Related Person Transactions

Our Managing Directors are our controlling shareholders. As of December 31, 2017, our Managing Directors own in aggregate, directly and indirectly through ABP Trust, (i) 162,567 shares of Class A common stock of RMR Inc., or Class A Common Shares; (ii) all of the outstanding shares of Class B-1 common stock of RMR Inc., or Class B-1 Common Shares; (iii) all of 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. Our Managing Directors are also officers of RMR Inc. and of RMR LLC.

Our Managing Directors are also managing trustees of each of the Managed REITs. As of December 31, 2017, GOV, HPT, SIR and SNH owned 1,214,225, 2,503,777, 1,586,836 and 2,637,408 of our Class A Common Shares, respectively, our Managing Directors owned in aggregate, directly and indirectly through ABP Trust, 1.8% of GOV’s common shares, 1.5% of HPT’s outstanding common shares, 1.9% of SIR’s outstanding common shares and 1.3% of SNH’s outstanding common shares and we owned (through Tremont Advisors) 19.2% of TRMT's outstanding common shares.

Our Managing Directors are also managing directors of TA, and Barry M. Portnoy is a managing director of Five Star. As of December 31, 2017, our Managing Directors owned in aggregate, directly and indirectly through ABP Trust, less than one percent of TA's outstanding common shares and 36.4% of Five Star’s outstanding common shares. Our Managing Directors are also the owners and directors of Sonesta and are directors of AIC.

All of the executive officers of the Managed REITs and many of the executive officers of the Managed Operators are also officers of RMR LLC.

Additional information about our related person transactions appears in Notes 8 and 12 below.

Revenues from Related Parties

For the three months ended December 31, 2017 and 2016, we recognized total revenues from related parties as set forth in the following table:



	Three Months Ended December 31,
	2017				2016
	$		%		$		%
Managed Equity REITs:
GOV	$	13,509	6.2	%	$	8,225	7.8	%
HPT	86,066		39.4	%	62,728		59.6	%
SIR	36,990		16.9	%	10,957		10.4	%
SNH	71,545		32.7	%	14,624		13.9	%
	208,110		95.2	%	96,534		91.7	%

Managed Operators:
Five Star	2,690		1.2	%	2,364		2.2	%
Sonesta	568		0.3	%	543		0.5	%
TA	3,771		1.7	%	3,806		3.6	%
	7,029		3.2	%	6,713		6.3	%

Other:
AIC	60		—	%	60		0.1	%
RIF	729		0.4	%	606		0.6	%
ABP Trust	1,279		0.6	%	771		0.7	%
TRMT	706		0.3	%	—		—	%
	2,774		1.3	%	1,437		1.4	%
Total revenues from related parties	217,913		99.7	%	104,684		99.4	%
Other unrelated parties	628		0.3	%	610		0.6	%
	$	218,541	100.0	%	$	105,294	100.0	%

On December 31, 2017, RMR LLC earned incentive business management fees from HPT, SIR and SNH of $74,572, $25,569 and $55,740, respectively, pursuant to our business management agreements with HPT, SIR and SNH. HPT, SIR and SNH paid these incentive fees to us in January 2018. On December 31, 2016, RMR LLC earned a $52,407 incentive business management fee from HPT pursuant to our business management agreement with HPT. HPT paid this incentive fee to us in January 2017. All of these incentive fees are included in the table above. These incentive fees are calculated annually at the end of each calendar year.

Amounts Due From Related Parties

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



	December 31,		September 30,
	2017		2017
Managed Equity REITs:
GOV	$	7,094	$	6,369
HPT	82,256		7,968
SIR	32,140		7,351
SNH	64,258		9,550
	185,748		31,238

Managed Operators:
Five Star	393		305
Sonesta	—		1
TA	573		444
	966		750

Other Client Companies:
AIC	20		22
RIF	35		36
ABP Trust	498		551
TRMT	984		115
	1,537		724
	$	188,251	$	32,712

Leases

As of December 31, 2017, we leased from ABP Trust and certain Managed REITs office space for use as our headquarters and local offices. We incurred rental expense under related party leases aggregating $1,028 and $1,050 for the three months ended December 31, 2017 and 2016, 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. In connection with the Tax Act and the resulting lower corporate income tax rates applicable to RMR Inc., we remeasured the amounts due pursuant to our tax receivable agreement with ABP Trust and reduced our liability by $24,710, or $1.53 per share, which is presented on our condensed consolidated statements of comprehensive income for the three months ended December 31, 2017 as tax receivable agreement remeasurement. As of December 31, 2017, our condensed consolidated balance sheet reflects a liability related to the tax receivable agreement of $37,288, including $2,935 classified as a current liability that we expect to pay to ABP Trust during the fourth quarter of fiscal year 2018.

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 assumed tax liabilities of its members. For the three months ended December 31, 2017 and 2016, pursuant to the RMR LLC operating agreement, RMR LLC made required quarterly tax distributions to holders of its membership units totaling $31,488 and $15,700, respectively, of which $16,333 and $8,123, respectively, was distributed to us and $15,155 and $7,577, 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.

Other

Effective December 31, 2017, Thomas M. O’Brien resigned from his position as an Executive Vice President and employee of RMR LLC and as president, chief executive officer and a managing director of TA. In connection with Mr. O’Brien’s resignation, RMR LLC and TA entered into a retirement agreement with Mr. O’Brien on November 29, 2017. Under Mr. O’Brien’s retirement agreement, consistent with past practice, RMR LLC continued to pay Mr. O’Brien his current annual base salary of $75 through December 31, 2017 and paid him a cash bonus in respect of 2017 in the amount of $515 (less amounts previously paid to him by RMR LLC during 2017) in December 2017. In addition, all 5,600 of our unvested Class A Common Shares previously awarded to Mr. O’Brien were fully accelerated on December 31, 2017, and we recorded $332, the aggregate value of those shares on such date, as compensation and benefit expense for the three months ended December 31, 2017. Pursuant to his retirement agreement, Mr. O’Brien granted to TA or its nominee a right of first refusal in the event he determines to sell any of his shares of TA, pursuant to which TA may elect during a specified period to purchase those shares at the average closing price per share for the ten trading days preceding the date of Mr. O'Brien's written notice to TA. In the event that TA declines to exercise its purchase right, RMR LLC may elect to purchase such shares at the price offered to TA. Mr. O’Brien also agreed that, as long as he owns shares in us, he will vote those shares at shareholders’ meetings in favor of nominees for director or trustee, as applicable, and proposals recommended by our Board of Directors. Mr. O’Brien made similar agreements regarding the voting of shares he owns of each Managed Equity REIT, TA and FVE for the benefit of those companies, respectively. Mr. O’Brien’s retirement agreement contains other terms and conditions, including cooperation, confidentiality, non-solicitation, non-competition and other covenants, and a waiver and release. Mr. O’Brien’s retirement agreement also contains certain terms relating to his service as president and chief executive officer of TA and compensation payable to him by TA.