Group 1 - The company has experienced a decline of over 80% since its IPO, with most losses occurring in 2022 [1] - The stock is currently priced for a 1% dividend yield, indicating potential for a resurgence [1] - The investment approach focuses on long-term ownership rather than short-term price predictions, emphasizing valuations over target prices [1] Group 2 - The analyst has transitioned from writing many Sell pieces to a simplified approach of "Buy or Don't Buy," with future articles likely to be categorized as Buy or Hold [1] - As of March 2024, no Strong Buy ratings have been issued for any securities [1]

Core Viewpoint - Industrial Logistics Properties Trust (ILPT) has received a Zacks Rank 2 (Buy) upgrade, indicating a positive earnings outlook that may lead to increased stock prices [1][4][11] Earnings Estimates - The Zacks Consensus Estimate for ILPT is projected at $0.52 per share for the fiscal year ending December 2024, reflecting an 8.3% year-over-year increase [9] - Over the past three months, earnings estimates for ILPT have risen by 2% [9] Zacks Rating System - The Zacks rating system is based solely on a company's changing earnings picture, which is a significant factor influencing stock prices [2][3] - The system classifies stocks into five groups, with Zacks Rank 1 (Strong Buy) stocks historically generating an average annual return of +25% since 1988 [8] Market Implications - The upgrade to Zacks Rank 2 positions ILPT in the top 20% of Zacks-covered stocks, suggesting a strong potential for market-beating returns in the near term [10][11] - Rising earnings estimates and the corresponding rating upgrade indicate an improvement in ILPT's underlying business, likely leading to increased investor interest and stock price appreciation [6][11]

Core Viewpoint - Industrial Logistics Properties Trust (ILPT) has experienced a significant downtrend, with an 18.8% decline over the past four weeks, but is now in oversold territory, suggesting a potential turnaround due to improved earnings expectations from analysts [1]. Group 1: Stock Performance - ILPT shares have faced heavy selling pressure, leading to an RSI reading of 25.83, indicating that the stock may soon reverse its downward trend [3]. - The stock's recent decline has placed it in oversold territory, which typically signals a potential for price recovery [1][3]. Group 2: Analyst Sentiment - There is strong consensus among sell-side analysts regarding an increase in earnings estimates for ILPT, with a 2% rise in the consensus EPS estimate over the last 30 days [3]. - ILPT holds a Zacks Rank 2 (Buy), positioning it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, further supporting the potential for a turnaround [3].

Financial Data and Key Metrics Changes - The company reported third quarter FFO of $8.1 million or $0.12 per share, representing an increase of 1.5% compared to the same quarter in 2023 [26] - Third quarter NOI decreased by 0.7% to $84.7 million, while cash basis NOI increased by 1.1% to $82.5 million compared to the same quarter in 2023 [26] - Adjusted EBITDAre increased by 0.9% to $83.9 million [26] - The net debt to total assets ratio improved to 68.1%, while the net debt coverage ratio declined to 12.1 times [30] Business Line Data and Key Metrics Changes - The company executed over 2.7 million square feet of leasing in the third quarter, with a weighted average rate that was 7% higher than prior leases [17] - The consolidated occupancy rate was 94.4%, a slight decrease from the previous quarter [14] - The company executed 13 renewals with FedEx, encompassing over 2 million square feet across eight states, with an average lease term of 5.1 years and a GAAP rollup in rent of 4.5% [21] Market Data and Key Metrics Changes - The portfolio consisted of 411 distribution and logistics properties in 39 states, totaling approximately 60 million square feet [11] - The company highlighted a unique Hawaii footprint with 226 properties totaling more than 16.7 million square feet [11] - 77% of annualized revenues come from investment-grade rated tenants and secure Hawaii land leases [12] Company Strategy and Development Direction - The company aims to capitalize on the attractive operating environment to deliver favorable leasing outcomes [18] - The management plans to address near-term expirations strategically to maximize mark-to-market rent growth while minimizing potential downtime [18] - The company is evaluating unsolicited offers for asset sales but notes a disconnect between property valuations and buyer offers [48] Management Comments on Operating Environment and Future Outlook - Management remains encouraged by the continued demand for high-quality industrial real estate and the strength in fundamentals [9] - The company expects strategic leasing approaches to result in strong tenant retention and stable cash flows [32] - Management is cautious about increasing dividends due to the need for liquidity and financial flexibility [20] Other Important Information - American Tire Distributors, a significant tenant, filed for voluntary Chapter 11 proceedings, but the company expects them to continue operating and fulfilling lease obligations [13][37] - The company announced it would maintain its quarterly cash dividend at $0.01 per share [19] Q&A Session Summary Question: Interest rate cap costs and trade-offs - Management discussed the interest rate for the loan increasing to 6.71% and the strike rate for the cap being set at 2.78%, allowing for upfront cost savings [34] Question: Leasing timelines for Hawaii and Indianapolis - Management indicated that leasing for the Hawaii land parcel is expected in the second half of 2025, while Indianapolis may see leasing in the first half of 2025 [36] Question: American Tire's lease status - Management expects American Tire to utilize the properties and not reject the leases, noting their history of renewing leases even during bankruptcy [38] Question: Dividend expectations - Management acknowledged the importance of dividends to investors but emphasized the need for financial flexibility before increasing the dividend level [40] Question: Interest expense forecast - Management clarified that the expected cash interest expense would be $60 million, with noncash amortization at $12 million, reflecting changes in interest rates and amortization of financing costs [43]

Core Viewpoint - Industrial Logistics Properties Trust (ILPT) reported quarterly funds from operations (FFO) of $0.12 per share, matching the Zacks Consensus Estimate, and showing no year-over-year change [1] - The company posted revenues of $108.95 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 1.13% and down from $110.14 million a year ago [2] Financial Performance - FFO for the previous quarter was also $0.14 per share, with the company having surpassed consensus FFO estimates only once in the last four quarters [1] - The current consensus FFO estimate for the upcoming quarter is $0.11 on revenues of $109.92 million, and for the current fiscal year, it is $0.51 on revenues of $442.97 million [7] Market Performance - ILPT shares have declined approximately 16% since the beginning of the year, contrasting with the S&P 500's gain of 22.1% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Outlook - The REIT and Equity Trust - Other industry is currently ranked in the top 24% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% of ranked industries [8]

Property and Occupancy - As of September 30, 2024, the company owned 411 properties with approximately 59,890,000 rentable square feet and a 94.4% occupancy rate[67]. - Occupancy at Mainland Properties was 97.7%, contributing to 72.1% of total annualized rental revenues as of September 30, 2024[78]. - Occupancy at Hawaii Properties was 85.7%, representing 27.9% of total annualized rental revenues, with potential for future rent growth due to periodic rent resets[79]. - 5.6% of rentable square feet were currently vacant as of September 30, 2024[81]. Rental Income and Financial Performance - Rental income and net operating income (NOI) increased during the nine months ended September 30, 2024, primarily due to leasing activity and rent resets, with long-term e-commerce trends contributing to high occupancy[69]. - Rental income for the nine months ended September 30, 2024, increased to $331,801, a 1.1% increase from $328,339 in the same period of 2023[93]. - Rental income for Q3 2024 was $108,945, a decrease of $1,197 or 1.1% compared to $110,142 in Q3 2023[84]. - NOI for Q3 2024 was $84,713, a decrease of $609 or 0.7% compared to $85,322 in Q3 2023[84]. - Net Operating Income (NOI) for the period was $257,062, up 1.1% from $254,150 in the previous year[93]. - The Funds From Operations (FFO) attributable to common shareholders for the nine months ended September 30, 2024, was $26,478, an increase of 13.0% from $23,236 in the same period of 2023[109]. Leasing Activity - The company entered into new and renewal leases totaling 2,757 thousand square feet during the three months ended September 30, 2024, with a weighted average rental rate change of 7.0%[72]. - During the nine months ended September 30, 2024, the company completed rent resets for approximately 106,000 square feet in Hawaii at rates 27.5% higher than prior rates[73]. - The company’s total leasing costs and concession commitments for new leases were $113,000, averaging $6.77 per square foot[72]. Expenses and Losses - Operating expenses totaled $24,232, down $588 or 2.4% from $24,820 in the same period last year[84]. - General and administrative expenses decreased by $475 or 6.2%, totaling $7,237 in Q3 2024[84]. - Total operating expenses rose to $74,739, reflecting a 0.7% increase compared to $74,189 in the prior year[93]. - The net loss attributable to common shareholders improved to $(71,568) from $(76,749), reflecting a 6.8% reduction in losses[93]. - The net loss attributable to common shareholders was $24,990, a decrease of $1,122 or 4.3% from $26,112 in Q3 2023[84]. Interest and Debt - Interest income increased significantly by 67.1% to $8,921, driven by higher interest rates and average cash balances[100]. - Interest expense rose to $220,797, a 2.4% increase from $215,558, primarily due to increased amortization related to interest rate caps[101]. - The company’s interest expense for the three months ended September 30, 2024, was $73,936, slightly up from $72,941 in the same period of 2023[107]. - The company had an aggregate principal amount of $4,312,421 of indebtedness, including the ILPT Floating Rate Loan and the Mountain Floating Rate Loan[125]. - A one percentage point increase in interest rates would result in a weighted average interest rate of 6.98% and total interest expense per year of $186,568[137]. Cash and Investments - Cash and cash equivalents at the end of the period increased to $264,931 from $222,503 in the previous year, reflecting a growth of 19.1%[112]. - The company reported a net cash provided by operating activities of $15,426 for the nine months ended September 30, 2024, compared to $14,063 in 2023, marking an increase of 9.7%[112]. - The company capitalized $5,637 for tenant improvements and leasing costs in the three months ended September 30, 2024, compared to $5,275 in the same period of 2023, indicating an increase of 6.9%[115]. Tenant and Lease Information - As of September 30, 2024, subsidiaries of FedEx and Amazon accounted for 22.7% and 8.0% of total leased square feet, representing 29.3% and 6.8% of total annualized rental revenues, respectively[77]. - As of September 30, 2024, 77.2% of annualized rental revenues came from investment-grade rated tenants, with only 4.0% of revenues from leases expiring in the next 12 months[110]. - Future rental rates will depend on prevailing market conditions, with historical increases not guaranteed[81]. Compliance and Governance - The company believes it was in compliance with all covenants and terms under the agreements governing its loans as of September 30, 2024[126].

Financial Performance - The net loss attributable to common shareholders was $25.0 million, or $0.38 per diluted share, while normalized FFO attributable to common shareholders was $8.1 million, or $0.12 per share [5]. - Adjusted EBITDAre increased by 0.9% to $83.9 million compared to Q3 2023 [5]. - Rental income for Q3 2024 was $108,945, a decrease of 1.1% from $110,142 in Q3 2023 [8]. - Net loss attributable to common shareholders for Q3 2024 was $(24,990), compared to $(26,112) in Q3 2023, showing an improvement of 4.3% [8]. - Adjusted EBITDAre for Q3 2024 was $83,947, down from $85,057 in Q2 2024 [6]. - Cash Basis NOI for Q3 2024 was $82,503, slightly down from $82,935 in Q2 2024 [6]. - Normalized FFO attributable to common shareholders for Q3 2024 was $8,063, consistent with Q2 2024 [6]. - CAD attributable to common shareholders for Q3 2024 was $11,247, down from $14,005 in Q2 2024 [6]. - Total rental income for the three months ended September 30, 2024, was $42,189,000, compared to $42,061,000 for the same period in 2023, reflecting a slight increase [33]. - The company reported a net loss attributable to common shareholders of $16,309,000 for the three months ended September 30, 2024 [20]. - Normalized FFO for the three months ended September 30, 2024, was $32,000, compared to $747,000 for the same period in 2023, reflecting a significant decrease [34]. - Net loss for the three months ended September 30, 2024, was $(26,737,000), slightly higher than the $(26,248,000) loss in the same period of 2023 [34]. - EBITDA for the three months ended September 30, 2024, was $31,044,000, compared to $30,749,000 for the same period in 2023, indicating a modest increase [34]. - Total expenses for the three months ended September 30, 2024, were $12,976,000, a decrease from $13,515,000 in the same period of 2023 [36]. - Cash Basis NOI for the three months ended September 30, 2024, was $82,503,000, compared to $81,643,000 for the same period in 2023, showing an increase of 1.1% [38]. Leasing Activity - In Q3 2024, Industrial Logistics Properties Trust (ILPT) executed approximately 2.74 million square feet of leases at rates 7.0% higher than prior rents, with a weighted average lease term of 5.5 years [2]. - Leasing activity included over 2.0 million square feet of renewals with FedEx, ILPT's largest tenant, at weighted average rental rates that were 4.5% higher than prior [5]. - The portfolio contains approximately 59.9 million rentable square feet, with 77% of annualized rental revenues coming from investment-grade tenants [4]. - The percentage of properties leased as of September 30, 2024, was 94.4%, down from 98.9% as of September 30, 2023 [14]. - As of September 30, 2024, the percentage of properties leased is 94.4%, down from 95.4% in the previous quarter [16]. - New leases showed a percentage change in GAAP rent of 4.1%, a significant decrease from 43.5% in the previous quarter [16]. - The top tenant, FedEx Corporation, accounts for 22.7% of total leased square feet and 29.3% of rental revenues [17]. - Leasing costs and concession commitments for new leases total $2,907,000, with an average cost per square foot of $6.77 [16]. - Scheduled rent resets at Hawaii properties total 3,384 square feet, with annualized rental revenues of $22,873,000 [19]. Financial Position - The company had approximately $153.9 million in cash and cash equivalents to meet capital obligations and fund future financing needs [5]. - Total liabilities as of September 30, 2024, were $4,412,049, compared to $4,401,896 as of December 31, 2023 [6]. - Total equity decreased to $1,042,759 as of September 30, 2024, from $1,161,779 as of December 31, 2023 [6]. - Total assets as of September 30, 2024, decreased to $5,454,808, down from $5,563,675 as of December 31, 2023, reflecting a decline of approximately 1.95% [9]. - Cash and cash equivalents increased to $153,863 as of September 30, 2024, from $112,341 as of December 31, 2023, an increase of approximately 36.9% [9]. - The weighted average interest rate on total debt was 5.36% as of September 30, 2024 [10]. - The company’s net debt to annualized Adjusted EBITDA ratio was 12.1x as of September 30, 2024, compared to 12.3x as of December 31, 2023 [12]. - The net debt to total gross assets ratio was 68.1% as of September 30, 2024, slightly improved from 68.2% as of June 30, 2024 [12]. - Total gross assets amounted to $2,522,145,000, while total debt was $2,585,000,000, resulting in a net debt to annualized Adjusted EBITDA ratio of 13.5x [20]. - The annualized Cash Basis NOI to total gross assets ratio was 7.9% [20]. Dividends and Distributions - ILPT's quarterly distribution was declared on October 16, 2024, to shareholders of record as of the close of business on October 30, 2024 [2]. - Annualized dividend yield at the end of Q3 2024 was 0.8%, down from 1.1% in Q2 2024 [6]. - The annualized dividend yield is calculated by dividing the annualized dividend paid by the closing price of ILPT's common shares [53]. Strategic Focus - The company remains focused on maximizing mark-to-market rent growth while evaluating opportunities to reduce operating expenses [2]. - The company plans to continue expanding its market presence and exploring new acquisition opportunities [22]. - The company believes that being managed by RMR provides a competitive advantage due to RMR's management depth and experience in the real estate industry [45]. - ILPT is included in 137 market indices, comprising more than 1% of several key indices as of September 30, 2024 [45]. Joint Ventures - ILPT owns a 61% equity interest in a joint venture that includes 94 properties with approximately 21.0 million rentable square feet [57]. - The joint venture, Mountain Industrial REIT LLC, had a total of 94 properties across 27 states as of September 30, 2024 [32]. - Distributions received from the joint venture for the three months ended September 30, 2024, were $990,000, down from $5,390,000 in the same period of 2023 [36]. - The weighted average interest rate for the joint venture's debt was 4.22% as of September 30, 2024 [36].

Financial Data and Key Metrics Changes - Cash basis NOI increased by 2.6% year-over-year, while normalized FFO rose by 18.1% [4][8] - GAAP and cash basis NOI were reported at $86.3 million and $82.9 million, reflecting increases of 2.2% and 2.6% year-over-year [8] - Interest expense increased by $1.8 million compared to the same period last year, totaling $73.6 million [9] - Net debt to total assets ratio improved by 60 basis points to 68.2%, and net debt coverage ratio improved by 80 basis points to 11.9x [10] Business Line Data and Key Metrics Changes - In the first half of 2024, the company signed 26 leases totaling 2.6 million square feet at weighted average rental rates that were 30.5% higher than prior rates [4][5] - Leasing spreads for GAAP and cash were 15.8% and 7.8%, respectively [6] - The company executed 15 new and renewal leases for approximately 628,000 square feet at a weighted average lease term of 6.8 years [5] Market Data and Key Metrics Changes - The Hawaii portfolio experienced minimal new construction and a market vacancy of 1%, leading to rental rate increases of 23.8% for executed leases [6] - A 2.2 million square foot land parcel in Hawaii became vacant, impacting occupancy which declined to 95.4% [6] Company Strategy and Development Direction - The company aims to generate organic cash flow growth and reduce leverage, which has decreased from 12.7x to 11.9x over the past year [8] - The leasing pipeline remains active with 36 deals for over 7 million square feet, of which 2.5 million square feet are in advanced stages [7] Management's Comments on Operating Environment and Future Outlook - Management remains encouraged by the demand for the company's high-quality portfolio, supported by solid leasing activity [4] - The company is proactively engaging in renewal discussions for upcoming lease expirations, with 1.3 million square feet or 3.1% of annualized revenue set to expire in 2024 [7] Other Important Information - Total cash as of June 30 was approximately $250 million, including $112 million of restricted cash, representing a growth of about $50 million over the past year [10] - The company plans to use cash for a replacement interest rate cap and to fund future leasing obligations [11] Q&A Session Summary Question: Timing for Home Depot and Indianapolis properties leasing - Management suggests modeling for the second half of 2025 due to the time required for negotiations [12] Question: Cost expectations for upcoming loan extension - Expected cost for the cap is between $25 million and $30 million, likely executed close to September 30 [13] Question: Pace of deleveraging - Management indicates that the pace of deleveraging should be similar to the past 12 months [14] Question: Consideration for increasing dividend payout - The Board discusses dividend payout at each meeting but currently plans to preserve cash for business operations [15] Question: Leasing pipeline execution rate - The leasing pipeline decreased slightly due to executed leases, resulting in a net positive of 150,000 square feet from the previous quarter [17][18] Question: Refinancing existing debt - Management is evaluating the potential benefits of refinancing existing debt before exercising the cap [21]

Core Viewpoint - Industrial Logistics Properties Trust has shown mixed performance in terms of estimate revisions and is currently rated as a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [2] Financial Performance - The company reported quarterly funds from operations (FFO) of $0.14 per share, which was in line with the Zacks Consensus Estimate and represents an increase from $0.12 per share a year ago [7] - Revenues for the quarter ended June 2024 were $110.62 million, slightly missing the Zacks Consensus Estimate by 0.52%, but showing an increase from $108.04 million in the same quarter last year [8] - The current consensus FFO estimate for the upcoming quarter is $0.12 on revenues of $110.7 million, and for the current fiscal year, it is $0.52 on revenues of $444.45 million [5] Market Context - Year-to-date, Industrial Logistics Properties Trust shares have increased by approximately 6.8%, underperforming compared to the S&P 500's gain of 14.5% [12] - The REIT and Equity Trust - Other industry, to which the company belongs, is currently ranked in the bottom 41% of over 250 Zacks industries, indicating potential challenges ahead [14]

For the quarterly period ended June 30, 2024 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-38342 INDUSTRIAL LOGISTICS PROPERTIES TRUST (Address of Principal Executive Offices) (Zip Code) 617-219-1460 (Registrant's Telephone Number, Including Area Code) Securities R ...