RMR reported a decline in their second-quarter revenue, with figures dropping to $166.668 million from $217.947 million in the same timeframe last year. The company's President and CEO, Adam Portnoy, indicated that the results fell short of expectations primarily due to lower capital expenditures, asset sales, and deleveraging activities in their Managed REITs. Despite these obstacles, RMR focused on expense management to lessen the impact on their profit margins. For this quarter, the net income per share stood at $0.21, while Adjusted Net Income per share reached $0.28, and Distributable Earnings per share were $0.40.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 1 analysts, the average target price for The RMR Group Inc (RMR, Financial) is $24.00 with a high estimate of $24.00 and a low estimate of $24.00. The average target implies an upside of 65.29% from the current price of $14.52. More detailed estimate data can be found on the The RMR Group Inc (RMR) Forecast page.
Based on the consensus recommendation from 3 brokerage firms, The RMR Group Inc's (RMR, Financial) average brokerage recommendation is currently 2.7, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for The RMR Group Inc (RMR, Financial) in one year is $32.84, suggesting a upside of 126.17% from the current price of $14.52. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the The RMR Group Inc (RMR) Summary page.
RMR Key Business Developments
Release Date: February 06, 2025
- Adjusted Net Income: $0.35 per share.
- Distributable Earnings: $0.46 per share.
- Cash on Hand: Nearly $150 million.
- Adjusted EBITDA: Approximately $21 million.
- Recurring Service Revenues: $47.3 million, a decrease of approximately $700,000 sequentially.
- Recurring Cash Compensation: $42.6 million, a decline of approximately $1.5 million sequentially.
- Recurring G&A Expenses: $11.1 million.
- New Credit Facility: $100 million line of credit.
- On-Balance Sheet Loan Portfolio: $67 million in aggregate commitments.
- OPI Asset Dispositions: Sold 17 properties for over $114 million.
- DHC Property Sale: Sold a Life Science Campus for $159 million.
- Seven Hills Realty Trust Shareholder Return: Over 12% total shareholder return in 2024.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- The RMR Group Inc (RMR, Financial) reported first quarter results in line with expectations, with adjusted net income of $0.35 per share and distributable earnings of $0.46 per share.
- The company has nearly $150 million of cash on hand and has established a $100 million line of credit to strengthen liquidity, enhancing its financial profile.
- RMR is optimistic about the improvement in the commercial real estate market in 2025, with fundamentals across most real estate sectors getting better.
- The company successfully raised over $60 million from institutional partners to acquire two South Florida residential communities, with expected returns in the high teens.
- RMR's commercial mortgage REIT, Seven Hills Realty Trust, delivered a total shareholder return of over 12% in 2024, outperforming its industry benchmark.
Negative Points
- Recurring service revenues decreased by approximately $700,000 sequentially, driven by enterprise value declines and lower property management fees.
- The company expects recurring service revenues to decline further to approximately $46 million next quarter due to a meaningful decline in construction activity.
- RMR's adjusted net income is projected to decrease to between $0.29 and $0.30 per share next quarter, reflecting ongoing challenges.
- The company's EBITDA margins have deteriorated from 52% to 42% over the last year, primarily due to the residential platform's breakeven status.
- Construction management fees are expected to decline significantly, impacting overall earnings despite acquisition fees providing some offset.
