Industrial Logistics Properties Trust 10-K

Item 9A. Controls and Procedures As of the end of the period covered by this Annual Report on Form 10-K, our management carried out an evaluation, under the supervision and with the participation of our President and Chief Executive Officer and our Chief Financial Officer and Treasurer, of the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 under the Exchange Act. Based upon that evaluation, our President and Chief Executive Officer and our Chief Financial Officer and Treasurer concluded that our disclosure controls and procedures are effective. There have been no changes in our internal control over financial reporting during the quarter ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Management Report on Assessment of Internal Control Over Financial Reporting We are responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control system is designed to provide reasonable assurance to our management and Board of Trustees regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2020. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework (2013 Framework). Based on this assessment, we believe that, as of December 31, 2020, our internal control over financial reporting was effective. 65 Table of Contents Deloitte & Touche LLP, the independent registered public accounting firm that audited our 2020 Consolidated Financial Statements included in this Annual Report on Form 10-K, has issued an attestation report on our internal control over financial reporting. The report appears elsewhere herein. Item 9B. Other Information None. 66 Table of Contents PART III Item 10. Directors, Executive Officers and Corporate Governance We have a Code of Conduct that applies to our officers and Trustees, RMR Inc. and RMR LLC, senior level officers of RMR LLC, senior level officers and directors of RMR Inc. and certain other officers and employees of RMR LLC. Our Code of Conduct is posted on our website, www.ilptreit.com . A printed copy of our Code of Conduct is also available free of charge to any person who requests a copy by writing to Investor Relations, Industrial Logistics Properties Trust, Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458-1634. We intend to satisfy the requirements under Item 5.05 of Form 8-K regarding disclosure of amendments to, or waivers from, provisions of our Code of Conduct that apply to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, on our website. The remainder of the information required by Item 10 is incorporated by reference to our definitive Proxy Statement. Item 11. Executive Compensation The information required by Item 11 is incorporated by reference to our definitive Proxy Statement. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Equity Compensation Plan Information. We may grant common shares to our officers and other employees of RMR LLC under our 2018 Equity Compensation Plan, or the 2018 Plan. In addition, each of our Trustees receives common shares as part of his or her annual compensation for serving as a Trustee and such shares are awarded under the 2018 Plan. The terms of awards made under the 2018 Plan are determined by the Compensation Committee of our Board of Trustees at the time of the awards. The following table is as of December 31, 2020: Number of securities Number of securities remaining available for future to be issued upon Weighted-average issuance under equity exercise of exercise price of compensation plan (excluding outstanding options, outstanding options, securities reflected in warrants and rights warrants and rights column (a)) Plan category (a) (b) (c) Equity compensation plans approved by securityholders-2018 Plan None. None. 3,698,912 (1) Equity compensation plans not approved by securityholders None. None. None. Total None. None. 3,698,912 (1) (1) Consists of common shares available for issuance pursuant to the terms of the 2018 Plan. Share awards that are repurchased or forfeited will be added to the common shares available for issuance under the 2018 Plan. Payments by us to RMR LLC employees are described in Notes 6 and 10 to the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K. The remainder of the information required by Item 12 is incorporated by reference to our definitive Proxy Statement. Item 13. Certain Relationships and Related Transactions, and Director Independence The information required by Item 13 is incorporated by reference to our definitive Proxy Statement. Item 14. Principal Accountant Fees and Services The information required by Item 14 is incorporated by reference to our definitive Proxy Statement. 67 Table of Contents PART IV Item 15. Exhibits and Financial Statement Schedules (a) Index to Financial Statements and Financial Statement Schedules The following consolidated financial statements and financial statement schedules of Industrial Logistics Properties Trust are included on the pages indicated: Reports of Independent Registered Public Accounting Firm F-1 Report of Independent Registered Public Accounting Firm F-3 Consolidated Balance Sheets as of December 31, 2020 and 2019 F-5 Consolidated Statements of Comprehensive Income for each of the three years in the period ended December 31, 2020 F-6 Consolidated Statements of Shareholders' Equity for each of the three years in the period ended December 31, 2020 F-7 Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2020 F-8 Notes to Consolidated Financial Statements F-10 Schedule III—Real Estate and Accumulated Depreciation S-1 All other schedules for which provision is made in the applicable accounting regulations of the SEC are not required under the related instructions, or are inapplicable, and therefore have been omitted. (b) Exhibits Exhibit Number Description 3.1 Composite Copy of Amended and Restated Declaration of Trust of the Company, dated as of January 11, 2018, as amended to date. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020.) 3.2 Amended and Restated Bylaws of the Company, adopted March 25, 2019. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on March 26, 2019.) 4.1 Form of Common Share Certificate. (Incorporated by reference to Amendment No. 2 to the Company’s Registration Statement on Form S-11, File No. 333-221708.) 4.2 Description of Securities. (Filed herewith.) 8.1 Opinion of Sullivan & Worcester LLP as to certain tax matters. (Filed herewith.) 10.1 Transaction Agreement, dated as of January 17, 2018, between the Company and Office Properties Income Trust (f/k/a Government Properties Income Trust) (as successor to Select Income REIT). (Incorporated by reference to the Company’s Current Report on Form 8-K filed on January 1 8 , 2018.) 10.2 Credit Agreement, dated as of December 29, 2017, among the Company, Citibank, N.A., as administrative agent and collateral agent, and each of the other financial institutions initially a signatory thereto. (Incorporated by reference to Select Income REIT’s Current Report on Form 8-K filed on December 29, 2017.) 10.3 Business Management Agreement, dated as of January 17, 2018, between the Company and The RMR Group LLC.(+) (Incorporated by reference to the Company’s Current Report on Form 8-K filed on January 1 8 , 2018.) 10.4 Amendment to Business Management Agreement, dated as of December 31, 2018, between the Company and The RMR Group LLC.(+) (Incorporated by reference to the Company’s Current Report on Form 8-K filed on January 4, 2019.) 10.5 Property Management Agreement, dated as of January 17, 2018, between the Company and The RMR Group LLC.(+) (Incorporated by reference to the Company’s Current Report on Form 8-K filed on January 1 8 , 2018.) 10.6 2018 Equity Compensation Plan.(+) (Incorporated by reference to the Company’s Current Report on Form 8-K filed on January 1 8 , 2018.) 68 Table of Contents 10.7 Form of Share Award Agreement.(+) (Incorporated by reference to Amendment No. 3 to the Company’s Registration Statement on Form S-11, File No. 333-221708.) 10.8 Form of Share Award Agreement.(+) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.) 10.9 Form of Indemnification Agreement.(+) ( Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2 020. ) 10.10 Summary of Trustee Compensation.(+) (Incorporated by reference to the Company’s Current Report on Form 8-K filed on May 29, 2020.) 10.11 Loan Agreement, dated as of January 29, 2019, among certain of the Company’s subsidiaries, as co-borrowers, and Morgan Stanley Bank, N.A., Citi Real Estate Funding Inc., UBS AG and JPMorgan Chase Bank, National Association. (Incorporated by reference to the Company ’ s Annual Report on Form 10-K for the year ended December 31, 2018.) 10.12 Loan Agreement, dated as of October 21, 2019, among certain of the Company’s subsidiaries, as co-borrowers, and Morgan Stanley Bank, N.A., UBS AG and Bank of America, N.A. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on October 23, 2019.) 21.1 Subsidiaries of the Company. (Filed herewith.) 23.1 Consent of Deloitte & Touche LLP. (Filed herewith.) 23.2 Consent of Ernst & Young LLP. (Filed herewith.) 23.3 Consent of Sullivan & Worcester LLP. (Contained in Exhibit 8.1.) 31.1 Rule 13a-14(a) Certification. (Filed herewith.) 31.2 Rule 13a-14(a) Certification. (Filed herewith.) 32.1 Section 1350 Certification. (Furnished herewith.) 99.1 Letter Agreement, dated as of January 29, 2019, between the Company and The RMR Group LLC. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.) 101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. 101.SCH XBRL Taxonomy Extension Schema Document. (Filed herewith.) 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document. (Filed herewith.) 101.DEF XBRL Taxonomy Extension Definition Linkbase Document. (Filed herewith.) 101.LAB XBRL Taxonomy Extension Label Linkbase Document. (Filed herewith.) 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document. (Filed herewith.) 104 Cover Page Interactive Data File (Formatted as Inline XBRL and contained in Exhibit 101.) (+) Management contract or compensatory plan or arrangement. Item 16. Form 10-K Summary None. 69 Table of Contents Report of Independent Registered Public Accounting Firm To the Trustees and Shareholders of Industrial Logistics Properties Trust Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of Industrial Logistics Properties Trust (the "Company") as of December 31, 2020, the related consolidated statements of comprehensive income, shareholders' equity, and cash flows, for the year then ended, and the related notes and the schedule listed in the Index at Item 15(a) (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 18, 2021, expressed an unqualified opinion on the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Impairment of Real Estate Properties - Refer to Notes 2 to the financial statements Critical Audit Matter Description The Company’s investments in real estate assets are evaluated for impairment periodically or when events or changes in circumstances indicate that the carrying amount of a real estate asset may not be recoverable. The Company’s evaluation of the recoverability of real estate assets involves the comparison of undiscounted future cash flows expected to be generated by each real estate asset over the Company’s estimated holding period to the respective carrying amount. The Company’s undiscounted future cash flows analysis and the assessment of expected remaining holding period requires management to make significant estimates and assumptions related to future occupancy levels, rental rates, estimated sale proceeds, and capitalization rates. In the event that a real estate asset is not recoverable, the Company will adjust the real estate asset to its fair value based on third-party appraisals, broker selling estimates, sale agreements under negotiation, and/or final selling prices, when available, and recognize an impairment loss for the carrying amount in excess of fair value. F-1 Table of Contents We identified the impairment of real estate assets as a critical audit matter because of the significant estimates and assumptions management makes to evaluate the recoverability of real estate assets. This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate the reasonableness of management’s undiscounted future cash flows analysis and assessment of expected remaining holding period. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the undiscounted cash flows analysis and the assessment of the expected remaining hold period included the following, among others: • We tested the effectiveness of controls over management’s evaluation of the recoverability of real estate property assets, including the key inputs utilized in estimating the undiscounted future cash flows. • We evaluated the undiscounted cash flow analysis including estimates of future occupancy levels, rental rates, estimated sale proceeds, and capitalization rates for each real estate asset or group of assets with possible impairment indicators by (1) evaluating the source information and assumptions used by management and (2) testing the mathematical accuracy of the undiscounted future cash flows analysis. • We evaluated the reasonableness of management’s undiscounted future cash flows analysis by comparing management’s projections to external market sources and evidence obtained in other areas of our audit. • We held discussions with management about the current status of potential transactions and about management’s judgments to understand the probability of future events that could affect the hold period and other cash flow assumptions for the properties. /s/ Deloitte & Touche LLP Boston, Massachusetts February 18, 2021 We have served as the Company's auditor since 2020. F-2 Table of Contents Report of Independent Registered Public Accounting Firm To the Trustees and Shareholders of Industrial Logistics Properties Trust Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Industrial Logistic Properties Trust (the “Company”) as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2020, of the Company and our report dated February 18, 2021, expressed an unqualified opinion on those financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management Report on Assessment of Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Deloitte & Touche LLP Boston, Massachusetts February 18, 2021 F-3 Table of Contents Report of Independent Registered Public Accounting Firm To the Trustees and Shareholders of Industrial Logistics Properties Trust Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of Industrial Logistics Properties Trust (the Company) as of December 31, 2019, the related consolidated statements of comprehensive income, shareholders' equity and cash flows for each of the two years in the period ended December 31, 2019, and the related notes and the financial statement schedule listed in the Index at item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2019, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2019, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 24, 2020 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ Ernst & Young LLP We served as the Company’s auditor from 2017 to 2020. Boston, Massachusetts February 24, 2020 F-4 Table of Contents INDUSTRIAL LOGISTICS PROPERTIES TRUST CONSOLIDATED BALANCE SHEETS (dollars in thousands, except per share data) December 31, 2020 2019 ASSETS Real estate properties: Land $ 709,099 $ 747,794 Buildings and improvements 1,099,971 1,588,170 Total real estate properties, gross 1,809,070 2,335,964 Accumulated depreciation ( 141,406 ) ( 131,468 ) Total real estate properties, net 1,667,664 2,204,496 Investment in unconsolidated joint venture 60,590 — Acquired real estate leases, net 83,644 138,596 Cash and cash equivalents 22,834 28,415 Restricted cash — 6,135 Rents receivable, including straight line rents of $ 62,753 and $ 58,336 , respectively 69,511 62,782 Deferred leasing costs, net 4,595 6,581 Debt issuance costs, net 1,477 2,954 Due from related persons 2,665 1,504 Other assets, net 2,765 3,438 Total assets $ 1,915,745 $ 2,454,901 LIABILITIES AND SHAREHOLDERS' EQUITY Revolving credit facility $ 221,000 $ 310,000 Mortgage notes payable, net 645,579 1,096,608 Assumed real estate lease obligations, net 14,630 17,508 Accounts payable and other liabilities 14,716 16,475 Rents collected in advance 7,811 9,442 Security deposits 6,540 6,680 Due to related persons 2,279 2,498 Total liabilities 912,555 1,459,211 Commitments and contingencies Shareholders' equity: Common shares of beneficial interest, $ .01 par value: 100,000,000 shares authorized; 65,301,088 and 65,180,628 shares issued and outstanding, respectively 653 652 Additional paid in capital 1,010,819 999,302 Cumulative net income 224,226 142,155 Cumulative common distributions ( 232,508 ) ( 146,419 ) Total shareholders' equity 1,003,190 995,690 Total liabilities and shareholders' equity $ 1,915,745 $ 2,454,901 The accompanying notes are an integral part of these consolidated financial statements. F-5 Table of Contents INDUSTRIAL LOGISTICS PROPERTIES TRUST CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (amounts in thousands, except per share data) Year Ended December 31, 2020 2019 2018 Rental income $ 254,575 $ 229,234 $ 162,530 Expenses: Real estate taxes 35,185 30,367 19,342 Other operating expenses 20,749 17,643 13,005 Depreciation and amortization 70,518 61,927 28,575 Acquisition and certain other transaction related costs 200 — — General and administrative 19,580 17,189 11,307 Total expenses 146,232 127,126 72,229 Gain on sale of real estate 23,996 — — Interest income 113 743 200 Interest expense (including net amortization of debt issuance costs, premiums and discounts of $ 2,481 , $ 2,017 and $ 1,244 , respectively) ( 51,619 ) ( 50,848 ) ( 16,081 ) Gain on early extinguishment of debt 120 — — Income before income tax expense and equity in earnings of investees 80,953 52,003 74,420 Income tax expense ( 277 ) ( 171 ) ( 32 ) Equity in earnings of investees 529 666 — Net income $ 81,205 $ 52,498 $ 74,388 Net loss attributable to noncontrolling interest 866 — — Net income attributable to common shareholders $ 82,071 $ 52,498 $ 74,388 Weighted average common shares outstanding - basic 65,104 65,049 64,139 Weighted average common shares outstanding - diluted 65,114 65,055 64,140 Per common share data (basic and diluted): Net income attributable to common shareholders $ 1.26 $ 0.81 $ 1.16 The accompanying notes are an integral part of these consolidated financial statements. F-6 Table of Contents INDUSTRIAL LOGISTICS PROPERTIES TRUST CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (dollars in thousands) Total Equity Total Equity Number of Additional Cumulative Attributable to Attributable to Total Common Common Paid In Cumulative Common Common Noncontrolling Shareholders' Shares Shares Capital Net Income Distributions Shareholders Interest Equity Balance at December 31, 2017 45,000,000 $ 450 $ 546,489 $ 15,269 $ — $ 562,208 $ — $ 562,208 Net income — — — 74,388 — 74,388 — 74,388 Contributions — — 16,162 — — 16,162 — 16,162 Distributions — — ( 9,187 ) — — ( 9,187 ) — ( 9,187 ) Issuance of common shares, net 20,000,000 200 444,109 — — 444,309 — 444,309 Share grants 77,400 1 926 — — 927 — 927 Share forfeitures ( 240 ) — — — — — — — Share repurchases ( 2,369 ) — ( 52 ) — — ( 52 ) — ( 52 ) Distributions to common shareholders — — — — ( 60,482 ) ( 60,482 ) — ( 60,482 ) Balance at December 31, 2018 65,074,791 651 998,447 89,657 ( 60,482 ) 1,028,273 — 1,028,273 Net income — — — 52,498 — 52,498 — 52,498 Share grants 119,200 1 1,110 — — 1,111 — 1,111 Share repurchases ( 11,963 ) — ( 253 ) — — ( 253 ) — ( 253 ) Share forfeitures ( 1,400 ) — ( 2 ) — — ( 2 ) — ( 2 ) Distributions to common shareholders — — — — ( 85,937 ) ( 85,937 ) — ( 85,937 ) Balance at December 31, 2019 65,180,628 652 999,302 142,155 ( 146,419 ) 995,690 — 995,690 Net income (loss) — — — 82,071 — 82,071 ( 866 ) 81,205 Share grants 139,100 1 2,335 — — 2,336 — 2,336 Share repurchases ( 18,060 ) — ( 382 ) — — ( 382 ) — ( 382 ) Share forfeitures ( 580 ) — ( 3 ) — — ( 3 ) — ( 3 ) Distributions to common shareholders — — — — ( 86,089 ) ( 86,089 ) — ( 86,089 ) Contributions from noncontrolling interest — — 9,567 — — 9,567 98,375 107,942 Distributions to noncontrolling interest — — — — — — ( 5,479 ) ( 5,479 ) Sale of interest in joint venture — — — — — — ( 92,030 ) ( 92,030 ) Balance at December 31, 2020 65,301,088 $ 653 $ 1,010,819 $ 224,226 $ ( 232,508 ) $ 1,003,190 $ — $ 1,003,190 The accompanying notes are an integral part of these consolidated financial statements. F-7 Table of Contents INDUSTRIAL LOGISTICS PROPERTIES TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) Year Ended December 31, 2020 2019 2018 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 81,205 $ 52,498 $ 74,388 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 43,821 38,177 18,781 Net amortization of debt issuance costs, premiums and discounts 2,481 2,017 1,244 Amortization of acquired real estate leases and assumed real estate lease obligations 24,573 21,465 8,592 Amortization of deferred leasing costs 1,357 1,113 820 Provision for losses on rents receivable — — 1,198 Straight line rental income ( 9,041 ) ( 4,345 ) ( 4,739 ) Gain on early extinguishment of debt ( 120 ) — — Gain on sale of property ( 23,996 ) — — Other non-cash expenses 2,331 1,109 927 Equity in earnings of investees ( 529 ) ( 666 ) — Distributions of earnings from Affiliates Insurance Company — 666 — Change in assets and liabilities: Rents receivable ( 2,907 ) ( 1,497 ) ( 1,727 ) Deferred leasing costs ( 2,443 ) ( 1,457 ) ( 1,745 ) Other assets ( 1,068 ) ( 594 ) 3,591 Due from related persons ( 3,871 ) ( 114 ) ( 1,390 ) Accounts payable and other liabilities 2,613 3,095 1,618 Rents collected in advance 279 3,438 210 Security deposits 12 550 456 Due to related persons ( 133 ) 845 ( 5,461 ) Net cash provided by operating activities 114,564 116,300 96,763 CASH FLOWS FROM INVESTING ACTIVITIES: Real estate acquisitions and deposits ( 115,813 ) ( 884,570 ) ( 121,891 ) Real estate improvements ( 5,857 ) ( 17,157 ) ( 5,004 ) Proceeds from sale of properties 10,578 — — Proceeds from sale of interest in joint venture 106,283 — — Distributions in excess of earnings from Affiliates Insurance Company 287 8,334 — Investment in Affiliates Insurance Company — — ( 8,632 ) Net cash used in investing activities ( 4,522 ) ( 893,393 ) ( 135,527 ) The accompanying notes are an integral part of these consolidated financial statements. F-8 Table of Contents INDUSTRIAL LOGISTICS PROPERTIES TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (dollars in thousands) Year Ended December 31, 2020 2019 2018 CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common shares, net — — 444,309 Proceeds from issuance of mortgage notes payable — 1,000,000 — Borrowings under revolving credit facility 234,000 744,000 193,000 Repayments of revolving credit facility ( 323,000 ) ( 847,000 ) ( 530,000 ) Repayment of mortgage note payable ( 48,750 ) — — Payment of debt issuance costs — ( 8,775 ) ( 5,378 ) Proceeds from noncontrolling interest, net 107,942 — — Distributions to noncontrolling interest ( 5,479 ) — — Distributions to common shareholders ( 86,089 ) ( 85,937 ) ( 60,482 ) Repurchase of common shares ( 382 ) ( 253 ) ( 52 ) Contributions — — 16,162 Distributions — — ( 9,187 ) Net cash (used in) provided by financing activities ( 121,758 ) 802,035 48,372 (Decrease) increase in cash, cash equivalents and restricted cash ( 11,716 ) 24,942 9,608 Cash, cash equivalents and restricted cash at beginning of period 34,550 9,608 — Cash, cash equivalents and restricted cash at end of period $ 22,834 $ 34,550 $ 9,608 Year Ended December 31, 2020 2019 2018 SUPPLEMENTAL DISCLOSURES: Interest paid $ 50,433 $ 46,072 $ 14,749 Income taxes paid $ 209 $ 164 $ — Interest capitalized $ — $ 187 $ — NON-CASH INVESTING AND FINANCING ACTIVITIES: Decrease in assets and liabilities resulting from the deconsolidation of investments that were previously consolidated: Real estate, net $ ( 631,879 ) $ — $ — Mortgage notes, net $ 403,160 $ — $ — Real estate acquired by assumption of mortgage note payable $ — $ ( 56,980 ) $ — Assumption of mortgage note payable $ — $ 56,980 $ — SUPPLEMENTAL DISCLOSURE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH: The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets to the amounts shown in the consolidated statements of cash flows: As of December 31, 2020 2019 2018 Cash and cash equivalents $ 22,834 $ 28,415 $ 9,608 Restricted cash — 6,135 — Total cash, cash equivalents and restricted cash shown in the statements of cash flows $ 22,834 $ 34,550 $ 9,608 The accompanying notes are an integral part of these consolidated financial statements. F-9 Table of Contents INDUSTRIAL LOGISTICS PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share data) Note 1. Organization Industrial Logistics Properties Trust, or, collectively with its consolidated subsidiaries, we, us or our, is a real estate investment trust, or REIT, formed under Maryland law on September 15, 2017, as a wholly owned subsidiary of Select Income REIT, or SIR, a former publicly traded REIT that merged with a subsidiary of Office Properties Income Trust, or OPI, on December 31, 2018. Until January 17, 2018, we were a wholly owned subsidiary of SIR and SIR managed and controlled our cash management function through a series of commingled centralized accounts. As a result, for the year ended December 31, 2018, the cash receipts collected by SIR on our behalf have been accounted for as distributions and the cash disbursements paid by SIR on our behalf have been accounted for as additional paid in capital. On January 17, 2018, we completed an initial public offering and listing on The Nasdaq Stock Market LLC, or Nasdaq, of 20,000,000 of our common shares, or our IPO. At that time, we owned 266 properties with a total of approximately 28,540,000 rentable square feet, or our Initial Properties (all square footage amounts included within these notes are unaudited). Our Initial Properties were contributed to us on September 29, 2017, by SIR. In connection with our formation and this contribution of properties, we (1) issued to SIR 45,000,000 of our common shares of beneficial interest, $ .01 par value per share, or our common shares, (2) issued to SIR a $ 750,000 non-interest bearing demand note, or the SIR Note, which we repaid with proceeds from our IPO, and (3) assumed three mortgage notes totaling $ 63,069 , excluding premiums, that were secured by three of our Initial Properties. On December 27, 2018, SIR distributed all 45,000,000 of our common shares that SIR owned to SIR's shareholders of record as of the close of business on December 20, 2018. Note 2. Summary of Significant Accounting Policies Basis of Presentation. These consolidated financial statements include the accounts of us and our subsidiaries. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. The consolidated accounts of our Initial Properties are presented at SIR’s historical basis and the transaction described in Note 1 has been accounted for as a reorganization of entities under common control in accordance with the Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, 805-50-30, Business Combinations . Substantially all of the rental income received from our tenants and SIR’s other tenants was deposited in and commingled with SIR’s general funds during the periods prior to January 17, 2018. For the period from January 1, 2018 to January 17, 2018, $ 538 of general and administrative costs of SIR were primarily allocated to us based on the historical cost of our real estate investments as a percentage of SIR’s historical cost of all of its real estate investments. In accordance with applicable accounting guidance, we believe this method for allocating general and administrative expenses is reasonable. However, actual expenses may have been different from allocated expenses if we operated as a standalone company and those differences may be material. Real Estate Properties. We record properties at our cost and have presented our Initial Properties at their historical cost basis. Our real estate investments in lands are not depreciated. We calculate depreciation on other real estate investments on a straight line basis over estimated useful lives generally ranging from seven to 40 years. F-10 Table of Contents INDUSTRIAL LOGISTICS PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share data) We allocate the purchase prices of our properties to land, building and improvements based on determinations of the fair values of these assets assuming the properties are vacant. We determine the fair value of each property using methods similar to those used by independent appraisers, which may involve estimated cash flows that are based on a number of factors, including capitalization rates and discount rates, among others. In some circumstances, we engage independent real estate appraisal firms to provide market information and evaluations which are relevant to our purchase price allocations and determinations of depreciable useful lives; however, we are ultimately responsible for the purchase price allocations and determinations of useful lives. We allocate a portion of the purchase price to above market and below market leases based on the present value (using an interest rate which reflects the risks associated with acquired in place leases at the time each property was acquired by us) of the difference, if any, between (i) the contractual amounts to be paid pursuant to the acquired in place leases and (ii) our estimates of fair market lease rates for the corresponding leases, measured over a period equal to the terms of the respective leases. The terms of below market leases that include bargain renewal options, if any, are further adjusted if we determine renewal to be probable. We allocate a portion of the purchase price to acquired in place leases and tenant relationships based upon market estimates to lease up the property based on the leases in place at the time of purchase. In making these allocations, we consider factors such as estimated carrying costs during the expected lease up periods, including real estate taxes, insurance and other operating income and expenses and costs, such as leasing commissions, legal and other related expenses, to execute similar leases in current market conditions at the time a property was acquired by us. We allocate this aggregate value between acquired in place lease values and tenant relationships based on our evaluation of the specific characteristics of each tenant’s lease. However, we have not separated the value of tenant relationships from the value of acquired in place leases because such value and related amortization expense is immaterial to the accompanying consolidated financial statements. If the value of tenant relationships becomes material in the future, we may separately allocate those amounts and amortize the allocated amount over the estimated life of the relationships. We amortize capitalized above market lease values (included in acquired real estate leases in our consolidated balance sheets) and below market lease values (presented as assumed real estate lease obligations in our consolidated balance sheets) as a reduction or increase, respectively, to rental income over the terms of the associated leases. Such amortization resulted in increases in rental income of $ 791 , $ 1,195 and $ 401 during the years ended December 31, 2020, 2019 and 2018, respectively. We amortize the value of acquired in place leases (included in acquired real estate leases in our consolidated balance sheets), exclusive of the value of above market and below market acquired in place leases, or lease origination value, over the terms of the associated leases. Such amortization, which is included in depreciation and amortization expense, totaled $ 25,364 , $ 22,661 and $ 8,993 during the years ended December 31, 2020, 2019 and 2018, respectively. If a lease is terminated prior to its stated expiration, we write off the unamortized amounts relating to that lease. As of December 31, 2020 and 2019, our acquired real estate leases and assumed real estate lease obligations were as follows: December 31, 2020 2019 Acquired real estate leases: Capitalized above market lease values $ 27,323 $ 28,723 Less: accumulated amortization ( 18,400 ) ( 18,303 ) Capitalized above market lease values, net 8,923 10,420 Lease origination value 135,453 186,758 Less: accumulated amortization ( 60,732 ) ( 58,582 ) Lease origination value, net 74,721 128,176 Acquired real estate leases, net $ 83,644 $ 138,596 Assumed real estate lease obligations: Capitalized below market lease values $ 33,927 $ 36,278 Less: accumulated amortization ( 19,297 ) ( 18,770 ) Assumed real estate lease obligations, net $ 14,630 $ 17,508 F-11 Table of Contents INDUSTRIAL LOGISTICS PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share data) As of December 31, 2020, the weighted average amortization periods for capitalized above market lease values, lease origination value and capitalized below market lease values were 9.7 years, 6.4 years, and 11.9 years, respectively. Future amortization of net intangible acquired real estate lease assets and liabilities to be recognized over the current terms of the associated leases as of December 31, 2020 are estimated to be $ 15,228 in 2021, $ 14,537 in 2022, $ 12,606 in 2023, $ 8,681 in 2024, $ 5,473 in 2025 and $ 12,489 thereafter. We recognize impairment losses on real estate investments when indicators of impairment are present and the estimated undiscounted cash flow from our real estate investments is less than the carrying amount of such real estate investments. Impairment indicators may include declining tenant occupancy, lack of progress releasing vacant space, tenant bankruptcies, low long term prospects for improvement in property performance, weak or declining tenant profitability, cash flow or liquidity, our decision to dispose of an asset before the end of its estimated useful life and legislative, market or industry changes that could permanently reduce the value of a property. We review our properties for impairment quarterly, or whenever events or changes in circumstances indicate that carrying amounts may not be recoverable. If indicators of impairment are present, we evaluate the carrying value of the related property by comparing it to the expected future undiscounted cash flows expected to be generated from that property. The future net undiscounted cash flows are subjective and are based in part on assumptions regarding hold periods, market rents and terminal capitalization rates. If the sum of these expected future undiscounted cash flows is less than the carrying value, we reduce the net carrying value of the property to its estimated fair value. The determination of undiscounted cash flow includes consideration of many factors including income to be earned from the investment, holding costs (exclusive of interest), estimated selling prices, and prevailing economic and market conditions. No impairments exist on any of our properties as of December 31, 2020 and 2019. Certain of our industrial lands in Hawaii may require environmental remediation, especially if the use of those lands is changed; however, we do not have any present plans to change the use of those lands or to undertake this environmental cleanup. As of both December 31, 2020 and 2019, accrued environmental remediation costs of $ 6,940 , were included in accounts payable and other liabilities in our consolidated balance sheets. These accrued environmental remediation costs relate to maintenance of our properties for current uses, and, because of the indeterminable timing of the remediation, these amounts have not been discounted to present value. In general, we do not have any insurance designated to limit any losses that we may incur as a result of known or unknown environmental conditions which are not caused by an insured event, such as, for example, fire or flood, although some of our tenants may maintain such insurance that may benefit us. Although we do not believe that there are environmental conditions at any of our properties that will have a material adverse effect on us, we cannot be sure that such conditions are not present at our properties or that costs we incur to remediate contamination will not have a material adverse effect on our business or financial condition. Charges for environmental remediation costs, if any, are included in other operating expenses in our consolidated statements of comprehensive income. Capitalization Policy. Costs directly related to the development of properties are capitalized. We capitalize development costs, including interest, real estate taxes, insurance, and other project costs, incurred during the period of development. Determinations of when a development project commences and capitalization begins, and when a development project is substantially complete and held available for occupancy and capitalization must cease, involve judgments. We begin the capitalization of costs during the pre-construction period, which we consider to begin when activities that are necessary to the development of the property commence. We consider a development project as substantially completed and held available for occupancy upon the completion of tenant improvements, but no later than one year from cessation of major construction activity. Cash and Cash Equivalents. We consider highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. Restricted Cash. Restricted cash consists of amounts escrowed for future capital expenditures as required by certain of our mortgage notes. Deferred Leasing Costs. Deferred leasing costs include capitalized brokerage costs and, until January 1, 2019, legal and other fees associated with the successful negotiation of leases, which are amortized to depreciation and amortization expense on a straight line basis over the terms of the respective leases. Deferred leasing costs totaled $ 8,116 and $ 11,383 at December 31, 2020 and 2019, respectively, and accumulated amortization of deferred leasing costs totaled $ 3,521 and $ 4,802 at December 31, 2020 and 2019, respectively. Future amortization of deferred leasing costs to be recognized during the current terms of our existing leases as of December 31, 2020, are estimated to be $ 682 in 2021, $ 608 in 2022, $ 422 in 2023, $ 388 in 2024, $ 365 in 2025 and $ 2,130 thereafter. F-12 Table of Contents INDUSTRIAL LOGISTICS PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share data) Debt Issuance Costs. Debt issuance costs include capitalized issuance costs related to borrowings, which are amortized to interest expense over the terms of the respective loans. As of both December 31, 2020 and 2019, we had debt issuance costs for our revolving credit facility totaling $ 5,907 , and accumulated amortization of debt issuance costs for our revolving credit facility were $ 4,430 and $ 2,953 at December 31, 2020, and 2019, respectively. As of December 31, 2020, we had debt issuance costs, net of accumulated amortization, of $ 4,421 for certain of our mortgage notes payable obtained during 2019. Future amortization of debt issuance costs to be recognized with respect to our revolving credit facility and mortgage notes payable as of December 31, 2020 are estimated to be $ 2,024 in 2021, $ 547 in 2022, $ 547 in 2023, $ 547 in 2024, $ 547 in 2025 and $ 1,686 thereafter. Equity Method Investments. We own a 22 % equity interest in an unconsolidated joint venture which owns 12 properties, or our joint venture. The properties owned by our joint venture are encumbered by an aggr egate $ 406,980 of mo rtgage debts. We do not control the activities that are most significant to our joint venture and, as a result, we account for our investment in our joint venture under the equity method of accounting under the fair value option. See Notes 3 and 6 for more information regarding our joint venture. We account for our investment in Affiliates Insurance Company, or AIC, until AIC was dissolved as described in Note 10, using the equity method of accounting. Significant influence was present through common representation on the boards of trustees or directors of us and AIC. We acquired shares of common stock of AIC from SIR on December 31, 2018 for $ 8,632 . Until its dissolution on February 13, 2020, we owned a 14.3 % ownership interest in AIC. As of December 31, 2020 and 2019, our investment in AIC had a carrying value of $ 12 and $ 298 , respectively. See Note 10 for more information regarding our investment in AIC. We periodically evaluate our equity method investments for possible indicators of other than temporary impairment whenever events or changes in circumstances indicate the carrying amount of the investment might not be recoverable. These indicators may include the length of time and the extent to which the market value of our investment is below our carrying value, the financial condition of our investees, our intent and ability to be a long term holder of the investment and other considerations. If the decline in fair value is judged to be other than temporary, we record an impairment charge to adjust the basis of the investment to its estimated fair value. Revenue Recognition. We are a lessor of industrial and logistics properties. Our leases provide our tenants with the contractual right to use and economically benefit from all the physical space specified in the leases; therefore, we have determined to evaluate our leases as lease arrangements. In February 2016, the FASB issued Accounting Standards Update, or ASU, No. 2016-02, Leases . In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases and ASU No. 2018-11, Leases (Topic 842): Targeted Improvements . In December 2018, the FASB issued ASU No. 2018-20 Leases (Topic 842), Narrow-Scope Improvements for Lessors . Collectively, these standards set out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). ASU No. 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease. ASU No. 2016-02 requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales type leases, direct financing leases and operating leases. These standards were effective as of January 1, 2019. Upon adoption, we applied the package of practical expedients that has allowed us to not reassess (i) whether any expired or existing contracts are or contain leases, (ii) lease classification for any expired or existing leases and (iii) initial direct costs for any expired or existing leases. Furthermore, we applied the optional transition method in ASU No. 2018-11, which has allowed us to initially apply the new leases standard at the adoption date and recognize a cumulative effect adjustment to the opening balance of shareholders' equity in the adoption period, although we did not have an adjustment. Additionally, our leases met the criteria in ASU No. 2018-11 to not separate non-lease components from the related lease component; therefore, the accounting for these leases remained largely unchanged from the previous standard. The adoption of ASU No. 2016-02 and the related improvements did not have a material impact in our consolidated financial statements. Upon adoption, (i) allowances for bad debts are now recognized as a direct reduction of rental income, and (ii) legal costs associated with the execution of our leases, which were previously capitalized and amortized over the life of their respective leases, are expensed as incurred. Subsequent to January 1, 2019, provisions for credit losses are now included in "rental income" in our consolidated financial statements. For periods prior to January 1, 2019, we maintained an allowance for doubtful accounts for estimated losses resulting from the inability or unwillingness of certain tenants to make payments required under their leases. The computation of the allowance was based on F-13 Table of Contents INDUSTRIAL LOGISTICS PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share data) the tenants’ payment histories and then current credit profiles, as well as other considerations. Provisions for credit losses prior to January 1, 2019 were previously included in other operating expenses in our consolidated financial statements and prior periods were not reclassified to conform to the current presentation. Our leases provide for base rent payments and in addition may include variable payments. Rental income from operating leases, including any payments derived by index or market based indices, is recognized on a straight line basis over the lease term when we have determined that the collectability of substantially all the lease payments is probable. Some of our leases have options to extend or terminate the lease exercisable at the option of our tenants, which are considered when determining the lease term. Certain of our leases contain non-lease components, such as property level operating expenses and capital expenditures reimbursed by our tenants as well as other required lease payments. We have determined that all our leases qualify for the practical expedient to not separate the lease and non-lease components because (i) the lease components are operating leases and (ii) the timing and pattern of recognition of the non-lease components are the same as those of the lease components. We apply ASC 842, Leases , to the combined component. Income derived by our leases is recorded in rental income in our consolidated statements of comprehensive income. Certain tenants are obligated to pay directly their obligations under their leases for insurance, real estate taxes and certain other expenses. These obligations, which have been assumed by the tenants under the terms of their respective leases, are not reflected in our consolidated financial statements. To the extent any tenant responsible for any such obligations under the applicable lease defaults on such lease or if it is deemed probable that the tenant will fail to pay for such obligations, we would record a liability for such obligations. Income Taxes. Until January 17, 2018, we were a wholly owned subsidiary of SIR, which was taxed as a REIT under the Internal Revenue Code of 1986, as amended, or the IRC. Accordingly, until January 17, 2018, we were a qualified REIT subsidiary and a disregarded entity for income tax purposes. We have qualified for taxation as a REIT under the IRC for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2018 and intend to maintain such qualification. Accordingly, we generally are not, and will not be, subject to U.S. federal income taxes provided we distribute our taxable income and meet certain organization and operating requirements to qualify for taxation as a REIT. We are, however, subject to certain state and local taxes. Use of Estimates. Preparation of these financial statements in conformity with U.S. generally accepted accounting principles, or GAAP, requires us to make estimates and assumptions that may affect the amounts reported in these consolidated financial statements and related notes. Net Income Per Common Share. We calculate basic earnings per common share by dividing net income by the weighted average number of common shares outstanding during the period. We calculate diluted net income per share using the more dilutive of the two class method or the treasury stock method. Unvested share awards and other potentially dilutive common shares and the related impact on earnings are considered when calculating diluted earnings per share. Segment Reporting. We operate in one business segment: ownership and leasing of properties that include industrial and logistics buildings and leased industrial lands. Reclassifications. Reclassifications have been made to the prior years' consolidated financial statements to conform to the current year's presentation. Note 3. Real Estate Investments As of December 31, 2020, our portfolio was comprised of 289 wholly owned properties with a total of approximately 34,870,000 rentable square feet, including 226 buildings, leasable land parcels and easements containing approximately 16,756,000 rentable square feet of primarily industrial lands located on the island of Oahu, HI, or our Hawaii Properties, and 63 properties containing approximately 18,114,000 rentable square feet of industrial properties located in 30 other states, or our Mainland Properties. As of December 31, 2020, we also owned a 22 % equity interest in an unconsolidated joint venture which owns 12 properties located in nine states in the mainland United States totaling approximately 9,227,000 rentable square feet that were 100 % leased. F-14 Table of Contents INDUSTRIAL LOGISTICS PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share data) We operate in one business segment: ownership and leasing of properties that include industrial and logistics buildings and leased industrial lands. For the years ended December 31, 2020, 2019 and 2018, approximately 42.2 %, 43.9 % and 59.7 %, respectively, of our rental income were from our Hawaii Properties. In addition, a subsidiary of Amazon.com, Inc., which is a tenant at certain of our Mainland Properties, accounted for $ 38,241 , $ 31,623 and $ 16,047 of our rental income for the years ended December 31, 2020, 2019 and 2018, respectively. Joint Venture Activities As of December 31, 2020, we have an equity investment in a joint venture that consists of the following: ILPT Carrying Value of ILPT Investment at December 31, Number of Square Joint Venture Ownership 2020 Properties Location Feet 12 properties in nine states 22 % $ 60,590 12 Various 9,226,729 The following table provides a summary of the mortgage debts of our joint venture: Principal Balance at December 31, Joint Venture Coupon Rate (1) Maturity Date 2020 (2) Mortgage note payable (secured by one property in Florida) 3.60 % 10/1/2023 $ 56,980 Mortgage note payable (secured by 11 other properties in eight states) 3.33 % 11/7/2029 350,000 Weighted Average/Total 3.37 % $ 406,980 (1) Includes the effect of mark to market purchase accounting. (2) Amounts are not adjusted for our minority interest. In the first quarter of 2020, we entered into agreements related to a joint venture for 12 of our properties in the mainland United States with an Asian institutional investor. We contributed 11 of these properties to our joint venture in February 2020 and the remaining property in March 2020. We received proceeds from the investor in an aggregate amount of $ 107,942 , which includes $ 734 of costs associated with the formation of our joint venture, for a 39 % equity interest in our joint venture and we retained the remaining 61 % equity interest in our joint venture. We recognized a noncontrolling interest in our consolidated balance sheet of $ 98,375 as of the completion of this transaction, which was equal to 39 % of our aggregate carrying value of the total equity of the properties immediately prior to our respective contributions of the properties to our joint venture. The difference between the net proceeds received from this transaction and the noncontrolling interest recognized, which was $ 9,567 , has been reflected as an increase in additional paid in capital in our consolidated balance sheet. The portion of our joint venture's net loss not attributable to us, or $ 866 for the year ended December 31, 2020 is reported as noncontrolling interest in our consolidated statements of comprehensive income. During the year ended December 31, 2020, our joint venture made aggregate cash distributions of $ 14,049 , $ 5,479 to the first joint venture investor, which was reflected as a decrease in total equity attributable to noncontrolling interest and $ 8,570 to us. We determined that, while we owned a 61 % equity interest in our joint venture, our joint venture was a variable interest entity, or VIE, as defined under the Consolidation Topic of the FASB ASC. We concluded that we must consolidate this VIE, and we did so, until we sold an additional 39 % equity interest in the joint venture in November 2020. We reached this determination because we were the entity with the power to direct the activities that most significantly impacted the VIE's economic performance and we had the obligation to absorb losses of, and the right to receive benefits from, the VIE that could be significant to the VIE, and therefore were the primary beneficiary of the VIE. The joint venture investor's interest in this consolidated entity was reflected as noncontrolling interest in our consolidated financial statements. F-15 Table of Contents INDUSTRIAL LOGISTICS PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share data) In November 2020, we sold an additional 39 % equity interest from our remaining 61 % equity interest in our joint venture to a second unrelated third party institutional investor for $ 108,812 , which includes certain costs associated with the formation of our joint venture. We deconsolidated the net assets of our joint venture and recognized a net gain on sale of $ 23,415 on this transaction, which is included in gain on sale of real estate in our consolidated statements of comprehensive income. After giving effect to the sale, we continue to own a 22 % equity interest in our joint venture, but have determined that we are no longer the primary beneficiary. Effective as of the date of the sale, we deconsolidated our joint venture and, since that time, we account for our joint venture using the equity method of accounting under the fair value option. Our initial investment amount was based on an aggregate property valuation of $ 680,000 , less $ 406,980 of existing mortgage debts on the properties that our joint venture assumed. We used the net proceeds from this transaction to reduce outstanding borrowings under our revolving credit facility. For more information regarding the use of the equity method for our joint venture, see Note 6 to the Notes to the Consolidated Financial Statements included in Part IV, of this Annual Report on Form 10-K. 2020 Disposition: During the year ended December 31, 2020, we sold one property located in Virginia containing approximately 308,000 rentable square feet for a sales price of $ 10,775 , excluding closing costs. The sale of this property, as presented in the following table, does not represent a significant disposition or a strategic shift. As a result, the results of operations of this property are included in continuing operations through the date of sale in our consolidated statements of comprehensive income. We did not dispose of any properties during the years ended December 31, 2019 and 2018. Number of Square Gross Gain on Sale of Date of Sale Properties Location Feet Sale Price (1) Real Estate December 2020 1 Winchester, VA 308,217 $ 10,775 $ 581 (1) Gross sale price is the gross contract price, adjusted for purchase price adjustments, if any, and excluding closing costs. 2020 Acquisitions: During the year ended December 31, 2020, we acquired two properties containing a combined 1,465,846 rentable square feet for an aggregate purchase price of $ 115,813 , including acquisition related costs of $ 332 . These acquisitions were accounted for as acquisitions of assets. We allocated the purchase prices for these acquisitions based on the estimated fair value of the acquired assets and assumed liabilities as follows: Number Rentable Buildings Acquired of Square Purchase and Real Estate Date Market Area Properties Feet Price Land Improvements Leases February 2020 Phoenix, AZ 1 820,384 $ 71,628 $ 11,214 $ 54,676 $ 5,738 December 2020 Kansas City, KS 1 645,462 44,185 5,740 32,701 5,744 2 1,465,846 $ 115,813 $ 16,954 $ 87,377 $ 11,482 2020 Investments: During the year ended December 31, 2020, we committed $ 2,106 for expenditures related to tenant improvements and leasing costs for leases executed during the period for approximately 1,102,000 square feet. Committed, but unspent tenant related obligations based on existing leases as of December 31, 2020, were $ 544 , of which $ 373 is expected to be spent during the next 12 months. F-16 Table of Contents INDUSTRIAL LOGISTICS PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share data) 2019 Acquisitions: During the year ended December 31, 2019, we completed the acquisition of 30 industrial properties containing a combined 13,288,180 rentable square feet for an aggregate purchase price of $ 941,550 , including acquisition related costs of $ 4,800 . These acquisitions were accounted for as acquisitions of assets. We allocated the purchase prices for these acquisitions based on the estimated fair value of the acquired assets and assumed liabilities as follows: Acquired Number Rentable Buildings Acquired Real Estate Discount of Square Purchase and Real Estate Lease on Assumed Date Market Area Properties Feet Price Land Improvements Leases Obligations Debt February 2019 2 mainland states 7 3,708,343 $ 250,276 $ 19,558 $ 205,811 $ 24,907 $ — $ — April 2019 Indianapolis, IN 1 493,500 30,517 2,817 24,836 2,864 — — April 2019 12 mainland states 20 8,694,321 628,457 52,546 519,829 56,715 ( 1,965 ) 1,332 August 2019 Columbus, OH 2 392,016 32,300 2,393 27,363 2,544 — — 30 13,288,180 $ 941,550 $ 77,314 $ 777,839 $ 87,030 $ ( 1,965 ) $ 1,332 Note 4. Leases Rental income from operating leases, including payments derived by index or market-based indices, is recognized on a straight line basis over the lease term when we have determined that the collectability of substantially all of the lease payments is probable. We increased rental income by $ 9,041 , $ 4,345 and $ 4,739 to record revenue on a straight line basis during the years ended December 31, 2020, 2019 and 2018, respectively. We do not include in our measurement of our lease receivables certain variable payments, including payments determined by changes in the index or market-based indices after the inception of the lease, certain tenant reimbursements and other income until the specific events that trigger the variable payments have occurred. Such payments totaled $ 45,858 , $ 40,898 and $ 24,161 for the years ended December 31, 2020, 2019 and 2018, respectively, of which tenant reimbursements totaled $ 44,878 , $ 38,755 and $ 23,219 , respectively. The following operating lease maturity analysis presents the future contractual lease payments to be received by us through 2064 as of December 31, 2020: Year Amount 2021 $ 169,312 2022 167,850 2023 150,817 2024 132,497 2025 117,143 Thereafter 991,913 $ 1,729,532 As a result of the COVID-19 pandemic and its aftermath, certain of our tenants have requested relief from their obligations to pay rent due to us. We evaluate these requests on a tenant by tenant basis. As of February 15, 2021, we granted requests to certain of our tenants to defer aggregate rent payments of $ 3,244 . In most cases, these tenants were obligated to pay the deferred rents in 12 equal monthly installments beginning in September 2020. We have elected to use the FASB relief package regarding the application of lease accounting guidance to lease concessions provided as a result of the COVID-19 pandemic. The FASB relief package provides entities with the option to account for lease concessions resulting from the COVID-19 pandemic outside of the existing lease modification guidance if the resulting cash flows from the modified lease are substantially the same as or less than the original lease. Because the deferred rent amounts referenced above will be repaid, the cash flows from the respective leases are substantially the same as before the rent deferrals. As of December 31, 2020, deferred payments totaling $ 2,630 are included in rents receivable in our condensed consolidated balance sheet. These deferred amounts did not negatively impact our financial results for the year ended December 31, 2020. F-17 Table of Contents INDUSTRIAL LOGISTICS PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share data) Note 5. Indebtedness As of December 31, 2020 and 2019, our outstanding indebtedness consisted of the following: Net Book Principal Balance as of Value December 31, of Collateral Interest At December 31, 2020 (1) 2019 (1) Rate Maturity 2020 Unsecured revolving credit facility (2) $ 221,000 $ 310,000 1.70 % Dec 2021 $ — Mortgage notes payable (secured by 186 properties in Hawaii) 650,000 650,000 4.31 % Feb 2029 491,559 Mortgage note payable (secured by one property in Virginia) — 48,750 3.48 % Nov 2020 — Mortgage note payable (secured by one property in Florida) (3) — 56,980 4.22 % Oct 2023 — Mortgage note payable (secured by 11 properties located in eight states) (3) — 350,000 3.33 % Nov 2029 — 871,000 1,415,730 $ 491,559 Unamortized debt issuance costs, premiums and discounts ( 4,421 ) ( 9,122 ) $ 866,579 $ 1,406,608 (1) The principal balances are the amounts stated in contracts. In accordance with GAAP, our carrying values and recorded interest expense may be different because of market conditions at the time we assumed certain of these debts. (2) The maturity date of our revolving credit facility is December 29, 2021 and we have the option to extend the maturity date for two , six month periods through December 29, 2022. (3) The properties encumbered by these mortgages were contributed in the first quarter of 2020 to a joint venture, which we deconsolidated in November 2020 and in which we currently own a 22 % equity interest. In 2019, these properties were consolidated into our financial statements. See Note 3 for further information regarding our joint venture. We have a $ 750,000 unsecured revolving credit facility that is available for our general business purposes, including acquisitions. The maturity date of our revolving credit facility is December 29, 2021. We may borrow, repay and reborrow funds under our revolving credit facility until maturity, and no principal repayment is due until maturity. Interest on borrowings under our revolving credit facility is calculated at floating rates based on LIBOR plus a premium that varies based on our leverage ratio. We have the option to extend the maturity date of our revolving credit facility for two , six month periods, subject to payment of extension fees and satisfaction of other conditions. We are also required to pay a commitment fee on the unused portion of our revolving credit facility. The agreement governing our revolving credit facility, or our credit agreement, also includes a feature under which the maximum borrowing availability under our revolving credit facility may be increased to up to $ 1,500,000 in certain circumstances. As of December 31, 2020 and 2019, interest payable on the amount outstanding under our revolving credit facility was LIBOR plus 155 basis points. As of December 31, 2020 and 2019, the interest rate payable on borrowings under our revolving credit facility was 1.70 % and 3.26 %, respectively. The weighted average interest rate for borrowings under our revolving credit facility was 2.36 %, 3.68 % and 3.33 % for the years ended December 31, 2020, 2019 and 2018, respectively. As of December 31, 2020 and February 15, 2021, we had $ 221,000 outstanding under our revolving credit facility, and $ 529,000 available to borrow under our revolving credit facility. Our credit agreement provides for acceleration of payment of all amounts due thereunder upon the occurrence and continuation of certain events of default, such as, a change of control of us, which includes RMR LLC ceasing to act as our business manager and property manager. Our credit agreement also contains a number of covenants, including covenants that restrict our ability to incur debts or to make distributions in certain circumstances, and generally requires us to maintain certain financial ratios. We believe we were in compliance with the terms and conditions of the covenants under our credit agreement at December 31, 2020. In January 2019, we obtained a $ 650,000 mortgage loan secured by 186 of our properties located on the island of Oahu, HI containing approximately 9.6 million square feet. This non-amortizing loan matures on February 7, 2029 and requires monthly F-18 Table of Contents INDUSTRIAL LOGISTICS PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share data) payments of interest only at a fixed rate of 4.31 % per annum. We used the proceeds from this loan to reduce outstanding borrowings under our revolving credit facility and to fund acquisitions. In connection with the acquisition of a portfolio of 20 industrial properties in April 2019, as discussed in Note 3, we assumed a $ 56,980 mortgage note secured by one property containing approximately 1.0 million square feet located in Ruskin, FL. This non-amortizing loan matures on October 1, 2023 and requires monthly payments of interest only at a fixed rate of 3.60 % per annum. We recorded a $ 1,332 discount in connection with this assumed mortgage note, which increased its effective interest rate to 4.22 % per annum. We recorded this discount as we believed the interest rate payable on this mortgage note was below the rate we would have had to pay for debt with the same maturity and similar other terms at the time we assumed this obligation. In October 2019, we obtained a $ 350,000 mortgage loan secured by 11 of our properties located in eight states containing an aggregate of approximately 8.2 million rentable square feet. This non-amortizing loan matures in November 2029 and requires monthly payments of interest at a fixed rate of 3.33 % per annum. We used the proceeds from this loan to reduce outstanding borrowings under our revolving credit facility. We no longer include the $ 56,980 secured mortgage note or the $ 350,000 mortgage loan in our consolidated balance sheet following the deconsolidation of the net assets of our formerly majority-owned joint venture discussed in Note 3. In May 2020, we prepaid at par plus accrued interest a mortgage note secured by one of our properties with an outstanding principal balance of approximately $ 48,750 , an annual interest rate of 3.48 % and a maturity date in November 2020. As a result of the prepayment of this mortgage note, we recorded a gain on early extinguishment of debt of $ 120 for the year ended December 31, 2020 to write off unamortized premiums. The required principal payments due during the next five years and thereafter under all our outstanding debt as of December 31, 2020 are as follows: Principal Year Payment 2021 $ 221,000 2022 — 2023 — 2024 — 2025 — Thereafter 650,000 $ 871,000 (1) (1) Total debt outstanding as of December 31, 2020, including unamortized debt issuance costs of $ 4,421 , was 645,579 . Note 6. Fair Value of Assets and Liabilities Our financial instruments include cash and cash equivalents, restricted cash, rents receivable, our revolving credit facility, mortgage notes payable, accounts payable, security deposits, rents collected in advance and amounts due from or to related persons. At December 31, 2020 and 2019, the fair value of our financial instruments approximated their carrying values in our consolidated financial statements, due to the short term nature or floating interest rates, except as follows: At December 31, 2020 At December 31, 2019 Carrying Estimated Carrying Estimated Value (1) Fair Value Value (1) Fair Value Mortgage notes payable $ 645,579 $ 730,119 $ 1,096,608 $ 1,143,437 (1) Includes unamortized debt issuance costs, premiums and discounts of $ 4,421 and $ 9,122 as of December 31, 2020 and 2019, respectively. F-19 Table of Contents INDUSTRIAL LOGISTICS PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share data) We estimate the fair value of our mortgage notes payable using discounted cash flow analyses and currently prevailing market rates as of the measurement date (Level 3 inputs). Because Level 3 inputs are unobservable, our estimated fair value may differ materially from the actual fair value. The table below presents certain of our assets measured on a recurring basis at fair value at December 31, 2020, categorized by the level of inputs as defined in the fair value hierarchy under GAAP, used in the valuation of each asset: Quoted Prices in Significant Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs Total (Level 1) (Level 2) (Level 3) Recurring fair value measurements Investment in unconsolidated joint venture (1) $ 60,590 $ — $ — $ 60,590 (1) We own a 22 % equity interest in a joint venture that owns 12 properties and is included in investment in unconsolidated joint venture in our consolidated balance sheet, and is reported at fair value, which is based on significant unobservable inputs (Level 3 inputs). The significant unobservable inputs used in the fair value are discount rates, exit capitalization rates, holding periods and market rents. The assumptions are based on the location, type and nature of each property, and current and anticipated market conditions, which are derived from appraisers, industry publications and our experience. See Note 3 for further information regarding our joint venture . Note 7. Shareholders’ Equity Common Share Awards: We have common shares available for issuance under the terms of our 2018 Equity Compensation Plan, or the 2018 Plan. During the years ended December 31, 2020, 2019 and 2018, we awarded to our officers and other employees of RMR LLC annual share awards of 108,600 , 104,200 and 54,400 of our common shares, respectively, valued at $ 2,460 , $ 2,260 and $ 1,269 , in aggregate, respectively. In accordance with our Trustee compensation arrangements, we awarded each of our then seven Trustees 3,500 common shares in 2020 with an aggregate value of $ 460 ($ 66 per Trustee). Also in 2020, in connection with the election of two of our Trustees, we awarded 3,000 of our common shares to each such Trustee with an aggregate value of $ 141 ($ 71 per Trustee) as part of their annual compensation. During 2019, we awarded each of our then Trustees 3,000 common shares with an aggregate value of $ 281 ($ 56 per Trustee) as part of their annual compensation. During 2018, we awarded each of our then Trustees 1,000 of our common shares with an aggregate value of $ 104 ($ 21 per Trustee) as compensation for the period from our IPO to May 2018 and awarded each of our then Trustees 3,000 common shares with an aggregate value of $ 314 ($ 63 per Trustee) as part of their annual compensation. We awarded an additional 3,000 common shares in December 2018, with an aggregate value of $ 61 to one of our Managing Trustees, who was elected as a Managing Trustee in December 2018. The values of the share awards were based upon the closing price of our common shares trading on Nasdaq on the dates of awards. The common shares awarded to our Trustees vested immediately. The common shares awarded to our officers and certain other employees of RMR LLC vest in five equal annual installments beginning on the date of award. We recognize share forfeitures as they occur. We include the value of awarded shares in general and administrative expenses ratably over the vesting period. A summary of shares awarded, vested and forfeited under the terms of the 2018 Plan for the year ended December 31, 2020, 2019 and 2018 is as follows: Year Ended December 31, 2020 December 31, 2019 December 31, 2018 Weighted Weighted Weighted Average Average Average Number Grant Date Number Grant Date Number Grant Date of Shares Fair Value of Shares Fair Value of Shares Fair Value Unvested at beginning of year 108,200 $ 22.08 43,280 $ 23.33 — $ — Granted 139,100 22.01 119,200 21.32 77,400 22.60 Vested ( 84,520 ) 21.41 ( 52,880 ) 20.78 ( 33,880 ) 21.64 Forfeited ( 580 ) 22.20 ( 1,400 ) 22.39 ( 240 ) 23.33 Unvested at end of year 162,200 $ 22.37 108,200 $ 22.08 43,280 $ 23.33 F-20 Table of Contents INDUSTRIAL LOGISTICS PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share data) The 162,200 unvested shares as of December 31, 2020 are scheduled to vest as follows: 63,260 shares in 2021, 43,460 shares in 2022, 36,160 shares in 2023 and 19,320 in 2024. As of December 31, 2020, the estimated future compensation expense for the unvested shares was approximately $ 2,903 . The weighted average period over which the compensation expense will be recorded is approximately 22 months. During the years ended December 31, 2020, 2019 and 2018, we recorded $ 2,331 , $ 1,109 and $ 927 respectively, of compensation expense related to the 2018 Plan. At December 31, 2020, 3,698,912 common shares remain available for issuance under the 2018 Plan. Common Share Purchases: During the years ended December 31, 2020, 2019 and 2018, we repurchased 18,060 , 11,963 and 2,369 of our common shares, respectively, at weighted average prices of $ 21.16 , $ 21.19 and 22.08 per common share, respectively, from our Trustees and current and former officers and employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares. Distributions: During the years ended December 31, 2020, 2019 and 2018, we paid distributions on our common shares as follows: Annual Per Characterization of Distribution Share Total Return of Ordinary Year Distribution Distribution Capital Income 2020 $ 1.32 $ 86,089 29.0 % 71.0 % 2019 $ 1.32 $ 85,937 21.8 % 78.2 % 2018 $ 0.93 $ 60,482 — % 100.0 % On January 14, 2021, we declared a regular quarterly distribution of $ 0.33 per common share, or $ 21,549 , to shareholders of record on January 25, 2021. We paid this distribution to our shareholders on February 18, 2021. Note 8. Per Common Share Amounts The following table provides a reconciliation of the weighted average number of common shares used in the calculation of basic and diluted earnings per share (in thousands): Year Ended December 31, 2020 2019 2018 Weighted average common shares for basic earnings per share 65,104 65,049 64,139 Effect of dilutive securities: unvested share awards 10 6 1 Weighted average common shares for diluted earnings per share 65,114 65,055 64,140 Note 9. Business and Property Management Agreements with RMR LLC We have no employees. The personnel and various services we require to operate our business are provided to us by RMR LLC. We have two agreements with RMR LLC to provide management services to us: (1) a business management agreement, which relates to our business generally; and (2) a property management agreement, which relates to our property level operations. Management Agreements with RMR LLC. Our management agreements with RMR LLC provide for an annual base management fee, an annual incentive management fee and property management and construction supervision fees, payable in cash, among other terms: • Base Management Fee . The annual base management fee payable to RMR LLC by us for each applicable period is equal to the lesser of: ◦ the sum of (i) 0.5 % of the average aggregate historical cost of the real estate assets acquired from a REIT to which RMR LLC provided business management or property management services, or the Transferred F-21 Table of Contents INDUSTRIAL LOGISTICS PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share data) Assets, plus (ii) 0.7 % of the average aggregate historical cost of our real estate investments excluding the Transferred Assets up to $ 250,000 , plus (iii) 0.5 % of the average aggregate historical cost of our real estate investments excluding the Transferred Assets exceeding $ 250,000 ; and ◦ the sum of (i) 0.7 % of the average closing price per share of our common shares on the stock exchange on which such shares are principally traded during such period, multiplied by the average number of our common shares outstanding during such period, plus the daily weighted average of the aggregate liquidation preference of each class of our preferred shares outstanding during such period, plus the daily weighted average of the aggregate principal amount of our consolidated indebtedness during such period, or, together, our Average Market Capitalization, up to $ 250,000 , plus (ii) 0.5 % of our Average Market Capitalization exceeding $ 250,000 . The average aggregate historical cost of our real estate investments includes our consolidated assets invested, directly or indirectly, in equity interests in or loans secured by real estate and personal property owned in connection with such real estate (including acquisition related costs and costs which may be allocated to intangibles or are unallocated), all before reserves for depreciation, amortization, impairment charges or bad debts or other similar non-cash reserves. • Incentive Management Fee . The incentive management fee which may be earned by RMR LLC for an annual period is calculated as follows: ◦ An amount, subject to a cap, based on the value of our common shares outstanding, equal to 12.0 % of the product of: – if the relevant measurement period ends on or before December 31, 2020, $ 1,560,000 (our unadjusted equity market capitalization as calculated at our IPO) or, if the relevant measurement period ends thereafter, our equity market capitalization on the last trading day of the calendar year immediately prior to the relevant measurement period, and – the amount (expressed as a percentage) by which the total return per share, as defined in the business management agreement and further described below, of our common shareholders (i.e., share price appreciation plus dividends) exceeds the total shareholder return of the applicable market index, or the benchmark return per share, for the relevant measurement period. Effective as of January 1, 2019, we amended our business management agreement with RMR LLC so that the SNL U.S. Industrial REIT Index will be used for periods beginning on and after January 1, 2019, with the SNL U.S. REIT Equity Index used for periods ending on or prior to December 31, 2018. For purposes of the total return per share of our common shareholders, share price appreciation for a measurement period is determined by subtracting (i) if the measurement period ends on or before December 31, 2020, $ 24.00 per common share (our unadjusted initial share price, as defined under the business management agreement, based on our IPO price of our common shares) or, if the measurement period ends after December 31, 2020, the closing price of our common shares on Nasdaq on the last trading day of the year immediately before the first year of the applicable measurement period from (ii) the average closing price of our common shares on the 10 consecutive trading days having the highest average closing prices during the final 30 trading days in the last year of the measurement period. ◦ The calculation of the incentive management fee (including the determinations of our equity market capitalization, initial share price and the total return per share of our common shareholders) is subject to adjustments if we issue or repurchase our common shares, or our common shares are forfeited, during the measurement period. ◦ No incentive management fee is payable by us unless our total return per share during the measurement period is positive. ◦ The measurement periods are generally three year periods ending with the year for which the incentive management fee is being calculated, with shorter periods applicable in the case of the calculation of the incentive fee for 2020 (the period beginning on January 12, 2018, the first day our common shares began F-22 Table of Contents INDUSTRIAL LOGISTICS PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share data) trading, and ending on December 31, 2020), 2019 (the period beginning on January 12, 2018 and ending on December 31, 2019) and 2018 (the period beginning on January 12, 2018 and ending on December 31, 2018). ◦ If our total return per share exceeds 12.0 % per year in any measurement period, the benchmark return per share is adjusted to be the lesser of the total shareholder return of the applicable market index for such measurement period and 12.0 % per year, or the adjusted benchmark return per share. In instances where the adjusted benchmark return per share applies, the incentive management fee will be reduced if our total return per share is between 200 basis points and 500 basis points below the applicable market index, by a low return factor, as defined in the business management agreement, and there will be no incentive management fee paid if, in these instances, our total return per share is more than 500 basis points below the applicable market index. ◦ The incentive management fee is subject to a cap. The cap is equal to the value of the number of our common shares which would, after issuance, represent 1.5 % of the number of our common shares then outstanding multiplied by the average closing price of our common shares during the 10 consecutive trading days having the highest average closing prices during the final 30 trading days of the relevant measurement period. ◦ Incentive management fees we paid to RMR LLC for any period may be subject to “clawback” if our financial statements for that period are restated due to material non-compliance with any financial reporting requirements under the securities laws as a result of the bad faith, fraud, willful misconduct or gross negligence of RMR LLC and the amount of the incentive management fee we paid was greater than the amount we would have paid based on the restated financial statements. Pursuant to our business management agreement with RMR LLC, we recognized net business management fees of $ 12,983 and $ 11,897 for the years ended December 31, 2020 and 2019, respectively, and $ 7,269 for the period from January 17, 2018 through December 31, 2018. The net business management fees we recognized for the year ended December 31, 2020 include $ 1,005 of management fees paid to RMR LLC by our joint venture that was a consolidated subsidiary of ours until November 2020. See Note 3 for further information regarding our joint venture. The net business management fees we recognized are included in general and administrative expenses in our consolidated statements of comprehensive income for the years ended December 31, 2020, 2019 and 2018. We did no t incur any incentive management fee pursuant to our business management agreement for the periods ended December 31, 2020, 2019 and 2018. • Property Management and Construction Supervision Fees . The property management fees payable to RMR LLC by us for each applicable period are equal to 3.0 % of gross collected rents and the construction supervision fees payable to RMR LLC by us for each applicable period are equal to 5.0 % of construction costs. Pursuant to our property management agreement with RMR LLC, we recognized aggregate property management and construction supervision fees of $ 7,472 and $ 7,548 for the years ended December 31, 2020 and 2019, respectively, and $ 4,680 for the period from January 17, 2018 through December 31, 2018. For the years ended December 31, 2020 and 2019 and for the period from January 17, 2018 through December 31, 2018, $ 7,267 , $ 6,697 and $ 4,467 , respectively, of the total net property management and construction supervision fees were expensed to other operating expenses in our consolidated statements of comprehensive income and $ 205 , $ 851 and $ 213 , respectively, were capitalized as building improvements in our consolidated balance sheets. • Expense Reimbursement . We are generally responsible for all of our operating expenses, including certain expenses incurred or arranged by RMR LLC on our behalf. We are generally not responsible for payment of RMR LLC’s employment, office or administrative expenses incurred to provide management services to us, except for the employment and related expenses of RMR LLC’s employees assigned to work exclusively or partly at our properties, our share of the wages, benefits and other related costs of RMR LLC’s centralized accounting personnel, our share of RMR LLC’s costs for providing our internal audit function and as otherwise agreed. Our Audit Committee appoints our Director of Internal Audit and our Compensation Committee approves the costs of our internal audit function. Our property level operating expenses are generally incorporated into rents charged to our tenants, including certain payroll and related costs incurred by RMR LLC. We reimbursed RMR LLC $ 4,948 and $ 4,269 for these expenses and costs for the years ended December 31, 2020 and 2019, respectively, and F-23 Table of Contents INDUSTRIAL LOGISTICS PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share data) $ 2,908 for the period from January 17, 2018 through December 31, 2018. These amounts are included in other operating expenses and general and administrative expenses, as applicable, for these periods. • Term . Our management agreements with RMR LLC have terms that end on December 31, 2040, and automatically extend on December 31st of each year for an additional year, so that the terms of our management agreements thereafter end on the 20th anniversary of the date of the extension. • Termination Rights . We have the right to terminate one or both of our management agreements with RMR LLC: (i) at any time on 60 days’ written notice for convenience, (ii) immediately on written notice for cause, as defined therein, (iii) on written notice given within 60 days after the end of an applicable calendar year for a performance reason, as defined therein, and (iv) by written notice during the 12 months following a change of control of RMR LLC, as defined therein. RMR LLC has the right to terminate the management agreements for good reason, as defined therein. • Termination Fee . If we terminate one or both of our management agreements with RMR LLC for convenience, or if RMR LLC terminates one or both of our management agreements for good reason, we have agreed to pay RMR LLC a termination fee in an amount equal to the sum of the present values of the monthly future fees, as defined therein, for the terminated management agreement(s) for the term that was remaining prior to such termination, which, depending on the time of termination would be between 19 and 20 years. If we terminate one or both of our management agreements with RMR LLC for a performance reason, we have agreed to pay RMR LLC the termination fee calculated as described above, but assuming a 10 year term was remaining prior to the termination. We are not required to pay any termination fee if we terminate our management agreements with RMR LLC for cause or as a result of a change of control of RMR LLC. • Transition Services . RMR LLC has agreed to provide certain transition services to us for 120 days following an applicable termination by us or notice of termination by RMR LLC, including cooperating with us and using commercially reasonable efforts to facilitate the orderly transfer of the management and real estate investment services provided under our business management agreement and to facilitate the orderly transfer of the management of the managed properties under our property management agreement, as applicable. • Vendors . Pursuant to our management agreements with RMR LLC, RMR LLC may from time to time negotiate on our behalf with certain third party vendors and suppliers for the procurement of goods and services to us. As part of this arrangement, we may enter agreements with RMR LLC and other companies to which RMR LLC or its subsidiaries provide management services for the purpose of obtaining more favorable terms from such vendors and suppliers. • Investment Opportunities . Under our business management agreement with RMR LLC, we acknowledge that RMR LLC may engage in other activities or businesses and act as the manager to any other person or entity (including other REITs) even though such person or entity has investment policies and objectives similar to ours and we are not entitled to preferential treatment in receiving information, recommendations and other services from RMR LLC. Management Agreements between Our Joint Venture and RMR LLC. As described further in Note 3, we own a 22 % equity interest in our joint venture. In November 2020, our joint venture entered into (1) an amended and restated asset management agreement with RMR LLC, which provides for an asset management fee of 1.0 % of average invested capital for our joint venture, and (2) an amended and restated master property management agreement with RMR LLC, which provides for a property management fee of 3 % of gross collected rents and 5 % of construction costs supervised by RMR LLC for our joint venture. Prior to November 2020, our joint venture was our consolidated subsidiary and, as such, we were obligated to pay fees under our management agreements with RMR LLC regarding our joint venture; however, any fees paid by that joint venture were credited against the fees payable by us to RMR LLC. Starting in November 2020, our joint venture is no longer our consolidated subsidiary and, as a result, we are no longer required to pay management fees to RMR LLC with respect to our joint venture and fees our joint venture pays to RMR LLC are no longer credited against amounts we owe to RMR LLC. F-24 Table of Contents INDUSTRIAL LOGISTICS PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share data) Note 10. Related Person Transactions We have relationships and historical and continuing transactions with RMR LLC, The RMR Group Inc., or RMR Inc., and others related to them, including other companies to which RMR LLC or its subsidiaries provide management services and some of which have trustees, directors or officers who are also our Trustees or officers. RMR LLC is a majority owned subsidiary of RMR Inc. The Chair of our Board of Trustees and one of our Managing Trustees, Adam Portnoy, is the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of RMR Inc., a managing director and the president and chief executive officer of RMR Inc. and an officer and employee of RMR LLC. John Murray, our other Managing Trustee and our President and Chief Executive Officer, also serves as an officer and employee of RMR LLC, and each of our other officers is also an officer and employee of RMR LLC. Some of our Independent Trustees also serve as independent trustees or independent directors of other public companies to which RMR LLC or its subsidiaries provide management services. Adam Portnoy serves as chair of the boards of trustees or boards of directors of several of these public companies and as a managing director or managing trustee of these public companies. Other officers of RMR LLC, including Mr. Murray and certain of our other officers, serve as managing trustees, managing directors or officers of certain of these companies. O ur Manager, RMR LLC. We have two agreements with RMR LLC to provide management services to us. See Note 9 for further information regarding our management agreements with RMR LLC. Share Awards to RMR LLC Employees . As described in Note 7, we award shares to our officers and other employees of RMR LLC annually. Generally, one fifth of these awards vest on the grant date and one fifth vests on each of the next four anniversaries of the grant dates. In certain instances, we may accelerate the vesting of an award, such as in connection with the award holder’s retirement as an officer of us or an officer or employee of RMR LLC. These awards to RMR LLC employees are in addition to the share awards to our Managing Trustees, as Trustee compensation, and the fees we paid to RMR LLC. See Note 7 for information regarding our share awards and activity as well as certain share purchases we made in connection with share award recipients satisfying tax withholding obligations on the vesting of share awards. SIR and OPI. Effective December 31, 2018, SIR merged with and into a subsidiary of OPI. Adam Portnoy is also a managing trustee of OPI and was a managing trustee of SIR prior to its merger with OPI’s subsidiary. RMR LLC provided management services to SIR until its merger with OPI’s subsidiary and continues to provide management services to OPI and to us. On December 27, 2018, SIR distributed all 45,000,000 of our common shares that it owned to SIR’s shareholders of record on December 20, 2018. As a result of the merger, OPI succeeded to all of SIR’s rights and obligations, including with respect to SIR’s agreements with us. OPI owed to us $ 1,504 as of December 31, 2019 for rents that it collected on our behalf from certain of our tenants. A predecessor of OPI owned those properties and those tenants first became tenants at those properties prior to our ownership. OPI paid these amounts due to us or collected on our behalf in January 2020. AIC . Until its dissolution on February 13, 2020, we, ABP Trust and five other companies to which RMR LLC provides management services owned AIC in equal amounts. We and the other AIC shareholders historically participated in a combined property insurance program arranged and insured or reinsured in part by AIC until June 30, 2019. In connection with AIC’s dissolution, we and each other AIC shareholder received an initial liquidating distribution of $ 9,000 from AIC in December 2019 and an additional liquidating distribution of approximately $ 287 in June 2020. We recognized income related to our investment in AIC of $ 666 for the year ended December 31, 2019, which is presented as equity in earnings of investees in our consolidated statement of comprehensive income. We did not recognize any income related to our investment in AIC for the years ended December 31, 2020 or 2018. Our Joint Venture. As of December 31, 2020, our joint venture owed to us $ 2,665 for post-closing adjustments relating to our sale of some of our equity interests to a second third party institutional investor in November 2020. This amount is presented as due from related persons in our consolidated balance sheet. F-25 Table of Contents INDUSTRIAL LOGISTICS PROPERTIES TRUST SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 2020 (dollars in thousands) Initial Cost to Costs Gross Amount Carried at Company Capitalized Close of Period (4) Original Buildings and Subsequent to Buildings and Accumulated Date Construction Property Location State Property Type Encumbrances (1) Land Equipment Acquisition Land Equipment Total (2) Depreciation (3) Acquired Date 1 4501 Industrial Drive Fort Smith AR Mainland Properties $ 900 $ 3,485 $ — $ 900 $ 3,485 $ 4,385 $ ( 516 ) 1/29/2015 2013 2 16920 West Commerce Drive Goodyear AZ Mainland Properties 11,214 54,676 32 11,214 54,708 65,922 ( 1,376 ) 2/14/2020 2008 3 955 Aeroplaza Drive Colorado Springs CO Mainland Properties 800 7,412 39 800 7,451 8,251 ( 1,103 ) 1/29/2015 2012 4/5 13400 East 39th Avenue and 3800 Wheeling Street Denver CO Mainland Properties 3,100 12,955 4 3,100 12,959 16,059 ( 1,917 ) 1/29/2015 1973 6 3870 Ronald Reagan Boulevard Johnstown CO Mainland Properties 2,780 9,722 — 2,780 9,722 12,502 ( 559 ) 4/9/2019 2007 7 150 Greenhorn Drive Pueblo CO Mainland Properties 200 4,177 — 200 4,177 4,377 ( 618 ) 1/29/2015 2013 8 2 Tower Drive Wallingford CT Mainland Properties 1,471 2,165 858 1,471 3,023 4,494 ( 854 ) 10/24/2006 1978 9 235 Great Pond Road Windsor CT Mainland Properties 2,400 9,469 — 2,400 9,469 11,869 ( 1,993 ) 7/20/2012 2004 10 10450 Doral Boulevard Doral FL Mainland Properties 15,225 28,102 — 15,225 28,102 43,327 ( 2,342 ) 6/27/2018 1996 11 2100 NW 82nd Avenue Miami FL Mainland Properties 144 1,297 454 144 1,751 1,895 ( 845 ) 3/19/1998 1987 12 1000 Mapunapuna Street Honolulu HI Hawaii Properties (A) 2,252 — — 2,252 — 2,252 — 12/5/2003 — 13 1001 Ahua Street Honolulu HI Hawaii Properties (A) 15,155 3,312 91 15,155 3,403 18,558 ( 1,439 ) 12/5/2003 — 14 1024 Kikowaena Place Honolulu HI Hawaii Properties (A) 1,818 — — 1,818 — 1,818 — 12/5/2003 — 15 1024 Mapunapuna Street Honolulu HI Hawaii Properties (A) 1,385 — — 1,385 — 1,385 — 12/5/2003 — 16 1027 Kikowaena Place Honolulu HI Hawaii Properties (A) 5,444 — — 5,444 — 5,444 — 12/5/2003 — 17 1030 Mapunapuna Street Honolulu HI Hawaii Properties (A) 5,655 — — 5,655 — 5,655 — 12/5/2003 — 18 1038 Kikowaena Place Honolulu HI Hawaii Properties (A) 2,576 — — 2,576 — 2,576 — 12/5/2003 — 19 1045 Mapunapuna Street Honolulu HI Hawaii Properties (A) 819 — — 819 — 819 — 12/5/2003 — 20 1050 Kikowaena Place Honolulu HI Hawaii Properties (A) 1,404 873 — 1,404 873 2,277 ( 372 ) 12/5/2003 — 21 1052 Ahua Street Honolulu HI Hawaii Properties (A) 1,703 — 240 1,703 240 1,943 ( 92 ) 12/5/2003 — 22 1055 Ahua Street Honolulu HI Hawaii Properties (A) 1,216 — — 1,216 — 1,216 — 12/5/2003 — 23 106 Puuhale Road Honolulu HI Hawaii Properties (A) 1,113 — 274 1,113 274 1,387 ( 81 ) 12/5/2003 1966 24 1062 Kikowaena Place Honolulu HI Hawaii Properties (A) 1,049 598 61 1,049 659 1,708 ( 256 ) 12/5/2003 — 25 1122 Mapunapuna Street Honolulu HI Hawaii Properties (A) 5,781 — — 5,781 — 5,781 — 12/5/2003 — 26 113 Puuhale Road Honolulu HI Hawaii Properties (A) 3,729 — — 3,729 — 3,729 — 12/5/2003 — 27 1150 Kikowaena Place Honolulu HI Hawaii Properties (A) 2,445 — — 2,445 — 2,445 — 12/5/2003 — 28 120 Mokauea Street Honolulu HI Hawaii Properties (A) 1,953 — 1,029 1,953 1,029 2,982 ( 150 ) 12/5/2003 1970 29 120 Sand Island Access Road Honolulu HI Hawaii Properties (A) 1,132 11,307 1,423 1,132 12,730 13,862 ( 4,965 ) 11/23/2004 2004 30 120B Mokauea Street Honolulu HI Hawaii Properties (A) 1,953 — — 1,953 — 1,953 — 12/5/2003 1970 S-1 Table of Contents Initial Cost to Costs Gross Amount Carried at Company Capitalized Close of Period (4) Original Buildings and Subsequent to Buildings and Accumulated Date Construction Property Location State Property Type Encumbrances (1) Land Equipment Acquisition Land Equipment Total (2) Depreciation (3) Acquired Date 31 125 Puuhale Road Honolulu HI Hawaii Properties (A) 1,630 — — 1,630 — 1,630 — 12/5/2003 — 32 125B Puuhale Road Honolulu HI Hawaii Properties (A) 2,815 — — 2,815 — 2,815 — 12/5/2003 — 33 1330 Pali Highway Honolulu HI Hawaii Properties (A) 1,423 — — 1,423 — 1,423 — 12/5/2003 — 34 1360 Pali Highway Honolulu HI Hawaii Properties (A) 9,170 — 161 9,170 161 9,331 ( 124 ) 12/5/2003 — 35 140 Puuhale Road Honolulu HI Hawaii Properties (A) 1,100 — — 1,100 — 1,100 — 12/5/2003 — 36 142 Mokauea Street Honolulu HI Hawaii Properties (A) 2,182 — 1,576 2,182 1,576 3,758 ( 435 ) 12/5/2003 1972 37 148 Mokauea Street Honolulu HI Hawaii Properties (A) 3,476 — — 3,476 — 3,476 — 12/5/2003 — 38 150 Puuhale Road Honolulu HI Hawaii Properties (A) 4,887 — — 4,887 — 4,887 — 12/5/2003 — 39 151 Puuhale Road Honolulu HI Hawaii Properties (A) 1,956 — — 1,956 — 1,956 — 12/5/2003 — 40 158 Sand Island Access Road Honolulu HI Hawaii Properties (A) 2,488 — — 2,488 — 2,488 — 12/5/2003 — 41 165 Sand Island Access Road Honolulu HI Hawaii Properties (A) 758 — — 758 — 758 — 12/5/2003 — 42 179 Sand Island Access Road Honolulu HI Hawaii Properties (A) 2,480 — — 2,480 — 2,480 — 12/5/2003 — 43 180 Sand Island Access Road Honolulu HI Hawaii Properties (A) 1,655 — — 1,655 — 1,655 — 12/5/2003 — 44 1926 Auiki Street Honolulu HI Hawaii Properties (A) 2,872 — 1,722 2,872 1,722 4,594 ( 582 ) 12/5/2003 1959 45 1931 Kahai Street Honolulu HI Hawaii Properties (A) 3,779 — — 3,779 — 3,779 — 12/5/2003 — 46 197 Sand Island Access Road Honolulu HI Hawaii Properties (A) 1,238 — — 1,238 — 1,238 — 12/5/2003 — 47 2001 Kahai Street Honolulu HI Hawaii Properties (A) 1,091 — — 1,091 — 1,091 — 12/5/2003 — 48 2019 Kahai Street Honolulu HI Hawaii Properties (A) 1,377 — — 1,377 — 1,377 — 12/5/2003 — 49 2020 Auiki Street Honolulu HI Hawaii Properties (A) 2,385 — — 2,385 — 2,385 — 12/5/2003 — 50 204 Sand Island Access Road Honolulu HI Hawaii Properties (A) 1,689 — — 1,689 — 1,689 — 12/5/2003 — 51 207 Puuhale Road Honolulu HI Hawaii Properties (A) 2,024 — — 2,024 — 2,024 — 12/5/2003 — 52 2103 Kaliawa Street Honolulu HI Hawaii Properties (A) 3,212 — — 3,212 — 3,212 — 12/5/2003 — 53 2106 Kaliawa Street Honolulu HI Hawaii Properties (A) 1,568 — 169 1,568 169 1,737 ( 89 ) 12/5/2003 — 54 2110 Auiki Street Honolulu HI Hawaii Properties (A) 837 — — 837 — 837 — 12/5/2003 — 55 212 Mohonua Place Honolulu HI Hawaii Properties (A) 1,067 — — 1,067 — 1,067 — 12/5/2003 — 56 2122 Kaliawa Street Honolulu HI Hawaii Properties (A) 1,365 — — 1,365 — 1,365 — 12/5/2003 — 57 2127 Auiki Street Honolulu HI Hawaii Properties (A) 2,906 — 67 2,906 67 2,973 ( 29 ) 12/5/2003 — 58 2135 Auiki Street Honolulu HI Hawaii Properties (A) 825 — — 825 — 825 — 12/5/2003 — 59 2139 Kaliawa Street Honolulu HI Hawaii Properties (A) 885 — — 885 — 885 — 12/5/2003 — S-2 Table of Contents Initial Cost to Costs Gross Amount Carried at Company Capitalized Close of Period (4) Original Buildings and Subsequent to Buildings and Accumulated Date Construction Property Location State Property Type Encumbrances (1) Land Equipment Acquisition Land Equipment Total (2) Depreciation (3) Acquired Date 60 214 Sand Island Access Road Honolulu HI Hawaii Properties (A) 1,864 — 542 1,864 542 2,406 ( 95 ) 12/5/2003 1981 61 2140 Kaliawa Street Honolulu HI Hawaii Properties (A) 931 — — 931 — 931 — 12/5/2003 — 62 2144 Auiki Street Honolulu HI Hawaii Properties (A) 2,640 — 7,196 2,640 7,196 9,836 ( 2,481 ) 12/5/2003 1953 63 215 Puuhale Road Honolulu HI Hawaii Properties (A) 2,117 — — 2,117 — 2,117 — 12/5/2003 — 64 218 Mohonua Place Honolulu HI Hawaii Properties (A) 1,741 — — 1,741 — 1,741 — 12/5/2003 — 65 220 Puuhale Road Honolulu HI Hawaii Properties (A) 2,619 — — 2,619 — 2,619 — 12/5/2003 — 66 2250 Pahounui Drive Honolulu HI Hawaii Properties (A) 3,862 — — 3,862 — 3,862 — 12/5/2003 — 67 2264 Pahounui Drive Honolulu HI Hawaii Properties (A) 1,632 — — 1,632 — 1,632 — 12/5/2003 — 68 2276 Pahounui Drive Honolulu HI Hawaii Properties (A) 1,619 — — 1,619 — 1,619 — 12/5/2003 — 69 228 Mohonua Place Honolulu HI Hawaii Properties (A) 1,865 — — 1,865 — 1,865 — 12/5/2003 — 70 2308 Pahounui Drive Honolulu HI Hawaii Properties (A) 3,314 — — 3,314 — 3,314 — 12/5/2003 — 71 231 Sand Island Access Road Honolulu HI Hawaii Properties (A) 752 — — 752 — 752 — 12/5/2003 — 72 231B Sand Island Access Road Honolulu HI Hawaii Properties (A) 1,539 — — 1,539 — 1,539 — 12/5/2003 — 73 2344 Pahounui Drive Honolulu HI Hawaii Properties (A) 6,709 — — 6,709 — 6,709 — 12/5/2003 — 74 238 Sand Island Access Road Honolulu HI Hawaii Properties (A) 2,273 — — 2,273 — 2,273 — 12/5/2003 — 75 2635 Waiwai Loop A Honolulu HI Hawaii Properties (A) 934 350 683 934 1,033 1,967 ( 243 ) 12/5/2003 — 76 2635 Waiwai Loop B Honolulu HI Hawaii Properties (A) 1,177 105 682 1,177 787 1,964 ( 139 ) 12/5/2003 — 77 2760 Kam Highway Honolulu HI Hawaii Properties (A) 703 — 185 703 185 888 — 12/5/2003 — 78 2804 Kilihau Street Honolulu HI Hawaii Properties (A) 1,775 2 — 1,775 2 1,777 — 12/5/2003 — 79 2806 Kaihikapu Street Honolulu HI Hawaii Properties (A) 1,801 — — 1,801 — 1,801 — 12/5/2003 — 80 2808 Kam Highway Honolulu HI Hawaii Properties (A) 310 — — 310 — 310 — 12/5/2003 — 81 2809 Kaihikapu Street Honolulu HI Hawaii Properties (A) 1,837 — — 1,837 — 1,837 — 12/5/2003 — 82 2810 Paa Street Honolulu HI Hawaii Properties (A) 3,340 — — 3,340 — 3,340 — 12/5/2003 — 83 2810 Pukoloa Street Honolulu HI Hawaii Properties (A) 27,699 — — 27,699 — 27,699 — 12/5/2003 — 84 2812 Awaawaloa Street Honolulu HI Hawaii Properties (A) 1,801 3 — 1,801 3 1,804 ( 2 ) 12/5/2003 — 85 2814 Kilihau Street Honolulu HI Hawaii Properties (A) 1,925 — — 1,925 — 1,925 — 12/5/2003 — 86 2815 Kaihikapu Street Honolulu HI Hawaii Properties (A) 1,818 — 6 1,818 6 1,824 ( 2 ) 12/5/2003 — 87 2815 Kilihau Street Honolulu HI Hawaii Properties (A) 287 — — 287 — 287 — 12/5/2003 — 88 2816 Awaawaloa Street Honolulu HI Hawaii Properties (A) 1,009 27 — 1,009 27 1,036 ( 12 ) 12/5/2003 — 89 2819 Mokumoa Street - A Honolulu HI Hawaii Properties (A) 1,821 — — 1,821 — 1,821 — 12/5/2003 — 90 2819 Mokumoa Street - B Honolulu HI Hawaii Properties (A) 1,816 — — 1,816 — 1,816 — 12/5/2003 — S-3 Table of Contents Initial Cost to Costs Gross Amount Carried at Company Capitalized Close of Period (4) Original Buildings and Subsequent to Buildings and Accumulated Date Construction Property Location State Property Type Encumbrances (1) Land Equipment Acquisition Land Equipment Total (2) Depreciation (3) Acquired Date 91 2819 Pukoloa Street Honolulu HI Hawaii Properties (A) 2,090 — 34 2,090 34 2,124 ( 10 ) 12/5/2003 — 92 2821 Kilihau Street Honolulu HI Hawaii Properties (A) 287 — — 287 — 287 — 12/5/2003 — 93 2826 Kaihikapu Street Honolulu HI Hawaii Properties (A) 3,921 — — 3,921 — 3,921 — 12/5/2003 — 94 2827 Kaihikapu Street Honolulu HI Hawaii Properties (A) 1,801 — — 1,801 — 1,801 — 12/5/2003 — 95 2828 Paa Street Honolulu HI Hawaii Properties (A) 12,448 — — 12,448 — 12,448 — 12/5/2003 — 96 2829 Awaawaloa Street Honolulu HI Hawaii Properties (A) 1,720 2 8 1,720 10 1,730 ( 2 ) 12/5/2003 — 97 2829 Kilihau Street Honolulu HI Hawaii Properties (A) 287 — — 287 — 287 — 12/5/2003 — 98 2829 Pukoloa Street Honolulu HI Hawaii Properties (A) 2,088 — — 2,088 — 2,088 — 12/5/2003 — 99 2830 Mokumoa Street Honolulu HI Hawaii Properties (A) 2,146 — — 2,146 — 2,146 — 12/5/2003 — 100 2831 Awaawaloa Street Honolulu HI Hawaii Properties (A) 860 — 7 860 7 867 — 12/5/2003 — 101 2831 Kaihikapu Street Honolulu HI Hawaii Properties (A) 1,272 529 55 1,272 584 1,856 ( 248 ) 12/5/2003 — 102 2833 Kilihau Street Honolulu HI Hawaii Properties (A) 601 — — 601 — 601 — 12/5/2003 — 103 2833 Paa Street Honolulu HI Hawaii Properties (A) 1,701 — — 1,701 — 1,701 — 12/5/2003 — 104 2833 Paa Street #2 Honolulu HI Hawaii Properties (A) 1,675 — — 1,675 — 1,675 — 12/5/2003 — 105 2836 Awaawaloa Street Honolulu HI Hawaii Properties (A) 1,353 — — 1,353 — 1,353 — 12/5/2003 — 106 2838 Kilihau Street Honolulu HI Hawaii Properties (A) 4,262 — — 4,262 — 4,262 — 12/5/2003 — 107 2839 Kilihau Street Honolulu HI Hawaii Properties (A) 627 — — 627 — 627 — 12/5/2003 — 108 2839 Mokumoa Street Honolulu HI Hawaii Properties (A) 1,942 — — 1,942 — 1,942 — 12/5/2003 — 109 2840 Mokumoa Street Honolulu HI Hawaii Properties (A) 2,149 — — 2,149 — 2,149 — 12/5/2003 — 110 2841 Pukoloa Street Honolulu HI Hawaii Properties (A) 2,088 — — 2,088 — 2,088 — 12/5/2003 — 111 2844 Kaihikapu Street Honolulu HI Hawaii Properties (A) 1,960 14 — 1,960 14 1,974 ( 13 ) 12/5/2003 — 112 2846-A Awaawaloa Street Honolulu HI Hawaii Properties (A) 2,181 954 — 2,181 954 3,135 ( 407 ) 12/5/2003 — 113 2847 Awaawaloa Street Honolulu HI Hawaii Properties (A) 582 303 — 582 303 885 ( 129 ) 12/5/2003 — 114 2849 Kaihikapu Street Honolulu HI Hawaii Properties (A) 860 — — 860 — 860 — 12/5/2003 — 115 2850 Awaawaloa Street Honolulu HI Hawaii Properties (A) 287 172 — 287 172 459 ( 73 ) 12/5/2003 — 116 2850 Mokumoa Street Honolulu HI Hawaii Properties (A) 2,143 — — 2,143 — 2,143 — 12/5/2003 — 117 2850 Paa Street Honolulu HI Hawaii Properties (A) 22,827 — — 22,827 — 22,827 — 12/5/2003 — 118 2855 Kaihikapu Street Honolulu HI Hawaii Properties (A) 1,807 — — 1,807 — 1,807 — 12/5/2003 — 119 2855 Pukoloa Street Honolulu HI Hawaii Properties (A) 1,934 — — 1,934 — 1,934 — 12/5/2003 — 120 2857 Awaawaloa Street Honolulu HI Hawaii Properties (A) 983 — — 983 — 983 — 12/5/2003 — 121 2858 Kaihikapu Street Honolulu HI Hawaii Properties (A) 1,801 — — 1,801 — 1,801 — 12/5/2003 — S-4 Table of Contents Initial Cost to Costs Gross Amount Carried at Company Capitalized Close of Period (4) Original Buildings and Subsequent to Buildings and Accumulated Date Construction Property Location State Property Type Encumbrances (1) Land Equipment Acquisition Land Equipment Total (2) Depreciation (3) Acquired Date 122 2861 Mokumoa Street Honolulu HI Hawaii Properties (A) 3,867 — — 3,867 — 3,867 — 12/5/2003 — 123 2864 Awaawaloa Street Honolulu HI Hawaii Properties (A) 1,836 — 7 1,836 7 1,843 ( 5 ) 12/5/2003 — 124 2864 Mokumoa Street Honolulu HI Hawaii Properties (A) 2,092 — — 2,092 — 2,092 — 12/5/2003 — 125 2865 Pukoloa Street Honolulu HI Hawaii Properties (A) 1,934 — — 1,934 — 1,934 — 12/5/2003 — 126 2868 Kaihikapu Street Honolulu HI Hawaii Properties (A) 1,801 — — 1,801 — 1,801 — 12/5/2003 — 127 2869 Mokumoa Street Honolulu HI Hawaii Properties (A) 1,794 — — 1,794 — 1,794 — 12/5/2003 — 128 2875 Paa Street Honolulu HI Hawaii Properties (A) 1,330 — — 1,330 — 1,330 — 12/5/2003 — 129 2879 Mokumoa Street Honolulu HI Hawaii Properties (A) 1,789 — — 1,789 — 1,789 — 12/5/2003 — 130 2879 Paa Street Honolulu HI Hawaii Properties (A) 1,691 — 44 1,691 44 1,735 ( 13 ) 12/5/2003 — 131 2886 Paa Street Honolulu HI Hawaii Properties (A) 2,205 — — 2,205 — 2,205 — 12/5/2003 — 132 2889 Mokumoa Street Honolulu HI Hawaii Properties (A) 1,783 5 — 1,783 5 1,788 — 12/5/2003 — 133 2906 Kaihikapu Street Honolulu HI Hawaii Properties (A) 1,814 2 — 1,814 2 1,816 ( 1 ) 12/5/2003 — 134 2908 Kaihikapu Street Honolulu HI Hawaii Properties (A) 1,798 23 — 1,798 23 1,821 ( 2 ) 12/5/2003 — 135 2915 Kaihikapu Street Honolulu HI Hawaii Properties (A) 2,579 — — 2,579 — 2,579 — 12/5/2003 — 136 2927 Mokumoa Street Honolulu HI Hawaii Properties (A) 1,778 — — 1,778 — 1,778 — 12/5/2003 — 137 2928 Kaihikapu Street - A Honolulu HI Hawaii Properties (A) 1,801 — — 1,801 — 1,801 — 12/5/2003 — 138 2928 Kaihikapu Street - B Honolulu HI Hawaii Properties (A) 1,948 — — 1,948 — 1,948 — 12/5/2003 — 139 2960 Mokumoa Street Honolulu HI Hawaii Properties (A) 1,977 — — 1,977 — 1,977 — 12/5/2003 — 140 2965 Mokumoa Street Honolulu HI Hawaii Properties (A) 2,140 — — 2,140 — 2,140 — 12/5/2003 — 141 2969 Mapunapuna Street Honolulu HI Hawaii Properties (A) 4,038 15 — 4,038 15 4,053 ( 9 ) 12/5/2003 — 142 2970 Mokumoa Street Honolulu HI Hawaii Properties (A) 1,722 — — 1,722 — 1,722 — 12/5/2003 — 143 33 S. Vineyard Boulevard Honolulu HI Hawaii Properties (A) 844 — — 844 — 844 — 12/5/2003 — 144 525 N. King Street Honolulu HI Hawaii Properties (A) 1,342 — — 1,342 — 1,342 — 12/5/2003 — 145 609 Ahua Street Honolulu HI Hawaii Properties (A) 616 — — 616 — 616 — 12/5/2003 — 146 619 Mapunapuna Street Honolulu HI Hawaii Properties (A) 1,401 2 12 1,401 14 1,415 ( 2 ) 12/5/2003 — 147 645 Ahua Street Honolulu HI Hawaii Properties (A) 882 — — 882 — 882 — 12/5/2003 — 148 659 Ahua Street Honolulu HI Hawaii Properties (A) 860 20 — 860 20 880 ( 18 ) 12/5/2003 — 149 659 Puuloa Road Honolulu HI Hawaii Properties (A) 1,807 — — 1,807 — 1,807 — 12/5/2003 — 150 660 Ahua Street Honolulu HI Hawaii Properties (A) 1,783 4 7 1,783 11 1,794 ( 3 ) 12/5/2003 — 151 667 Puuloa Road Honolulu HI Hawaii Properties (A) 860 2 — 860 2 862 ( 2 ) 12/5/2003 — 152 669 Ahua Street Honolulu HI Hawaii Properties (A) 1,801 14 62 1,801 76 1,877 ( 26 ) 12/5/2003 — S-5 Table of Contents Initial Cost to Costs Gross Amount Carried at Company Capitalized Close of Period (4) Original Buildings and Subsequent to Buildings and Accumulated Date Construction Property Location State Property Type Encumbrances (1) Land Equipment Acquisition Land Equipment Total (2) Depreciation (3) Acquired Date 153 673 Ahua Street Honolulu HI Hawaii Properties (A) 1,801 — — 1,801 — 1,801 — 12/5/2003 — 154 675 Mapunapuna Street Honolulu HI Hawaii Properties (A) 1,081 — — 1,081 — 1,081 — 12/5/2003 — 155 679 Puuloa Road Honolulu HI Hawaii Properties (A) 1,807 3 — 1,807 3 1,810 ( 3 ) 12/5/2003 — 156 685 Ahua Street Honolulu HI Hawaii Properties (A) 1,801 — — 1,801 — 1,801 — 12/5/2003 — 157 689 Puuloa Road Honolulu HI Hawaii Properties (A) 1,801 20 — 1,801 20 1,821 ( 18 ) 12/5/2003 — 158 692 Mapunapuna Street Honolulu HI Hawaii Properties (A) 1,796 2 — 1,796 2 1,798 — 12/5/2003 — 159 697 Ahua Street Honolulu HI Hawaii Properties (A) 994 811 — 994 811 1,805 ( 347 ) 12/5/2003 — 160 702 Ahua Street Honolulu HI Hawaii Properties (A) 1,784 3 1 1,784 4 1,788 ( 3 ) 12/5/2003 — 161 704 Mapunapuna Street Honolulu HI Hawaii Properties (A) 2,390 685 — 2,390 685 3,075 ( 292 ) 12/5/2003 — 162 709 Ahua Street Honolulu HI Hawaii Properties (A) 1,801 — — 1,801 — 1,801 — 12/5/2003 — 163 719 Ahua Street Honolulu HI Hawaii Properties (A) 1,960 — — 1,960 — 1,960 — 12/5/2003 — 164 729 Ahua Street Honolulu HI Hawaii Properties (A) 1,801 — — 1,801 — 1,801 — 12/5/2003 — 165 733 Mapunapuna Street Honolulu HI Hawaii Properties (A) 3,403 — — 3,403 — 3,403 — 12/5/2003 — 166 739 Ahua Street Honolulu HI Hawaii Properties (A) 1,801 — — 1,801 — 1,801 — 12/5/2003 — 167 759 Puuloa Road Honolulu HI Hawaii Properties (A) 1,766 3 — 1,766 3 1,769 ( 3 ) 12/5/2003 — 168 761 Ahua Street Honolulu HI Hawaii Properties (A) 3,757 2 — 3,757 2 3,759 ( 1 ) 12/5/2003 — 169 766 Mapunapuna Street Honolulu HI Hawaii Properties (A) 1,801 — — 1,801 — 1,801 — 12/5/2003 — 170 770 Mapunapuna Street Honolulu HI Hawaii Properties (A) 1,801 — — 1,801 — 1,801 — 12/5/2003 — 171 789 Mapunapuna Street Honolulu HI Hawaii Properties (A) 2,608 3 — 2,608 3 2,611 ( 3 ) 12/5/2003 — 172 80 Sand Island Access Road Honolulu HI Hawaii Properties (A) 7,972 — — 7,972 — 7,972 — 12/5/2003 — 173 803 Ahua Street Honolulu HI Hawaii Properties (A) 3,804 — — 3,804 — 3,804 — 12/5/2003 — 174 808 Ahua Street Honolulu HI Hawaii Properties (A) 3,279 — — 3,279 — 3,279 — 12/5/2003 — 175 812 Mapunapuna Street Honolulu HI Hawaii Properties (A) 1,960 25 625 2,610 — 2,610 — 12/5/2003 — 176 819 Ahua Street Honolulu HI Hawaii Properties (A) 4,821 583 11 4,821 594 5,415 ( 261 ) 12/5/2003 — 177 822 Mapunapuna Street Honolulu HI Hawaii Properties (A) 1,795 15 — 1,795 15 1,810 ( 14 ) 12/5/2003 — 178 830 Mapunapuna Street Honolulu HI Hawaii Properties (A) 1,801 25 — 1,801 25 1,826 ( 22 ) 12/5/2003 — 179 855 Mapunapuna Street Honolulu HI Hawaii Properties (A) 3,265 — — 3,265 — 3,265 — 12/5/2003 — 180 842 Mapunapuna Street Honolulu HI Hawaii Properties (A) 1,795 14 — 1,795 14 1,809 ( 12 ) 12/5/2003 — 181 846 Ala Lilikoi Boulevard B Honolulu HI Hawaii Properties (A) 234 — — 234 — 234 — 12/5/2003 — 182 848 Ala Lilikoi Boulevard A Honolulu HI Hawaii Properties (A) 9,426 — — 9,426 — 9,426 — 12/5/2003 — 183 850 Ahua Street Honolulu HI Hawaii Properties (A) 2,682 2 — 2,682 2 2,684 ( 2 ) 12/5/2003 — S-6 Table of Contents Initial Cost to Costs Gross Amount Carried at Company Capitalized Close of Period (4) Original Buildings and Subsequent to Buildings and Accumulated Date Construction Property Location State Property Type Encumbrances (1) Land Equipment Acquisition Land Equipment Total (2) Depreciation (3) Acquired Date 184 852 Mapunapuna Street Honolulu HI Hawaii Properties (A) 1,801 — — 1,801 — 1,801 — 12/5/2003 — 185 855 Ahua Street Honolulu HI Hawaii Properties (A) 1,834 — — 1,834 — 1,834 — 12/5/2003 — 186 865 Ahua Street Honolulu HI Hawaii Properties (A) 1,846 — — 1,846 — 1,846 — 12/5/2003 — 187 889 Ahua Street Honolulu HI Hawaii Properties (A) 5,888 315 — 5,888 315 6,203 ( 64 ) 11/21/2012 — 188 905 Ahua Street Honolulu HI Hawaii Properties (A) 1,148 — — 1,148 — 1,148 — 12/5/2003 — 189 918 Ahua Street Honolulu HI Hawaii Properties (A) 3,820 — — 3,820 — 3,820 — 12/5/2003 — 190 930 Mapunapuna Street Honolulu HI Hawaii Properties (A) 3,654 — — 3,654 — 3,654 — 12/5/2003 — 191 944 Ahua Street Honolulu HI Hawaii Properties (A) 1,219 — — 1,219 — 1,219 — 12/5/2003 — 192 949 Mapunapuna Street Honolulu HI Hawaii Properties (A) 11,568 — — 11,568 — 11,568 — 12/5/2003 — 193 950 Mapunapuna Street Honolulu HI Hawaii Properties (A) 1,724 — — 1,724 — 1,724 — 12/5/2003 — 194 960 Ahua Street Honolulu HI Hawaii Properties (A) 614 — — 614 — 614 — 12/5/2003 — 195 960 Mapunapuna Street Honolulu HI Hawaii Properties (A) 1,933 — — 1,933 — 1,933 — 12/5/2003 — 196 970 Ahua Street Honolulu HI Hawaii Properties (A) 817 — — 817 — 817 — 12/5/2003 — 197 91-027 Kaomi Loop Kapolei HI Hawaii Properties 2,667 — — 2,667 — 2,667 — 6/15/2005 — 198 91-064 Kaomi Loop Kapolei HI Hawaii Properties 1,826 — — 1,826 — 1,826 — 6/15/2005 — 199 91-080 Hanua Kapolei HI Hawaii Properties 2,187 — — 2,187 — 2,187 — 6/15/2005 — 200 91-083 Hanua Kapolei HI Hawaii Properties 716 — — 716 — 716 — 6/15/2005 — 201 91-086 Kaomi Loop Kapolei HI Hawaii Properties 13,884 — — 13,884 — 13,884 — 6/15/2005 — 202 91-087 Hanua Kapolei HI Hawaii Properties 381 — — 381 — 381 — 6/15/2005 — 203 91-091 Hanua Kapolei HI Hawaii Properties 552 — — 552 — 552 — 6/15/2005 — 204 91-102 Kaomi Loop Kapolei HI Hawaii Properties 1,599 — — 1,599 — 1,599 — 6/15/2005 — 205 91-110 Kaomi Loop Kapolei HI Hawaii Properties 1,293 — — 1,293 — 1,293 — 6/15/2005 — 206 91-119 Olai Kapolei HI Hawaii Properties 1,981 — — 1,981 — 1,981 — 6/15/2005 — 207 91-141 Kalaeloa Kapolei HI Hawaii Properties 11,624 — — 11,624 — 11,624 — 6/15/2005 — 208 91-150 Kaomi Loop Kapolei HI Hawaii Properties 3,159 — — 3,159 — 3,159 — 6/15/2005 — 209 91-171 Olai Kapolei HI Hawaii Properties 218 — 13 218 13 231 ( 3 ) 6/15/2005 — 210 91-174 Olai Kapolei HI Hawaii Properties 962 — 47 962 47 1,009 ( 22 ) 6/15/2005 — 211 91-175 Olai Kapolei HI Hawaii Properties 1,243 — 43 1,243 43 1,286 ( 23 ) 6/15/2005 — 212 91-185 Kalaeloa Kapolei HI Hawaii Properties 1,761 — — 1,761 — 1,761 — 6/15/2005 — 213 91-202 Kalaeloa Kapolei HI Hawaii Properties 1,722 — 326 1,722 326 2,048 ( 61 ) 6/15/2005 1964 214 91-120 Kauhi Kapolei HI Hawaii Properties 567 — — 567 — 567 — 6/15/2005 — S-7 Table of Contents Initial Cost to Costs Gross Amount Carried at Company Capitalized Close of Period (4) Original Buildings and Subsequent to Buildings and Accumulated Date Construction Property Location State Property Type Encumbrances (1) Land Equipment Acquisition Land Equipment Total (2) Depreciation (3) Acquired Date 215 91-210 Olai Kapolei HI Hawaii Properties 706 — — 706 — 706 — 6/15/2005 — 216 91-218 Olai Kapolei HI Hawaii Properties 1,622 — 62 1,622 62 1,684 ( 26 ) 6/15/2005 — 217 91-220 Kalaeloa Kapolei HI Hawaii Properties 242 1,457 141 242 1,598 1,840 ( 594 ) 6/15/2005 1991 218 91-222 Olai Kapolei HI Hawaii Properties 2,035 — — 2,035 — 2,035 — 6/15/2005 — 219 91-238 Kauhi Kapolei HI Hawaii Properties 1,390 — 9,331 1,390 9,331 10,721 ( 3,078 ) 6/15/2005 1981 220 91-241 Kalaeloa Kapolei HI Hawaii Properties 426 3,983 865 426 4,848 5,274 ( 1,740 ) 6/15/2005 1990 221 91-250 Komohana Kapolei HI Hawaii Properties 1,506 — — 1,506 — 1,506 — 6/15/2005 — 222 91-252 Kauhi Kapolei HI Hawaii Properties 536 — — 536 — 536 — 6/15/2005 — 223 91-255 Hanua Kapolei HI Hawaii Properties 1,230 — 37 1,230 37 1,267 ( 5 ) 6/15/2005 — 224 91-259 Olai Kapolei HI Hawaii Properties 2,944 — — 2,944 — 2,944 — 6/15/2005 — 225 91-265 Hanua Kapolei HI Hawaii Properties 1,569 — — 1,569 — 1,569 — 6/15/2005 — 226 91-300 Hanua Kapolei HI Hawaii Properties 1,381 — 18 1,381 18 1,399 — 6/15/2005 1994 227 91-329 Kauhi Kapolei HI Hawaii Properties 294 2,297 2,701 294 4,998 5,292 ( 1,718 ) 6/15/2005 1980 228 91-349 Kauhi Kapolei HI Hawaii Properties 649 — — 649 — 649 — 6/15/2005 — 229 91-399 Kauhi Kapolei HI Hawaii Properties 27,405 — — 27,405 — 27,405 — 6/15/2005 — 230 91-400 Komohana Kapolei HI Hawaii Properties 1,494 — — 1,494 — 1,494 — 6/15/2005 — 231 91-410 Komohana Kapolei HI Hawaii Properties 418 — 12 418 12 430 ( 3 ) 6/15/2005 — 232 91-416 Komohana Kapolei HI Hawaii Properties 713 — 11 713 11 724 ( 3 ) 6/15/2005 — 233 AES HI Easement Kapolei HI Hawaii Properties 1,250 — — 1,250 — 1,250 — 6/15/2005 — 234 Other Easements & Lots Kapolei HI Hawaii Properties 358 — 1,395 358 1,395 1,753 ( 518 ) 6/15/2005 — 235 Tesaro 967 Easement Kapolei HI Hawaii Properties 6,593 — — 6,593 — 6,593 — 6/15/2005 — 236 Texaco Easement Kapolei HI Hawaii Properties 2,657 — — 2,657 — 2,657 — 6/15/2005 — 237 94-240 Pupuole Street Waipahu HI Hawaii Properties (A) 717 — — 717 — 717 — 12/5/2003 — 238 951 Trails Road Eldridge IA Mainland Properties 470 7,480 1,188 470 8,668 9,138 ( 2,853 ) 4/2/2007 1994 239 3425 Maple Drive Fort Dodge IA Mainland Properties 100 2,000 — 100 2,000 2,100 ( 99 ) 4/9/2019 2014 240 2300 North 33rd Avenue East Newton IA Mainland Properties 500 13,236 162 500 13,398 13,898 ( 4,119 ) 9/29/2008 2008 241 7121 South Fifth Avenue Pocatello ID Mainland Properties 400 4,201 436 400 4,637 5,037 ( 650 ) 1/29/2015 2007 242 1230 West 171st Street Harvey IL Mainland Properties 800 1,673 — 800 1,673 2,473 ( 248 ) 1/29/2015 2004 243 5156 American Road Rockford IL Mainland Properties 400 1,529 239 400 1,768 2,168 ( 259 ) 1/29/2015 1996 244 3201 Bearing Drive Franklin IN Mainland Properties 1,100 15,403 ( 2 ) 1,100 15,401 16,501 ( 888 ) 4/9/2019 1973 245 2482 Century Drive Goshen IN Mainland Properties 840 9,061 7 840 9,068 9,908 ( 447 ) 4/9/2019 2005 246 6825 West County Road 400 North Greenfield IN Mainland Properties 918 14,300 665 918 14,965 15,883 ( 796 ) 2/14/2019 2008 S-8 Table of Contents Initial Cost to Costs Gross Amount Carried at Company Capitalized Close of Period (4) Original Buildings and Subsequent to Buildings and Accumulated Date Construction Property Location State Property Type Encumbrances (1) Land Equipment Acquisition Land Equipment Total (2) Depreciation (3) Acquired Date 247 900 Commerce Parkway West Drive Greenwood IN Mainland Properties 1,483 16,253 — 1,483 16,253 17,736 ( 873 ) 2/14/2019 2007 248 9347 E Pendleton Pike Lawrence IN Mainland Properties 3,763 34,877 1 3,763 34,878 38,641 ( 1,874 ) 2/14/2019 2009 249 17001 West Mercury Street Gardner KS Mainland Properties 5,740 32,701 — 5,740 32,701 38,441 ( 3 ) 12/30/2020 2018 250 1985 International Way Hebron KY Mainland Properties 1,453 8,546 1,275 1,453 9,821 11,274 ( 579 ) 2/14/2019 1997 251 17200 Manchac Park Lane Baton Rouge LA Mainland Properties 1,700 8,860 — 1,700 8,860 10,560 ( 1,310 ) 1/29/2015 2014 252 209 South Bud Street Lafayette LA Mainland Properties 700 4,549 15 700 4,564 5,264 ( 675 ) 1/29/2015 2010 253 4000 Principio Parkway North East MD Mainland Properties 4,200 71,518 803 4,200 72,321 76,521 ( 10,647 ) 1/29/2015 2012 254 3800 Midlink Drive Kalamazoo MI Mainland Properties 2,630 40,599 — 2,630 40,599 43,229 ( 6,006 ) 1/29/2015 2014 255 2401 Cram Avenue SE Bemidji MN Mainland Properties 100 2,137 — 100 2,137 2,237 ( 316 ) 1/29/2015 2013 256 10100 89th Avenue N Maple Grove MN Mainland Properties 3,469 21,284 — 3,469 21,284 24,753 ( 1,306 ) 10/16/2018 2015 257 110 Stanbury Industrial Drive Brookfield MO Mainland Properties 200 1,859 — 200 1,859 2,059 ( 275 ) 1/29/2015 2012 258 3502 Enterprise Avenue Joplin MO Mainland Properties 1,380 12,121 — 1,380 12,121 13,501 ( 598 ) 4/9/2019 2014 259 5501 Providence Hill Drive St. Joseph MO Mainland Properties 400 3,500 24 400 3,524 3,924 ( 176 ) 4/9/2019 2014 260 628 Patton Avenue Asheville NC Mainland Properties 500 1,514 — 500 1,514 2,014 ( 224 ) 1/29/2015 1987 261 3900 NE 6th Street Minot ND Mainland Properties 700 3,223 — 700 3,223 3,923 ( 477 ) 1/29/2015 2013 262 1415 West Commerce Way Lincoln NE Mainland Properties 2,200 8,518 388 2,200 8,906 11,106 ( 1,280 ) 1/29/2015 1971 263 52 Pettengill Road Londonderry NH Mainland Properties 5,871 43,335 7 5,871 43,342 49,213 ( 2,139 ) 4/9/2019 2015 264 309 Dulty's Lane Burlington NJ Mainland Properties 1,600 51,400 — 1,600 51,400 53,000 ( 7,603 ) 1/29/2015 2001 265 725 Darlington Avenue Mahwah NJ Mainland Properties 8,492 9,451 1,413 8,492 10,864 19,356 ( 1,806 ) 4/9/2014 1999 266 2375 East Newlands Road Fernley NV Mainland Properties 1,100 17,314 286 1,100 17,600 18,700 ( 2,628 ) 1/29/2015 2007 267 7000 West Post Road Las Vegas NV Mainland Properties 4,230 13,472 246 4,230 13,718 17,948 ( 790 ) 4/9/2019 2010 268 55 Commerce Avenue Albany NY Mainland Properties 1,000 10,105 179 1,000 10,284 11,284 ( 1,535 ) 1/29/2015 2013 269 158 West Yard Road Feura Bush NY Mainland Properties 1,870 7,931 — 1,870 7,931 9,801 ( 685 ) 4/9/2019 1989 270 32150 Just Imagine Drive Avon OH Mainland Properties 2,200 23,280 — 2,200 23,280 25,480 ( 6,742 ) 5/29/2009 1996 271 1415 Industrial Drive Chillicothe OH Mainland Properties 1,200 3,265 — 1,200 3,265 4,465 ( 483 ) 1/29/2015 2012 272/273/274 1580, 1590 & 1600 Williams Road Columbus OH Mainland Properties 2,060 29,143 — 2,060 29,143 31,203 ( 1,678 ) 4/9/2019 1992 275 5300 Centerpoint Parkway Groveport OH Mainland Properties 2,701 29,863 68 2,701 29,931 32,632 ( 4,419 ) 1/29/2015 2014 276 200 Orange Point Drive Lewis Center OH Mainland Properties 1,300 8,613 162 1,300 8,775 10,075 ( 1,312 ) 1/29/2015 2013 277/278 2353 & 2373 Global Drive Obetz OH Mainland Properties 2,393 27,363 8 2,393 27,371 29,764 ( 1,061 ) 8/23/2019 2018 279 301 Commerce Drive South Point OH Mainland Properties 600 4,530 — 600 4,530 5,130 ( 670 ) 1/29/2015 2013 280 2820 State Highway 31 McAlester OK Mainland Properties 581 2,237 4,582 581 6,819 7,400 ( 708 ) 1/29/2015 2012 281 1990 Hood Road Greer SC Mainland Properties 400 10,702 — 400 10,702 11,102 ( 528 ) 4/9/2019 2015 S-9 Table of Contents Initial Cost to Costs Gross Amount Carried at Company Capitalized Close of Period (4) Original Buildings and Subsequent to Buildings and Accumulated Date Construction Property Location State Property Type Encumbrances (1) Land Equipment Acquisition Land Equipment Total (2) Depreciation (3) Acquired Date 282 996 Paragon Way Rock Hill SC Mainland Properties 2,600 35,920 3 2,600 35,923 38,523 ( 5,313 ) 1/29/2015 2014 283 700 Marine Drive Rock Hill SC Mainland Properties 820 8,381 668 820 9,049 9,869 ( 516 ) 4/9/2019 1986 284 510 John Dodd Road Spartanburg SC Mainland Properties 3,300 57,998 347 3,300 58,345 61,645 ( 8,609 ) 1/29/2015 2012 285 5001 West Delbridge Street Sioux Falls SD Mainland Properties 2,570 14,832 — 2,570 14,832 17,402 ( 732 ) 4/9/2019 2016 286 4836 Hickory Hill Road Memphis TN Mainland Properties 1,402 10,769 1,033 1,402 11,802 13,204 ( 1,772 ) 12/23/2014 1984 287 2020 Joe B. Jackson Parkway Murfreesboro TN Mainland Properties 7,500 55,259 154 7,500 55,413 62,913 ( 8,174 ) 1/29/2015 2012 288 1095 South 4800 West Salt Lake City UT Mainland Properties 1,500 6,913 20 1,500 6,933 8,433 ( 1,025 ) 1/29/2015 2012 289 1901 Meadowville Technology Parkway Chester VA Mainland Properties 4,000 67,511 — 4,000 67,511 71,511 ( 9,987 ) 1/29/2015 2012 $ 708,449 $ 1,052,875 $ 47,746 $ 709,099 $ 1,099,971 $ 1,809,070 $ ( 141,406 ) (1) Represents mortgage notes and includes the unamortized balance of debt issuance costs totaling $ 4,421 . Certain of our properties are encumbered as follows: Encumbrance Undepreciated Cost (A) - 186 properties encumbered by one mortgage loan $ 645,579 $ 505,155 (2) Excludes value of real estate intangibles. (3) Depreciation on buildings and improvements is provided for periods ranging up to 40 years and on equipment up to seven years . (4) The total aggregate cost for U.S. federal income tax purposes is approximately $ 1,924,900 . S-10 Table of Contents INDUSTRIAL LOGISTICS PROPERTIES TRUST SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED) December 31, 2020 (dollars in thousands) Analysis of the carrying amount of real estate properties and accumulated depreciation: Real Estate Accumulated Properties Depreciation Balance at December 31, 2017 $ 1,343,602 $ ( 74,614 ) Additions 118,898 ( 18,781 ) Disposals ( 104 ) 104 Balance at December 31, 2018 1,462,396 ( 93,291 ) Additions 873,568 ( 38,177 ) Balance at December 31, 2019 2,335,964 ( 131,468 ) Additions 109,020 ( 43,821 ) Disposals ( 635,914 ) 33,883 Balance at December 31, 2020 $ 1,809,070 $ ( 141,406 ) S-11 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. INDUSTRIAL LOGISTICS PROPERTIES TRUST By: /s/ John G. Murray John G. Murray President and Chief Executive Officer Dated: February 18, 2021 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ John G. Murray Managing Trustee, President and Chief Executive Officer February 18, 2021 John G. Murray /s/ Richard W. Siedel, Jr. Chief Financial Officer and Treasurer (principal February 18, 2021 Richard W. Siedel, Jr. financial officer and principal accounting officer) /s/ Adam D. Portnoy Managing Trustee February 18, 2021 Adam D. Portnoy /s/ Bruce M. Gans, M.D. Independent Trustee February 18, 2021 Bruce M. Gans, M.D. /s/ Lisa Harris Jones Independent Trustee February 18, 2021 Lisa Harris Jones /s/ Joseph L. Morea Independent Trustee February 18, 2021 Joseph L. Morea /s/ Kevin C. Phelan Independent Trustee February 18, 2021 Kevin C. Phelan