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Related Person Transactions | 12 Months Ended
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Sep. 30, 2020
Related Party Transactions [Abstract] |
Related Person Transactions | Related Person Transactions Adam D. Portnoy, one of our Managing Directors, is the sole trustee of our controlling shareholder, ABP Trust, and owns all of ABP Trust’s voting securities and a majority of the economic interests of ABP Trust. As of September 30, 2020, Adam D. Portnoy beneficially owned, in aggregate, (i) 157,502 Class A Common Shares; (ii) all the outstanding shares of Class B-1 common stock of RMR Inc., or Class B-1 Common Shares; (iii) all 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. Adam D. Portnoy and Jennifer B. Clark, our other Managing Director, are also officers of ABP Trust and RMR Inc. and officers and employees of RMR LLC. Matthew P. Jordan, our Executive Vice President, Chief Financial Officer and Treasurer is also an officer of ABP Trust and an officer and employee of RMR LLC. Adam D. Portnoy is also the chair of the board of trustees of each of the Managed Equity REITs, the chair of the board of directors of each of Five Star and TA, a managing trustee or managing director of each of the Managed REITs, Five Star, RMRM and TA, a director of Sonesta (and its parent) and, with a family member, is the majority shareholder of Sonesta. Jennifer B. Clark, our other Managing Director, is a managing trustee of DHC and RMRM, a managing director of FVE and a director of Sonesta, and she serves as the secretary of all the publicly traded Client Companies and Sonesta and as an officer of ABP Trust. Prior to its dissolution on February 13, 2020, Mr. Portnoy was a director of AIC and Ms. Clark was the president and chief executive officer of AIC. As of September 30, 2020, Adam D. Portnoy beneficially owned, in aggregate, 6.4% of Five Star’s outstanding common shares, 1.1% of SVC’s outstanding common shares, 1.2% of ILPT’s outstanding common shares, 1.5% of OPI’s outstanding common shares, 1.1% of DHC’s outstanding common shares, 4.6% of TA’s outstanding common shares (including through RMR LLC), 2.3% of RMRM’s outstanding common shares, and 19.4% of TRMT’s outstanding common shares (including through Tremont Advisors). Until its dissolution on February 13, 2020, ABP Trust owned 14.3% of AIC. As of September 30, 2020, ABP Trust owned 100% of Centre Street. On July 1, 2019, DHC, OPI and SVC sold all their Class A Common Shares in an underwritten public offering at a price to the public of $40.00 per share pursuant to an underwriting agreement among us, those Managed Equity REITs and the underwriters named therein. The Managed Equity REITs, TRMT and RMRM all have no employees, and the Open End Fund and AIC had no employees. RMR LLC provides or arranges for all the personnel, overhead and services required for the operation of the Managed Equity REITs, and did the same for the Open End Fund (until its dissolution on July 28, 2020) and AIC (until its dissolution on February 13, 2020), pursuant to management agreements with them. All the officers of the Managed Equity REITs are, and all of the officers of the Open End Fund were, officers or employees of RMR LLC. All the officers, overhead and required office space of TRMT are provided or arranged by Tremont Advisors. All of TRMT’s officers are officers or employees of Tremont Advisors or RMR LLC. All the officers, overhead and required office space of RMRM are provided or arranged by RMR Advisors. All of RMRM’s officers are officers or employees of RMR Advisors or RMR LLC. Many of the executive officers of the Managed Operators are officers or employees of RMR LLC. Some of our executive officers are also managing directors or managing trustees of certain of the Managed REITs, the Managed Operators and RMRM. Revenues from Related Parties For the fiscal years ended September 30, 2020, 2019 and 2018, we recognized revenues from related parties as set forth in the following table:
|  | Fiscal Year Ended September 30,
|  | 2020 |  | 2019 (1) |  | 2018 (2)
|  | $ |  | % |  | $ |  | % |  | $ |  | %
Managed Equity REITs: |  |  |  |  |  |  |  |  |  |  |  |
DHC |  | $ | 175,082 |  |  | 29.7 | % |  | $ | 210,728 |  |  | 29.5 | % |  | $ | 118,301 |  |  | 29.2 | %
ILPT |  | 48,056 |  |  | 8.2 |  |  | 43,242 |  |  | 6.1 |  |  | 10,935 |  |  | 2.7 |
OPI (3) |  | 242,217 |  |  | 41.1 |  |  | 239,291 |  |  | 33.5 |  |  | 53,954 |  |  | 13.3 |
SIR (3) |  | — |  |  | — |  |  | 47,843 |  |  | 6.7 |  |  | 62,321 |  |  | 15.4 |
SVC |  | 61,836 |  |  | 10.5 |  |  | 102,029 |  |  | 14.3 |  |  | 118,596 |  |  | 29.3 |
|  | 527,191 |  |  | 89.5 |  |  | 643,133 |  |  | 90.1 |  |  | 364,107 |  |  | 89.9 |
Managed Operators: |  |  |  |  |  |  |  |  |  |  |  |
Five Star |  | 9,084 |  |  | 1.5 |  |  | 9,702 |  |  | 1.4 |  |  | 9,840 |  |  | 2.4 |
Sonesta |  | 1,738 |  |  | 0.3 |  |  | 3,186 |  |  | 0.4 |  |  | 2,847 |  |  | 0.7 |
TA |  | 13,565 |  |  | 2.3 |  |  | 14,191 |  |  | 2.0 |  |  | 15,357 |  |  | 3.8 |
|  | 24,387 |  |  | 4.1 |  |  | 27,079 |  |  | 3.8 |  |  | 28,044 |  |  | 6.9 |
Other Client Companies: |  |  |  |  |  |  |  |  |  |  |  |
ABP Trust |  | 12,544 |  |  | 2.2 |  |  | 15,070 |  |  | 2.1 |  |  | 4,865 |  |  | 1.2 |
AIC |  | 98 |  |  | — |  |  | 570 |  |  | 0.1 |  |  | 240 |  |  | 0.1 |
Open End Fund |  | 18,988 |  |  | 3.2 |  |  | 20,366 |  |  | 2.9 |  |  | 608 |  |  | 0.2 |
RMRM |  | 2,767 |  |  | 0.5 |  |  | 3,013 |  |  | 0.4 |  |  | 2,888 |  |  | 0.7 |
TRMT |  | 2,546 |  |  | 0.4 |  |  | 3,509 |  |  | 0.5 |  |  | 2,505 |  |  | 0.6 |
Centre Street |  | 119 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
|  | 37,062 |  |  | 6.3 |  |  | 42,528 |  |  | 6.0 |  |  | 11,106 |  |  | 2.8 |
Total revenues from related parties |  | 588,640 |  |  | 99.9 |  |  | 712,740 |  |  | 99.9 |  |  | 403,257 |  |  | 99.6 |
Revenues from unrelated parties |  | 865 |  |  | 0.1 |  |  | 628 |  |  | 0.1 |  |  | 1,722 |  |  | 0.4 |
|  | $ | 589,505 |  |  | 100.0 | % |  | $ | 713,368 |  |  | 100.0 | % |  | $ | 404,979 |  |  | 100.0 | %
(1)The amounts for the fiscal year ended September 30, 2019 include incentive business management fees of $40,642, $25,817 and $53,635, which RMR LLC earned for the 2018 calendar year from DHC, SIR and SVC, respectively, and which were paid in January 2019. (2)The amounts for the fiscal year ended September 30, 2018 include incentive business management fees of $55,740, $25,569 and $74,572, which RMR LLC earned for the 2017 calendar year from DHC, SIR and SVC, respectively, and which were paid in January 2018. (3)OPI acquired SIR by merger on December 31, 2018. This table presents revenues for the fiscal year ended September 30, 2018 and, for the applicable part of the fiscal year ended September 30, 2019, from SIR separately as they relate to periods prior to this merger. For additional information regarding our management or advisory agreements with these related parties, please see Note 2, Summary of Significant Accounting Policies. TRMT’s 2019 Offering On May 21, 2019, TRMT issued and sold 5,000,000 common shares of beneficial interest, $0.01 par value per share, or TRMT Common Shares, in an underwritten public offering, or the Offering, pursuant to an underwriting agreement among TRMT, Tremont Advisors and the underwriters. Tremont Advisors purchased 1,000,000 TRMT Common Shares in the Offering at a total price of $5,650. The underwriters did not receive any discount for the TRMT Common Shares that Tremont Advisors purchased in the Offering. As of September 30, 2020, Tremont Advisors owned 1,600,100, or approximately 19.3%, of TRMT’s common shares. Credit Agreement between TRMT and Tremont Advisors Until May 23, 2019, TRMT was a party to a credit agreement with Tremont Advisors as the lender, or the Credit Agreement. Pursuant to the Credit Agreement, from time to time until August 4, 2019, the scheduled expiration date of the Credit Agreement, TRMT was able to borrow up to $25,000 and, beginning May 3, 2019, up to $50,000 in subordinated unsecured loans at a rate of 6.50% per annum. In connection with TRMT’s repayment of the outstanding amount of $14,220 on May 23, 2019, TRMT terminated the Credit Agreement. RMR Office Property Fund LP On August 31, 2018, ABP Trust formed the Open End Fund. In connection with the formation of the Open End Fund, ABP Trust contributed 15 properties to the Open End Fund with an aggregate value of $206,300. A wholly-owned subsidiary of ABP Trust served as the general partner of the Open End Fund. RMR LLC had committed to contribute up to $100,000 to the Open End Fund when called by the general partner. On July 28, 2020, the Open End Fund was dissolved and RMR LLC’s $100,000 commitment was terminated as a result. In connection with the dissolution, all of the properties that ABP Trust had contributed to the Open End Fund were transferred back to ABP Trust. Amounts Due From Related Parties The following table represents amounts due from related parties as of the dates indicated:
|  | September 30,
|  | 2020 |  | 2019
Managed Equity REITs: |  |  |  |
DHC |  | $ | 27,583 |  |  | $ | 25,505 |
ILPT |  | 8,880 |  |  | 10,630 |
OPI |  | 38,412 |  |  | 39,233 |
SVC |  | 10,584 |  |  | 18,933 |
|  | 85,459 |  |  | 94,301 |
Managed Operators: |  |  |  |
Five Star |  | 251 |  |  | 136 |
Sonesta |  | — |  |  | 37 |
TA |  | 556 |  |  | 392 |
|  | 807 |  |  | 565 |
Other Client Companies: |  |  |  |
ABP Trust |  | 3,454 |  |  | 2,580 |
AIC |  | 7 |  |  | 7 |
Open End Fund |  | — |  |  | 4,567 |
RMRM |  | — |  |  | 75 |
TRMT |  | 633 |  |  | 664 |
Centre Street |  | 9 |  |  | — |
|  | 4,103 |  |  | 7,893 |
|  | $ | 90,369 |  |  | $ | 102,759 |
Leases As of September 30, 2020, we leased from ABP Trust and certain Managed Equity REITs office space for use as our headquarters and local offices. During the fiscal years ended September 30, 2020, 2019 and 2018, we incurred rental expense under related party leases aggregating $5,619, $5,646 and $4,839, respectively. Our related party leases have various termination dates and many have renewal options. Some of our related party leases are terminable on 30 days’ notice and many allow us to terminate early if our management agreements for the buildings in which we lease space are terminated. For additional information regarding leases, please see Note 11, Leases. 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 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 RMR Inc. 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, which is presented on our consolidated statements of income for the fiscal year ended September 30, 2018 as Tax Receivable Agreement remeasurement. During the fiscal years ended September 30, 2020, 2019 and 2018, we paid $2,111, $2,266 and $2,962, respectively, to ABP Trust pursuant to the Tax Receivable Agreement. As of September 30, 2020, our consolidated balance sheet reflects a liability related to the Tax Receivable Agreement of $29,950, including $2,161 classified as a current liability that we expect to pay to ABP Trust during the fourth quarter of fiscal year 2021. 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 estimated tax liabilities of its members estimated quarterly, subject to future adjustment based on actual results. For the fiscal years ended September 30, 2020, 2019 and 2018, pursuant to the RMR LLC operating agreement, RMR LLC made required quarterly tax distributions to holders of its membership units totaling $31,545, $79,074 and $92,430 respectively, of which $16,606, $41,099 and $47,940, respectively, was distributed to us and $14,939, $37,975 and $44,490, 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 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 our U.S. federal and state income tax liabilities and to pay our obligations under the Tax Receivable Agreement. Purchase of TA Shares On July 6, 2020, RMR LLC purchased 218,577 shares of TA common stock in an underwritten public equity offering. RMR LLC paid an aggregate purchase price of $3,060 for these shares. On September 30, 2020, RMR LLC purchased 104,738 shares of TA common stock from Andrew J. Rebholz, TA’s former Managing Director and Chief Executive Officer pursuant to a right of first refusal. RMR LLC paid an aggregate purchase price of $2,259 for these shares. As a result, as of September 30, 2020, RMR LLC owned 621,853 shares of TA common stock, or approximately 4.3% of TA’s then outstanding shares of common stock. Registration and Lock-up Agreements The following registration rights and lock-up agreements are in effect: •ABP Trust Registration Rights Agreement. RMR Inc. is party to a registration rights agreement with ABP Trust pursuant to which RMR Inc. has granted ABP Trust demand and piggyback registration rights, subject to certain limitations, covering the Class A Common Shares ABP Trust owns, including the shares received on conversion of Class B-1 Common Shares or redemption of the paired Class B-2 Common Shares and Class A Units of RMR LLC. •Founders Registration Rights and Lock-Up Agreements. Adam D. Portnoy and ABP Trust are parties to a registration rights and lock-up agreement with each of DHC, OPI and SVC with respect to each such Managed Equity REITs’ common shares pursuant to which ABP Trust and Adam D. Portnoy agreed not to transfer the Managed Equity REITs’ common shares they acquired in connection with RMR LLC’s reorganization in June 2015 for a period of ten years, subject to certain exceptions, and each of those Managed Equity REITs has granted ABP Trust and Adam D. Portnoy demand and piggyback registration rights, subject to certain limitations. •Registration Rights and Lock-Up Agreement with FVE. Adam D. Portnoy and ABP Trust are parties to a registration rights and lock-up agreement with FVE with respect to FVE’s common stock pursuant to which ABP Trust and Adam D. Portnoy agreed not to transfer the FVE common stock they acquired in 2016 for a period of ten years, subject to certain exceptions, and FVE has granted ABP Trust and Adam D. Portnoy demand and piggyback registration rights, subject to certain limitations. In addition, in connection with a capital market transaction that we or any of our Client Companies may engage in from time-to-time, we or other Client Companies and our and their related parties may enter into customary lock up agreements with the underwriters for that capital transaction with respect to the shares that we or the other Client Companies may own of the issuer in that capital market transaction. Relationships Between Client Companies Several of our Client Companies have historical and ongoing material relationships with other Client Companies. As of September 30, 2020, SVC owned 8.2% of the outstanding common shares of TA and 33.9% of the outstanding shares of Sonesta, and DHC owned 33.9% of the outstanding common stock of Five Star. Until AIC’s dissolution on February 13, 2020, each of ABP Trust, the Managed Equity REITs, Five Star and TA owned AIC in equal amounts. SVC is TA’s principal landlord and TA is SVC’s largest tenant, operating travel center locations owned by SVC pursuant to long term leases, and Sonesta manages many of the hotels SVC owns and most of the hotels Sonesta operates are owned by SVC. Five Star manages most of the senior living communities that DHC owns pursuant to long term agreements. On December 31, 2018, SIR merged with and into a wholly owned subsidiary of OPI. Several of the independent trustees and independent directors of our publicly owned Client Companies also serve as independent trustees or independent directors of other publicly owned Client Companies. Separation Arrangements In October 2020, we entered into a retirement agreement with David M. Blackman, an Executive Vice President of RMR LLC. Mr. Blackman also currently serves as president, chief executive officer and a director of Tremont Realty Advisors LLC, president, chief executive officer and managing trustee of TRMT, president, chief executive officer and managing trustee of OPI, and executive vice president of RMR Advisors LLC. Mr. Blackman will continue to serve in his current officer, director and trustee roles with RMR LLC, Tremont Realty Advisors LLC, TRMT, OPI and RMR Advisors through December 31, 2020, except that he will continue to serve as a managing trustee of OPI until June 30, 2021 or such earlier time as his successor managing trustee is elected to OPI’s board of trustees. In addition, Mr. Blackman will continue to serve as an employee of RMR LLC through June 30, 2021. Under Mr. Blackman’s retirement agreement, RMR LLC agreed to pay Mr. Blackman combined cash payments in the amount of $2,850, with half of that amount expected to be paid on or about January 31, 2021 and the other half expected to be paid on or about July 31, 2021. In addition, in October 2020, our Compensation Committee approved the acceleration of all 9,400 unvested shares owned by Mr. Blackman of us as of his retirement date, June 30, 2021, subject to conditions. During the quarter ending December 31, 2020, we expect to record approximately $300 of equity based separation costs related to the acceleration of these shares and approximately $2,900 of cash separation costs, including taxes, related to the payments discussed above. We entered into retirement agreements with each of Mark L. Kleifges, Bruce J. Mackey Jr., John C. Popeo and Andrew J. Rebholz, each a former Executive Vice President of RMR LLC, between October 24, 2018 and December 13, 2019 in connection with their retirements. Pursuant to these agreements, we made various cash payments and accelerated the vesting of unvested shares RMR Inc. previously awarded to these retiring officers. We also enter into separation arrangements from time to time with other nonexecutive officers and employees of ours. All costs associated with separation arrangements, for which there remains no substance performance obligations, are recorded in our consolidated statements of income as separation costs. During the quarter ending December 31, 2020, we expect to record approximately $100 of equity based separation costs related to the acceleration of shares and approximately $1,300 of cash separation costs, including taxes, related to a separation arrangement with one of our nonexecutive officers. For the fiscal years ended September 30, 2020, 2019 and 2018, we recognized cash and equity based separation costs as set forth in the following table:
|  | Fiscal Year Ended September 30,
|  | 2020 |  | 2019 |  | 2018
Former executive officers: |  |  |  |  |  |
Cash separation costs |  | $ | 260 |  |  | $ | 5,312 |  |  | $ | 1,875 |
Equity based separation costs |  | 281 |  |  | 1,488 |  |  | 483 |
|  | 541 |  |  | 6,800 |  |  | 2,358 |
Former nonexecutive officers and other: |  |  |  |  |  |
Cash separation costs (1) |  | 1,316 |  |  | 153 |  |  | 1,372 |
Equity based separation costs |  | 24 |  |  | 97 |  |  | — |
|  | 1,340 |  |  | 250 |  |  | 1,372 |
Total separation costs |  | $ | 1,881 |  |  | $ | 7,050 |  |  | $ | 3,730 |
(1)The fiscal year ended September 30, 2020 includes a withdrawal liability of $515 related to a prior Client Company’s shared pension plan, for which the funded status was previously not reflected on our consolidated balance sheet as the plan was accounted for as a multiemployer benefit plan. Other The Managed REITs and Managed Operators award common shares directly to certain of our officers and employees in connection with the provision of services to those companies. For a description of the accounting implications to us of these share awards, please see Note 2, Summary of Significant Accounting Policies and Note 7, Shareholders’ Equity. The compensation of senior executives of the Managed Operators, who are also employees or officers of RMR LLC, is the sole responsibility of the party to or on behalf of which the individual renders services. In the past, because at least 80.0% of each of these executives’ business time was devoted to services to the Managed Operator, 80.0% of their total cash compensation was paid by the Managed Operator and the remainder was paid by RMR LLC.

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- Definition The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 1 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 1 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 1 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -URI http://asc.fasb.org/topic&trid=2122745 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39691-107864 + Details
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