Industrial Logistics Properties Trust (NASDAQ:ILPT) Q3 2023 Earnings Conference Call October 26, 2023 11:00 AM ET Company Participants Stephen Colbert - Director of Investor Relations Yael Duffy - President and Chief Operating Officer Tiffany Sy - Chief Financial Officer and Treasurer Conference Call Participants Bryan Maher - B. Riley Mitch Germain - JMP Securities Operator Good morning, and welcome to Industrial Logistics Properties Trust Third Quarter 2023 Financial Results Conference Call. [Operator Ins ...

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 For the quarterly period ended September 30, 2023 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 (Exact Name of Registrant as Specified in Its Charter) (State or Other Jurisdiction of Incorporation or Organization) (I.R.S. ...

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 For the quarterly period ended June 30, 2023 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 (Exact Name of Registrant as Specified in Its Charter) (State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Empl ...

Industrial Logistics Properties Trust (NASDAQ:ILPT) Q1 2023 Earnings Conference Call April 26, 2023 10:00 AM ET Company Participants Stephen Colbert - Director, Investor Relations Yael Duffy - President & Chief Operating Officer Brian Donley - Chief Financial Officer & Treasurer Conference Call Participants Bryan Maher - B. Riley FBR Mitch Germain - JMP Securities DG Balachandran - RBC Capital Markets Operator Hello and welcome to the Industrial Logistics Properties Trust First Quarter 2023 Financial Result ...

PART I: Financial Information [Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20%28unaudited%29) This section presents the unaudited condensed consolidated financial statements for Industrial Logistics Properties Trust as of March 31, 2023, and for the three-month periods ended March 31, 2023, and 2022. It includes the balance sheets, statements of comprehensive income (loss), statements of shareholders' equity, statements of cash flows, and accompanying notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows a slight decrease in total assets from $5.68 billion at year-end 2022 to $5.63 billion as of March 31, 2023. Total liabilities remained relatively stable at approximately $4.35 billion, while total equity decreased from $1.33 billion to $1.29 billion, primarily due to a net loss and distributions Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total real estate properties, net | $4,873,569 | $4,902,641 | | Cash and cash equivalents | $61,250 | $48,261 | | **Total assets** | **$5,634,976** | **$5,676,166** | | Mortgages and notes payable, net | $4,245,651 | $4,244,501 | | **Total liabilities** | **$4,348,801** | **$4,345,395** | | **Total equity** | **$1,286,175** | **$1,330,771** | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) For the three months ended March 31, 2023, the company reported a net loss of $35.5 million, a significant increase from the $9.8 million net loss in the same period of 2022. The net loss attributable to common shareholders was $24.8 million, or ($0.38) per share, compared to a loss of $6.5 million, or ($0.10) per share, in Q1 2022. The increased loss was driven by higher interest and operating expenses following acquisition activities Q1 2023 vs. Q1 2022 Performance (in thousands, except per share data) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Rental income | $110,258 | $71,375 | | Total expenses | $79,149 | $45,163 | | Interest expense | ($70,771) | ($40,999) | | Net loss | ($35,546) | ($9,787) | | Net loss attributable to common shareholders | ($24,809) | ($6,514) | | Net loss per share (basic and diluted) | ($0.38) | ($0.10) | [Condensed Consolidated Statements of Shareholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders%27%20Equity) Total equity decreased from $1.33 billion at the end of 2022 to $1.29 billion at March 31, 2023. The decrease was primarily driven by a net loss of $35.5 million and common distributions of $0.7 million, partially offset by share-based compensation - Total equity attributable to common shareholders declined from **$790.7 million** to **$758.6 million** during the first quarter of 2023[14](index=14&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities was $1.2 million in Q1 2023, a sharp decrease from $56.6 million in Q1 2022, mainly due to higher interest payments. Investing activities provided $9.4 million, compared to a $3.4 billion use of cash in the prior-year period which included the MNR acquisition. Financing activities used $6.2 million, a reversal from the $3.8 billion provided in Q1 2022 which was used to fund the acquisition Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,167 | $56,639 | | Net cash provided by (used in) investing activities | $9,435 | ($3,442,485) | | Net cash (used in) provided by financing activities | ($6,223) | $3,777,878 | | **Increase in cash, cash equivalents and restricted cash** | **$4,379** | **$392,032** | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed disclosure on the company's accounting policies and activities. Key details include the composition of the real estate portfolio, joint venture structures, lease information including tenant and geographic concentrations, a breakdown of outstanding indebtedness and related interest rate caps, and details on related party transactions with its manager, RMR - As of March 31, 2023, the portfolio consisted of 413 consolidated properties totaling approximately **60.0 million** rentable square feet[24](index=24&type=chunk) - For Q1 2023, subsidiaries of FedEx Corporation and Amazon.com, Inc. accounted for **31.6%** and **6.8%** of rental income, respectively. Properties in Hawaii accounted for **27.4%** of rental income[40](index=40&type=chunk)[41](index=41&type=chunk) - The company has two floating-rate loans totaling **$2.635 billion**, with interest rate caps to manage exposure to rising SOFR rates[70](index=70&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's operating results for Q1 2023 compared to Q1 2022, highlighting the impact of the MNR acquisition on revenue and expenses. The discussion covers property operations, leasing activity, non-GAAP financial measures (NOI and FFO), liquidity, capital resources, and debt covenants. Management also acknowledges macroeconomic risks from inflation and rising interest rates [Overview and Property Operations](index=17&type=section&id=Overview%20and%20Property%20Operations) As of March 31, 2023, ILPT's consolidated portfolio of 413 properties was 98.7% leased, with a weighted average remaining lease term of 8.4 years. The company executed 1.14 million square feet of new and renewal leases in Q1 2023 with a weighted average rental rate increase of 15.1%. Management notes that rising interest rates and inflation have increased the cost of capital and pose a risk to financial conditions Portfolio Occupancy | Metric | As of March 31, 2023 | As of March 31, 2022 | | :--- | :--- | :--- | | Total properties | 413 | 412 | | Total rentable square feet (thousands) | 59,983 | 59,736 | | Percent leased | 98.7% | 98.9% | Q1 2023 Leasing Activity | Metric | Total | | :--- | :--- | | Square feet leased (thousands) | 1,143 | | Weighted average rental rate change | 15.1% | | Weighted average lease term (years) | 8.9 | - Leases representing **2.9%** of total annualized rental revenues are scheduled to expire by the end of 2023[84](index=84&type=chunk) - The company faces risks from inflationary pressures and rising interest rates, which have increased its cost of capital and could negatively impact tenant financial health and property values[78](index=78&type=chunk) [Results of Operations](index=20&type=section&id=Results%20of%20Operations) Comparing Q1 2023 to Q1 2022, rental income rose 54.5% to $110.3 million, primarily due to the MNR acquisition. However, this was offset by a 74.5% increase in real estate taxes, a 98.7% increase in depreciation and amortization, and a 72.6% rise in interest expense, all largely attributable to the acquisition. Consequently, the net loss widened from $9.8 million to $35.5 million Consolidated Results Comparison (in thousands) | Line Item | Q1 2023 | Q1 2022 | % Change | | :--- | :--- | :--- | :--- | | Rental income | $110,258 | $71,375 | 54.5% | | Total operating expenses | $25,785 | $16,208 | 59.1% | | Net operating income (NOI) | $84,473 | $55,167 | 53.1% | | Depreciation and amortization | $45,457 | $22,878 | 98.7% | | Interest expense | ($70,771) | ($40,999) | 72.6% | | Net loss | ($35,546) | ($9,787) | N/M | - The significant increases in rental income, operating expenses, depreciation, and interest expense are primarily a result of the acquisition of Monmouth Real Estate Investment Corporation (MNR) in February 2022[96](index=96&type=chunk)[97](index=97&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk) [Non-GAAP Financial Measures](index=22&type=section&id=Non-GAAP%20Financial%20Measures) The company reported Net Operating Income (NOI) of $84.5 million for Q1 2023, up 53.1% from $55.2 million in Q1 2022. Normalized Funds From Operations (Normalized FFO) attributable to common shareholders was $7.9 million, or $0.12 per share, a significant decrease from $27.6 million, or $0.42 per share, in Q1 2022. The decline in Normalized FFO was primarily due to higher interest expense NOI Reconciliation (in thousands) | Line Item | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net loss | ($35,546) | ($9,787) | | Add back: Interest, G&A, D&A, etc. | $120,019 | $64,954 | | **NOI** | **$84,473** | **$55,167** | Normalized FFO Reconciliation (in thousands, except per share data) | Line Item | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net loss attributable to common shareholders | ($24,809) | ($6,514) | | Adjustments (D&A, etc.) | $32,725 | $14,616 | | **FFO attributable to common shareholders** | **$7,916** | **$8,102** | | Acquisition and transaction related costs | — | $18,673 | | **Normalized FFO attributable to common shareholders** | **$7,916** | **$27,603** | | **Normalized FFO per share** | **$0.12** | **$0.42** | [Liquidity and Capital Resources](index=24&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2023, the company had $61.3 million in cash and cash equivalents. The primary source of liquidity is rent from tenants. The company has $4.28 billion in debt, with significant floating-rate loans maturing in 2024. Management believes operating cash flow will be sufficient to meet obligations for the next 12 months but notes that the REIT distribution requirement limits capital retention. The company is in compliance with all debt covenants - The company's principal sources of funds are rents from tenants. As of March 31, 2023, **77.6%** of annualized rental revenues came from investment-grade tenants or Hawaii land leases[114](index=114&type=chunk) - The company has two major floating-rate loans: a **$1.235 billion** loan maturing in October 2024 and a **$1.4 billion** loan (in a consolidated JV) maturing in March 2024. Both have extension options[118](index=118&type=chunk)[119](index=119&type=chunk) - As of March 31, 2023, the company believes it was in compliance with all debt covenants, including a minimum consolidated net worth of **$250 million** and liquidity of at least **$15 million** required by one of its mortgage loans[132](index=132&type=chunk) Q1 2023 Capital Expenditures (in thousands) | Category | Amount | | :--- | :--- | | Tenant improvements and leasing costs | $2,040 | | Building improvements | $370 | | Development, redevelopment and other | $2,521 | | **Total** | **$4,931** | [Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk on its $2.64 billion of floating-rate debt. This risk is partially managed through interest rate caps. A hypothetical 1% increase in interest rates would increase annual interest expense by approximately $26.7 million, excluding the impact of the caps. The company also has $1.65 billion in fixed-rate debt, whose fair value is sensitive to market rate changes Floating Rate Debt Summary (as of March 31, 2023) | Debt | Principal Balance | Interest Rate | | :--- | :--- | :--- | | ILPT Floating Rate Loan | $1,235,000,000 | 6.18% | | Floating Rate Loan (JV) | $1,400,000,000 | 6.17% | | **Total** | **$2,635,000,000** | | - To hedge against rising SOFR rates, the company purchased an interest rate cap with a **2.25%** strike rate for the ILPT Floating Rate Loan and a **3.40%** strike rate for the JV's Floating Rate Loan[140](index=140&type=chunk) - A hypothetical immediate one percentage point increase in interest rates would change the fair value of the company's fixed-rate debt by approximately **$26.7 million**[146](index=146&type=chunk) [Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the President, COO, and CFO, evaluated the company's disclosure controls and procedures and concluded that they were effective as of March 31, 2023. There were no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of the end of the period, the company's management concluded that its disclosure controls and procedures are effective[147](index=147&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[148](index=148&type=chunk) PART II: Other Information [Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no material changes to the risk factors from those previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2022 - There have been no material changes to the risk factors from those provided in the 2022 Annual Report[159](index=159&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=32&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the quarter ended March 31, 2023, the company purchased a total of 976 of its own common shares at a weighted average price of $3.33 per share. These purchases were made to satisfy tax withholding obligations for certain former officers and employees of RMR in connection with vested share awards Issuer Purchases of Equity Securities (Q1 2023) | Calendar Month | Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | January 2023 | 582 | $3.50 | | March 2023 | 394 | $3.07 | | **Total** | **976** | **$3.33** | [Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the company's organizational documents, officer certifications (Rule 13a-14(a) and Section 1350), and XBRL data files - The exhibits filed include certifications by the President & COO and the CFO & Treasurer regarding the accuracy and completeness of the report[162](index=162&type=chunk)

Financial Data and Key Metrics Changes - For Q4 2022, normalized funds from operations (FFO) were $5.4 million or $0.08 per share, a decline of $26.3 million compared to the prior year quarter, primarily due to higher interest expenses, partially offset by a $40 million increase in net operating income (NOI) [18] - Consolidated same-property cash-based NOI increased by 1.3% year-over-year, driven by leasing activity and contractual rent steps [19] - Adjusted EBITDAre increased by 88% year-over-year to $79.2 million, attributed to the acquisition of Monmouth and related financing activities earlier in 2022 [24] Business Line Data and Key Metrics Changes - The company achieved record annual leasing activity of 7.8 million square feet in 2022, with weighted average rental rates 47.3% higher than prior rates, resulting in an increase of $17.1 million in annualized rental revenue [13] - In Q4, the company entered 17 new and renewal leases totaling 1.4 million square feet, with GAAP and cash leasing spreads of 18.7% and 6.7% respectively [14] - Approximately 12 million square feet or 18% of the portfolio is scheduled to roll by the end of 2025, with expected average roll-ups in rent of 20% on the Mainland and 30% in Hawaii [15] Market Data and Key Metrics Changes - Occupancy at year-end was 99.1%, with major tenants including FedEx, Amazon, and Home Depot representing approximately 40% of annualized rental revenues [7][8] - The company noted that leasing activity in Hawaii was strong, but future leasing will likely focus more on the Mainland [23] Company Strategy and Development Direction - The company is focused on improving leverage but is patient due to ongoing uncertainty in capital markets, with no near-term debt maturities [16] - The company is evaluating opportunities for potential asset sales and joint ventures, remaining open to all options that could yield the highest proceeds [42][57] Management's Comments on Operating Environment and Future Outlook - Management expressed that the leasing market has been quiet due to rising interest rates, and they are looking for more data to assess cap rates before engaging in property sales [30] - The company expects to see growth in cash NOI as leasing activity from 2022 begins to take effect in 2023 and 2024 [46] Other Important Information - Capital expenditures for Q4 were $7.9 million, including tenant improvements, building improvements, and development costs [20] - The company has $48 million in cash on hand, excluding cash held by its consolidated joint venture [26] Q&A Session Summary Question: When will discussions with potential joint venture partners heat up? - Management indicated that the transaction market has been quiet due to rising interest rates, and they are waiting for more data on cap rates before proceeding [30] Question: What is the outlook for occupancy and known vacancies? - Management expects occupancy to remain around 99% to 98% and noted that they have a couple of known vacancies in Hawaii that they can typically release within a quarter or two [32] Question: What is the expected leverage range for 2023? - Management expects leverage to remain in the high 12 to low 13 range throughout 2023, influenced by the effects of rent roll-ups [38] Question: Are all properties on the table for potential sales? - Management stated they are evaluating all properties in their portfolio for potential disposition, not limited to the original pool of Monmouth assets [42] Question: When will the same-store pool change to include the Monmouth acquisition? - The same-store pool will include the Monmouth acquisition starting in Q2 [36]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 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 (Exact Name of Registrant as Specified in Its Charter) Maryland 82-2809631 (State of Organization) (I.R.S. Employer Identification No. ...

Industrial Logistics Properties Trust (NASDAQ:ILPT) Q3 2022 Earnings Conference Call October 26, 2022 10:00 AM ET Company Participants Kevin Barry - Director, Investor Relations Yael Duffy - President & Chief Operating Officer Brian Donley - Chief Financial Officer & Treasurer Conference Call Participants Bryan Maher - B. Riley Securities Mitchell Germain - JMP Securities Tom Catherwood - BTIG Aditi Balachandran - RBC Capital Markets Operator Good morning, and welcome to the Industrial Logistics Properties ...

Property Management and Leasing - As of September 30, 2022, the company owned 413 consolidated properties with approximately 59,962,000 rentable square feet, achieving a leasing rate of 99.2%[112] - The average effective rental rate per square foot for all properties increased to $6.96 for the three months ended September 30, 2022, compared to $6.22 for the same period in 2021[122] - During the three months ended September 30, 2022, the company signed new leases for 543,000 square feet with a weighted average rental rate change of 280.7%[124] - The company completed rent resets for approximately 194,000 square feet of land in Hawaii at rates approximately 36.8% higher than prior rates[126] - The company has a weighted average remaining lease term of approximately 8.9 years across its consolidated properties[112] - As of September 30, 2022, the total annualized rental revenues amount to $419,981,000, with a weighted average remaining lease term of 8.6 years[127] - Federal Express Corporation accounts for 22.0% of total rentable square feet and 29.6% of annualized rental revenues, with a remaining lease term of 7.3 years[129] - Hawaii Properties contribute approximately 28.5% of annualized rental revenues, with scheduled rent resets totaling $23,121,000 as of September 30, 2022[130] - The company expects to renew or extend leases at Mainland Properties, which represent approximately 71.5% of annualized rental revenues, due to tenants' capital investments[129] - The company employs a tenant review process to assess creditworthiness, which includes evaluating information provided by tenants and third-party sources[133] Financial Performance - Rental income for Q3 2022 was $53,357, an increase of $767 or 1.5% compared to $52,590 in Q3 2021[135] - Net operating income for Q3 2022 was $41,014, a decrease of $109 or 0.3% compared to $41,123 in Q3 2021[135] - Total operating expenses for Q3 2022 were $12,343, an increase of $876 or 7.6% compared to $11,467 in Q3 2021[135] - General and administrative expenses increased by 92.7% to $9,110 in Q3 2022 from $4,728 in Q3 2021, primarily due to higher business management fees[141] - Interest expense rose significantly to $(89,739) in Q3 2022 from $(9,084) in Q3 2021, reflecting higher average interest rates and outstanding debt[142] - Net loss attributable to common shareholders for Q3 2022 was $(45,627), compared to net income of $18,307 in Q3 2021[145] - The company recorded a significant loss on impairment of real estate amounting to $100,747 in 2022, impacting overall financial performance[1] - Net loss attributable to common shareholders was $(195,680) for the nine months ended September 30, 2022, compared to a net income of $56,475 in 2021, reflecting a change of $(252,155)[1] - The company recorded a loss on equity securities of $5,758, reflecting realized losses from certain equity securities acquired during the MNR acquisition[1] Debt and Financing - The company entered into a $1,235,000 Floating Rate Loan secured by 104 properties, maturing in October 2024, with an interest rate capped at 2.25%[117] - The weighted average annual interest rate payable under the Floating Rate Loan was 5.62% as of September 30, 2022[174] - The company has aggregate floating rate debt of $2,635,000, with an annual interest expense of $155,003 as of September 30, 2022[215] - A one percentage point increase in floating interest rates would raise the annual floating rate interest expense to $181,288, impacting earnings per share by $0.40[216] - The company plans to prepay up to $280,000 of the Floating Rate Loan after March 2023, and the Fixed Rate Loan can be prepaid in full or part at any time, subject to a premium[177] - The company intends to explore refinancing alternatives, property sales, or sales of equity interests in joint ventures to manage its debt as maturities approach[191] - As of September 30, 2022, the company had an aggregate principal amount of $4,295,842 of debt, scheduled to mature between 2022 and 2038[181] Cash Flow and Distributions - Cash and cash equivalents at the end of the nine months ended September 30, 2022, were $126,669,000, up from $44,093,000 at the end of the same period in 2021[171] - The company reduced its quarterly cash distribution rate to $0.01 per share as of July 14, 2022[173] - The company reduced its quarterly dividend to $0.01 per common share to enhance liquidity until the long-term financing plan for the MNR acquisition is completed[194] - During the nine months ended September 30, 2022, the company paid quarterly cash distributions to shareholders totaling $43,821[193] Market and Economic Conditions - The company anticipates that market conditions will influence future rental rates and lease negotiations, particularly for Hawaii Properties[130] - Economic conditions in areas where properties are located may decline, reducing demand for leasing industrial space and impacting financial results[230] - Delays in the anticipated sales of former MNR properties are due to current market conditions, which may result in lower sale prices than carrying values[228] Risks and Challenges - The ability to grow the business and increase distributions largely depends on acquiring properties that generate rents exceeding capital costs, which may not be achievable[228] - Existing and future derivative contracts may expose the company to additional risks, including counterparty credit risk, which could lead to unforeseen losses[228] - The competitive advantages the company believes it has may not materialize, and competition may increase, affecting market position[234] - The company may face challenges in maintaining good relations with significant tenants, which could affect occupancy rates and rental income[228]

Financial Data and Key Metrics Changes - Total portfolio same-property NOI grew 10.8% year-over-year, reflecting a favorable impact of approximately $3.4 million due to the noncash write-off of a below-market lease [23] - Adjusted EBITDA increased nearly 100% year-over-year to $80.8 million, driven by same-property NOI growth and the Monmouth acquisition [25] - Second quarter normalized FFO was $28.3 million or $0.43 per share, including a favorable impact of approximately $0.05 per share related to the lease write-off [26] - Net loss for the quarter was $151.3 million, including a noncash impairment charge of $100.7 million due to the decision not to sell properties in the current market [27] Business Line Data and Key Metrics Changes - ILPT's consolidated portfolio included 412 warehouse and distribution properties totaling approximately 60 million square feet with nearly 99% occupancy [12] - Record leasing activity of 3.9 million square feet at weighted average rental rates that were 61.3% higher than prior rates [13] - New leasing activity included 8 new leases for approximately 2.7 million square feet at an average roll-up in rents of 104.7% [13] - Renewal leasing activity included 22 lease renewals for approximately 1 million square feet at an average roll-up in rents of 29.1% [13] Market Data and Key Metrics Changes - The company has paused discussions with potential partners for the Mountain Industrial joint venture due to increased interest rates affecting market conditions [10] - The real estate transaction market has deteriorated, with buyers seeking steep discounts, leading to the withdrawal of 30 Monmouth properties from the market [9][10] Company Strategy and Development Direction - The company plans to remain disciplined in considering future sales of properties or equity interests to maximize value [10] - A temporary reduction in the quarterly cash dividend was made to preserve approximately $20 million of cash flow per quarter, enhancing cash reserves for refinancing options [11][32] - The company is evaluating alternatives to repay its bridge facility, including longer duration debt and joint venture opportunities [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of their properties and the robust industry tailwinds underpinning demand for real estate [10] - The company expects demand for its properties to persist as it executes on its financing plans [80] - Management acknowledged that while operating trends are stable, interest rate headwinds are real and may lead to further deterioration in FFO [55] Other Important Information - The company ended the quarter with $292 million of cash on hand and a debt to annualized adjusted EBITDA ratio of 12.4x [31] - The RMR Group's Annual Sustainability Report was published, highlighting the company's commitment to long-term ESG goals [21] Q&A Session Summary Question: Will the combination of cash on hand and dividend availability allow for refinancing the bridge loan? - Management confirmed that the extra liquidity from the dividend reduction provides additional flexibility for refinancing options [36] Question: What is the status of the joint venture discussions? - Management indicated that discussions with multiple groups have paused due to market volatility [38] Question: What are the plans for the 30 properties withdrawn from marketing? - Management stated they are flexible and will consider remarketing based on market conditions [40] Question: Has the process for joint venturing other properties started? - Management has not identified specific properties yet but has potential opportunities with fixed-rate debt in place [42] Question: What is the current interest rate environment affecting refinancing? - Management noted that every 50 basis points increase in interest rates translates to about $0.04 of FFO per quarter [58] Question: Is there a pullback in leasing activity from tenants? - Management reported that demand remains strong despite inflationary pressures and rising interest rates [59] Question: What is the impact of the impairment charge on the properties? - The impairment charge reflects the decision to reclassify properties from held for sale to held for use due to market conditions [27][62]