Industrial Logistics Properties Trust(ILPT) - 2021 Q3 - Quarterly Report

Property and Occupancy - As of September 30, 2021, the company owned 294 properties with approximately 36.5 million rentable square feet, achieving a consolidated occupancy rate of 99.0%[70] - The average remaining lease term for consolidated properties was approximately 9.0 years as of September 30, 2021[70] - As of September 30, 2021, only 0.1% of total leased square feet and 0.2% of total annualized rental revenues were scheduled to expire by December 31, 2021[81] - Tenants representing 1% or more of total annualized rental revenues accounted for 53.0% of total leased square feet and 48.3% of annualized rental revenues[84] Rental Income and Rates - The average effective rental rate per square foot for all properties increased to $6.22 for the three months ended September 30, 2021, compared to $6.03 for the same period in 2020, reflecting a growth of 3.2%[75] - During the three months ended September 30, 2021, the company completed new leases for 17,000 square feet with a weighted average rental rate change of 24.2%[77] - The company completed rent resets for approximately 47,000 square feet in Hawaii, achieving rental rates approximately 34.5% higher than prior rates[79] - Mainland Properties contributed approximately 50.7% of annualized rental revenues, with expectations for lease renewals due to tenant investments[85] - Hawaii Properties represented approximately 49.3% of annualized rental revenues, with rents periodically resetting based on fair market values[86] - Scheduled rent resets at Hawaii Properties total $27,763,000, with significant resets occurring in 2026 and thereafter[89] Financial Performance - Rental income for Q3 2021 was $53,138, a 2.7% increase from $51,741 in Q3 2020, while consolidated rental income decreased by 15.6% to $54,981 from $65,106[100] - Net operating income for Q3 2021 was $40,194, reflecting a 3.0% decrease from $41,397 in Q3 2020, with consolidated net operating income down 15.1% to $42,947 from $50,559[100] - Net income attributable to common shareholders increased by 29.9% to $18,307 in Q3 2021 from $14,089 in Q3 2020, resulting in a basic earnings per share of $0.28, up 27.3% from $0.22[100] - Rental income for the nine months ended September 30, 2021, was $163,378, a decrease of 16.0% compared to $194,494 in 2020[1] - Net operating income (NOI) for the nine months ended September 30, 2021, was $127,291, down 16.2% from $151,982 in 2020[1] - Net income attributable to common shareholders increased by 35.3% to $56,475 for the nine months ended September 30, 2021, compared to $41,756 in 2020[1] Expenses and Costs - Total other expenses decreased by 26.9% to $17,422 in Q3 2021 from $23,846 in Q3 2020, primarily due to lower depreciation and amortization costs[100] - Interest expense decreased by 29.5% to $9,084 in Q3 2021 from $12,886 in Q3 2020, attributed to lower average outstanding indebtedness[108] - General and administrative expenses decreased by 8.7% to $4,728 in Q3 2021 from $5,180 in Q3 2020, mainly due to reduced business management fees[107] - Total operating expenses decreased by 15.1% to $36,087 for the nine months ended September 30, 2021, from $42,512 in 2020[1] - Depreciation and amortization expenses decreased by 32.7% to $37,202 for the nine months ended September 30, 2021, compared to $55,303 in 2020[1] - Interest expense decreased by 34.8% to $26,468 for the nine months ended September 30, 2021, from $40,610 in 2020[1] Acquisitions and Investments - During the nine months ended September 30, 2021, the company acquired four industrial properties and one parcel of land for a total of $134,730,000[91] - An agreement was made in October 2021 to acquire a property in Detroit for $120,000,000, pending conditions[92] - A joint venture with an Asian institutional investor involved 12 properties, generating $108,676,000 for a 39% equity interest[93] - The company recorded an increase in the fair value of its joint venture investment of $5,455,000 for the nine months ended September 30, 2021[97] - Cash distributions from the joint venture amounted to $1,980,000 during the nine months ended September 30, 2021[97] Debt and Financing - The principal debt obligations included $650,000 in non-recourse mortgage loans scheduled to mature in 2029[137] - As of September 30, 2021, the company was in compliance with all covenants and terms under its credit agreement and mortgage loan agreement, which require a minimum consolidated net worth of at least $250,000 and liquidity of at least $15,000[153] - The company's fixed rate debt includes mortgage notes for 186 properties in Hawaii, with a principal balance of $650,000 and an annual interest rate of 4.31%, resulting in annual interest payments of $28,015[156] - A one percentage point increase in interest rates would increase the annual interest cost of the fixed rate mortgage notes by approximately $6,500[157] - The company has $354,000 in floating rate debt under its revolving credit facility, which matures on December 29, 2021[159] - A one percentage point increase in interest rates would raise the annual floating rate interest expense from $4,921 to $8,461, impacting earnings per share by $(0.13)[161] Shareholder Distributions - The company paid quarterly cash distributions totaling $64,653 to shareholders during the nine months ended September 30, 2021[145] - A regular quarterly distribution of $0.33 per common share, totaling approximately $21,600, was declared on October 14, 2021[146] Other Financial Metrics - The company recognized $1.168 million in accounts receivable related to deferred rent amounts as of September 30, 2021[71] - The company reported a non-cash straight-line rent adjustment of approximately $5,673 for the 2021 period[1] - The company’s equity in earnings of investees was $5,455 for the nine months ended September 30, 2021, compared to no earnings in 2020[1] - For the three months ended September 30, 2021, FFO attributable to common shareholders was $30,278, compared to $29,939 for the same period in 2020, reflecting a 1.1% increase[130] - For the nine months ended September 30, 2021, Normalized FFO attributable to common shareholders was $91,549, up from $90,845 in 2020, indicating a 0.8% increase[130]