What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-04-26 compared with 2020-10-28 · 126 added, 217 removed, 211 unchanged (62% of the section changed)

3 unchanged sentences

(dollars in thousands, except per share data)

September 30, December 31,

March 31, December 31,

Real estate properties:

4 unchanged sentences

Total real estate properties, net 1,660,279 1,667,664

Assets of property held for sale 10,136 —

Investment in unconsolidated joint venture 62,511 60,590

Acquired real estate leases, net 78,394 83,644

Cash and cash equivalents 26,147 22,834

Restricted cash 12,806 6,135

Rents receivable, including straight line rents of $ 64,797 and $ 62,753 , respectively

5 unchanged sentences

Total assets $ 1,909,019 $ 1,915,745

LIABILITIES AND EQUITY

LIABILITIES AND SHAREHOLDERS' EQUITY

Revolving credit facility $ 217,000 $ 221,000

Mortgage notes payable, net 645,715 645,579

Liabilities of property held for sale 227 —

Assumed real estate lease obligations, net 14,053 14,630

5 unchanged sentences

Commitments and contingencies

Equity attributable to common shareholders:

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

65,301,088 shares issued and outstanding for both periods presented

Additional paid in capital 1,011,058 1,010,819

1 unchanged sentence

Cumulative common distributions ( 254,058 ) ( 232,508 )

Total equity attributable to common shareholders 983,744 995,690

Noncontrolling interest:

Total equity attributable to noncontrolling interest 93,679 —

Total equity 1,077,423 995,690

Total liabilities and equity $ 2,498,994 $ 2,454,901

Total shareholders' equity 1,001,216 1,003,190

Total liabilities and shareholders' equity $ 1,909,019 $ 1,915,745

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2 unchanged sentences

(amounts in thousands, except per share data)

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

Rental income $ 54,217 $ 64,278

2 unchanged sentences

Depreciation and amortization 12,678 18,290

Acquisition and certain other transaction related costs 178 — 178 —

General and administrative 3,756 4,831

3 unchanged sentences

( 8,741 ) ( 14,519 )

Gain on early extinguishment of debt — — 120 —

Income before income tax expense and equity in earnings of an investee 13,827 10,902 41,267 40,338

Income before income tax expense and equity in earnings of investees 16,819 12,757

Income tax expense ( 63 ) ( 63 )

Equity in earnings of an investee — 83 — 617

Equity in earnings of investees 2,581 —

Net income 19,337 12,694

1 unchanged sentence

Net income attributable to common shareholders $ 19,337 $ 12,846

Other comprehensive income:

Equity in unrealized gains of an investee — ( 46 ) — 91

Other comprehensive income — ( 46 ) — 91

Comprehensive income attributable to common shareholders $ 14,089 $ 10,876 $ 41,756 $ 40,915

Weighted average common shares outstanding - basic 65,139 65,075

13 unchanged sentences

Share grants — — 239 — — 239 — 239

Share repurchases ( 951 ) — ( 18 ) — — ( 18 ) — ( 18 )

Distributions to common shareholders — — — — ( 21,550 ) ( 21,550 ) — ( 21,550 )

Contributions from noncontrolling interest — — 6,972 — — 6,972 100,668 107,640

Balance at March 31, 2021 65,301,088 $ 653 $ 1,011,058 $ 243,563 $ ( 254,058 ) $ 1,001,216 $ — $ 1,001,216

Net income (loss) — — — 14,821 — 14,821 ( 264 ) 14,557

Share grants 24,500 — 654 — — 654 — 654

Share repurchases ( 613 ) — ( 13 ) — — ( 13 ) — ( 13 )

Distributions to common shareholders — — — — ( 21,511 ) ( 21,511 ) — ( 21,511 )

Distributions to noncontrolling interest — — — — — — ( 1,898 ) ( 1,898 )

Balance at June 30, 2020 65,209,564 652 1,007,223 169,822 ( 189,440 ) 988,257 98,354 1,086,611

Balance at December 31, 2019 65,180,628 $ 652 $ 999,302 $ 142,155 $ ( 146,419 ) $ 995,690 $ — $ 995,690

Net income (loss) — — — 12,846 — 12,846 ( 152 ) 12,694

1 unchanged sentence

Share repurchases ( 951 ) — ( 18 ) — — ( 18 ) — ( 18 )

Share forfeitures ( 580 ) — ( 3 ) — — ( 3 ) — ( 3 )

Distributions to common shareholders — — — — ( 21,510 ) ( 21,510 ) — ( 21,510 )

Contributions from noncontrolling interest — — 6,972 — — 6,972 100,668 107,640

Distributions to noncontrolling interest — — — — — — ( 2,107 ) ( 2,107 )

Balance at September 30, 2020 65,301,088 $ 653 $ 1,010,139 $ 183,911 $ ( 210,959 ) $ 983,744 $ 93,679 $ 1,077,423

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(dollars in thousands)

Number of Additional Other Cumulative

Common Common Paid In Cumulative Comprehensive Common Total

Shares Shares Capital Net Income Income Distributions Equity

Balance at December 31, 2018 65,074,791 $ 651 $ 998,447 $ 89,657 $ — $ ( 60,482 ) $ 1,028,273

Net income — — — 16,786 — — 16,786

Equity in unrealized gains of investee — — — — 66 — 66

Share grants — — 73 — — — 73

Distributions to common shareholders — — — — — ( 21,474 ) ( 21,474 )

Balance at March 31, 2020 65,185,677 $ 652 $ 1,006,582 $ 155,001 $ ( 167,929 ) $ 994,306 $ 100,516 $ 1,094,822

Net income — — — 13,116 — — 13,116

Equity in unrealized gains of investee — — — — 71 — 71

Share grants 15,000 — 345 — — — 345

Share repurchases ( 1,362 ) — ( 28 ) — — — ( 28 )

Share forfeitures ( 240 ) — ( 1 ) — — — ( 1 )

Distributions to common shareholders — — — — — ( 21,475 ) ( 21,475 )

Balance at June 30, 2019 65,088,189 651 998,836 119,559 137 ( 103,431 ) 1,015,752

Net income — — — 10,922 — — 10,922

Equity in unrealized losses of investee — — — — ( 46 ) — ( 46 )

Share grants 104,200 1 521 — — — 522

Share repurchases ( 10,476 ) — ( 223 ) — — — ( 223 )

Distributions to common shareholders — — — — — ( 21,479 ) ( 21,479 )

Balance at September 30, 2019 65,181,913 $ 652 $ 999,134 $ 130,481 $ 91 $ ( 124,910 ) $ 1,005,448

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2 unchanged sentences

(dollars in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

6 unchanged sentences

Straight line rental income ( 2,044 ) ( 1,967 )

Gain on early extinguishment of debt ( 120 ) —

Other non-cash expenses 239 326

Equity in earnings of an investee — ( 617 )

Unconsolidated joint venture distributions 660 —

Equity in earnings of investees ( 2,581 ) —

Change in assets and liabilities:

11 unchanged sentences

Real estate improvements ( 789 ) ( 2,307 )

Distributions in excess of earnings from Affiliates Insurance Company 287 —

Net cash used in investing activities ( 789 ) ( 73,935 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of mortgage notes payable — 650,000

Borrowings under revolving credit facility 9,000 125,000

Repayments of revolving credit facility ( 13,000 ) ( 170,000 )

Repayment of mortgage note payable ( 48,750 ) —

Payment of debt issuance costs — ( 5,517 )

Distributions to common shareholders ( 21,550 ) ( 21,510 )

Proceeds from noncontrolling interest, net — 107,640

Distributions to noncontrolling interest ( 4,005 ) —

Repurchase of common shares — ( 18 )

Net cash provided by financing activities 265 816,804

Increase in cash, cash equivalents and restricted cash 17,361 13,728

Net cash (used in) provided by financing activities ( 25,550 ) 41,112

Increase (decrease) in cash, cash equivalents and restricted cash 3,313 ( 3,378 )

Cash, cash equivalents and restricted cash at beginning of period 22,834 34,550

4 unchanged sentences

(dollars in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

SUPPLEMENTAL DISCLOSURES:

Interest paid $ 8,240 $ 14,143

Income taxes paid $ 199 $ 164

NON-CASH INVESTING ACTIVITIES:

Real estate acquired by assumption of mortgage note payable $ — $ ( 56,980 )

NON-CASH FINANCING ACTIVITIES:

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 condensed consolidated balance sheets to the amounts shown in the condensed consolidated statements of cash flows:

As of September 30,

As of March 31,

Cash and cash equivalents $ 26,147 $ 19,870

6 unchanged sentences

Basis of Presentation

The accompanying condensed consolidated financial statements of Industrial Logistics Properties Trust and its consolidated subsidiaries, or we, us or our, are unaudited.

The accompanying condensed consolidated financial statements of Industrial Logistics Properties Trust and its consolidated subsidiaries, or the Company, ILPT, we, us or our, are unaudited.

Certain information and disclosures required by U.S.

5 unchanged sentences

Our operating results for interim periods are not necessarily indicative of the results that may be expected for the full year.

Reclassifications have been made to the prior year’s condensed consolidated financial statements to conform to the current year’s presentation.

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts.

1 unchanged sentence

Significant estimates in the condensed consolidated financial statements include purchase price allocations, useful lives of fixed assets, impairments of real estate and related intangibles.

In February and March 2020, we entered into agreements related to a joint venture with an institutional investor for 12 of our properties located in the mainland United States.

The investor owns a 39 % equity interest in the joint venture, and we own the remaining 61 % equity interest in the joint venture.

We have determined that this joint venture is a variable interest entity, or VIE, as defined under the Consolidation Topic of the Financial Accounting Standards Board, or FASB, Accounting Standards Codification.

We concluded that we must consolidate this VIE because we are the entity with the power to direct the activities that most significantly impact the VIE’s economic performance and we have the obligation to absorb losses of, and the right to receive benefits from, the VIE that could be significant to the VIE, and therefore are the primary beneficiary of the VIE.

The assets of this VIE were $ 655,618 as of September 30, 2020 and consist primarily of the real estate owned by the joint venture.

The liabilities of this VIE were $ 408,906 as of September 30, 2020 and consist primarily of mortgage debts secured by the properties owned by the joint venture.

The joint venture investor's interest in this consolidated entity is reflected as noncontrolling interest in our condensed consolidated financial statements.

See Note 11 for further information about this joint venture.

Recent Accounting Pronouncements

In June 2016, the FASB issued Accounting Standards Update No.

2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments , which requires that entities use a new forward looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses.

The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount.

We adopted this standard which was effective as of January 1, 2020 using the modified retrospective approach.

The implementation of this standard did not have a material impact in our condensed consolidated financial statements.

Real Estate Properties

As of September 30, 2020, we owned 301 properties with a total of approximately 43,759,000 rentable square feet, including 226 buildings, leasable land parcels and easements with a total of approximately 16,756,000 rentable square feet of primarily industrial lands located on the island of Oahu, HI, or our Hawaii Properties, and 75 properties with a total of approximately 27,003,000 rentable square feet of industrial properties located in 30 other states, or our Mainland Properties, including 12 properties with approximately 9,227,000 rentable square feet owned by a joint venture in which we own a 61 % equity interest and one property with approximately 308,000 rentable square feet which is classified as held for sale.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

Real Estate Investments

As of March 31, 2021, our portfolio was comprised of 289 wholly owned properties containing 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, Hawaii, 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 March 31, 2021, we also owned a 22 % equity interest in an unconsolidated joint venture which owns 12 properties located in nine states totaling approximately 9,227,000 rentable square feet.

We operate in one business segment:

ownership and leasing of properties that include industrial and logistics buildings and leased industrial lands.

For the three months ended September 30, 2020 and 2019, approximately 40.7 % and 40.5 %, respectively, of our rental income was from our Hawaii Properties.

For the nine months ended September 30, 2020 and 2019, approximately 41.0 % and 45.2 %, respectively, of our rental income was from our Hawaii Properties.

In addition, a subsidiary of Amazon.com, Inc., which is a tenant at certain of our Mainland Properties, accounted for $ 10,288 , or 15.8 %, and $ 8,992 , or 14.8 %, of our rental income for the three months ended September 30, 2020 and 2019, respectively, and $ 30,349 , or 15.6 %, and $ 22,557 , or 13.5 %, of our rental income for the nine months ended September 30, 2020 and 2019, respectively.

During the nine months ended September 30, 2020, we completed the acquisition of an industrial property containing 820,384 rentable square feet for a purchase price of $ 71,628 , including acquisition related costs of $ 147 .

This acquisition was accounted for as an asset acquisition.

We allocated the purchase price for this acquisition based on the estimated fair value of the acquired assets 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

1 820,384 $ 71,628 $ 11,214 $ 54,676 $ 5,738

In September 2020, we entered into an agreement to sell one property located in Virginia containing approximately 308,000 rentable square feet for a sales price of $ 11,000 , excluding closing costs.

This sale is expected to occur during the fourth quarter of 2020.

However, this sale is subject to conditions;

accordingly, we cannot be sure that we will complete this sale, that this sale will not be delayed or that the terms will not change.

We have classified this property as held for sale in our condensed consolidated balance sheets as of September 30, 2020.

During the nine months ended September 30, 2020, we committed $ 1,614 for expenditures related to tenant improvements and leasing costs for leases executed during the period for approximately 849,000 square feet.

Committed but unspent tenant related obligations based on existing leases as of September 30, 2020 were $ 499 .

For the three months ended March 31, 2021 and 2020, approximately 50.2 % and 41.1 %, respectively, of our rental income was from our Hawaii Properties.

In addition, a subsidiary of Amazon.com, Inc., which is a tenant at certain of our Mainland Properties, accounted for $ 5,538 , or 10.2 %, and $ 9,662 , or 15.0 %, of our rental income for the three months ended March 31, 2021 and 2020, respectively.

During the three months ended March 31, 2021, we committed $ 3,256 for expenditures related to leasing related costs for leases executed during the period for approximately 620,000 square feet.

Committed but unspent tenant related obligations based on existing leases as of March 31, 2021 were $ 1,704 .

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.

As of both September 30, 2020 and December 31, 2019, accrued environmental remediation costs of $ 6,940 were included in accounts payable and other liabilities in our condensed consolidated balance sheets.

however, we do not have plans to change the use of those lands.

As of both March 31, 2021 and December 31, 2020, accrued environmental remediation costs of $ 6,940 were included in accounts payable and other liabilities in our condensed 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.

2 unchanged sentences

Charges for environmental remediation costs, if any, are included in other operating expenses in our condensed consolidated statements of comprehensive income.

In March 2021, we entered into an agreement to acquire a newly built property located near the Rickenbacker intermodal terminal and airport in Columbus, Ohio containing approximately 358,000 rentable square feet and net leased to a single tenant for a purchase price of $ 31,500 , excluding acquisition related costs.

This acquisition is expected to close during the second quarter of 2021.

However, this acquisition is subject to conditions;

accordingly, we cannot be sure that we will complete this acquisition, that this acquisition will not be delayed or that the terms will not change.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

Joint Venture Activities

As of March 31, 2021, we have an equity investment in a joint venture that consists of the following:

ILPT Carrying Value of

ILPT Investment at March 31, Number of Square

Joint Venture Ownership 2021 Properties Location Feet

12 properties

22 % $ 62,511 12 Nine states

The following table provides a summary of the mortgage debts of our joint venture:

Principal Balance

Joint Venture Coupon Rate (1)

Maturity Date 2021 (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;

none of the debt is recourse to us.

During the three months ended March 31, 2020, we entered into agreements related to a joint venture for 12 of our properties in the mainland United States, or our joint venture, with an Asian institutional investor, and contributed those 12 properties to our joint venture.

We received an aggregate of $ 108,266 from that investor for a 39 % equity interest in our joint venture and we retained the remaining 61 % equity interest in our joint venture.

During the three months ended March 31, 2020, we incurred transaction costs of $ 626 in connection with the formation of this joint venture.

We recognized a 39 % noncontrolling interest in our condensed consolidated financial statements for the three months ended March 31, 2020.

The portion of our joint venture's net loss not attributable to us, or $ 152 for the three months ended March 31, 2020, is reported as noncontrolling interest in our condensed consolidated statements of comprehensive income.

No distributions were made by our joint venture during the three months ended March 31, 2020.

In November 2020, we sold an additional 39 % equity interest from our remaining 61 % equity interest to a second unrelated third party institutional investor and retained a 22 % equity interest in our joint venture.

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.

During the three months ended March 31, 2021, we recorded the change in the fair value of our investment in our joint venture of $ 2,581 as equity in earnings of investees in our condensed consolidated statements of comprehensive income.

In addition, during the three months ended March 31, 2021, our joint venture made aggregate cash distributions of $ 660 to us.

See Note 5 for more information regarding our joint venture.

We are a lessor of industrial and logistics properties.

5 unchanged sentences

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 $ 11,943 and $ 10,915 for the three months ended September 30, 2020 and 2019, respectively, of which tenant reimbursements totaled

Such payments totaled $ 9,872 and

INDUSTRIAL LOGISTICS PROPERTIES TRUST

1 unchanged sentence

(dollars in thousands, except per share data)

$ 11,698 and $ 10,915 , respectively, and $ 35,103 and $ 28,679 for the nine months ended September 30, 2020 and 2019, respectively, of which tenant reimbursements totaled $ 34,368 and $ 27,517 , respectively.

We increased rental income to record revenue on a straight line basis by $ 2,120 and $ 979 for the three months ended September 30, 2020 and 2019, respectively, and $ 6,183 and $ 3,960 for the nine months ended September 30, 2020 and 2019, respectively.

Certain of our tenants have requested relief from their obligations to pay rent due to us in response to the current economic conditions resulting from the COVID-19 pandemic.

As of October 23, 2020, we granted requests to certain of our tenants to defer aggregate rent payments of $ 3,578 .

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 the original lease.

Because the deferred rents referenced above will be repaid, the cash flows from the respective leases are substantially the same as before the rent deferrals.

These deferred amounts did not impact our operating results for the three and nine months ended September 30, 2020 and as of September 30, 2020, we recognized $ 2,847 in our accounts receivable related to these deferred amounts.

As of September 30, 2020, our outstanding indebtedness consisted of the following:

$ 11,520 for the three months ended March 31, 2021 and 2020, respectively, of which tenant reimbursements totaled $ 9,627 and $ 11,275 , respectively.

We increased rental income to record revenue on a straight line basis by $ 2,044 and $ 1,967 for the three months ended March 31, 2021 and 2020, respectively.

During the year ended December 31, 2020, certain of our tenants requested relief from their obligations to pay rent due to us in response to the economic conditions resulting from the COVID-19 pandemic.

In most cases, the tenants granted deferrals were obligated to pay the deferred rents in 12 equal monthly installments beginning in September 2020.

As of March 31, 2021 and December 31, 2020, deferred payments totaling $ 1,725 and $ 2,630 , respectively, are included in rents receivable in our condensed consolidated balance sheets.

These deferred amounts did not impact our operating results for the three months ended March 31, 2021.

As of March 31, 2021, our outstanding indebtedness consisted of the following:

Principal Balance as of of Collateral

September 30, December 31, Interest At September 30,

March 31, December 31, Interest At March 31,

Rate Maturity 2021

1 unchanged sentence

$ 217,000 $ 221,000 1.41 % Dec 2021 $ —

Mortgage note payable (secured by one property in Florida) (3)

56,980 56,980 4.22 % Oct 2023 104,173

Mortgage note payable (secured by 186 properties in Hawaii)

Mortgage notes payable (secured by 186 properties in Hawaii)

650,000 650,000 4.31 % Feb 2029 491,336

Mortgage note payable (secured by 11 Mainland Properties) (3)

350,000 350,000 3.33 % Nov 2029 490,109

Mortgage note payable (secured by one property in Virginia)

— 48,750 N/A N/A N/A

867,000 871,000 $ 491,336

Unamortized debt issuance costs, premiums and discounts ( 8,459 ) ( 9,122 )

Unamortized debt issuance costs ( 4,285 ) ( 4,421 )

$ 862,715 $ 866,579

2 unchanged sentences

(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 are owned by a joint venture in which we own a 61 % equity interest.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

We have a $ 750,000 unsecured revolving credit facility that is available for our general business purposes, including acquisitions.

5 unchanged sentences

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 September 30, 2020, interest payable on the amount outstanding under our revolving credit facility was LIBOR plus 140 basis points and our commitment fee was 25 basis points.

As of September 30, 2020 and December 31, 2019, the interest rate payable on borrowings under our revolving credit facility was 1.56 % and 3.26 %, respectively.

The weighted average interest rate for borrowings under our revolving credit facility was 1.57 % and 3.73 % for the three months ended September 30, 2020 and 2019, respectively, and 2.51 % and 3.75 % for the nine months ended September 30, 2020 and 2019, respectively.

As of September 30, 2020 and October 26, 2020, we had $ 320,000 and $ 293,000 , respectively, outstanding under our revolving credit facility, and $ 430,000 and $ 457,000 , respectively, available to borrow under our revolving credit facility.

As of March 31, 2021, interest payable on the amount outstanding under our revolving credit facility was LIBOR plus 130 basis points and our commitment fee was 25 basis points.

As of March 31, 2021 and December 31, 2020, the interest rate payable on borrowings under our revolving credit facility was 1.41 % and 1.70 %, respectively.

The weighted average interest rate for borrowings under our revolving credit facility was 1.57 % and 3.23 % for the three months ended March 31, 2021 and 2020, respectively.

As of March 31, 2021 and April 22, 2021, we had $ 217,000 outstanding under our revolving credit facility, and $ 533,000 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 The RMR Group LLC, or 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 September 30, 2020.

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 nine months ended September 30, 2020 to write off unamortized debt premiums.

We believe we were in compliance with the terms and conditions of the covenants under our credit agreement at March 31, 2021.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

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, rents collected in advance, security deposits and amounts due from or to related persons.

At September 30, 2020 and December 31, 2019, the fair value of our financial instruments approximated their carrying values in our condensed consolidated financial statements, due to their short term nature or floating interest rates, except as follows:

At September 30, 2020 At December 31, 2019

At March 31, 2021 and December 31, 2020, the fair value of our financial instruments approximated their carrying values in our condensed consolidated financial statements, due to their short term nature or floating interest rates, except as follows:

At March 31, 2021 At December 31, 2020

Carrying Estimated Carrying Estimated

1 unchanged sentence

Mortgage notes payable $ 645,715 $ 706,152 $ 645,579 $ 730,119

(1) Includes unamortized debt issuance costs, premiums and discounts of $ 8,459 and $ 9,122 as of September 30, 2020 and December 31, 2019, respectively.

(1) Includes unamortized debt issuance costs of $ 4,285 and $ 4,421 as of March 31, 2021 and December 31, 2020, respectively.

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 March 31, 2021 , 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)

$ 62,511 $ — $ — $ 62,511

(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 condensed 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 of between 4.8 % and 7.3 %, exit capitalization rates of between 4.4 % and 6.8 %, holding periods of approximately 10 years 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 2 for further information regarding our investment in this joint venture.

Shareholders’ Equity

Common Share Awards:

On February 21, 2020, in connection with the election of two of our Trustees, we awarded to each such Trustee 3,000 of our common shares, valued at $ 23.54 per share, the closing price of our common shares on The Nasdaq Stock Market LLC, or Nasdaq, on that day.

Distributions:

During the three months ended March 31, 2021 , we declared and paid a regular quarterly distribution to common shareholders as follows:

Record Date Payment Date Distribution Per Share Total Distribution

January 25, 2021 February 18, 2021 $ 0.33 $ 21,550

On April 15, 2021, we declared a regular quarterly distribution of $ 0.33 per common share, or approximately $ 21,550 , to shareholders of record on April 26, 2021.

We expect to pay this distribution to our shareholders on or about May 20, 2021.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

1 unchanged sentence

(dollars in thousands, except per share data)

On May 28, 2020, in accordance with our Trustee compensation arrangements, we awarded to each of our then seven Trustees 3,500 of our common shares, valued at $ 18.77 per share, the closing price of our common shares on Nasdaq on that day.

On September 17, 2020, we awarded under our equity compensation plan an aggregate of 108,600 of our common shares, valued at $ 22.65 per share, the closing price of our common shares on Nasdaq on that day, to our officers and certain other employees of RMR LLC.

Common Share Purchases:

During the nine months ended September 30, 2020, we purchased our common shares from our officers and certain former and current 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, valued at the closing price of our common shares on Nasdaq on the purchase dates, as follows:

Date Purchased Number of Shares Price per Share

1/9/2020 420 $ 22.01

3/13/2020 531 $ 17.75

6/30/2020 613 $ 20.55

9/21/2020 16,496 $ 21.27

Distributions:

During the nine months ended September 30, 2020 , we declared and paid a regular quarterly distribution to common shareholders as follows:

Record Date Payment Date Distribution Per Share Total Distribution

January 27, 2020

February 20, 2020

$ 0.33 $ 21,510

April 16, 2020

$ 0.33 $ 21,511

July 27, 2020 August 20, 2020 $ 0.33 $ 21,519

On October 15, 2020, we declared a regular quarterly distribution of $ 0.33 per common share, or approximately $ 21,550 , to shareholders of record on October 26, 2020.

We expect to pay this distribution on or about November 19, 2020.

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):

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

Weighted average common shares for basic earnings per share 65,139 65,075

8 unchanged sentences

and (2) a property management agreement, which relates to our property level operations.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

Pursuant to our business management agreement with RMR LLC, we recognized net business management fees of $ 3,410 and $ 9,994 for the three and nine months ended September 30, 2020, respectively, and $ 3,291 and $ 8,576 for the three and nine months ended September 30, 2019, respectively.

T he net business management fees we recognized for the three and nine months ended September 30, 2020 include $ 347 and $ 823 , respectively, of management fees related to our subsidiary level management agreement with RMR LLC entered in connection with our joint venture arrangement, which arrangement is further described in Note 11.

Based on our common share total return, as defined in our business management agreement, as of September 30, 2020 and 2019, no incentive fees are included in the net business management fees we recognized for the three or nine months ended September 30, 2020 or 2019.

The actual amount of annual incentive fees for 2020, if any, will be based on our common share total return, as defined in our business management agreement, for the period from January 12, 2018 to December 31, 2020 and will be payable in 2021.

Pursuant to our business management agreement with RMR LLC, we recognized net business management fees of $ 2,544 and $ 3,307 for the three months ended March 31, 2021 and 2020, respectively.

T he net business management fees we recognized for the three months ended March 31, 2020 include $ 129 of management fees paid to RMR LLC for that period by our joint venture we then owned a majority interest in and whose operating results we reported on a consolidated basis.

Beginning in November 2020, our ownership in our joint venture was reduced to a minority interest;

as a result, we ceased at that time to consolidate our joint venture’s operating results and, since then, we do not include the management fees it pays to RMR LLC in the management fees we pay to RMR LLC.

Our joint venture is further described in Notes 2 and 9.

Based on our common share total return, as defined in our business management agreement, as of March 31, 2021 and 2020, no incentive fees are included in the net business management fees we recognized for the three months ended March 31, 2021 or 2020.

The actual amount of annual incentive fees for 2021, if any, will be based on our common share total return, as defined in our business management agreement, for the three year period ending December 31, 2021, and will be payable in 2022.

We did no t incur any incentive fee payable to RMR LLC for the year ended December 31, 2020.

We include business management fees in general and administrative expenses in our condensed consolidated statements of comprehensive income.

Pursuant to our property management agreement with RMR LLC, we recognized aggregate property management and construction supervision fees of $ 1,914 and $ 5,697 for the three and nine months ended September 30, 2020, respectively, and $ 2,098 and $ 5,367 for the three and nine months ended September 30, 2019, respectively.

These amounts are included in other operating expenses or have been capitalized, as appropriate, in our condensed consolidated financial statements.

Pursuant to our property management agreement with RMR LLC, we recognized aggregate property management and construction supervision fees of $ 1,594 and $ 1,923 for the three months ended March 31, 2021 and 2020, respectively.

Of these amounts, for the three months ended March 31, 2021 and 2020, $ 1,582 and $ 1,860 , respectively, were expensed to other operating expenses in our condensed consolidated statements of comprehensive income and $ 12 and $ 63 , respectively, were capitalized as building improvements in our condensed consolidated balance sheets.

We are generally responsible for all 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 applicable 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, or as otherwise agreed.

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, or as otherwise agreed.

Our property level operating expenses are generally incorporated into the rents charged to our tenants, including certain payroll and related costs incurred by RMR LLC.

We reimbursed RMR LLC $ 1,328 and $ 3,744 for these expenses and costs for the three and nine months ended September 30, 2020, respectively, and $ 1,203 and $ 3,132 for the three and nine months ended September 30, 2019, respectively.

We reimbursed RMR LLC $ 1,141 and $ 1,199 for these expenses and costs for the three months ended March 31, 2021 and 2020, respectively.

These amounts are included in other operating expenses and general and administrative expenses, as applicable, in our condensed consolidated statements of comprehensive income.

2 unchanged sentences

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.

RMR LLC is a majority owned

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

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 of RMR LLC, and each of our other officers is also 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.

2 unchanged sentences

Murray and certain of our other officers, serve as managing trustees, managing directors or officers of certain of these companies.

See Note 7 for information relating to the awards of our common shares we made in September 2020 to our officers and certain other employees of RMR LLC and common shares we purchased in 2020 from our officers and certain former and current 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.

We include amounts recognized as expense for awards of our common shares to our officers and RMR LLC employees in general and administrative expenses in our condensed consolidated statements of comprehensive income.

Our Manager, RMR LLC .

1 unchanged sentence

See Note 8 for further information regarding our management agreements with RMR LLC.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

Office Properties Income Trust, or 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 previously 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.

Until its dissolution on February 13, 2020, we, ABP Trust and five other companies to which RMR LLC provides management services owned Affiliates Insurance Company, or AIC, an Indiana insurance company, in equal amounts.

Certain of our Trustees and certain trustees or directors of the other AIC shareholders served on the board of directors of AIC, until its dissolution.

We and the other AIC shareholders historically participated in a combined property insurance program arranged and insured or reinsured in part by AIC.

The policies under that program expired on June 30, 2019, and we and the other AIC shareholders elected not to renew the AIC property insurance program;

we have instead purchased standalone property insurance coverage with unrelated third party insurance providers.

As of September 30, 2020 and December 31, 2019, our investment in AIC had a carrying value of $ 11 and $ 298 , respectively.

These amounts are included in other assets in our condensed consolidated balance sheets.

In June 2020, we received an additional liquidating distribution of approximately $ 287 from AIC in connection with its dissolution.

We did no t recognize any income related to our investment in AIC for the three and nine months ended September 30, 2020, respectively, and recognized $ 83 and $ 617 related to our investment in AIC for the three and nine months ended September 30, 2019, respectively, which amounts are presented as equity in earnings of an investee in our condensed consolidated statements of comprehensive income.

Our other comprehensive income included our proportionate share of unrealized gains on securities, if any, which were owned by AIC, related to our investment in AIC.

For further information about these and other such relationships and certain other related person transactions, see our 2020 Annual Report.

Noncontrolling Interest

In February and March 2020, we entered into agreements related to a joint venture for 12 of our Mainland Properties with an Asian institutional investor.

We contributed to the joint venture 11 of these properties in February 2020 and the remaining property in March 2020.

We received from the investor $ 108,676 in aggregate for a 39 % equity interest in the joint venture, and we retained the remaining 61 % equity interest.

The joint venture assumed $ 406,980 of then existing mortgage debts on the properties we contributed.

We incurred transaction costs of $ 734 in connection with the formation of this joint venture.

We recognized a noncontrolling interest in our condensed consolidated balance sheets 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 the 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 condensed consolidated balance sheets.

The portion of the joint venture's net loss not attributable to us, or $ 275 and $ 691 for the three and nine months ended September 30, 2020, respectively, is reported as noncontrolling interest in our condensed consolidated statements of comprehensive income.

During the three and nine months ended September 30, 2020, the joint venture made aggregate cash distributions of $ 2,107 and $ 4,005 , respectively, to the other joint venture investor, which are reflected as a decrease in total equity attributable to noncontrolling interest in our condensed consolidated balance sheets.

As of September 30, 2020, the joint venture held real estate assets with an aggregate net book value of $ 655,618 , including restricted cash of $ 12,806 , and had liabilities of $ 408,906 .

Our Joint Venture .

As of March 31, 2021 and December 31, 2020, our joint venture owed to us $ 1,409 and $ 2,665 , respectively, for post-closing adjustments relating to our sale of some of our equity interests to a second third party institutional investor in November 2020.

These amounts are presented as due from related persons in our condensed consolidated balance sheets.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements