Industrial Logistics Properties Trust(ILPT) - 2025 Q2 - Quarterly Results

Quarterly Results Industrial Logistics Properties Trust Announces Second Quarter 2025 Financial Results Industrial Logistics Properties Trust (ILPT) announced its Q2 2025 financial results, highlighting a successful refinancing of $1.235 billion in floating-rate debt with fixed-rate debt, which is expected to provide stability and annual cash savings - Successfully refinanced $1.235 billion of floating-rate debt with $1.16 billion of fixed-rate debt, providing stability and annual cash savings[10] - The quarterly distribution on common shares was increased to $0.05 per share, payable in August 2025[12] - As of June 30, 2025, ILPT's portfolio consisted of 411 properties with approximately 59.9 million rentable square feet across 39 states[14] - Approximately 76% of ILPT's annualized rental revenues are derived from investment-grade tenants, their subsidiaries, or Hawaii land leases[14] Second Quarter 2025 Highlights In Q2 2025, ILPT reported a net loss of $21.3 million ($0.32 per share) but generated Normalized FFO of $13.8 million ($0.21 per share), achieving a 1.5% increase in NOI and a 2.1% increase in Cash Basis NOI compared to Q2 2024 Key Financial Highlights | Metric | Value | Per Share | | :--- | :--- | :--- | | Net loss attributable to common shareholders | $(21.3) million | $(0.32) | | Normalized FFO attributable to common shareholders | $13.8 million | $0.21 | | Adjusted EBITDAre | $85.0 million | N/A | - NOI increased by 1.5% to $87.6 million and Cash Basis NOI increased by 2.1% to $84.7 million compared to Q2 2024[15] - Executed 171,000 square feet of new and renewal leases with weighted average rental rates 21.1% higher than prior rates for the same space[15] - Portfolio cash flows remain stable with 94.3% occupancy and a weighted average lease term of 7.6 years[15] Financials Key Financial Data For Q2 2025, ILPT reported rental income of $112.1 million and a net loss attributable to common shareholders of $21.3 million, or ($0.32) per share, with Normalized FFO at $13.8 million, or $0.21 per share Selected Income Statement Data (Q2 2025) | Metric | Amount (in thousands) | Per Share | | :--- | :--- | :--- | | Rental income | $112,097 | N/A | | Net loss attributable to common shareholders | $(21,310) | $(0.32) | | NOI | $87,557 | N/A | | Cash Basis NOI | $84,672 | N/A | | Normalized FFO attributable to common shareholders | $13,808 | $0.21 | | CAD attributable to common shareholders | $10,500 | $0.16 | Capitalization (as of June 30, 2025) | Metric | Amount (in thousands) | | :--- | :--- | | Equity market capitalization | $301,829 | | Debt | $4,223,519 | | Total market capitalization | $4,525,348 | | Net debt | $4,064,454 | Condensed Consolidated Statements of Income (Loss) For the second quarter ended June 30, 2025, ILPT recorded rental income of $112.1 million, a slight increase from $110.6 million in the same period of 2024, reporting a net loss attributable to common shareholders of $21.3 million, an improvement from the $23.2 million loss in Q2 2024 Condensed Consolidated Statements of Income (Loss) | (in thousands, except per share) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Rental income | $112,097 | $110,621 | | Total expenses | $75,645 | $75,716 | | Interest expense | $(67,914) | $(73,631) | | Loss on extinguishment of debt | $(5,070) | - | | Net loss | $(30,394) | $(33,479) | | Net loss attributable to common shareholders | $(21,310) | $(23,175) | | Net loss per share (basic and diluted) | $(0.32) | $(0.35) | Condensed Consolidated Balance Sheets As of June 30, 2025, ILPT's total assets stood at $5.24 billion, a decrease from $5.41 billion at the end of 2024, with total liabilities at $4.29 billion, primarily due to a reduction in mortgages notes payable Condensed Consolidated Balance Sheets | (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total real estate properties, net | $4,573,309 | $4,656,499 | | Total assets | $5,238,548 | $5,406,331 | | Mortgages notes payable, net | $4,200,314 | $4,300,537 | | Total liabilities | $4,290,784 | $4,397,001 | | Total equity | $947,764 | $1,009,330 | Debt Summary As of June 30, 2025, ILPT had total debt of approximately $4.22 billion with a weighted average interest rate of 5.43% and a weighted average maturity of 3.9 years, including a $1.4 billion floating-rate loan in the Mountain JV maturing in March 2026 Debt Overview | Metric | Value | | :--- | :--- | | Total Principal Balance | $4,223,519 thousand | | Weighted Average Interest Rate | 5.43% | | Weighted Average Years to Maturity | 3.9 | - The debt portfolio includes a newly issued $1.16 billion fixed-rate loan at 6.40% maturing in July 2030[23] - The Mountain JV has a significant $1.4 billion floating-rate loan with a 5.87% interest rate, maturing in March 2026[23] Debt Maturity Schedule The debt maturity schedule as of June 30, 2025, indicates a significant maturity of $1.4 billion in 2026, consisting of secured floating-rate debt from a consolidated joint venture, with minimal maturities in 2025, 2027, and 2028 - A major debt maturity of $1.4 billion is scheduled for 2026, representing secured floating-rate debt of a consolidated joint venture[27][28] - There are no significant maturities in 2025, 2027, and 2028[27] - A total of $671.8 million in secured fixed-rate debt matures in 2029[27] Leverage and Coverage Ratios As of Q2 2025, ILPT's Net Debt to Annualized Adjusted EBITDAre was 12.0x, and its interest coverage ratio was 1.3x, with variable rate debt significantly decreasing to 34.4% of net debt from 64.8% in the prior quarter Leverage and Coverage Ratios | Ratio | 6/30/2025 | 3/31/2025 | | :--- | :--- | :--- | | Leverage Ratios: | | | | Net debt / total gross assets | 69.9% | 68.7% | | Variable rate debt / net debt | 34.4% | 64.8% | | Coverage Ratios: | | | | Net debt / annualized Adjusted EBITDAre | 12.0x | 11.9x | | Adjusted EBITDAre / interest expense | 1.3x | 1.2x | Capital Expenditures Summary Total capital expenditures for Q2 2025 amounted to $5.2 million, a significant increase from $2.8 million in the prior-year quarter, primarily allocated to tenant improvements and building improvements Capital Expenditures | (in thousands) | For the Three Months Ended 6/30/2025 | For the Three Months Ended 6/30/2024 | | :--- | :--- | :--- | | Tenant improvements | $2,393 | $142 | | Leasing costs | $300 | $184 | | Building improvements | $2,458 | $2,506 | | Total capital expenditures | $5,151 | $2,832 | Portfolio Information Same Property Results For its same-property portfolio of 410 properties, ILPT reported positive year-over-year growth in Q2 2025, with Net Operating Income (NOI) increasing by 1.5% to $86.9 million and Cash Basis NOI growing by 2.1% to $84.0 million Same Property Performance | (dollars in thousands) | For the Three Months Ended 6/30/2025 | For the Three Months Ended 6/30/2024 | % Change | | :--- | :--- | :--- | :--- | | Properties | 410 | 410 | 0.0% | | Percent leased | 94.3% | 95.3% | (1.0%) | | NOI | $86,893 | $85,607 | 1.5% | | Cash Basis NOI | $83,953 | $82,236 | 2.1% | Occupancy and Leasing Summary As of Q2 2025, ILPT's total portfolio of 411 properties was 94.3% leased, with 171,000 square feet of new and renewal leases executed at a weighted average GAAP rent increase of 21.1% - The total portfolio of 411 properties, comprising 59.9 million rentable square feet, was 94.3% leased at the end of Q2 2025[41] Leasing Activity (Q2 2025) | Leasing Activity (Q2 2025) | Square Feet | % Change in GAAP Rent | Weighted Avg. Lease Term (Years) | | :--- | :--- | :--- | :--- | | New leases | 44,000 | 83.4% | 5.0 | | Renewals | 127,000 | 16.4% | 5.5 | | Total/Weighted Avg. | 171,000 | 21.1% | 5.4 | Tenant Credit Characteristics and Concentration ILPT's revenue is supported by a strong tenant base, with 76.2% of total annualized rental revenues derived from investment-grade tenants, their subsidiaries, and Hawaii land leases, though the top 10 tenants account for 47.1% of revenues - A combined 76.2% of annualized rental revenue comes from high-quality sources: investment-grade rated tenants (18.3%), subsidiaries of investment-grade parents (37.1%), and leased Hawaii lands (20.8%)[43] Top Tenant Concentration | Top 5 Tenants | % of Total Annualized Rental Revenues | | :--- | :--- | | 1. FedEx Corporation | 28.8% | | 2. Amazon.com Services, Inc. | 6.7% | | 3. Home Depot U.S.A., Inc. | 2.2% | | 4. OldCo Tire Distributors, Inc. | 1.7% | | 5. UPS Supply Chain Solutions, Inc. | 1.5% | | Total Top 10 | 47.1% | Portfolio Lease Expiration and Reset Schedules The portfolio's lease expirations are well-laddered, with only 7.1% of leased square feet expiring through the end of 2026, and a significant portion (55.0% of leased square feet) expiring in 2030 and beyond Lease Expiration Schedule | Year | Leased Square Feet Expiring (%) | Cumulative (%) | Annualized Rental Revenues Expiring (%) | Cumulative (%) | | :--- | :--- | :--- | :--- | :--- | | 2025 | 1.5% | 1.5% | 0.7% | 0.7% | | 2026 | 5.6% | 7.1% | 4.4% | 5.1% | | 2027 | 14.7% | 21.8% | 11.7% | 16.8% | | 2028 | 11.0% | 32.8% | 10.8% | 27.6% | | 2029 | 12.2% | 45.0% | 10.2% | 37.8% | | Thereafter | 55.0% | 100.0% | 62.2% | 100.0% | - The weighted average remaining lease term is 6.8 years by square feet and 7.6 years by annualized rental revenues[47] Key Financial Data by Investment Portfolio This section provides a breakdown of key metrics across ILPT's wholly-owned Mainland and Hawaii properties, and its consolidated Mountain Industrial REIT joint venture, highlighting the Mountain JV's nearly full occupancy at 99.8% Investment Portfolio Key Financial Data | (As of Q2 2025) | ILPT Wholly Owned (Total) | Mountain Industrial REIT LLC (1) | ILPT Consolidated | | :--- | :--- | :--- | :--- | | Properties | 316 | 94 | 411 | | Occupancy % | 91.4% | 99.8% | 94.3% | | Total gross assets (thousands) | $2,524,443 | $3,103,542 | $5,818,254 | | Total debt (principal, thousands) | $2,510,000 | $1,713,519 | $4,223,519 | | NOI (thousands) | $53,716 | $33,752 | $87,557 | | Cash Basis NOI (thousands) | $51,652 | $32,944 | $84,672 | Joint Ventures Consolidated Joint Venture - Mountain Industrial REIT LLC ILPT holds a 61% ownership interest in the consolidated Mountain Industrial REIT LLC, which owns 94 properties with 99.8% occupancy, and generated $42.6 million in rental income for Q2 2025 - ILPT has a 61% ownership in the Mountain Industrial REIT LLC, which owns 94 properties in 27 states and is 99.8% occupied[63] - The JV's largest tenant is FedEx Corporation, representing 55.6% of its annualized rental revenues[58] Mountain Industrial REIT LLC Operating Information (100% Basis) | Operating Information (100% Basis) | Three Months Ended June 30, 2025 | | :--- | :--- | | Rental income | $42,643 thousand | | Net loss | $(23,247) thousand | | FFO and Normalized FFO | $2,368 thousand | | CAD | $(1,180) thousand | Unconsolidated Joint Venture - The Industrial Fund REIT LLC ILPT owns a 22% interest in The Industrial Fund REIT LLC, an unconsolidated joint venture with 18 properties and 98.7% occupancy, which reported a net loss of $1.0 million for Q2 2025 - ILPT holds a 22% ownership stake in this unconsolidated joint venture, which owns 18 properties and is 98.7% occupied[69] - For Q2 2025, the JV generated $18.7 million in rental income and had a net loss of $1.0 million (on a 100% basis)[69] - ILPT received distributions totaling $990,000 from this joint venture in Q2 2025[69] Appendix Calculation and Reconciliation of Non-GAAP Financial Measures This section provides detailed reconciliations for key non-GAAP financial measures to their nearest GAAP equivalents, including Net Loss to NOI, FFO, Normalized FFO, and Cash Available for Distribution (CAD) for Q2 2025 - Reconciles Net Loss to NOI and Cash Basis NOI: For Q2 2025, Net Loss of ($30.4 million) is reconciled to NOI of $87.6 million[75] - Reconciles Net Loss Attributable to Common Shareholders to FFO and Normalized FFO: For Q2 2025, Net Loss of ($21.3 million) is reconciled to Normalized FFO of $13.8 million[81] - Reconciles Normalized FFO to CAD: For Q2 2025, Normalized FFO of $13.8 million is reconciled to CAD of $10.5 million[82] Company Profile, Research Coverage and Governance Information This section outlines ILPT's corporate structure, leadership, and market information, noting that ILPT is externally managed by The RMR Group, an alternative asset management company with approximately $40 billion in assets under management - ILPT is managed by The RMR Group (Nasdaq: RMR), which had approximately $40 billion in assets under management as of June 30, 2025[83] - The document lists key officers, including Yael Duffy (President and COO) and Tiffany R. Sy (CFO and Treasurer), as well as the Board of Trustees[83][85] - Equity research coverage is provided by firms including BTIG and B. Riley Securities, Inc[84] Non-GAAP Financial Measures and Certain Definitions This section provides definitions and calculation methodologies for non-GAAP financial measures such as Net Operating Income (NOI), Funds From Operations (FFO), and Cash Available for Distribution (CAD), along with other key operational and financial terms - Provides definitions and calculation methodologies for non-GAAP measures such as NOI, Cash Basis NOI, FFO, Normalized FFO, CAD, and EBITDAre[87][88][89][90] - Defines key terms used in the report, including 'Annualized rental revenues', 'Gross book value of real estate assets', 'Net debt', and 'Same property'[93][94][97][100] Warning Concerning Forward-Looking Statements This standard safe harbor statement cautions readers about the forward-looking statements in the presentation, clarifying that future performance is subject to risks and uncertainties, and advises investors to consult SEC filings for detailed risk factors - The presentation contains forward-looking statements regarding future expectations, such as generating cash flow growth, strengthening the balance sheet, and reducing leverage[102] - These statements are subject to risks and uncertainties that could cause actual results to differ materially from expectations[103] - Investors are advised to consult the 'Risk Factors' section in ILPT's periodic filings with the SEC for a more detailed understanding of potential risks[103]