The RMR Group Completes Acquisition of CARROLL Multifamily Platform

Rhea-AI Summary

RMR Group (Nasdaq: RMR) completes acquisition of MPC Partnership Holdings, LLC, doing business as CARROLL, expanding expertise and private capital AUM

Insights

Financial Analyst

The completion of the acquisition of CARROLL by The RMR Group represents a strategic expansion into the multifamily commercial real estate sector. This move is significant as it fills a previous gap in RMR's portfolio, potentially enhancing the company's market position and offering a more diversified investment portfolio to its clients.

From a financial perspective, the increase in private capital assets under management (AUM) could lead to higher revenue streams from management fees, which are typically a stable and predictable source of income for asset management firms. Diversification of the client roster suggests a broader base of income and a potential reduction in risk exposure, as reliance on a particular sector or client type is diminished.

In the long-term, stakeholders could benefit from the synergies of the combined entities, such as operational efficiencies and cross-selling opportunities. However, the integration process poses risks, including potential culture clashes and the challenge of maintaining service quality during the transition. It is also important to monitor the performance of the multifamily sector, as shifts in real estate market trends can impact the success of the acquisition.

Real Estate Industry Analyst

Entering the multifamily commercial real estate market is a strategic decision, considering the sector's resilience during economic downturns and its potential for steady rental income. RMR's acquisition of CARROLL could provide access to new markets and demographics, enhancing their competitive edge against other real estate investment trusts (REITs).

However, the success of this acquisition will depend on RMR's ability to effectively manage the multifamily properties and leverage CARROLL's expertise. The multifamily sector often requires a hands-on approach to property management, tenant relations and maintenance, which may differ from RMR's existing management practices.

Industry norms suggest that successful integration involves not just the melding of portfolios, but also the alignment of management practices and business objectives. As such, it is crucial to evaluate how RMR adapts to these industry-specific challenges and capitalizes on the growth opportunities presented by the multifamily sector.

Accretive Transaction Expands RMR’s Expertise and Private Capital AUM

NEWTON, Mass.--(BUSINESS WIRE)-- The RMR Group (Nasdaq: RMR) today announced that it has completed its acquisition of MPC Partnership Holdings, LLC, doing business as CARROLL (“CARROLL”), a vertically integrated multifamily platform. The acquisition, which was announced on July 31, 2023, expands RMR’s platform to include multifamily commercial real estate, the only major property sector in which RMR did not have a significant presence, increases its private capital assets under management and diversifies its roster of private capital clients.

Adam Portnoy, President and Chief Executive Officer of RMR, made the following statement:

“With the CARROLL acquisition, RMR was able to implement our growth strategy of leveraging our strong balance sheet to make strategic acquisitions. Today, we acquired a vertically integrated organization that expands our scale, diversifies our platform, substantially increases our private capital assets under management and is financially accretive. I welcome the experienced and talented CARROLL team to RMR and look forward to working with them to further expand our multifamily platform.

“With more than $200 million in cash remaining after completing the CARROLL acquisition and no debt, RMR is well-positioned to pursue additional growth opportunities that deliver attractive risk adjusted returns for our shareholders.”

Transaction Details

RMR acquired 100% of the equity interests in CARROLL for $80 million in cash, subject to customary purchase price adjustments, with the potential for incremental earnout consideration up to $20 million based on the deployment of the remaining capital commitments of the existing CARROLL investment funds. Consents approving the transaction were received from all limited partners, joint venture partners and lenders to the extent that their consent was required in connection with the transaction.

Advisors

The CenterCap Group, LLC served as exclusive financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisor to RMR on this transaction. UBS Investment Bank served as exclusive financial advisor and King & Spalding LLP served as legal advisor to CARROLL.

About The RMR Group:

The RMR Group is a leading U.S. alternative asset management company, unique for its focus on commercial real estate (CRE) and related businesses. RMR’s vertical integration is supported by over 600 real estate professionals in more than 30 offices nationwide who manage approximately $36 billion in assets under management and leverage more than 35 years of institutional experience in buying, selling, financing and operating CRE. RMR benefits from a scalable platform, a deep and experienced management team and a diversity of direct real estate strategies across its clients. RMR is headquartered in Newton, MA and was founded in 1986. For more information, please visit www.rmrgroup.com.

WARNING REGARDING FORWARD-LOOKING STATEMENTS

This press release includes forward-looking statements that are within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws that are subject to subject to risks and uncertainties. These statements may include words such as “believe,” “could,” “driving,” “estimate,” “expect,” “goal,” “intend,” “may,” “plan,” “project,” “seek,” “should,” “will,” “would,” “considering,” and negative or derivatives of these or similar expressions. Forward-looking statements include, without limitation, statements regarding the transaction, prospective performance, future plans, events, expectations, performance, objectives and opportunities and the outlook for CARROLL’s business and the accuracy of any assumptions underlying any of the foregoing. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and are cautioned not to place undue reliance on these forward-looking statements. Actual results may differ materially from those currently anticipated due to a number of risks and uncertainties. The transaction is subject to various additional risks, including: the risk that the business will not be integrated successfully or that the integration will be more costly or more time-consuming and complex than anticipated; the risk that cost savings and synergies anticipated to be realized by the transaction may not be fully realized or may take longer to realize than expected; risks related to future opportunities, plans and strategy for CARROLL, including the uncertainty of expected future financial performance, expected access to capital, timing of accretion and operating results of RMR following completion of the transaction and the challenges facing the industries in which RMR and CARROLL operate; the risk that the transaction will divert management’s attention from RMR’s ongoing business operations; risks associated with the impact of general economic, political and market factors on us, CARROLL or the transaction; and other matters. These factors should not be construed as exhaustive and should be read in conjunction with other cautionary statements that are included in RMR’s periodic filings. The information contained in RMR’s filings with the Securities and Exchange Commission (“SEC”), including under the caption “Risk Factors” in its periodic reports, or incorporated therein, identifies important factors that could cause differences from the forward-looking statements in this press release. RMR’s filings with the SEC are available on its website and at www.sec.gov. You should not place undue reliance on forward-looking statements. Except as required by law, RMR undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20231219278378/en/

Kevin Barry, Senior Director, Investor Relations

(617) 658-0776

Source: The RMR Group Inc.

FAQ

What did RMR Group announce today?

RMR Group announced the completion of its acquisition of MPC Partnership Holdings, LLC, doing business as CARROLL, expanding its expertise and private capital AUM.

What is the ticker symbol for RMR Group?

The ticker symbol for RMR Group is RMR.

What does the acquisition of MPC Partnership Holdings, LLC mean for RMR Group?

The acquisition expands RMR Group's platform to include multifamily commercial real estate, increases its private capital assets under management, and diversifies its roster of private capital clients.

When was the acquisition of MPC Partnership Holdings, LLC announced?

The acquisition was announced on July 31, 2023.