Industrial Logistics Properties Trust(ILPT) - 2022 Q2 - Quarterly Report

Property and Acquisition Details - As of June 30, 2022, the company owned 412 consolidated properties with approximately 59.7 million rentable square feet, achieving an occupancy rate of 98.9%[104] - The company completed the acquisition of MNR on February 25, 2022, acquiring 124 Class A industrial properties with a total of approximately 25.7 million rentable square feet for an aggregate value of $3.73 billion[105] - The acquisition of MNR on February 25, 2022, included 124 Class A properties with a total of approximately 25,745,000 rentable square feet and a remaining weighted average lease term of eight years[123] - The aggregate value of the consideration paid in the MNR merger was $3,734,485, which included the assumption of $323,432 in mortgage debt[123] - Major tenants include Federal Express Corporation, which accounts for 21.8% of leased square feet and 29.2% of annualized rental revenues[116] Financial Performance - Rental income increased to $56,888, up 8.6% from $52,388 in the same period last year, primarily due to acquisition activities and leasing activity[130] - Net operating income rose to $45,395, reflecting a 10.8% increase compared to $41,499 in the prior year[130] - The company recorded a significant loss on impairment of real estate amounting to $100,747, impacting the overall financial results[137] - General and administrative expenses increased by 129.3% to $9,709, driven by higher business management fees related to acquisition activities[136] - Interest expense surged to $77,548, attributed to higher average interest rates on larger outstanding balances due to acquisitions[139] - The net loss attributable to common shareholders was $(143,539), compared to a net income of $18,831 in the previous year[142] - The company reported a loss on equity securities of $9,450 related to the acquisition of MNR[140] - Total operating expenses were $20,328, a 71.8% increase from $11,830 in the same quarter last year[130] - The company experienced a decrease in equity in earnings of investees, down 14.2% to $1,610 compared to $1,876 in the prior year[141] - The company reported a net loss per common share of $(2.30) for the six months ended June 30, 2022, compared to earnings of $0.58 per share in 2021[1] Lease and Rental Activity - The average effective rental rate per square foot for all properties increased to $7.26 for the three months ended June 30, 2022, compared to $6.29 for the same period in 2021, reflecting a year-over-year increase of 15.5%[110] - During the three months ended June 30, 2022, the company entered into new leases totaling 2.65 million square feet, with a weighted average rental rate change of 104.7%[112] - Approximately 2.1% of total leased square feet and 2.2% of total annualized rental revenues are scheduled to expire by December 31, 2022[114] - The company has a weighted average remaining lease term of 8.8 years across its properties as of June 30, 2022[115] - The company intends to seek rents equal to or higher than historical rents during lease renewals or extensions, although market conditions may impact this ability[121] Economic and Market Conditions - The company faces potential economic challenges due to rising interest rates and concerns about a recession, which could impact tenant lease renewals and rental payments[107] - Hawaii Properties represented approximately 29.0% of annualized rental revenues as of June 30, 2022, with future rental rates dependent on prevailing market conditions[118] - The company’s Hawaii Properties have historically seen revenue increases due to rent resets, but future increases depend on market conditions[118] Debt and Financing - The company has an aggregate principal amount of $4,451,429 of debt scheduled to mature between 2022 and 2038[173] - The consolidated joint venture assumed an aggregate $323,432 of former MNR mortgages secured by 11 properties[172] - The company plans to sell additional equity interests in its consolidated joint venture to reduce outstanding indebtedness[174] - The company has $2,785,158 in aggregate floating rate debt, which includes a $1,400,000 Floating Rate Loan and a $1,385,158 Bridge Loan[206] - The annual interest expense for the outstanding floating rate debt at June 30, 2022, is $114,799, which would increase to $142,651 with a one percentage point increase in interest rates[207] - The company purchased interest rate caps with a SOFR strike rate of 2.70% for the Bridge Loan and 3.40% for the Floating Rate Loan to hedge against interest rate risks[206] Cash Flow and Distributions - The net cash provided by operating activities for the six months ended June 30, 2022, was $80,931 thousand, an increase from $62,607 thousand in the same period of 2021[164] - The company reported net cash used in investing activities of $(3,416,022) thousand for the six months ended June 30, 2022, primarily due to the acquisition of MNR[164] - The company reduced its quarterly cash distribution rate to $0.01 per share, ensuring compliance with REIT distribution requirements[166] - During the six months ended June 30, 2022, the company paid quarterly cash distributions to shareholders totaling $43,167[185] - A quarterly distribution of $0.01 per common share, approximately $650, is expected to be paid to shareholders on or about August 18, 2022[186]