Q1 2025 The RMR Group Inc Earnings Call
Good morning, and welcome to the R. M. Our fiscal first quarter 2025 earnings conference call.
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Speaker Change: I'd now like to turn the call over to Kevin Berry Senior director of Investor Relations. Please go ahead.
Speaker Change: Good morning, and thank you for joining Rmr's first quarter fiscal 2025 conference call with me on today's call are President and CEO, Adam Portnoy, and Chief Financial Officer, Matt Jordan in just a moment they will provide details about our business and quarterly results followed by a question and answer session.
Speaker Change: I would also like to note that the recording and retransmission of today's conference call is prohibited without the prior written consent of the company. Today's conference call contains forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 and other securities laws.
Speaker Change: These forward looking statements are based on Rmr's beliefs and expectations as of today February six 2025, and actual results may differ materially from those that we project.
Speaker Change: The company undertakes no obligation to revise or publicly release the results of any revision to the forward looking statements made in today's conference call additional information concerning factors that could cause those differences is contained in our filings with the securities and Exchange Commission, which can be found on our website at RMR group Dot com.
Speaker Change: Passengers are cautioned not to place undue reliance upon any forward looking statements.
Speaker Change: In addition, we may discuss non-GAAP numbers during this call, including adjusted net income adjusted earnings per share distributable earnings and adjusted EBITDA. A reconciliation of net income determined in accordance with U S. Generally accepted accounting principles to these non-GAAP figures can be found in our financial results I will now.
Adam Portnoy: Turn the call over to Adam.
Adam Portnoy: Thanks, Kevin and thank you all for joining US this morning, yes.
Adam Portnoy: Yesterday, we reported first quarter results that were in line with our expectations highlighted by adjusted net income of <unk> 35 per share and distributable earnings of 46 cents per share with nearly $150 million of cash on hand, and adjusted EBITDA This quarter of approximately $21 million.
Adam Portnoy: Our dividend remains secure.
Adam Portnoy: Two weeks ago, we further strengthened our liquidity by establishing a 100 million dollar line of credit.
Adam Portnoy: Although we have no immediate plans to draw on this facility. It further enhances our financial profile and puts us in a strong position to continue investing in growth initiatives.
Adam Portnoy: We are optimistic that the cyclical bottom for commercial real estate is likely behind us and the market is positioned to improve in 2025.
Adam Portnoy: Despite some lingering uncertainty fundamentals across most real estate sectors are getting better.
Adam Portnoy: Our recent interactions with our institutional private capital partners indicate that they are also ready to make significant investments in sectors, where they have conviction around in 2025.
Three private capital growth areas that we are focused on in 2020 five or the residential sector credit strategies and development initiatives in.
Adam Portnoy: And each of these areas RMR is well positioned to take advantage of strong investor interest in these sectors and we continue to advance our fundraising efforts through a combination of internal resources and strategic partners.
Adam Portnoy: A recent example of the growing momentum is that our residential platform, where we recently raised over $60 million from three institutional partners to acquire two south Florida residential communities with an aggregate purchase price of almost $200 million.
Adam Portnoy: As general partner RMR will invest approximately $10 million in the aggregate into these deals over the next three to five years RMR will execute a value add business strategy at each property with expected returns in the high teens.
Adam Portnoy: In addition to acquisition fees and ongoing property management fees upon completion of each properties respective business plan, we stand to earn promote income if certain investment hurdles are met.
Adam Portnoy: We believe this early momentum is the beginning of our institutional partners coming off the sidelines and supporting our belief and now is a good time to make investments as we transition from a period of oversupply in residential to a period of steady demand driven growth, especially in the sunbelt.
Adam Portnoy: Markets were RMR has a successful track record.
While we expect to continue to execute one of our strategic joint ventures with RMR is the general partner. Our goal is to raise a committed fund focused on residential investments in the future.
Adam Portnoy: As it relates to our private cat private real estate credit vehicle fundraising we remain confident in the demand for private real estate credit and believe we have a differentiated products focused on middle market lending with a proven track record.
Adam Portnoy: We are continuing fundraising in what is a crowded space, but remain confident that in 2025, we will have success.
Adam Portnoy: As a reminder, our on balance sheet loan portfolio. Currently consists of $67 million in aggregate commitments all of which are performing at or ahead of ahead of their stated business plans with a goal of exceeding our credit vehicle with approximately $100 million of bridge loans.
Adam Portnoy: Turning to our public capital clients, we are eliminating what we can discuss today as we were reporting results in advance of their earnings reports in the coming weeks, although I do want to highlight some recent public announcements that underscore the actions, we are taking to reduce leverage and improve cash flow at these claim.
Adam Portnoy: Yes.
Adam Portnoy: Oh P. I finished an active year highlighted by a focus on addressing its debt maturities and a challenging financing environment for the office sector.
Adam Portnoy: We executed on $1.8 billion of financings, including a debt exchange transaction related to Opi's 2025 debt maturity. They closed in December 2024.
Adam Portnoy: O P. I also executed well on its asset disposition plans selling 17 properties for over $114 million during the past quarter and using the proceeds to repay its remaining 2025 debt maturity in January.
Adam Portnoy: S. B C is advancing its plans to improve the composition of its hotel portfolio and strengthening its balance sheet. The company has begun marketing efforts to sell 114th Sonesta hotels. This year targeting $1 billion in proceeds to improve liquidity and reduce leverage we.
We remain confident that the rationalization of SB six hotel portfolio stable cash flows from its triple net lease assets and continued prudent capital allocation well position SPC for long term value creation.
Speaker Change: D. H Z continues to execute on initiatives to improve its portfolio, while pursuing deleveraging strategies too.
Speaker Change: To that end earlier this week the company completed the sale of a 186000 square foot life Science campus in San Diego for $159 million, reflecting an attractive valuation of approximately $855 per square foot.
Speaker Change: D. H E also expects to close its previously announced sale of 18 senior living communities to Brookdale senior living for $135 million later this month.
Speaker Change: Lastly, our commercial mortgage REIT seven Hills Realty Trust achieved exceptional results for shareholders in 'twenty 'twenty four.
Speaker Change: Seven Hills delivered a total shareholder return of over 12% compared to its industry benchmark, which had a total return of negative 8% during the same period.
Speaker Change: This outperformance is a testament to the strength of our lending platform and management's disciplined underwriting and asset management capabilities.
Speaker Change: To conclude we are pleased with the progress we have made assisting our clients with their financial and strategic objectives. While also driving new growth initiatives. We look forward to updating you on our progress in the coming quarters with that I'll now turn the call withdrew Matt Jordan Executive Vice President and our Chief financial.
Matt Jordan: Officer, Thanks, Adam and good morning, everyone as Adam highlighted earlier this quarters results were in line with our expectations as RMR generated net income of 38 cents per share. Adjusted net income was 35 cents per share and distributable earnings of 46 cents per share.
Matt Jordan: On a sequential quarter basis Armours earnings continued to exhibit stability as cost containment efforts offset lower revenues given challenges at our managed equity Reits.
Matt Jordan: Recurring service revenues were $47 $3 million this quarter, a decrease of approximately $700000 sequentially.
Matt Jordan: This decrease was primarily driven by enterprise value declines at our managed equity Reits and lower property management fees, resulting from asset sales both of which were slightly offset by seasonal growth in construction spend that tends to occur in the fourth calendar quarter of every year.
Next quarter.
Matt Jordan: Just on the current enterprise values of our managed equity Reits and a meaningful decline in construction activity as our clients prudently manage liquidity.
We expect recurring service revenues to be approximately $46 million.
Matt Jordan: As Adam highlighted earlier in our March 31st quarter, We will have closed two joint ventures to acquire two south Florida residential communities with.
Matt Jordan: Aggregate purchase price of almost $200 million.
The recurring service revenues of $46 million I outlined for next quarter includes the impact of these transactions.
More specifically onetime acquisition fees of $700000 and ongoing property management fees.
Matt Jordan: Turning to expenses recurring cash compensation was $42 $6 million this quarter.
Matt Jordan: A decline of approximately $1.5 million sequentially.
Matt Jordan: Which reflects the impact of head count actions taken in calendar 2024 <unk>.
Matt Jordan: Investments in technology, we've made that have driven increased automation.
Matt Jordan: And adjustments to our bonus projections given the headwinds our clients are facing.
Matt Jordan: Looking ahead to next quarter, we expect recurring cash compensation to remain at approximately $43 million.
Matt Jordan: With our cash reimbursement rate remaining at approximately 50%.
Matt Jordan: Yeah.
Matt Jordan: Recurring G&A this quarter was $11 $1 million, a modest sequential increase due to investments being made in our growth initiatives.
Matt Jordan: Next quarter, we expect recurring G&A to remain at or slightly below this level.
Matt Jordan: Aggregating these collective assumptions next quarter, we expect adjusted net income to be between 29, and <unk> 30 per share.
Matt Jordan: Adjusted EBITDA to be approximately $20 million and.
Matt Jordan: And distributable earnings to be between 42 and 43 per share.
Matt Jordan: As Adam highlighted earlier in January we entered into a $100 million credit facility to increase our capacity to invest in private capital growth initiatives.
Matt Jordan: This line bears interest at Sofa, plus 225 basis points.
Matt Jordan: And has an unused commitment fee of 50 basis points.
Matt Jordan: With nearly $150 million of cash on hand, and no outstanding corporate debt, we remain well positioned to take advantage of improving real estate market conditions.
Matt Jordan: That concludes our prepared remarks, operator, please open the line for questions.
Matt Jordan: We will now begin the question and answer session.
Speaker Change: To ask a question you May press Star then one on your telephone keypad.
Matt Jordan: Speaker phone please pickup your handset before pressing the teeth.
Matt Jordan: To withdraw your question. Please press Star then two.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Matt Jordan: Yeah.
Speaker Change: Our first question will come from Ronald Camden with Morgan Stanley You May now go ahead.
Speaker Change: Hey, a J thanks for taking the questions. A couple quick ones I'm, just starting with the for RMR residential JV investments are just wondering if you could talk a little bit more about that.
Speaker Change: You know what those sort of opportunities present.
Speaker Change: What the pipeline it sort of looks like I know you put some of the.
Speaker Change: <unk> sort of the the the dollar numbers, but sort of targeted IRR is and things like that would be helpful.
Speaker Change: Sure Hi, good morning, Ron Ah Ah. Thank you for the question with regards to our residential platform and specifically the deals we announced on the call.
Speaker Change: This represents as I said before about $200 million in gross investment we are the G. P and those deals. Those are you can think of them as structured joint ventures. The partners have invested around totaled $60 million of equity in there. Most of those partners are generally you can think of them as other asset manage.
Speaker Change: <unk> firms generally and the goal really is to continue down this path of.
Speaker Change: Acquiring assets in this sort of this joint venture structure.
Speaker Change: For the remainder of 2025 to give you a feel for how we're thinking about it we expect a minimum of in total for our fiscal year of 500 million, but we could exceed $1 billion in investments along this line in 'twenty in fiscal 2025 and the expected.
Speaker Change: Turns generally are mid teens.
Speaker Change: And if we can hit or exceed those returns their promote structures in place, which RMR gets to participate in.
Speaker Change: If we are successful.
Speaker Change: Keep in mind, we just acquired in these properties. They typically have a three to five year business plan. So those promotes if they were to materialize youre talking about three to five years from now as we execute on the business plan and turn them around and we're very confident in our ability to execute on that strategy and we're also really confident there is a.
Speaker Change: A really large pipeline of opportunities for us to invest this way.
Speaker Change: As you know just over a year ago, we acquired the residential platform, which.
Speaker Change: Which is headquartered down in Atlanta, It really took us the last year or just sort of fully integrated sort of get all the acquisition and asset management management folks sort of in place that we wanted to have there and I feel really good about how we're starting this year and I think this is just the beginning of what I expect to be.
Speaker Change: A large part of our AUR going forward.
Speaker Change: Great. That's Super helpful. And then I guess my my second question was just I think in your opening comments I think you've talked about residential and some of it I think two others for the big theme for this year I felt like development may have been sort.
Speaker Change: Sort of a new I'm not sure you sort of mentioned that before but just maybe a little bit more commentary on what what that entails what that opportunity.
Speaker Change: Yes, Thanks, Dan.
Speaker Change: Sure. Thank you for that.
Dan: You're very astute Ron we did insert that in this year and this quarter script and we haven't talked much about it. We think there are a lot of development opportunities within our embedded portfolio.
Speaker Change: That we can take advantage of some of those to give you just a very high level example would be <unk>.
Dan: Taking down.
Dan: On older obsolete structure of some short it could be office it could be retail and then redeveloped that into likely yeah, industrial warehouses and or multifamily residential. There are also some mixed use opportunities. There. Some of these opportunities have been expressed in the in.
Dan: The press and the media.
Dan: It S V C. A very large opportunity is something that we have going on down in Nashville, we have a very large site. It's a former truckstop that's been discussed and media publications are about an opportunity to redevelop that into.
Dan: Uh huh.
Dan: Oh, you know close to 2 million square feet and that project is a mixed use project is very large project you know.
Dan: There's been press in our ground, we have a site here in Boston that we have submitted to the authorities here in the Boston market about Redeveloped ing, taking down a few buildings that we own and turning that into a 40 story tower.
Dan: It's a project again, it would be probably a multi years and if we were to get it going but those are some of the larger projects. There's many more smaller projects underway and those are opportunities for RMR to earn obviously, a construction management fee, but I think in many of those opportunities we could do them on balance sheet, but we can.
Dan: Also think about bringing in partners similar in a similar fashion to what we have done with the residential side, we bring in outside equity to be the the limited partner and RMR would then also perhaps separate opportunity do you earn a promote if we were to able to produce the returns we think we.
Dan: We can on some of these development projects. So I think look if all goes to plan I think in 2025, you'll start seeing some of these development plans come to fruition and that's why we wanted to flag it in the or in our in our commentary because I think it's going to be something that we are hopefully going to kick off in and have some investments to talk about.
Dan: In 2025.
Dan: Alright, that's it for me thanks, so much.
Dan: Yeah.
Speaker Change: Our next question will come from Mitch Germain with citizens J M. P. You may now go ahead.
Speaker Change: Thank you.
Speaker Change: Adam just on the.
Speaker Change: Residential investments.
Speaker Change: I know initially you were targeting to do a a broader fund.
Is this a pivot to do individual.
Speaker Change:
Speaker Change: Investments with specific institutions or is there some sort of roll up strategy that you're.
Speaker Change: I'm going to look to focusing on maybe down the road.
Mitch: Thanks, Good morning, Mitch and thanks for the question.
Speaker Change: It's it's a little different.
Speaker Change: And what we are originally spoke about when we acquired the residential platform about a year ago at that time, you will remember we acquired it it had a G. P fund in place at the time of acquisition.
Speaker Change: And we were not sure if that G. P fund was going to invest in future investments, we thought at the time of acquisition that they would likely invest in future acquisitions as the G. P. It is become evident that they are.
Speaker Change: That that fund is unlikely.
Speaker Change: We need to invest as a G P investor are in and the deals that we're putting together so the pivot if there's been a pivot has been the RMR is going to fund 100% of the GP interest we always anticipated that we would go out in the first instance, and fine.
Speaker Change: <unk> partners to come in as L. PS into deals and that RMR might take a very small minority piece of it of the deal. What's different is we are taking the full G. P interest it's not a material difference in terms of dollars, but it is a difference in the way we are approaching it.
Speaker Change: Ever so slightly and if you had if you went back and listened to what we said about a year ago, we talked a lot about.
Speaker Change: G P fund and that we had billions of dollars of capacity under that GP funds, you put investments to work.
Speaker Change: Doesn't look like that G. P fund is going for various reasons I won't get into is going to be deploying much capital and we are going to be doing the GP investments ourself. The good thing that we're encouraged by is that there's a lot of Lps out there that want to co invest and come into the deal and are very comfortable.
Speaker Change: The ball in fact deals might be coming together better because RMR is the GP and putting up you know a little bit of capital into the deal. So we're very encouraged by it it's a little bit of a pivot.
Speaker Change: Because of that I think you know.
Speaker Change: If you've listened to us a year ago, we were probably talking about you know we had capacity to 2 billion of acquisitions under that G. P Fund.
Speaker Change: I still think we could do well in excess of $1 billion with us as the GP as us acting as the G P. Perhaps more.
Speaker Change: To your second part of your question is there opportunity to do a roll up.
Speaker Change: Perhaps that is not the stated goal when we do put these deals together, but I did say in my prepared remarks, we are trying to put together a dedicated fund with either full discretion or limited discretion upon with RMR, that's something we're going to continue to pursue in 2025.
Speaker Change: Well into 2026, I imagine and as we do that it might make sense to seed the fund with some with some balance sheet investments.
Speaker Change: And so that's not really a roll up but it's a little different I'm trying to answer the question by saying, you'll remember that we bought a property on our balance sheet. It's in our supplemental materials Denver and I think it was the third quarter last year, our third or fourth fiscal quarter third calendar quarter.
Speaker Change: We could do a couple more deals like that.
Speaker Change: To help seed investment.
Speaker Change: To get that discretionary or quasi discretionary fund up and going not too dissimilar to what we're doing on the credit side do we talk about where we're putting our balance sheet. Some loan so very similar strategy, but it's not really a roll up but I am trying to answer it in the spirit of what you're asking.
Speaker Change: Okay. So I just wanted to kind of make sure I understand what you're saying because they.
Speaker Change: Basically me the.
Speaker Change: Over time, you could have some individual.
Speaker Change: Joint venture investments, whether it be multifamily maybe development.
Speaker Change: And you may have some.
Speaker Change: Funds.
Speaker Change: Multifamily loan whatever whatever whatever.
Speaker Change: Or whatever it might be.
Speaker Change: It just creates a little bit of complication, but there could be individual investments as well as loan investment fund investments right. That's the way to kind of think of the strategy going forward.
Speaker Change: Yes, absolutely.
Speaker Change: Quarter to quarter basis, you will likely see in the future there'll be some on balance sheet investments that we will fully consolidate it could be in residential could be loans I don't know or think we'd probably do a development fully on balance sheet, we probably only do that if it was you know off balance sheet, but.
Speaker Change: The goal is that we're doing that to seed funds. So eventually and I can't put an exact timeline on it eventually what is on balance sheet. You would go off balance sheet as the seed investments in a fund the only reason we would ever put anything on balance sheet.
Speaker Change: Is that we are hoping that it's going to be a seed investment for a future fund.
Speaker Change: No if that future fund would be one quarter away from when we put it on the balance sheet or four quarters away from when we put it on our balance sheet, but that's the that's the intention and that's why that's why we're doing it but yes quarter to quarter, you will likely see some you know fully consolidated investments in let's say loans of properties and then you will also.
Speaker Change: Investments in.
Speaker Change: As a G P in bonds or joint ventures, that's correct.
Speaker Change: Great.
Speaker Change: Perfect.
Speaker Change: Answered it exactly Hello.
Speaker Change: Wanted just to clarify it.
Speaker Change: I wanted just to just address.
Speaker Change: Earnings if I could.
Speaker Change: I forgot that I apologize I don't have here.
Speaker Change: I'm sorry, adjusted net income 29 to 30 cents, it's down quarter over quarter distributable earnings down for consecutive quarters. How much of this is seasonality because it does seem like you get a little bit of a pick up in the first quarter by the acquisition fee as well as the participation in the income.
Speaker Change: On these new investments. So you know what is really generally, causing this kind of quarter over quarter decline in earnings here.
Speaker Change: Yeah, the biggest hit heading into the first calendar quarter, Mitch as construction volumes they are going to be cut in half the fourth calendar quarter of the year is always our highest the first calendar quarter is always our lowest and the first calendar quarter is further exacerbated by just physical discipline at the REIT.
Speaker Change: <unk> construction spend from about $100 million this quarter to about 50 next quarter and that has a very meaningful impact on construction management fees. You also have some headwinds on the enterprise value for the rights and then the first calendar quarter also always suffers from a compensation expense ticked up a bit.
Speaker Change: Because of payroll taxes, and four one K withholdings restarting on January 1st every year. So the first calendar quarter has embedded seasonal headwinds.
Speaker Change: And then you just have some greater client related activities also.
Speaker Change: Impacting the quarter the goal and hope is as we look out past this upcoming quarter is that we will start to tick back up all of those major metrics.
Speaker Change: Metrics.
Speaker Change: Okay cause I know you get the benefit of the 700.
Speaker Change: Alistair do I felt like that offset some of the whether it be comp or seasonality, but okay.
Speaker Change: Construction.
Speaker Change: Got it.
Speaker Change: Go ahead.
Speaker Change: No go ahead please.
Speaker Change: Yeah, I was just going to give you a further construction management fees alone are down 1.8 million. So the acquisition fees helped soften that blow, but but that's a pretty big impact.
Speaker Change: And that's like.
Speaker Change: Is that example, you know kind of S V C, which is now taking a lot of the capex.
Speaker Change: Work away brought onboard but yeah, okay. That's it's across the board.
Speaker Change: Gotcha Okay.
Speaker Change:
Speaker Change: Well now that I have you I just talk to me about the margin I mean, obviously we knew.
Speaker Change: You know it was going to take a little time to fully integrate Carol.
Speaker Change: So the platform but.
Speaker Change: You know we have seen a pretty significant deterioration in your EBITDA margins.
Speaker Change: 52 to 42 over the last year.
Speaker Change: You know kind of what's your outlook there I mean listen you're extremely cash flow positive you're well covered on your dividend. This is a sign of distress.
Speaker Change: Distress, most people would love to have the 42% margins, but there wasn't guy I'd say, we're north of 50, So just talking about it you know kind of what's happening there and what your outlook is.
Speaker Change: Yeah, our target is to clearly get back to the 50% range merch and it really is a function of our residential platform, they're throwing off $5 million in fees, but unfortunately, a breakeven business and until that improves that margin that incremental growth back to 50% isn't going.
Speaker Change: To occur.
Speaker Change: So the points out of made the we are definitely headed in the right direction on the residential front and we're being very mindful of cost there are without impacting the ability to grow that platform.
Speaker Change: But I think it'll be a couple of quarters at the earliest before we're getting anywhere back towards the 50% margin.
Speaker Change: Great and then the last one for me just to clarify the multifamily investments you get.
Speaker Change: Ongoing participation in the income you get a management fee as well as just the one time acquisition fee is that the way to look at it.
Speaker Change: Yeah. So its an acquisition fee right upfront, which averages about 50 to 60 basis points a wilkes.
Speaker Change: You know get our proportionate share of our earnings are as the G. P. A M and an owner and then we just get property management and construction fees, which are about 200 Grand a quarter on these two assets we.
Speaker Change: We do not get asset management fees are that those kind of fees will be more applicable when we ultimately get to a fund structure.
Speaker Change: Right. Thank you.
Speaker Change: Again, if you have a question. Please press Star then one.
Speaker Change: Our next question will come from John My Soca with B Riley Securities.
Speaker Change: Oh go ahead.
Speaker Change: Good morning.
Speaker Change: So maybe just thinking about the <unk>.
Speaker Change: Revolver, you put in place I mean, what do you think is the likelihood that you tap anything off of that in calendar year 'twenty five just trying to think about the pace of.
Speaker Change: Private investments and given some of the the seed investments. It seems like you might be making in the coming quarters, just kind of wanted to get a little clarity on that in just the utilization of the cash balance as well.
Speaker Change: Sure.
Speaker Change: I think.
Speaker Change: It's probably you know we have enough cash on the balance sheet too.
Speaker Change: To shorter do our base business investments as we look at the horizon today.
Speaker Change: Through fiscal year September.
Speaker Change: So I would say less than 50% chance, we draw anything on the revolver, but it's but it's not zero.
Speaker Change: And we really put that in place because we are ramping up.
Speaker Change: This seeding funds putting more.
Speaker Change: Using our balance sheet much more active at RMR to try to accelerate.
Speaker Change: The rates the growth of our private capital business and as we do that.
Speaker Change: We wanted to make sure we had sufficient liquidity did if opportunities came around over the next several a few quarters.
That we could accelerate it so let's say for an example, and picking you know we had an opportunity to put a fun together, but we felt like we really had all the Lps lined up but we really had to seed it with like I'm going to just pick a number a few a few a couple of hundred million dollars of seed.
Speaker Change: Estimates we my.
Speaker Change: Accelerate the pace that we put assets on the balance sheet to then and that might require us to then draw on the revolver.
Speaker Change: To then quickly turn around our hope would be to then see that be the seed investments, but it's the base business as we look out today I think it's you know we can do everything we planned to do in 2025, probably without using the revolver, but we wanted to.
Speaker Change: Have that option that as we get further into the year that are opportunities present themselves, we have the flexibility and liquidity to act on it.
Speaker Change: And so I think it's less than 50%, but it's not zero and.
Speaker Change: Some chance we will draw on it but that I hope that gives you a feel for it.
Speaker Change: That's very helpful. And then maybe thinking about the residential investments specifically I mean is there kind of a split you see in the future between deals similar to the one in Florida versus kind of more.
Speaker Change: Full balance sheet seed transactions.
Speaker Change: I think youre going to see us.
Speaker Change: Doing both in count in fiscal year 2025, I think there's a let me put it this way I know for sure we're going to do a I think.
Speaker Change: Many more joint venture type deals like we just did I think youre going to see many deals like that.
Speaker Change: I think there's a good chance you could see one or two deals on balance sheet in fiscal year 2025. So that gives you a sense I think youll see it when I said earlier I think it was answering a question, let's say, we did a $1 billion in 2025 of residential investments.
Speaker Change: Expect the vast majority of that $1 billion would be where we're just the GP, but it could be in that scenario, where one or two of those assets could be call. It up there's a couple of hundred million dollars would be on our balance sheet. So theres a strong bias to do it much more in the JV structure, but there <unk>.
Speaker Change: Would it be an opportunity to do.
Speaker Change: Some on balance sheet this sort of ties back to your prior question around using the revolver.
Speaker Change: That could be an opportunity that could be a reason we would use the revolver, but again that would be tied to if we were doing that we'd have some conviction around the ability to use those on balance sheet investments Oh.
Speaker Change: Sedated property investments.
Speaker Change: To see the vehicle very similar to what we're doing longer credit fund I expect we will also do some additional credit investments alone investments on balance sheet in fiscal year 2025, again, all with an eye towards those are going to be the seed investments in the fund.
Speaker Change: Okay, and then I know, it's very big picture and you know we're early days, but any kind of is it 26 kind of the timeline for when we might anticipate.
Speaker Change: Both sets of funds being available to take down seed investments do additional yeah.
Speaker Change: Auctions et cetera, I mean is that kind of a 'twenty 'twenty six event.
Speaker Change: I think it's a fair assessment to say, it's a 2026 event I think we're laying all the groundwork in fiscal year 2025.
Speaker Change: Our hope is that we'll have some announcements in fiscal year 2025.
Speaker Change: But I don't think we will have capital out.
Speaker Change: It's hard for me to see that we will have a funds established deploying capital in that small in those funds.
Speaker Change: In 2025 Ah, it's up it could happen in the fourth fiscal quarter, but that would be you know things going really well.
Speaker Change: Okay.
Speaker Change: For me I appreciate the color. Thank you.
Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Adam Portnoy, President and Chief Executive Officer for any closing remarks.
Speaker Change: Thank you all for joining US today, we look forward to seeing many of you at the Morgan Stanley.
Speaker Change: <unk> Conference in New York City later this month, please reach out to Investor Relations, if you're interested in scheduling a meeting with RMR.
Speaker Change: Operator that concludes our call.
The conference has now concluded. Thank you for today's presentation you may now disconnect.