RMR GROUP INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

The following information should be read in conjunction with our condensed
consolidated financial statements and accompanying notes included in Part I,
Item 1 of this Quarterly Report on Form 10-Q and with our 2021 Annual Report.

OVERVIEW (dollars in thousands)


RMR Inc. is a holding company and substantially all of its business is conducted
by RMR LLC. RMR Inc. has no employees, and the personnel and various services it
requires to operate are provided by RMR LLC. RMR LLC manages a diverse portfolio
of real estate and real estate related businesses. As of June 30, 2022, RMR LLC
managed more than 2,100 properties in 47 states, Washington, D.C., Puerto Rico
and Canada that are principally owned by the Managed Equity REITs.

Business Environment and Outlook


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

Beyond general real estate industry trends, we are also taking into account
general economic factors impacting our clients. More specifically, in the U.S.,
the Federal Open Market Committee, or FOMC, has recently begun increasing the
federal funds rate in an attempt to slow inflation, which has in turn lead to
increased borrowing costs. In a period of increased borrowing costs, real estate
transaction volumes often slow along with real estate valuation growth. Rising
interest rates will also adversely impact our clients with floating rate debt,
which they, in some instances, attempt to address with interest rate caps and
other strategic actions to reduce leverage. Further, while the FOMC is looking
to slow inflation, its efforts may not be successful. The impact of rising
costs, both for goods and human capital, are impacting us and our clients and we
and our clients are implementing mitigation strategies to minimize the impact of
increased costs on our clients' earnings, where possible.

We consider industry and general economic factors when providing services to our
clients and attempt to take advantage of opportunities when they arise. For
example: (i) since March 2020, ILPT and DHC have completed several joint venture
transactions with institutional investors and subsequently grown some of those
ventures by acquiring additional properties; (ii) SVC transitioned over 200
hotels from other hotel operators to Sonesta, which on March 17, 2021, completed
its acquisition of RLH Corporation, establishing it as one of the largest hotel
companies in the U.S. and expanding its franchising capabilities; (iii) on
September 30, 2021, SEVN and TRMT merged, resulting in a larger, more
diversified mortgage REIT with an expanded capital base; and (iv) on February
25, 2022, ILPT completed its acquisition of 126 new, Class A, single tenant, net
leased, e-commerce focused industrial properties as a result of its acquisition
of Monmouth Real Estate Investment Corporation, or MNR, in an all-cash
transaction valued at approximately $4.0 billion. In addition, we balance our
pursuit of growth of our and our clients' businesses by executing, on behalf of
our clients, prudent capital recycling or business arrangement restructurings in
an attempt to help our clients prudently manage leverage and increased operating
costs. We also look to reposition their portfolios and businesses when
circumstances warrant such changes or when other more desirable opportunities
are identified.

Managed Equity REITs

The base business management fees we earn from the Managed Equity REITs are
calculated monthly in accordance with the applicable business management
agreement and are based on a percentage of the lower of (i) the average
historical cost of each REIT's properties and (ii) each REIT's average market
capitalization. The property management fees we earn from the Managed Equity
REITs are principally based on a percentage of the gross rents collected at
certain managed properties owned by the REITs, excluding rents or other revenues
from hotels, travel centers, senior living properties and wellness centers,
which are separately managed by our Managed Operating Companies or a third
party. Also, under the terms of the property management agreements, we receive
construction supervision fees in connection with certain construction activities
undertaken at the properties owned by the Managed Equity REITs and certain of
the Managed Operating Companies based on a percentage of the cost of such
construction. For further information regarding the fees we earn, see Note 2,
Revenue Recognition, to our condensed consolidated financial statements included
in Part I, Item 1 of this Quarterly Report on Form 10-Q.

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The following table presents for each Managed Equity REIT a summary of its
primary strategy and the lesser of the historical cost of its assets under
management and its market capitalization as of June 30, 2022 and 2021, as
applicable:

                                                                              Lesser of Historical Cost of Assets
                                                                                      Under Management or
                                                                               Total Market Capitalization as of
                                                                                            June 30,
REIT           Primary Strategy                                                    2022                  2021
               Medical office and life science properties, senior
DHC            living communities and wellness centers                       $   3,541,918          $  5,337,144
ILPT           Industrial and logistics properties                               5,372,641             1,997,990
               Office properties primarily leased to single tenants,
OPI            including the government                                          3,481,695             3,962,573

               Hotels and net lease service and necessity-based retail
SVC            properties                                                        7,363,672             9,277,211
                                                                             $  19,759,926          $ 20,574,918


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

The basis on which our base business management fees are calculated for the
three and nine months ended June 30, 2022 and 2021 may differ from the basis at
the end of the periods presented in the table above. As of June 30, 2022, the
market capitalization was lower than the historical cost of assets under
management for the Managed Equity REITs; the historical cost of assets under
management for DHC, ILPT, OPI and SVC as of June 30, 2022, were $7,198,520,
$5,644,407, $6,076,279 and $11,368,553, respectively.

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The fee revenues we earned from the Managed Equity REITs for the three and nine
months ended June 30, 2022 and 2021 are set forth in the following tables:

                                Three Months Ended June 30, 2022                                       Three Months Ended June 30, 2021
                     Base                        Base                                                              Base                       Base
                   Business                    Property            Construction                                  Business                   Property            Construction
                  Management                  Management           Supervision                                  Management                 Management           Supervision
REIT               Revenues                    Revenues              Revenues                Total               Revenues                   Revenues              Revenues              Total
DHC            $       4,659                $     1,282          $       1,267          $      7,208          $     6,478                $     2,440          $         781          $  9,699
ILPT                   7,031                      2,404                    368                 9,803                2,652                      1,570                     21             4,243
OPI                    4,270                      3,894                  2,476                10,640                4,417                      3,786                  1,117             9,320

SVC                    9,486                      1,013                    222                10,721               10,924                        875                    201            12,000
               $      25,446                $     8,593          $       4,333          $     38,372          $    24,471                $     8,671          $       2,120          $ 35,262


                                Nine Months Ended June 30, 2022                                          Nine Months Ended June 30, 2021
                    Base                        Base                                                                   Base                       Base
                  Business                    Property            Construction                                       Business                   Property            Construction
                 Management                  Management           Supervision                                       Management                 Management           Supervision
REIT              Revenues                    Revenues              Revenues                  Total                  Revenues                   Revenues              Revenues              Total
DHC            $     15,491                $     5,016          $       3,230          $     23,737               $    17,110                $     7,468          $       2,695          $  27,273
ILPT                 14,272                      6,761                    512                21,545                     8,330                      4,872                     88             13,290
OPI                  13,331                     12,100                  6,291                31,722                    12,361                     11,941                  2,913             27,215

SVC                  29,991                      3,024                  1,098                34,113                    30,798                      2,492                    208             33,498
               $     73,085                $    26,901          $      11,131          $    111,117               $    68,599                $    26,773          $       5,904          $ 101,276

Managed Operating Companies and Managed Private Real Estate Capital


We provide business management services to the Managed Operating Companies. ALR
operates senior living communities throughout the United States, many of which
are owned by and managed for DHC. Sonesta manages and franchises hotels, resorts
and cruise ships in the United States, Latin America, the Caribbean and the
Middle East; many of the U.S. hotels that Sonesta operates are owned by SVC. TA
operates, leases and franchises travel centers along the U.S. interstate highway
system, many of which are owned by SVC, and standalone truck service facilities.
Generally, our fees earned from business management services to the Managed
Operating Companies are based on a percentage of certain revenues.

In addition, we also provide management services to the Managed Private Real
Estate Capital clients and earn fees based on a percentage of average invested
capital, as defined in the applicable agreements, property management fees based
on a percentage of rents collected from managed properties and construction
management fees based on a percentage of the cost of construction activities.

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Our fee revenues from services to the Managed Operating Companies and the
Managed Private Real Estate Capital clients for the three and nine months ended
June 30, 2022 and 2021, are set forth in the following tables:


                                                  Three Months Ended June 30, 2022                                                    Three Months Ended June 30, 2021
                                 Base                   Base                                                          Base                 Base
                               Business               Property            Construction                              Business             Property           Construction
                              Management             Management           Supervision                              Management           Management           Supervision
                               Revenues               Revenues              Revenues              Total             Revenues             Revenues             Revenues             Total
ABP Trust                  $       480             $       360          $         208          $  1,048          $        580          $      446          $         47          $ 1,073
Other private
entities                         2,456                   1,671                     55             4,182                   696                 358                    11            1,065
ALR                              1,239                       -                      -             1,239                 1,794                   -                     -            1,794
Sonesta                          2,491                       -                      -             2,491                 1,522                   -                     -            1,522
TA                               4,441                       -                      -             4,441                 3,660                   -                     -            3,660
                           $    11,107             $     2,031          $         263          $ 13,401          $      8,252          $      804          $         58          $ 9,114


                                                  Nine Months Ended June 30, 2022                                                      Nine Months Ended June 30, 2021
                                 Base                  Base                                                           Base                  Base
                               Business              Property            Construction                               Business              Property            Construction
                              Management            Management           Supervision                               Management            Management           Supervision
                               Revenues              Revenues              Revenues              Total              Revenues              Revenues              Revenues              Total
ABP Trust                  $     1,577            $     1,162          $         400          $  3,139          $     1,737            $     1,342          $          92          $  3,171
Other private
entities                         5,518                  3,701                     92             9,311                1,726                    934                     11             2,671
ALR                              3,610                      -                      -             3,610                5,573                      -                      -             5,573
Sonesta                          6,092                      -                      -             6,092                2,511                      -                      -             2,511
TA                              11,499                      -                      -            11,499                9,904                      -                      -             9,904
                           $    28,296            $     4,863          $         492          $ 33,651          $    21,451            $     2,276          $         103          $ 23,830


Advisory Business

Tremont Realty Capital provides advisory services to SEVN, a publicly traded
mortgage REIT that focuses on originating and investing in first mortgage whole
loans secured by middle market and transitional commercial real estate. Tremont
Realty Capital also provided advisory services to TRMT until September 30, 2021,
when it merged with and into SEVN. Tremont Realty Capital is primarily
compensated pursuant to its management agreements with SEVN (beginning January
6, 2021) and TRMT (until September 30, 2021) based on a percentage of equity, as
defined in the applicable agreements.

We earned advisory services revenue of $1,137 and $1,134 for the three months
ended June 30, 2022 and 2021, respectively, and $3,392 and $2,849 for the nine
months ended June 30, 2022 and 2021, respectively. Tremont Realty Capital did
not earn incentive fees from SEVN for the three and nine months ended June 30,
2022. Incentive fees earned from TRMT were zero and $620 for the three and nine
months ended June 30, 2021, respectively.

The Tremont business acts as a transaction broker for non-investment advisory
clients for negotiated fees. The Tremont business earned fees for such brokerage
services of $46 and zero for the three months ended June 30, 2022 and 2021,
respectively, and $99 and $259 for the nine months ended June 30, 2022 and 2021,
respectively, which amounts are included in management services revenue in our
condensed consolidated statements of income.

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RESULTS OF OPERATIONS (dollars in thousands)

Three Months Ended June 30, 2022, Compared to the Three Months Ended June 30,
2021

The following table presents the changes in our operating results for the three
months ended June 30, 2022 compared to the three months ended June 30, 2021:

Three Months Ended June 30,

                                                       2022                  2021               $ Change             % Change

Revenues:

Management services                              $    51,819             $   44,376          $     7,443               16.8%

Advisory services                                      1,137                  1,134                    3               0.3%
Total management and advisory services
revenues                                              52,956                 45,510                7,446               16.4%
Reimbursable compensation and benefits                14,189                 13,069                1,120               8.6%
Reimbursable equity based compensation                   (69)                 1,402               (1,471)            (104.9)%
Other reimbursable expenses                          144,012                 85,263               58,749               68.9%
Total reimbursable costs                             158,132                 99,734               58,398               58.6%
Total revenues                                       211,088                145,244               65,844               45.3%
Expenses:
Compensation and benefits                             32,170                 30,530                1,640               5.4%
Equity based compensation                                512                  1,954               (1,442)             (73.8)%
Separation costs                                         400                      -                  400                n/m
Total compensation and benefits expense               33,082                 32,484                  598               1.8%
General and administrative                             8,323                  6,320                2,003               31.7%
Other reimbursable expenses                          144,012                 85,263               58,749               68.9%
Transaction and acquisition related costs                  -                     61                  (61)               n/m
Depreciation and amortization                            253                    245                    8               3.3%
Total expenses                                       185,670                124,373               61,297               49.3%
Operating income                                      25,418                 20,871                4,547               21.8%
Interest and other income                                279                    179                  100               55.9%
Equity in earnings of investees                            -                     28                  (28)               n/m
Unrealized (loss) gain on equity method
investments accounted for under the fair
value option                                          (5,489)                 1,312               (6,801)               n/m
Income before income tax expense                      20,208                 22,390               (2,182)             (9.7)%
Income tax expense                                    (2,943)                (3,361)                 418               12.4%
Net income                                            17,265                 19,029               (1,764)             (9.3)%
Net income attributable to noncontrolling
interest                                              (9,695)               (10,797)               1,102               10.2%
Net income attributable to The RMR Group
Inc.                                             $     7,570             $    8,232          $      (662)             (8.0)%


n/m - not meaningful

Management services revenue. Management services revenue increased $7,443
primarily due to (i) growth in base business management fees of $4,379 and
property management fees of $1,181 earned from ILPT, primarily due to its recent
acquisition of MNR, and (ii) increases in construction supervision fees earned
from OPI, DHC and SVC aggregating $1,866 due to increased development activity.

Reimbursable compensation and benefits. Reimbursable compensation and benefits
include reimbursements, at cost, that arise primarily from services our
employees provide pursuant to our property management agreements at the
properties of our clients. A significant portion of these compensation and
benefits are charged or passed through to and were paid by tenants of our
clients. Reimbursable compensation and benefits increased $1,120 primarily due
to increases in employee compensation and benefits for which we receive
reimbursement.

Reimbursable equity based compensation. Reimbursable equity based compensation
includes awards of common shares by our clients directly to certain of our
officers and employees in connection with the provision of management services
to those

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clients. We record an equal, offsetting amount as equity based compensation
expense for the value of these awards. Reimbursable equity based compensation
revenue decreased $1,471 primarily as a result of decreases in our clients’
respective share prices.

Other reimbursable expenses. For further information about these reimbursements,
see Note 2, Revenue Recognition, to our condensed consolidated financial
statements included in Part I, Item 1 of this Quarterly Report on Form 10­Q.


Compensation and benefits. Compensation and benefits consist of employee
salaries and other employment related costs, including health insurance expenses
and contributions related to our employee retirement plan. Compensation and
benefits expense increased $1,640 primarily due to increased headcount and wage
inflation in the current fiscal year.

Equity based compensation. Equity based compensation consists of the value of
vested shares awarded to certain of our employees under our equity compensation
plan and by our clients. Equity based compensation decreased $1,442 primarily as
a result of decreases in our clients' respective share prices.

Separation costs. For further information about these costs, see Note 6, Related
Person Transactions, to our condensed consolidated financial statements included
in Part I, Item 1 of this Quarterly Report on Form 10­Q.

General and administrative. General and administrative expenses consist of
office related expenses, information technology related expenses, employee
training, travel, professional services expenses, director compensation and
other administrative expenses. General and administrative costs increased $2,003
primarily due to increases in technology infrastructure costs, third-party costs
related to our expanded role in construction oversight and increases in
recruiting and other professional fees.

Transaction and acquisition related costs. Transaction and acquisition related
costs in the prior period relate to costs incurred in connection with RMR
Mortgage Trust's conversion from a registered investment company to a commercial
mortgage REIT and other strategic initiatives.

Interest and other income. Interest and other income increased $100 primarily
due to higher interest earned during the current period as a result of higher
interest rates compared to the prior period.

Equity in earnings of investees. Equity in earnings of investees represents our
proportionate share of earnings from our former equity interest in TRMT. For
further information, see Note 3, Equity Method Investments, to our condensed
consolidated financial statements included in Part I, Item 1 of this Quarterly
Report on Form 10-Q.

Unrealized (loss) gain on equity method investments accounted for under the fair
value option. Unrealized (loss) gain on equity method investments accounted for
under the fair value option represents the gain or loss on our investments in
SEVN and TA common shares. For further information, see Note 3, Equity Method
Investments, to our condensed consolidated financial statements included in Part
I, Item 1 of this Quarterly Report on Form 10-Q.

Income tax expense. The decrease in income tax expense of $418 is primarily
attributable to a lower effective tax rate for the three months ended June 30,
2022
, compared to the same period in the prior year.

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Nine Months Ended June 30, 2022, Compared to the Nine Months Ended June 30, 2021

The following table presents the changes in our operating results for the nine
months ended June 30, 2022 compared to the nine months ended June 30, 2021:

                                                                        Nine Months Ended June 30,
                                                     2022               2021             $ Change            % Change
Revenues:
Management services                              $ 144,867          $ 125,365          $  19,502               15.6%
Incentive business management fees                       -                620               (620)               n/m
Advisory services                                    3,392              2,849                543               19.1%
Total management and advisory services
revenues                                           148,259            128,834             19,425               15.1%
Reimbursable compensation and benefits              42,092             39,453              2,639               6.7%
Reimbursable equity based compensation               2,896              5,611             (2,715)             (48.4)%
Other reimbursable expenses                        397,063            259,856            137,207               52.8%
Total reimbursable costs                           442,051            304,920            137,131               45.0%
Total revenues                                     590,310            433,754            156,556               36.1%
Expenses:
Compensation and benefits                           95,671             90,610              5,061               5.6%
Equity based compensation                            4,719              7,267             (2,548)             (35.1)%
Separation costs                                       617              4,159             (3,542)             (85.2)%
Total compensation and benefits expense            101,007            102,036             (1,029)             (1.0)%
General and administrative                          24,464             19,684              4,780               24.3%
Other reimbursable expenses                        397,063            259,856            137,207               52.8%
Transaction and acquisition related costs                -                474               (474)               n/m
Depreciation and amortization                          731                734                 (3)             (0.4)%
Total expenses                                     523,265            382,784            140,481               36.7%
Operating income                                    67,045             50,970             16,075               31.5%
Interest and other income                              402                614               (212)             (34.5)%
Equity in earnings of investees                          -                755               (755)               n/m
Unrealized (loss) gain on equity method
investments accounted for under the fair
value option                                        (8,853)             6,032            (14,885)               n/m
Income before income tax expense                    58,594             58,371                223               0.4%
Income tax expense                                  (8,448)            (8,109)              (339)             (4.2)%
Net income                                          50,146             50,262               (116)             (0.2)%
Net income attributable to noncontrolling
interest                                           (28,142)           (28,192)                50               0.2%
Net income attributable to The RMR Group
Inc.                                             $  22,004          $  22,070          $     (66)             (0.3)%


n/m - not meaningful

Management services revenue. Management services revenue increased $19,502
primarily due to (i) growth in base business management fees of $5,942 and
property management fees of $2,313 earned from ILPT, primarily due to its recent
acquisition of MNR, (ii) increases in construction supervision fees earned from
OPI, SVC and DHC aggregating $4,803 due to increased development activity, and
(iii) an increase in management fees earned from Sonesta and TA of $3,581 and
$1,595, respectively, primarily resulting from an increase in travel as pandemic
restrictions have eased, and additionally for Sonesta, an increase in the number
of hotels that it manages and franchises during the current period.

Incentive business management fees. Incentive business management fees represent
fees earned by Tremont Realty Capital from TRMT. For further information about
incentive fees, see Note 2, Revenue Recognition, to our condensed consolidated
financial statements included in Part I, Item 1 of this Quarterly Report on Form
10­Q.

Advisory services revenue. Advisory services revenue increased $543 primarily
due to the expiration of the fee waiver that was previously provided to TRMT in
effect until December 31, 2020.

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Reimbursable compensation and benefits. Reimbursable compensation and benefits
increased $2,639 primarily due to increases in employee compensation and
benefits for which we receive reimbursement.


Reimbursable equity based compensation. Reimbursable equity based compensation
decreased $2,715 primarily as a result of decreases in our clients' respective
share prices.

Other reimbursable expenses. For further information about these reimbursements,
see Note 2, Revenue Recognition, to our condensed consolidated financial
statements included in Part I, Item 1 of this Quarterly Report on Form 10­Q.


Compensation and benefits. Compensation and benefits expense increased $5,061
primarily due to estimated bonus cost increases for the current fiscal year and
annual merit increases effective October 1, 2021.

Equity based compensation. Equity based compensation decreased $2,548 primarily
due to decreases in our clients’ respective share prices.


Separation costs. For further information about these costs, see Note 6, Related
Person Transactions, to our condensed consolidated financial statements included
in Part I, Item 1 of this Quarterly Report on Form 10­Q.

General and administrative. General and administrative costs increased $4,780
primarily due to increases in technology infrastructure costs, third-party costs
related to our expanded role in construction oversight and increases in
recruiting and other professional fees.

Transaction and acquisition related costs. Transaction and acquisition related
costs in the prior period relate to costs incurred in connection with RMR
Mortgage Trust's conversion from a registered investment company to a commercial
mortgage REIT and other strategic initiatives.

Interest and other income. Interest and other income decreased $212 primarily
due to lower interest earned during the current period as a result of lower
average cash balances invested at higher interest rates, compared to the prior
period.

Equity in earnings of investees. Equity in earnings of investees represents our
proportionate share of earnings from our former equity interest in TRMT. For
further information, see Note 3, Equity Method Investments, to our condensed
consolidated financial statements included in Part I, Item 1 of this Quarterly
Report on Form 10-Q.

Unrealized (loss) gain on equity method investments accounted for under the fair
value option. Unrealized (loss) gain on equity method investments accounted for
under the fair value option represents the gain or loss on our investments in
SEVN and TA common shares. For further information, see Note 3, Equity Method
Investments, to our condensed consolidated financial statements included in Part
I, Item 1 of this Quarterly Report on Form 10-Q.

Income tax expense. The increase in income tax expense of $339 is primarily
attributable to a one-time reduction in our income tax provision recorded during
the prior period of $520 related to final tax regulations released in December
2020. For further information, see Note 4, Income Taxes, to our condensed
consolidated financial statements included in Part I, Item 1 of this Quarterly
Report on Form 10-Q.

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


Our current assets have historically been comprised predominantly of cash, cash
equivalents and receivables for business management, property management and
advisory services fees. As of June 30, 2022 and September 30, 2021, we had cash
and cash equivalents of $195,936 and $159,835, respectively, of which $22,789
and $23,338, respectively, was held by RMR Inc., with the remainder being held
at RMR LLC. Cash and cash equivalents include all short term, highly liquid
investments that are readily convertible to known amounts of cash and have
original maturities of three months or less from the date of purchase. As of
June 30, 2022 and September 30, 2021, $175,459 and $131,065, respectively, of
our cash and cash equivalents were invested in money market funds. We believe
that our cash and cash equivalents leave us well positioned to pursue a range of
capital allocation strategies, with a focus on the growth of our private capital
business, and to fund our operations and obligations, in the next twelve months.

Our liquidity is highly dependent upon our receipt of fees from the businesses
that we manage. Historically, we have funded our working capital needs with cash
generated from our operating activities and we currently do not maintain any
credit facilities. We expect that our future working capital needs will relate
largely to our operating expenses, primarily consisting of employee compensation
and benefits costs, our obligation to make quarterly tax distributions to the
members of RMR LLC, our plan to make quarterly distributions on our Class A
Common Shares and Class B-1 Common Shares and our plan to pay quarterly
distributions to the members of RMR LLC in connection with the quarterly
dividends to RMR Inc. shareholders. Our

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management fees are typically payable to us within 30 days of the end of each
month or, in the case of annual incentive business management fees earned from
the Managed Equity REITs, if any, within 30 days following each calendar year
end. Quarterly incentive fees earned from SEVN, if any, are payable generally
within 30 days following the end of the applicable quarter. Historically, we
have not experienced losses on collection of our fees and have not recorded any
allowances for bad debts.

During the nine months ended June 30, 2022, we paid cash distributions to the
holders of our Class A Common Shares, Class B-1 Common Shares and to the other
owner of RMR LLC membership units in the aggregate amount of $32,930. On
July 14, 2022, 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 25, 2022 in the
amount of $0.40 per Class A Common Share and Class B-1 Common Share, or $6,600.
This dividend will be partially funded by a distribution from RMR LLC to holders
of its membership units in the amount of $0.32 per unit, or $10,080, of which
$5,280 will be distributed to us based on our aggregate ownership of 16,500,716
membership units of RMR LLC and $4,800 will be distributed to ABP Trust based on
its ownership of 15,000,000 membership units of RMR LLC. The remainder of this
dividend will be funded with cash accumulated at RMR Inc. We expect the total
dividend will amount to approximately $11,400 and we expect to pay this dividend
on or about August 18, 2022. See Note 7, Shareholders' Equity, to our condensed
consolidated financial statements included in Part I, Item 1 of this Quarterly
Report on Form 10-Q for more information regarding these distributions.

For the nine months ended June 30, 2022, pursuant to the RMR LLC operating
agreement, RMR LLC made required quarterly tax distributions to its holders of
its membership units totaling $21,969, of which $11,559 was distributed to us
and $10,410 was distributed to ABP Trust, based on each membership unit holder's
then respective ownership percentage in RMR LLC. The $11,559 distributed to us
was eliminated in our condensed consolidated financial statements included in
Part 1, Item 1 of this Quarterly Report on Form 10-Q, and the $10,410
distributed to ABP Trust was recorded as a reduction of their noncontrolling
interest. We expect to use a portion of these funds distributed to us to pay our
tax liabilities and amounts due under the tax receivable agreement described in
Note 6, Related Person Transactions, to our condensed consolidated financial
statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. We
expect to use the remaining funds distributed to us to fund our long-term tax
liabilities and pay dividends.

Cash Flows


Our changes in cash flows for the nine months ended June 30, 2022 compared to
the nine months ended June 30, 2021 were as follows: (i) net cash from operating
activities increased $17,485 from $72,371 in the prior period to $89,856 in the
current period; (ii) net cash used in investing activities increased $9,444 from
$940 in the prior period to $10,384 in the current period; and (iii) net cash
used in financing activities increased $78 from $43,293 in the prior period to
$43,371 in the current period.

The increase in cash from operating activities for the nine months ended June
30, 2022 compared to the prior period primarily reflects increases in net
income, excluding the impacts of non-cash gains and losses, and favorable
changes in working capital. The increase in cash used in investing activities
for the nine months ended June 30, 2022 compared to the prior period was
primarily due to the purchase of 882,407 SEVN common shares in the current
period. Cash used in financing activities for the nine months ended June 30,
2022 increased nominally from the prior period.

As of June 30, 2022, we had no off-balance sheet arrangements that have had or
that we expect would be reasonably likely to have a material effect on our
financial condition, changes in financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital resources.

Tax Receivable Agreement


We are party to a tax receivable agreement which provides for the payment by RMR
Inc. to ABP Trust of 85.0% of the amount of savings, if any, in U.S. federal,
state and local income tax or franchise tax that RMR Inc. realizes as a result
of (a) the increases in tax basis attributable to RMR Inc.'s dealings with ABP
Trust and (b) tax benefits related to imputed interest deemed to be paid by it
as a result of the tax receivable agreement. See Note 6, Related Person
Transactions, to our condensed consolidated financial statements included in
Part I, Item 1 of this Quarterly Report on Form 10-Q and "Business-Our
Organizational Structure-tax receivable agreement" in our Annual Report on Form
10-K for the fiscal year ended September 30, 2019. As of June 30, 2022, our
condensed consolidated balance sheet reflects a liability related to the tax
receivable agreement of $27,792, of which we expect to pay $2,215 to ABP Trust
during the fourth quarter of fiscal year 2022.

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Table of Contents

Market Risk and Credit Risk


We have not invested in derivative instruments, borrowed through issuing debt
securities or transacted in foreign currencies. As a result, we are not subject
to significant direct market risk related to interest rate changes, changes to
the market standard for determining interest rates, commodity price changes or
credit risks; however, if any of these risks were to negatively impact our
clients' businesses or market capitalization, our revenues would likely decline.
To the extent we change our approach on the foregoing activities, or engage in
other activities, our market and credit risks could change. See Part I, Item 1A
"Risk Factors" of our 2021 Annual Report for the risks to us and our clients.

Risks Related to Cash and Short Term Investments


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

Related Person Transactions


We have relationships and historical and continuing transactions with Adam D.
Portnoy, the chair of our Board and one of our Managing Directors, as well as
our clients. For further information about these and other such relationships
and related person transactions, please see Note 6, Related Person Transactions,
to our condensed consolidated financial statements included in Part I, Item 1 of
this Quarterly Report on Form 10-Q, our 2021 Annual Report, our definitive Proxy
Statement for our 2022 Annual Meeting of Shareholders and our other filings with
the SEC. In addition, see the section captioned "Risk Factors" in our 2021
Annual Report for a description of risks that may arise as a result of these and
other related person transactions and relationships. We may engage in additional
transactions with related persons, including businesses to which RMR LLC or its
subsidiaries provide management services.

Critical Accounting Estimates


The preparation of our condensed consolidated financial statements in conformity
with GAAP requires us to make estimates and assumptions that affect reported
amounts. Actual results could differ from those estimates. Significant estimates
that impact the condensed consolidated financial statements include the revenue
recognized during the reporting periods and our principles of consolidation.

A discussion of our critical accounting estimates is included in our 2021 Annual
Report. There have been no significant changes in our critical accounting
estimates since the fiscal year ended September 30, 2021.

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