What changed in this filing

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Item 1. Financial Statements

2021-07-28 compared with 2021-04-26 · 140 added, 78 removed, 259 unchanged (46% of the section changed)

3 unchanged sentences

(dollars in thousands, except per share data)

March 31, December 31,

June 30, December 31,

Real estate properties:

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100,000,000 shares authorized;

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

65,314,355 and 65,301,088 shares issued and outstanding, respectively

Additional paid in capital 1,011,636 1,010,819

7 unchanged sentences

(amounts in thousands, except per share data)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Rental income $ 54,180 $ 65,110 $ 108,397 $ 129,388

2 unchanged sentences

Depreciation and amortization 11,830 18,525 24,508 36,815

Acquisition and certain other transaction related costs 646 — 646 —

General and administrative 4,234 4,846 7,990 9,677

3 unchanged sentences

( 8,643 ) ( 13,205 ) ( 17,384 ) ( 27,724 )

Gain on early extinguishment of debt — 120 — 120

Income before income tax expense and equity in earnings of investees 16,997 14,683 33,816 27,440

12 unchanged sentences

(dollars in thousands)

Number of Additional Cumulative

Common Common Paid In Cumulative Common Total

Shares Shares Capital Net Income Distributions Equity

Balance at December 31, 2020 65,301,088 $ 653 $ 1,010,819 $ 224,226 $ ( 232,508 ) $ 1,003,190

Net income (loss) — — — 19,337 — 19,337

Share grants — — 239 — — 239

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

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

Net income (loss) — — — 18,831 — 18,831

Share grants 21,000 — 780 — — 780

Share repurchases ( 7,733 ) — ( 202 ) — — ( 202 )

Distributions to common shareholders — — — — ( 21,549 ) ( 21,549 )

Balance at June 30, 2021 65,314,355 $ 653 $ 1,011,636 $ 262,394 $ ( 275,607 ) $ 999,076

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)

Total Equity Total Equity

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Share grants 6,000 — 326 — — 326 — 326

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

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

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

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

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

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

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

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

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

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

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

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(dollars in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

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Straight line rental income ( 3,995 ) ( 4,063 )

Gain on early extinguishment of debt — ( 120 )

Other non-cash expenses 1,019 980

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Real estate improvements ( 1,351 ) ( 3,089 )

Proceeds from sale of joint venture 804 —

Distributions in excess of earnings from Affiliates Insurance Company — 287

Net cash used in investing activities ( 34,628 ) ( 74,430 )

2 unchanged sentences

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

Repayment of mortgage note payable — ( 48,750 )

Distributions to common shareholders ( 43,099 ) ( 43,021 )

Proceeds from noncontrolling interest, net — 107,640

Distributions to noncontrolling interest — ( 1,898 )

Repurchase of common shares ( 202 ) ( 31 )

7 unchanged sentences

(dollars in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

SUPPLEMENTAL DISCLOSURES:

Interest paid $ 16,184 $ 26,914

Income taxes paid $ 167 $ 199

NON-CASH INVESTING ACTIVITIES:

Real estate improvements accrued, not paid $ 174 $ 1,137

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 March 31,

As of June 30,

Cash and cash equivalents $ 30,512 $ 33,256

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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.

As of June 30, 2021, our portfolio was comprised of 291 wholly owned properties containing approximately 35,201,000 rentable square feet, including 226 buildings, leasable land parcels and easements containing approximately 16,729,000 rentable square feet of primarily industrial lands located on the island of Oahu, Hawaii, or our Hawaii Properties, and 65 properties containing approximately 18,472,000 rentable square feet of industrial properties located in 31 other states, or our Mainland Properties.

As of June 30, 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 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 .

For the three months ended June 30, 2021 and 2020, approximately 51.3 % and 41.3 %, respectively, of our rental income was from our Hawaii Properties.

For the six months ended June 30, 2021 and 2020, approximately 50.8 % and 41.2 %, respectively, of our rental income was from our Hawaii Properties.

In addition, subsidiaries of Amazon.com, Inc., which are tenants at certain of our Mainland Properties, accounted for $ 5,348 , or 9.9 %, and $ 10,399 , or 16.0 %, of our rental income for the three months ended June 30, 2021 and 2020, respectively, and $ 10,886 , or 10.0 %, and $ 20,061 , or 15.5 %, of our rental income for the six months ended June 30, 2021 and 2020, respectively.

During the six months ended June 30, 2021, we acquired one parcel of developable land and one property containing 357,504 rentable square feet for an aggregate purchase price of $ 34,081 , including acquisition related costs of $ 381 .

These acquisitions were accounted for as asset acquisitions.

We allocated the purchase prices for these acquisitions 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

May 2021 Dallas, TX 1 — $ 2,319 $ 2,319 $ — $ —

June 2021 Columbus, OH 1 357,504 31,762 1,491 27,407 2,864

2 357,504 $ 34,081 $ 3,810 $ 27,407 $ 2,864

During the six months ended June 30, 2021, we committed $ 4,547 for expenditures related to leasing related costs for leases executed during the period for approximately 1,184,000 square feet.

Committed but unspent tenant related obligations based on existing leases as of June 30, 2021 were $ 1,730 .

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 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.

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 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 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.

As of both June 30, 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

INDUSTRIAL LOGISTICS PROPERTIES TRUST

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(dollars in thousands, except per share data)

uses, and, because of the indeterminable timing of the remediation, these amounts have not been discounted to present value.

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

Joint Venture Activities

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

As of June 30, 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

ILPT Investment at June 30, Number of Square

Joint Venture Ownership 2021 Properties Location Feet

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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.

During the six months ended June 30, 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.

During the six months ended June 30, 2020, we incurred transaction costs of $ 626 in connection with the formation of our joint venture.

We recognized a 39 % noncontrolling interest in our condensed consolidated financial statements for the three and six months ended June 30, 2020.

The portion of our joint venture's net loss not attributable to us, or $ 264 and $ 416 for the three and six months ended June 30, 2020, respectively, is reported as noncontrolling interest in our condensed consolidated statements of comprehensive income.

During the three and six months ended June 30, 2020, our joint venture made aggregate cash distributions of $ 1,898 to the first joint venture investor, which were reflected as a decrease in total equity attributable to noncontrolling interest in our condensed consolidated balance sheets.

In November 2020, we sold an additional 39 % equity interest from our then 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.

During the three and six months ended June 30, 2021, we recorded an increase in the fair value of our investment in our joint venture of $ 1,876 and $ 4,457 , respectively, as equity in earnings of investees in our condensed consolidated statements of comprehensive income.

In addition, during the three and six months ended June 30, 2021, our joint venture made aggregate cash distributions of $ 660 and $ 1,320 , respectively, to us.

See Note 5 for more information regarding our joint venture.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

We are a lessor of industrial and logistics properties.

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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 $ 9,872 and

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

$ 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.

Such payments totaled $ 9,383 and $ 11,640 for the three months ended June 30, 2021 and 2020, respectively, of which tenant reimbursements totaled $ 9,138 and $ 11,395 , respectively, and $ 19,255 and $ 23,160 for the six months ended June 30, 2021 and 2020, respectively, of which tenant reimbursements totaled $ 18,765 and $ 22,670 , respectively.

We increased rental income to record revenue on a straight line basis by $ 1,951 and $ 2,096 for the three months ended June 30, 2021 and 2020, respectively, and $ 3,995 and $ 4,063 for the six months ended June 30, 2021 and 2020, respectively.

Rents receivable included $ 66,748 and $ 62,753 of straight line rents at June 30, 2021 and December 31, 2020, respectively.

During the year ended December 31, 2020, certain of our tenants requested, and we granted, 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:

As of June 30, 2021 and December 31, 2020, deferred payments totaling $ 1,383 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 or six months ended June 30, 2021 or 2020.

As of June 30, 2021, our outstanding indebtedness consisted of the following:

Principal Balance as of of Collateral

March 31, December 31, Interest At March 31,

June 30, December 31, Interest At June 30,

Rate Maturity 2021

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(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.

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.

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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 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.

As of June 30, 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 June 30, 2021 and December 31, 2020, the interest rate payable on borrowings under our revolving credit facility was 1.40 % and 1.70 %, respectively.

The weighted average interest rate for borrowings under our revolving credit facility was 1.41 % and 2.04 % for the three months ended June 30, 2021 and 2020, respectively, and 1.49 % and 2.80 % for the six months ended June 30, 2021 and June 30, 2020, respectively.

As of June 30, 2021 and July 26, 2021, we had $ 244,000 outstanding under our revolving credit facility, and $ 506,000 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 March 31, 2021.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

We believe we were in compliance with the terms and conditions of the covenants under our credit agreement at June 30, 2021.

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 three and six months ended June 30, 2020 to write off unamortized debt premiums.

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 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

At June 30, 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 June 30, 2021 At December 31, 2020

Carrying Estimated Carrying Estimated

1 unchanged sentence

Mortgage notes payable $ 645,851 $ 719,023 $ 645,579 $ 730,119

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

(1) Includes unamortized debt issuance costs of $ 4,149 and $ 4,421 as of June 30, 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:

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

The table below presents certain of our assets measured on a recurring basis at fair value at June 30, 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

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Shareholders’ Equity

Common Share Awards

On June 2, 2021, in accordance with our Trustee compensation arrangements, we awarded to each of our six Trustees 3,500 of our common shares, valued at $ 25.62 per share, the closing price of our common shares on The Nasdaq Stock Market LLC, or Nasdaq, on that day.

Share Repurchases

During the six months ended June 30, 2021, we purchased an aggregate of 7,733 of our common shares valued at a weighted average share price of $ 26.14 per share, from certain 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 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.

During the six months ended June 30, 2021, we declared and paid regular quarterly distributions to common shareholders as follows:

Declaration Date Record Date Payment Date Distribution Per Share Total Distribution

January 14, 2021 January 25, 2021 February 18, 2021 $ 0.33 $ 21,550

April 15, 2021 April 26, 2021 May 20, 2021 0.33 21,549

$ 0.66 $ 43,099

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

We expect to pay this distribution to our shareholders on or about August 19, 2021.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

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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 March 31,

We calculate basic earnings per common share by dividing net income attributable to common shareholders by the weighted average number of our common shares outstanding during the period.

We calculate diluted earnings per share using the more dilutive of the two class method or the treasury stock method.

Unvested common share awards and other potentially dilutive common shares, and the related impact on earnings, are considered when calculating diluted earnings per share.

The calculation of basic and diluted earnings per share is as follows:

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Net income attributable to common shareholders $ 18,831 $ 14,821 $ 38,168 $ 27,667

Income attributable to unvested participating securities ( 47 ) ( 24 ) ( 95 ) ( 45 )

Net income attributable to common shareholder used in calculating earnings per share $ 18,784 $ 14,797 $ 38,073 $ 27,622

Denominators:

Weighted average common shares for basic earnings per share 65,146 65,089 65,142 65,082

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Weighted average common shares for diluted earnings per share 65,207 65,091 65,192 65,087

Net income attributable to common shareholders per common share - basic $ 0.29 $ 0.23 $ 0.58 $ 0.42

Net income attributable to common shareholders per common share - diluted $ 0.29 $ 0.23 $ 0.58 $ 0.42

Business and Property Management Agreements with RMR LLC

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

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.

Pursuant to our business management agreement with RMR LLC, we recognized net business management fees of $ 2,580 and $ 5,124 for the three and six months ended June 30, 2021, respectively, and $ 3,277 and $ 6,584 for the three and six months ended June 30, 2020, respectively.

T he net business management fees we recognized for the three and six months ended June 30, 2020 include $ 347 and $ 476 , respectively, of management fees paid to RMR LLC for those periods 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;

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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.

Based on our common share total return, as defined in our business management agreement, as of June 30, 2021 and 2020, no incentive fees are included in the net business management fees we recognized for the three or six months ended June 30, 2021 or 2020.

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 $ 1,594 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.

Pursuant to our property management agreement with RMR LLC, we recognized aggregate property management and construction supervision fees of $ 1,591 and $ 3,185 for the three and six months ended June 30, 2021, respectively, and $ 1,860 and $ 3,783 for the three and six months ended June 30, 2020, respectively.

Of these amounts, for the three and six months ended June 30, 2021, $ 1,571 and $ 3,153 , respectively, were expensed to other operating expenses in our condensed consolidated financial statements and $ 20 and $ 32 were capitalized as building improvements in our condensed consolidated balance sheets and are being depreciated over the estimated useful lives of the related capital assets.

For the three and six months ended June 30, 2020, $ 1,813 and $ 3,673 , respectively, were expensed to other operating expenses in our condensed

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

consolidated financial statements and $ 47 and $ 110 , respectively, were capitalized as building improvements in our condensed consolidated balance sheets and are being depreciated over the estimated useful lives of the related capital assets.

We are generally responsible for all our operating expenses, including certain expenses incurred or arranged by RMR LLC on our behalf.

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

We reimbursed RMR LLC $ 1,125 and $ 2,267 for these expenses and costs for the three and six months ended June 30, 2021, respectively, and $ 1,217 and $ 2,416 for the three and six months ended June 30, 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.

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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

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

subsidiary of RMR Inc.

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.

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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.

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 in the joint venture to a second third party institutional investor in November 2020.

Our joint venture paid these amounts due to us during the six months ended June 30, 2021.

In May 2021, we acquired a property located in the Dallas, Texas market from TravelCenters of America Inc., or TA, for a purchase price of $ 2,319 , including acquisition related costs of $ 119 .

RMR LLC provides management services to TA and Mr.

Portnoy serves as the chair of the board of directors and as a managing director of TA.

See Note 2 for further information regarding this acquisition.

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