Industrial Logistics Properties Trust(ILPT) - 2020 Q1 - Quarterly Report

Property and Rental Performance - As of March 31, 2020, the company owned 301 properties with approximately 43.8 million rentable square feet, achieving an occupancy rate of 98.9%[75] - The average effective rental rate per square foot for all properties increased to $6.02 in Q1 2020, up from $5.89 in Q1 2019, representing a 2.2% increase[78] - During Q1 2020, the company entered lease renewals and new leases for approximately 49,000 square feet at weighted average rental rates approximately 12.3% higher than prior rates[80] - As of March 31, 2020, 74.1% of annualized rental revenues were derived from investment-grade rated tenants[69] - Only 0.5% of annualized rental revenues were set to expire over the next 12 months, indicating strong lease stability[69] - Scheduled rent resets at Hawaii properties total $30,085,000 as of March 31, 2020, with significant increases expected in future years[85] - The weighted average remaining lease term for properties was approximately 9.3 years as of March 31, 2020[75] - As of March 31, 2020, annualized rental revenues from tenants represented 57.1% of total revenues, with Amazon.com Services, Inc. contributing 16.1%[86] - The Mainland Properties accounted for approximately 59.9% of annualized rental revenues, with lease renewals expected despite potential COVID-19 impacts[87] - Hawaii Properties represented 40.1% of annualized rental revenues, with rents periodically resetting based on fair market values every ten years[88] Financial Performance - For the three months ended March 31, 2020, rental income increased by 39.8% to $64,278,000 compared to $45,987,000 in the same period in 2019[97] - Total operating expenses rose by 56.3% to $13,992,000 for the three months ended March 31, 2020, compared to $8,951,000 in the prior year[97] - Net income attributable to common shareholders decreased by 23.5% to $12,846,000 for the three months ended March 31, 2020, down from $16,786,000 in 2019[97] - Rental income for the three months ended March 31, 2020, was $50,286,000, up from $37,036,000 in the same period of 2019, reflecting a growth of approximately 35.5%[111] - Net income for the three months ended March 31, 2020, decreased to $12,694,000 from $16,786,000 in 2019, representing a decline of about 24.9%[111] - Net Operating Income (NOI) for the three months ended March 31, 2020, was $50,286,000, compared to $37,036,000 for the same period in 2019, indicating a 35.5% increase[111] - Funds From Operations (FFO) attributable to common shareholders for the three months ended March 31, 2020, was $30,159,000, up from $26,397,000 in 2019, a rise of approximately 10.6%[114] COVID-19 Impact and Response - The company is closely monitoring the impact of COVID-19 on its operations and tenant relationships, with a focus on maintaining liquidity and operational stability[69] - The company anticipates that future rental rates will depend on prevailing market conditions, which may be adversely affected by the COVID-19 pandemic[90] - The company expects to maintain its ability to meet operating and capital expenses, debt service obligations, and shareholder distributions for the next 12 months[115] - The company is focused on industrial and logistics properties, anticipating that demand for e-commerce will continue to support its performance amid the COVID-19 pandemic[115] Debt and Liquidity - The company has $485,000 available under its revolving credit facility and only $48,750 in debt maturities remaining for 2020[69] - As of April 29, 2020, the company had $485,000 available under its revolving credit facility, with debt maturities of $48,750,000 remaining in 2020[115] - The company had debt maturities totaling $1,105,730, with $48,750 due in 2020, $56,980 in 2023, and $1,000,000 in 2029[123] - The company had $265,000 outstanding under its revolving credit facility, with $485,000 available to borrow[120] - The company expects to use borrowings under its revolving credit facility and net proceeds from equity or debt offerings to fund future property acquisitions and developments[126] Joint Ventures and Acquisitions - The company acquired a property with 820,384 rentable square feet for a purchase price of $71,481,000 during the three months ended March 31, 2020[93] - A joint venture was formed for 12 Mainland Properties, resulting in proceeds of $108,266,000 for a 39% equity interest[94] - The company entered into a joint venture for 12 Mainland Properties, receiving proceeds of $108,266 for a 39% equity interest, while retaining a 61% equity interest[125] - The company acquired 31 properties from January 1, 2019, to March 31, 2020, contributing to increased rental income[98] Cash Flow and Distributions - The company reported cash flows from operating activities of $29,445,000 for the three months ended March 31, 2020, compared to $28,330,000 in the same period of 2019, reflecting an increase of approximately 3.9%[118] - The company paid a quarterly cash distribution totaling $21,510 during the three months ended March 31, 2020, using existing cash balances and borrowings[128] - A regular quarterly distribution of $0.33 per common share, or approximately $21,500, was declared on April 6, 2020, to shareholders of record on April 16, 2020[130] Interest Rate Sensitivity - The company’s fixed-rate debt totaled $1,105,730, with an annual interest expense of $43,666[146] - The annual interest cost would increase or decrease by approximately $11,057 if mortgage notes are refinanced at interest rates one percentage point higher or lower[148] - A hypothetical one percentage point change in interest rates would change the fair value of fixed rate debt obligations by approximately $87,787[149] - As of March 31, 2020, the company had $265,000 in floating rate debt under its revolving credit facility, which matures on December 29, 2021[150] - A one percentage point increase in interest rates would raise the annual floating rate interest expense from $6,625 to $9,275, impacting earnings per share by $(0.14)[151] - If fully drawn on the revolving credit facility, a one percentage point increase in interest rates would raise the annual interest expense from $18,750 to $26,250, impacting earnings per share by $(0.40)[153] - The company's exposure to fluctuations in floating interest rates will increase or decrease with changes in the outstanding amounts of its revolving credit facility and other floating rate debt[154] - The company expects LIBOR to be phased out in 2021, which may affect the determination of interest on borrowings under its revolving credit facility[155]