Summary of Industrial Logistics Properties Trust (ILPT) Conference Call Company Overview - **Company**: Industrial Logistics Properties Trust (ILPT) - **Portfolio**: Owns and leases industrial and logistics properties across the United States, totaling approximately 60 million square feet across 411 properties in 39 states, with a 95% lease rate and a weighted average lease term of 7.8 years [1][2] Key Insights Unique Market Position - **Hawaii Portfolio**: ILPT has a significant presence in Hawaii, owning 226 properties totaling about 16.7 million square feet, primarily ground leased. This region contributes 28% to annualized revenues, with rent increases of 20% to 30% expected as leases expire [2][4] - **Tenant Quality**: 76% of revenues come from investment-grade rated tenants or secure land leases in Hawaii, indicating a strong tenant base [4] Financial Performance - **Debt Management**: Current leverage is at 11.9 times, with all debt at fixed rates or hedged through interest rate caps, averaging 5.5% as of March 31 [4][5] - **No Debt Maturities**: ILPT has no debt maturities until February 2027, providing stability [5] Market Dynamics - **Tariff Impact**: The company believes its portfolio is less sensitive to global tariff changes due to its unique tenant mix and geographic focus, primarily east of the Mississippi [3][13] - **Tenant Retention**: Increased tenant retention has been observed, with tenants opting to renew leases amid rising construction costs and tariff uncertainties [15] Growth Opportunities - **Rent Growth**: Historical rent resets every ten years have led to significant roll-ups in rents, with increases of 60% to 80% noted in recent years [12] - **Vacancy Management**: ILPT is actively working to fill vacancies, including a significant 2.2 million square feet property in Hawaii, which has impacted occupancy rates but not annualized revenue significantly [21][30] Strategic Focus Business Plan Adjustments - **Acquisition of Monmouth**: The acquisition in February 2022 has led to a reevaluation of the business plan due to rising interest rates and market volatility. The company is focusing on tenant retention and exploring asset sales to reduce leverage [18][19] - **Asset Sales**: While there is interest in asset sales, the current debt structure complicates this process. The company is evaluating inbound offers and considering sales that align with their debt yield requirements [38][42] Future Considerations - **Dividend Strategy**: The company is assessing the potential for reinstating dividends as market conditions improve and cash retention needs decrease [42][46] - **Long-term Outlook**: ILPT aims for a higher stock price and reduced vacancies in the coming year, focusing on operational control and leasing strategies [48] Additional Insights - **Market Conditions**: The company is experiencing a competitive leasing environment in Indianapolis, with new products entering the market, but remains optimistic about its positioning as a low-cost alternative [28] - **Infrastructure Challenges**: The Hawaii parcel's lack of utilities and infrastructure presents challenges for development, but the company prefers to hold the land for future appreciation [25][24] This summary encapsulates the key points discussed during the conference call, highlighting ILPT's strategic positioning, financial health, and market dynamics.

Core Viewpoint - Industrial Logistics Properties Trust (ILPT) has experienced a significant decline in value, losing over 80% over the past 5 years due to high leverage, low dividend yield, and various headwinds [1] Company Summary - ILPT is categorized as an industrial Real Estate Investment Trust (REIT) [1] - The company has managed to retain and grow its operations despite the challenges faced [1] Investment Perspective - The REIT sector is viewed as presenting abundant opportunities for investors, particularly in identifying undervalued companies [1] - A fundamental investment philosophy is emphasized, focusing on financial health, competitive positioning, and management quality [1]

Financial Data and Key Metrics Changes - Cash basis NOI grew by nearly 2% year over year, while normalized FFO increased 43% year over year and 52% sequentially [7][15] - NOI for the quarter was reported at $87,500,000, with cash basis NOI at $83,800,000 and adjusted EBITDAre at $85,300,000, all showing increases year over year and sequentially [16] - Interest expense decreased to $69,800,000, reflecting a reduction in interest rate cap costs [16] Business Line Data and Key Metrics Changes - The company executed over 2,300,000 square feet of total leasing activity with an occupancy rate of 94.6%, reflecting a sequential increase of 20 basis points [7] - The Mainland properties accounted for nearly 80% of renewal activity, with significant leases signed with major tenants [11] - In Hawaii, 492,000 square feet of renewals were signed at rental rates 18.2% higher than prior rents [9] Market Data and Key Metrics Changes - The company is monitoring the evolving landscape surrounding global tariffs, which may impact tenant demand and the overall leasing environment [10] - The leasing pipeline includes 32 deals for more than 7,400,000 square feet, with anticipated roll-ups in rent of 20% on the Mainland and 30% in Hawaii [13] Company Strategy and Development Direction - The company aims to maximize mark-to-market growth opportunities, maintain strong tenant retention, and lease vacancies, particularly in undeveloped land parcels [10] - There is a focus on evaluating opportunities to improve the balance sheet and reduce leverage, potentially through refinancing existing debt and strategic property dispositions [10][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the portfolio's ability to withstand short-term volatility due to its high-quality assets and diversified tenant roster [10] - The company anticipates that tariffs may positively impact tenant demand, leading to higher tenant retention in the short term [38] Other Important Information - The company reported a strong start to the year with solid financial performance and steady demand for industrial real estate [17] - The company has no debt maturities until 2027, with all debt currently carried at fixed rates [17] Q&A Session Summary Question: Details on bad debt recovery impact - The financial impact from bad debt recovery in the first quarter was around $750,000, which is reflected in revenues [20][21] Question: Insights on leasing timelines - Leasing timelines have elongated, with tenants looking to start renewal processes earlier due to more stakeholders involved in lease decisions [22][23] Question: Status of notable vacancies in Hawaii and Indianapolis - Activity has been seen for the Hawaii property, with proposals out, while the Indianapolis property is actively being marketed with proposals but no finalized leases yet [24][26] Question: Motivation for leverage reduction and property sales - The company is evaluating unsolicited offers for properties, particularly from owner-users, which may lead to higher valuations [28][30] Question: Impact of tariffs on tenant decisions - Tariffs are anticipated to be beneficial for tenant demand, with some tenants opting to stay in place rather than relocate due to concerns about construction costs [37][38] Question: Exposure of Hawaii portfolio to inbound travel - The portfolio's exposure to inbound travel is minimal, as tenants generally serve the local economy rather than relying on tourism [39]

Financial Data and Key Metrics Changes - Cash basis NOI grew by nearly 2% year over year, while normalized FFO increased 43% year over year and 52% sequentially [7][16] - As of March 31, 2025, NOI was $87,500,000, cash basis NOI was $83,800,000, and adjusted EBITDAre was $85,300,000, all showing increases year over year and sequentially [17] - Interest expense decreased to $69,800,000, reflecting a reduction in interest rate cap costs [17] Business Line Data and Key Metrics Changes - The company executed over 2,300,000 square feet of total leasing activity with an occupancy rate of 94.6%, reflecting a sequential increase of 20 basis points [7] - The top 10 tenants account for 47% of annualized rental revenues, with over 76% coming from investment-grade rated tenants or secure Hawaii land leases [8] - In Hawaii, 492,000 square feet of renewals were signed at rental rates 18.2% higher than prior rents [9] Market Data and Key Metrics Changes - The Mainland properties accounted for nearly 80% of renewal activity, with significant leases signed with major companies [12] - The company is tracking 32 deals in its pipeline for over 7,400,000 square feet, anticipating a near-term conversion of 500,000 square feet [14] Company Strategy and Development Direction - The company aims to maximize mark-to-market growth opportunities, maintain strong tenant retention, and lease vacancies, particularly in Hawaii and Indianapolis [10] - There is a focus on evaluating opportunities to improve the balance sheet and reduce leverage, potentially through refinancing existing debt and strategic property dispositions [10][30] Management's Comments on Operating Environment and Future Outlook - Management is monitoring the evolving landscape surrounding global tariffs, believing the portfolio is well-positioned to withstand short-term volatility [10] - The company anticipates that tariffs may positively impact tenant demand, leading to higher tenant retention in the short term [38][39] - Management expressed confidence in the long-term value of the Hawaii land despite current leasing challenges [31] Other Important Information - The company reported a one-time benefit of $0.01 per share related to a required remediation payment for a scheduled lease termination in the second quarter [20] - The company has no debt maturities until 2027, with all debt currently carried at fixed rates [17] Q&A Session Summary Question: Details on bad debt recovery impact - The financial impact from bad debt recovery was around $750,000 in revenues [22] Question: Insights on leasing timelines - Leasing timelines are elongated, with tenants starting renewal processes earlier due to more people involved in decision-making [24][25] Question: Status of notable vacancies in Indianapolis and Hawaii - Activity has been seen in Hawaii with proposals out, while negotiations in Indianapolis did not materialize, and the property is actively being marketed [26][28] Question: Motivation for leverage reduction and property sales - The company is seeing unsolicited offers from owner-users, which are usually at higher valuations, prompting consideration for property sales [30] Question: Impact of tariffs on tenant decisions - Tariffs are anticipated to be beneficial for tenant demand, with some tenants opting to stay in place rather than relocate due to concerns over construction costs [38][39] Question: Exposure of Hawaii portfolio to inbound travel - The portfolio's exposure to inbound travel is minimal, as tenants generally serve the local economy rather than relying on tourism [40]

Financial Results and Supplemental Information FIRST QUARTER 2025 April 29, 2025 2020 Joe B. Jackson Parkway Murfreesboro, TN 1,016,281 Square Feet ILPT Ownership: 100% Table of Contents QUARTERLY RESULTS | 4 | Industrial Logistics Properties Trust Announces First Quarter 2025 Financial Results | | | --- | --- | --- | | First Quarter 2025 Highlights | | 5 | | FINANCIALS | | | | Key Financial Data | | 7 | | Condensed Consolidated Statements of Income (Loss) | | 8 | | Condensed Consolidated Balance Sheets | | ...

Property and Occupancy - As of March 31, 2025, the company owned 411 properties with approximately 59,890,000 rentable square feet and a 94.6% occupancy rate[76]. - As of March 31, 2025, 5.4% of rentable square feet was vacant, and $5,478,000 or 1.2% of annualized rental revenues was included in leases scheduled to expire by March 31, 2026[87]. - FedEx and Amazon accounted for 22.5% and 8.0% of total leased square feet, representing 28.7% and 6.7% of total annualized rental revenues, respectively[86]. Rental Rates and Income - The average effective rental rate increased to $7.92 per square foot as of March 31, 2025, compared to $7.58 in 2024[79]. - During the three months ended March 31, 2025, the company completed new and renewal leases totaling 2,175,000 square feet, with a weighted average rental rate change of 18.5%[83]. - Approximately 144,000 square feet of land at Hawaii Properties had rent resets that were 34.6% higher than prior rental rates[84]. - Rental income for Q1 2025 was $111,905, a decrease of 0.3% from $112,235 in Q1 2024, primarily due to vacancies at certain properties[91][92]. Financial Performance - Net operating income (NOI) increased by 1.7% to $87,502 in Q1 2025 from $86,052 in Q1 2024[91][100]. - Net loss attributable to common shareholders improved to $(21,532) in Q1 2025 from $(23,403) in Q1 2024, reflecting an 8.0% reduction[91][103]. - Funds from operations (FFO) attributable to common shareholders increased to $12,523 in Q1 2025, up from $9,450 in Q1 2024[91][103]. - Normalized FFO attributable to common shareholders also rose to $13,490 in Q1 2025, compared to $9,450 in Q1 2024[91][103]. Expenses and Cash Flow - General and administrative expenses rose by 7.1% to $8,238 in Q1 2025, driven by accrued incentive management fees of $967[91][95]. - Interest income decreased by 31.0% to $1,968 in Q1 2025, attributed to lower interest rates and average cash balances[91][96]. - Cash and cash equivalents at the end of Q1 2025 were $236,702, slightly up from $236,477 at the end of Q1 2024[91][105]. Debt and Financing - The company plans to explore refinancing alternatives and property sales as debt approaches maturity[91][107]. - Total outstanding floating rate debt as of March 31, 2025, was $2,635,000, with an annual interest expense of $167,340[124]. - A one percentage point increase in interest rates would result in an annual floating rate interest expense of $196,381 and a decrease in annual earnings per share of $2.98[127]. - The ILPT Floating Rate Loan had a weighted average interest rate of 6.71% for the three months ended March 31, 2025, compared to 6.18% in 2024[116]. - The Mountain Floating Rate Loan had a weighted average interest rate of 5.82% for the three months ended March 31, 2025, down from 6.09% in 2024[116]. Tenant and Lease Management - The company has a weighted average remaining lease term of 7.8 years across its portfolio[85]. - American Tire Distributors, which represented 1.6% of total annualized rental revenues, filed for Chapter 11 bankruptcy but intends to modify lease terms rather than vacate[89]. - The company plans to seek rents equal to or higher than historical rents during lease renewals and extensions, depending on market conditions[87]. Capital Expenditures and Obligations - For the three months ended March 31, 2025, total capital expenditures amounted to $3,959,000, an increase of 17.3% from $3,373,000 in the same period of 2024[109]. - As of March 31, 2025, committed but unspent tenant-related obligations were $6,786,000, expected to be spent within the next 12 months[110]. Shareholder Returns - The company declared and paid a regular quarterly distribution of $661,000 to common shareholders during the three months ended March 31, 2025[119]. Compliance and Accounting - The company believes it was in compliance with all covenants and terms under the agreements governing its loans as of March 31, 2025[117]. - There have been no significant changes in critical accounting estimates since the year ended December 31, 2024[122].

Leasing Activity - For Q1 2025, Industrial Logistics Properties Trust executed 2.3 million square feet of leasing activity at weighted average rental rates that were 18.9% higher than prior rates[14]. - Lease renewals accounted for approximately 75% of the leased square footage, indicating strong tenant retention and demand for high-quality assets[14]. - New leases signed during the quarter totaled 437 square feet, with a percentage change in GAAP rent of 22.2%[41]. - The company achieved a 30.7% increase in GAAP rent for leasing activity, weighted by square feet[52]. - Scheduled rent resets at Hawaii properties account for 13.0% of annualized rental revenues, indicating potential for revenue growth[48]. Financial Performance - Net loss attributable to common shareholders was $21.5 million, or $0.33 per diluted share, compared to a loss of $23.4 million in Q1 2024[14][19]. - Normalized FFO attributable to common shareholders was $13.5 million, or $0.20 per diluted share, reflecting an increase from $8.9 million in Q1 2024[14][18]. - NOI increased by 1.7% to $87.5 million, while Cash Basis NOI increased by 1.9% to $83.8 million compared to Q1 2024[14]. - Adjusted EBITDAre rose by 1.1% to $85.3 million compared to the same quarter last year[14]. - Total rental income for Q1 2025 was $111.9 million, slightly down from $112.2 million in Q1 2024[19]. - The company reported a net loss attributable to common shareholders of $(21,532,000)[52]. - For the three months ended March 31, 2025, the net loss was $31,169,000, an improvement from a net loss of $34,380,000 in the previous quarter[80]. - EBITDA for the same period was $80,190,000, slightly up from $79,203,000 in the prior quarter[80]. - Adjusted EBITDAre increased to $85,324,000 from $82,156,000 quarter-over-quarter[81]. - Normalized FFO attributable to common shareholders rose to $13,490,000, compared to $8,877,000 in the previous quarter, marking a significant increase of 52.9%[81]. Assets and Liabilities - Total assets as of March 31, 2025, amounted to $5,363,625, a decrease from $5,406,331 as of December 31, 2024[21]. - The company reported a total equity of $976,913 as of March 31, 2025, down from $1,009,330 at the end of 2024[21]. - The net debt to total gross assets ratio was 68.7% as of March 31, 2025, slightly up from 68.6% at the end of 2024[32]. - The company had a total debt balance of $4,303,196, with a significant portion maturing in the next 2.8 years[23]. - Total gross assets amount to $5,919,339,000, with total debt at $4,303,196,000, resulting in a net debt to annualized Adjusted EBITDAre ratio of 11.9x[52]. Tenant and Revenue Characteristics - As of March 31, 2025, approximately 76% of annualized rental revenues were derived from investment-grade tenants or their subsidiaries[14]. - The company’s tenant credit characteristics show that 37.0% of total annualized rental revenues come from subsidiaries of investment-grade rated parent entities[44]. - Top 10 tenants contribute 46.9% of total annualized rental revenues, with FedEx Corporation at 28.7% and Amazon.com Services, Inc. at 6.7%[45]. - The occupancy rate across properties is 94.6%, with the highest occupancy at Mountain Industrial REIT LLC at 99.8%[52]. - As of March 31, 2025, 387 leases are expiring, representing 56,680 square feet or 100% of total leased area, with annualized rental revenues of $443,909,000[48]. - The weighted average remaining lease term is 7.0 years, indicating stability in rental income[48]. Capital Expenditures and Debt Management - Total capital expenditures for the three months ended March 31, 2025, were $3,959,000, compared to $5,357,000 in the previous quarter[35]. - The weighted average interest rate on the company's debt was 5.53% as of March 31, 2025[23]. - The company reported interest expense of $69,813,000 for Q1 2025, slightly down from $71,739,000 in Q4 2024[79]. - The weighted average interest rate on the company's loans was 4.22% with a total principal balance of $538,700,000[73]. Joint Ventures and Consolidated Results - Consolidated Joint Venture reported rental income of $41,685,000 for Q1 2025, a decrease of 1.6% from $42,363,000 in Q1 2024[66]. - Total expenses for the Consolidated Joint Venture were $37,390,000 in Q1 2025, down 7.3% from $40,329,000 in Q1 2024[66]. - The net loss for the Consolidated Joint Venture was $24,801,000 in Q1 2025, compared to a net loss of $26,953,000 in Q1 2024, reflecting a 8% improvement[66]. - Normalized Funds From Operations (FFO) increased to $749,000 in Q1 2025 from a loss of $270,000 in Q1 2024[69]. - The Industrial Fund REIT LLC joint venture generated rental income of $19,635,000 in Q1 2025, an increase of 3.2% from $19,025,000 in Q1 2024[73]. Strategic Focus and Market Conditions - The company is focusing on market expansion and new product development to enhance future growth prospects[66]. - Geographic diversification shows that 12.2% of revenues come from Georgia, with significant contributions from other states, enhancing risk management[60]. - Forward-looking statements indicate expectations regarding leasing velocity and organic cash flow growth[101]. - Risks include tenant lease renewals, market conditions, and potential defaults affecting cash flows[101]. - ILPT's ability to maintain liquidity and manage capital expenditures is crucial for future performance[101]. - The company does not intend to update forward-looking statements unless required by law[102].

Financial Data and Key Metrics Changes - As of December 31, 2024, normalized FFO was $35.4 million or $0.54 per share, a 12.1% increase compared to 2023 [22] - NOI increased by 0.6% to $341.2 million, while cash basis NOI increased by 1.5% to $329.2 million [22] - Adjusted EBITDAre increased by 2.2% to $335.6 million [22] - For Q4, normalized FFO was $8.9 million or $0.13 per share, a 10% increase on both a sequential quarter and prior year basis [22] - Q4 NOI decreased by 0.8% to $84.2 million, while cash basis NOI remained flat at $81.6 million [23] Business Line Data and Key Metrics Changes - The company completed 731,000 square feet of leasing in Q4, with rental rates 39.3% higher than prior rents [11] - New leasing in Hawaii accounted for 148,000 square feet at rental rates 43% higher than prior rents [11] - Lease renewals on the Mainland accounted for 98% of renewal activity in Q4, with a weighted average rental rate increase of 38.7% [16] Market Data and Key Metrics Changes - The consolidated occupancy rate at year-end was 94.4%, consistent with Q3 results [9] - The company has a weighted average lease term of seven years, with top 10 tenants accounting for 48% of total annualized rental revenues [9] Company Strategy and Development Direction - The company aims to focus on leasing vacancies, particularly a 2.2 million square foot land parcel in Hawaii and a 535,000 square foot property in Indianapolis [12] - The leasing pipeline remains robust, tracking 28 deals for over 6.5 million square feet, including the two vacancies mentioned [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about leasing both vacant locations in 2025, despite challenges in tenant diligence and competition in Indianapolis [15] - The company expects normalized FFO for Q1 2025 to be between $0.16 and $0.18 per share, based on leasing activity and anticipated interest expense [26] Other Important Information - The company has no debt maturities until 2027, with a net debt to total assets ratio of 68.6% [24] - Cash on hand exceeded $130 million, and restricted cash held by the consolidated joint venture was over $110 million [24] Q&A Session Summary Question: What is driving the per share upside from Q4 earnings to Q1? - Management indicated that the main variables include interest expense and some leasing activity, along with a non-recurring bad debt of less than $1 million in Q4 [30] Question: Is there a broader change in the leasing pipeline environment? - Management clarified that the pipeline was still around $8 million, as some completed deals were removed from the pipeline [32] Question: How is the execution percentage on the leasing pipeline? - Management noted that execution has been consistent, with a successful track record once deals reach the LOI stage [34] Question: What is the status of discussions regarding the bankruptcy situation? - Management confirmed ongoing discussions with American Tire, with no leases rejected so far, and expressed confidence in retaining the properties [36]

REIT Qualification and Taxation - The company is required to distribute at least 90% of its REIT taxable income annually to qualify for taxation as a REIT[45]. - The company has elected to be taxed as a REIT under Sections 856 through 860 of the IRC, effective from the 2018 taxable year[71]. - The company believes it has operated in a manner that qualifies it for taxation as a REIT and will continue to do so[73]. - The company is generally not subject to federal income tax on net income distributed as dividends to shareholders, provided it meets certain requirements[72]. - If the company fails to qualify as a REIT in any year, it could face significant tax liabilities and reduced cash available for distribution to shareholders[74]. - The company may be subject to a 4% nondeductible excise tax if it fails to distribute at least 85% of its REIT ordinary income and 95% of its REIT capital gain net income for any calendar year[75]. - The company’s continued qualification as a REIT depends on compliance with various qualification tests imposed under the IRC[74]. - The company’s counsel believes it will continue to meet the requirements for qualification and taxation as a REIT based on current operations and investments[73]. - The company believes it has met all REIT qualification conditions during the requisite periods and will continue to do so in the future[79]. - At least 75% of the company's gross income must be derived from real property-related investments to maintain REIT status[92]. - The company must satisfy two gross income tests annually to maintain REIT qualification, with at least 95% of gross income needing to be qualifying income[92]. - The company has protective TRS elections in place to mitigate risks associated with subsidiary REITs not qualifying for taxation as REITs[86]. - The company is required to make annual distributions equal to at least 90% of its "real estate investment trust taxable income" to qualify for REIT taxation[107]. - If the company fails to meet the 90% distribution requirement, it may be subject to a 4% nondeductible excise tax on undistributed amounts[109]. - The company can rectify a failure to pay sufficient dividends by issuing "deficiency dividends" in a later year, subject to an interest charge[111]. - Following a corporate acquisition, the company must distribute all inherited C corporation earnings and profits by the end of the taxable year[117]. - The company acquired MNR in Q1 2022, which may have tax implications if MNR lost its REIT qualification prior to acquisition[118]. Debt and Financing - The company has no policies limiting the amount of debt it may incur, allowing for flexible financing strategies[46]. - As of December 31, 2024, the total outstanding floating rate debt amounted to $2,635 million with a weighted average interest rate of 6.32%[322]. - The ILPT Floating Rate Loan has a principal balance of $1,235 million with an interest rate of 6.71%, requiring monthly payments of $84,019 until maturity on October 9, 2025[322]. - The Mountain Floating Rate Loan has a principal balance of $1,400 million with an interest rate of 5.81%, requiring monthly payments of $82,470 until maturity on March 9, 2025[322]. - The company has purchased interest rate caps to hedge against fluctuations in SOFR, with current strike rates of 2.78% for the ILPT loan and 3.04% for the Mountain loan[323]. - In February 2025, the consolidated joint venture exercised the second extension option for the Mountain Floating Rate Loan and purchased a one-year interest rate cap for $15,010 with a SOFR strike rate of 3.10%[323]. - The company is exposed to market risks associated with interest rate changes and manages this risk by monitoring financing alternatives and employing derivative instruments[320]. - The company does not expect significant changes in its exposure to interest rate fluctuations in the near future[320]. - A one percentage point increase in interest rates would result in an annual floating rate interest expense of $166.489 million and a decrease in earnings per share of $2.53[324]. - If the weighted average interest rate of floating rate loans increases to 7.32%, the total floating rate interest expense per year would be $195.517 million, leading to a decrease in annual earnings per share of $2.98[325]. - The company's total outstanding fixed rate debt amounts to approximately $1.673 billion, with a weighted average interest rate of 4.37%[328]. - The annual interest cost for refinancing fixed rate mortgage notes at a one percentage point higher or lower rate would change by approximately $16.728 million[329]. - A hypothetical one percentage point change in market interest rates would affect the fair value of fixed rate debt obligations by approximately $78.250 million[330]. - The company is exposed to fluctuations in floating interest rates, which will vary with changes in outstanding amounts of floating rate debt and interest rate caps purchased[326]. - The company has several mortgage notes with varying interest rates, with the highest being 6.25% and the lowest at 2.95%[328]. - The company’s fixed rate mortgage notes require interest-only payments until maturity for certain amounts, while others require amortizing payments[329]. - Interest rates remain elevated despite recent reductions by the U.S. Federal Reserve, creating uncertainties for future interest rate movements[330]. Corporate Governance and Sustainability - The company relies on RMR for management services and has no employees of its own, with RMR employing over 1,000 full-time staff[52]. - The company competes with various public and private REITs and financial institutions, leveraging management experience and property quality as competitive advantages[48]. - As of December 31, 2024, the Board of Trustees included seven members, with 28.6% being female and 14.3% from under-represented communities[61]. - The company emphasizes corporate sustainability as a strategic focus, aligning with RMR's initiatives to minimize environmental impact[54]. - The company monitors environmental compliance and has set up reserves for potential environmental liabilities, although it does not believe current conditions will materially affect operations[47]. Asset Management and Compliance - The company has invested in real estate through partnerships, treating its proportionate share of income and assets for REIT qualification purposes[83]. - The company has subsidiary REITs that are expected to remain qualified for taxation as REITs under the IRC[84]. - The company is permitted to own securities of Taxable REIT Subsidiaries (TRSs), provided that no more than 20% of its total assets are comprised of these investments[87]. - The company must not own more than 10% of the vote or value of any one non-REIT issuer's outstanding securities, unless the securities are "straight debt" securities[101]. - The company must satisfy the asset tests at the close of each calendar quarter to maintain REIT status[103]. - If the company fails the 5% asset test, the failure will be excused if it is de minimis and corrective actions are taken within specified timeframes[104]. - The company has maintained records of the value of its assets to document compliance with the asset tests[106]. - The company cannot be sure that restrictions on ownership will effectively prevent qualification for taxation as a REIT from being jeopardized under the 10% affiliated tenant rule[93]. - The company expects that any revenues from TRS-provided services will qualify as "rents from real property" because the services will satisfy the geographically customary standard[94]. - The company believes that all or substantially all of its rents and related service charges have qualified as "rents from real property" for purposes of Section 856 of the IRC[94].

Leasing and Occupancy - Industrial Logistics Properties Trust achieved annual leasing of nearly 6,100,000 square feet, with 731,000 square feet leased in Q4 2024 at rental rates 39.3% higher than prior rents[7] - The portfolio's occupancy rate stands at 94.4%, with 77% of annualized rental revenues generated from investment-grade tenants[13] - The percentage of properties leased decreased to 94.4% in Q4 2024 from 98.8% in Q4 2023[36] - The company executed 731 leasing activities in the last quarter, including 148 new leases and 583 renewals, with a total of 682 expirations[39] - The weighted average lease term for newly leased properties is 11.5 years, with lease renewals accounting for approximately 80% of leased square footage[13] - The weighted average lease term for new leases was 21.3 years, and for renewals, it was 7.8 years[39] - The top 10 tenants contribute 43.2% of total annualized rental revenues, with FedEx Corporation alone accounting for 22.6%[40] - 76.7% of rental revenues come from investment-grade rated tenants or their subsidiaries[40] Financial Performance - Net loss attributable to common shareholders for Q4 2024 was $24.1 million, or $0.37 per diluted share[13] - Normalized FFO attributable to common shareholders was $8.9 million, or $0.13 per diluted share[13] - NOI for Q4 2024 was $84.2 million, with cash basis NOI at $81.6 million and Adjusted EBITDAre at $82.2 million[13] - Rental income for Q4 2024 was $110,521,000, a 1.5% increase from $108,895,000 in Q4 2023[18] - Net loss attributable to common shareholders for Q4 2024 was $24,101,000, compared to a net loss of $31,240,000 in Q4 2023, representing a 22.5% improvement[18] - Cash and cash equivalents increased to $131,706,000 in 2024 from $112,341,000 in 2023, a rise of 17.3%[19] - The company reported a net loss of $(34,380) thousand for the three months ended December 31, 2024, compared to $(41,402) thousand in 2023[63] - The company’s total rental income for the year ended December 31, 2024, was $442,322 thousand, compared to $437,338 thousand in 2023[65] Debt and Liquidity - Total cash and cash equivalents as of December 31, 2024, were $131.7 million, excluding restricted cash[13] - The company exercised the first of three one-year extension options for its $1.2 billion floating rate loan, purchasing a one-year interest rate cap for $17.0 million[13] - Net debt to total gross assets ratio was 68.6% as of Q4 2024, slightly up from 68.1% in Q3 2024[29] - The weighted average interest rate on debt was 5.51% as of December 31, 2024[21] - Total liabilities amounted to $1,757,801, with mortgages and notes payable at $1,722,015[53] - The company is focused on maintaining sufficient liquidity and reducing leverage to navigate market uncertainties[98] Asset Management - Total assets decreased to $5,406,331,000 in 2024 from $5,563,675,000 in 2023, a decline of 2.8%[19] - The company managed over $40 billion in assets as of December 31, 2024, with more than $5 billion in annual revenues and approximately 2,000 properties[74] - ILPT wholly owns 316 properties, including 226 buildings and approximately 16.7 million rentable square feet primarily located in Hawaii[89] - Mountain JV owns 94 mainland properties with approximately 21.0 million rentable square feet across 27 states, fully consolidated in ILPT's financial statements[91] Future Outlook and Risks - Forward-looking statements indicate potential risks related to tenant lease renewals and market conditions affecting rental income[97] - The company aims to prudently pursue renovation projects to achieve expected returns despite potential cost overruns and supply chain challenges[98] - ILPT's performance is subject to various risks, including economic downturns and changes in real estate utilization[98] - The company does not intend to update forward-looking statements unless required by law, highlighting the inherent uncertainties in its projections[100]