RMR - Embedded Expectations Analysis - 2019 02 22
The RMR Group Inc. (RMR:USA) currently trades well below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 6.4x Uniform P/E, implying bearish expectations for the firm. Furthermore, management may be concerned about acquisition opportunities, rental rate growth, and debt financing for TremontSpecifically, management may lack confidence in their ability to find acquisition opportunities, and may be concerned about transaction seasonality. Additionally, they may be concerned about their ability to sustain rental rate growth, and may be overstating the quality of ILPT's industrial assets. Moreover, they may be concerned about their financing agreements for Tremont, HPT's sale of travel centers, and their ability to manage cash. Finally, they may be downplaying their concerns about C-level turnover, and real estate opportunities in low-cap markets
RMR Group is a holding company. Substantially various of the business of the company is conducted by its subsidiary, The RMR Group LLC (RMR LLC). The company's business consists of providing management services to its Managed Equity Real Estate Investment Trusts (REITs) and its real estate operating companies (Managed Operators). As manager of the Managed Equity REITs, the company implements investment strategies and manages day to day operations, subject to supervision and oversight by each Managed Equity REIT's board of trustees. RMR Advisors LLC, a subsidiary of RMR LLC, is an investment advisor which provides advisory services to the RMR Real Estate Income Fund.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
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