relative humidity in order to help minimize the concentration of the virus;

•	flushing domestic water systems to prepare for re-occupancy;

•	performing service calls and preventative maintenance after business hours to limit social interactions;

•	requiring vendors to follow best practices under COVID-19 pandemic conditions, including providing us with documented preventative measures for their employees and requiring staff to wear appropriate personal protective equipment when working at our managed properties; and

•	altering cleaning schedules to perform vacuuming at times intended to reduce the potential airborne spread of the virus.

---

•	the duration and severity of the negative economic impact, especially on the hospitality, senior living and service retail sectors,

•	the strength and sustainability of any economic recovery,

•

the timing and process for how federal, state and local governments and other market participants may oversee and conduct the return of economic activity when the COVID-19 pandemic abates, such as what continuing restrictions and protective measures may remain in place or be added and what restrictions and protective measures may be lifted or reduced in order to foster a return of increased economic activity in the United States, and

•	whether, following a recommencing of more normal levels of economic activities, the United States or other countries experience increased numbers of COVID-19 infections and, if so, the responses of governments, businesses and the general public to those events.

---

(1)	SIR merged with and into OPI on December 31, 2018 with OPI continuing as the surviving entity.

---

---

---

---

---

---

---

---

---

---

•	the impact of the COVID-19 pandemic and the resulting market disruptions on us and our Client Companies;

•	substantially all of our revenues are derived from services to a limited number of Client Companies;

•	our revenues are highly variable;

•	changing market conditions that may adversely impact our Client Companies and our business with them;

•	potential terminations of our management agreements with our Client Companies;

•	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;

•	the ability of our Client Companies to operate their businesses profitably and to grow and increase their market capitalizations and total shareholder returns;

•	litigation risks;

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

•	risks related to potential impairment of our equity investments;

•	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; and

•	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.

•

We have a limited number of Client Companies. We have long term contracts with our Managed Equity REITs; however, the other contracts under which we earn our revenues are for shorter terms, and the long term contracts with our Managed Equity REITs may be terminated in certain circumstances. The termination or loss of any of our management contracts may have a material adverse impact upon our revenues, profits, cash flows and business reputation;

•

Our base business management fees earned from our Managed Equity REITs are calculated monthly based upon the lower of each REIT’s cost of its applicable assets and such REIT’s market capitalization. Our business management fees earned from our Managed Operators are calculated based upon certain revenues from each operator’s business. Accordingly, our future revenues, income and cash flows will decline if the business activities, assets or market capitalizations of our Client Companies decline;

•

The fact that we earned significant incentive business management fees from certain Managed Equity REITs in previous years may imply that we will earn incentive business management fees in future years. The incentive business management fees which we may earn from our Managed Equity REITs are based upon total returns realized by the REITs’ shareholders compared to the total shareholders return of certain identified indices. We have only limited control over the total returns realized by shareholders of our Managed Equity REITs and effectively no control over indexed total returns. There can be no assurance that we will earn any incentive business management fees in the future;

---

•

We currently intend to pay a regular quarterly dividend of $0.38 per Class A Common Share and Class B-1 Common Share. Our dividends are declared and paid at the discretion of our board of directors. Our board may consider many factors when deciding whether to declare and pay dividends, including our current and projected earnings, our cash flows and alternative uses for any available cash. Our board may decide to lower or even eliminate our dividends. There can be no assurance that we will continue to pay any regular dividends or with regard to the amount of dividends we may pay;

•

Our liquidity will be temporarily impacted by rent deferrals our Client Companies have granted to their tenants because our property management fee revenues are based on gross rents collected and we will not begin to earn fees related to these deferred amounts until September 2020 and then assuming the tenants begin to then pay the deferred amounts to the Client Companies. However, these tenants may be unable to repay those amounts when due. Further, these and other tenants of our Client Companies may be unable to pay other rent amounts and they may default on those payments or our Client Companies may grant them relief, any of which may reduce or delay the fees we earn and negatively impact our liquidity;

•

We balance our pursuit of growth of our and our Client Companies’ businesses by executing, on behalf of our Client Companies, prudent capital recycling or business arrangement restructurings in an attempt to help our Client Companies prudently manage leverage and to reposition their portfolios and businesses when circumstances warrant such changes or when other more desirable opportunities are identified. However, these efforts may not be successful and, even if they are successful, they may not be sufficient to prevent our Client Companies from experiencing increases in leverage, to adequately reposition our Client Companies’ portfolios and businesses, or to enable our Client Companies to execute successfully on desirable opportunities;

•

We have undertaken new initiatives and are considering other initiatives to grow our business and any actions we may take to grow our business may not be successful or we may elect to abandon pursuing some or all of those initiatives in order to pursue other initiatives or for other reasons. In addition, any investments or repositioning of the properties we or our Client Companies may make or pursue may not increase the value of the applicable properties, offset the decline in value those properties may otherwise experience, or increase the market capitalization or total shareholder returns of our Client Companies; and

•

The market turmoil created by COVID-19 may have lasting effects on our business and the businesses of our Client Companies. Our business is dependent on revenue generated from sectors that have been and may continue to be adversely impacted by COVID-19 to a greater degree than other sectors. Further, our revenues from other sectors may become increasingly adversely impacted by COVID-19. Accordingly, there can be no assurances that we will be able to successfully manage through the COVID-19 pandemic, resulting market disruptions and their aftermath, or that we will be able to take advantage of any resulting opportunities.

---

---

▪	continued sudden and/or severe declines in the market price of our and our Client Companies’ common shares;

▪	the inability of our Client Companies to comply with certain financial covenants or pay interest and principal on their outstanding debt that could result in their defaulting under their debt agreements;

▪	the inability of our Client Companies to access debt and equity capital on attractive terms, or at all;

▪	downgrades of our Client Companies’ credit ratings by nationally recognized credit rating agencies;

▪	the inability of our Client Companies to pay distributions to their shareholders;

▪	worsening economic and financial market conditions that could significantly reduce the value of the real estate, loans and other investments of our Client Companies and reduce the amounts earned on those investments;

▪	increased risk of our Client Companies’ and their tenants’ and managers’ default or bankruptcy;

▪	increased risk of our Client Companies’ and their tenants’ and managers’ inability to weather an extended cessation of normal economic activity and thereby impairing their ability to continue functioning as going concerns and our Client Companies’ tenants’ and managers’ ability to pay rent and returns to our Client Companies;

▪	our and our Client Companies’ and their tenants’ and managers’ inability to operate our and their businesses if the health of our and their management personnel and other employees is affected, particularly if a significant number of individuals are impacted; and

▪	reduced economic demand resulting from mass employee layoffs or furloughs in response to governmental action taken to slow the spread of COVID-19, which could impact our and our Client Companies’ continued viability.

•	some of our Client Companies have reduced their quarterly distribution rates payable to their shareholders;

•	some of our Client Companies have deferred capital spending to conserve cash and liquidity;

•	some of our Client Companies have raised additional debt and equity capital;

•	some of our Client Companies have obtained a waiver from the lenders under their credit facilities;

•	we and our Client Companies have been in regular, frequent contact with our and their key managers, tenants, lenders, customers, suppliers and other vendors to implement cost savings measures to minimize losses and preserve liquidity, including agreeing to the closures of certain properties, the reduction of staffing and certain other measures; and

•	our Client Companies have provided rent and debt funding relief to certain of their tenants and borrowers.

---

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

---

---