What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-02-15 compared with 2021-02-18 · 275 added, 270 removed, 1059 unchanged (34% of the section changed)

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Other Information

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

Directors, Executive Officers and Corporate Governance

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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

Report of Independent Registered Public Accounting Firm

Reports of Independent Registered Public Accounting Firm (PCAOB ID No.

Report of Independent Registered Public Accounting Firm (PCAOB ID No.

Consolidated Balance Sheets as of December 31, 202 1 and 20 20

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Number Description

2.1 Agreement and Plan of Merger, dated as of November 5, 2021, by and among the Company, Monmouth Real Estate Investment Corporation and Maple Delaware Merger Sub LLC.

(Incorporated by reference to the Company’s Current Report on Form 8-K filed on November 9, 2021.)

2.2 Amendment No.

1 to Agreement and Plan of Merger, dated as of February 7, 2022, by and among the Company, Monmouth Real Estate Investment Corporation and Maple Delaware Merger Sub LLC.

(Incorporated by reference to the Company’s Current Report on Form 8-K filed on February 7, 2022.)

3.1 Composite Copy of Amended and Restated Declaration of Trust of the Company, dated as of January 11, 2018, as amended to date.

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4.2 Description of Securities.

(Filed herewith.)

(Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.)

8.1 Opinion of Sullivan & Worcester LLP as to certain tax matters.

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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 Second Amendment to Business Management Agreement, effective as of August 1, 2021, between the Company and The RMR Group LLC.(+) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021.)

10.6 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 18, 2018.)

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10.10 Form of Indemnification Agreement.(+) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.)

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 Summary of Trustee Compensation.(+) (Incorporated by reference to the Company’s Current Report on Form 8-K filed on June 4, 2021.)

10.12 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.

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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 audited the accompanying consolidated balance sheets of Industrial Logistics Properties Trust (the “Company”) as of December 31, 2021 and 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, 2021 and 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, 2021, 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 15, 2022, expressed an unqualified opinion on the Company's internal control over financial reporting.

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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

Investment in Unconsolidated Joint Venture (Valuation) - Refer to Note 3 and 6 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.

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.

The Company holds an equity interest in an unconsolidated investment that is accounted for using the equity method of accounting under the fair value option.

We identified the valuation of this investment as a critical audit matter as the fair value determination of this investment requires management to make significant estimates and assumptions related to the discount rate, exit capitalization rates, holding periods and market rents of the real estate assets underlying this investment.

Each of these assumptions is sensitive to future market or industry conditions.

A high degree of auditor judgment and an increased extent of effort were required to perform audit procedures that evaluated the reasonableness of management's estimates and assumptions.

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.

Our audit procedures related to the valuation of this investment included the following, among others:

• Test design and implementation of controls over valuation of real estate assets underlying this investment.

• Discuss with management the rationale for significant assumptions used in preparing the valuation to assess the reasonableness of such assumptions in light of market or other data available including evidence obtained in other areas of our audit.

• Obtain from management the documentation supporting the significant assumptions used in preparing the valuations to assess the reasonableness of such assumptions and ascertain whether the assumptions used are consistent with those market participants would use to value the real estate assets underlying this investment

We evaluated the Company’s determination of fair value by performing the following:

• With the assistance of our fair value specialists, we evaluated a selection of real estate assets using a risk-based approach for the reasonableness of the (1) valuation methodologies used;

and (2) significant assumptions made, including the exit capitalization rate, discount rates, holding periods and market rent rates applied.

• Testing the mathematical accuracy of the calculation.

/s/ Deloitte & Touche LLP

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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.

We have audited the accompanying consolidated statements of comprehensive income, shareholders' equity and cash flows of Industrial Logistics Properties Trust (the Company) for the year 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 results of its operations and its cash flows for the year ended December 31, 2019, in conformity with U.S.

generally accepted accounting principles.

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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.

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 audits in accordance with the standards of 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 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.

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 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.

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.

/s/ Ernst & Young LLP

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Cash and cash equivalents 29,397 22,834

Restricted cash — 6,135

Rents receivable, including straight line rents of $ 69,172 and $ 62,753 , respectively

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Net income — — — 52,498 — 52,498 — 52,498

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 119,200 1 1,110 — — 1,111 — 1,111

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

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 — — — 52,498 — 52,498 — 52,498

Net income (loss) — — — 82,071 — 82,071 ( 866 ) 81,205

Share grants 139,100 1 2,335 — — 2,336 — 2,336

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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

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Distributions to common shareholders — — — — ( 86,236 ) ( 86,236 ) — ( 86,236 )

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, 2021 65,404,592 $ 654 $ 1,012,224 $ 343,908 $ ( 318,744 ) $ 1,038,042 $ — $ 1,038,042

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Amortization of deferred leasing costs 938 1,357 1,113

Provision for losses on rents receivable — — 1,198

Straight line rental income ( 7,263 ) ( 9,041 ) ( 4,345 )

Gain on early extinguishment of debt — ( 120 ) —

Gain on sale of property ( 23,996 ) — —

Gain on sale of real estate ( 12,054 ) ( 23,996 ) —

Other non-cash expenses 2,328 2,331 1,109

Unconsolidated joint venture distributions 2,640 — —

Equity in earnings of investees ( 40,918 ) ( 529 ) ( 666 )

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Deferred leasing costs ( 4,694 ) ( 2,443 ) ( 1,457 )

Other assets ( 1,068 ) ( 594 ) 3,591

Due from related persons 2,665 ( 3,871 ) ( 114 )

Other assets ( 3,434 ) ( 1,068 ) ( 594 )

Accounts payable and other liabilities 2,525 2,613 3,095

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Real estate improvements ( 4,911 ) ( 5,857 ) ( 17,157 )

Proceeds from sale of properties to joint venture, net 160,506 — —

Proceeds from sale of properties 1,206 10,578 —

Proceeds from sale of interest in joint venture 106,283 — —

Proceeds from sale of joint venture interests 804 106,283 —

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 )

Net cash provided by (used in) investing activities 22,875 ( 4,522 ) ( 893,393 )

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

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CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of common shares, net — — 444,309

Proceeds from issuance of mortgage notes payable — — 1,000,000

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Repurchase of common shares ( 922 ) ( 382 ) ( 253 )

Contributions — — 16,162

Distributions — — ( 9,187 )

Net cash (used in) provided by financing activities ( 126,962 ) ( 121,758 ) 802,035

(Decrease) increase in cash, cash equivalents and restricted cash ( 11,716 ) 24,942 9,608

Increase (Decrease) cash, cash equivalents and restricted cash 6,563 ( 11,716 ) 24,942

Cash, cash equivalents and restricted cash at beginning of period 22,834 34,550 9,608

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(dollars in thousands, except per share data)

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.

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 of December 31, 2021, our portfolio was comprised of 288 wholly owned properties.

The 288 properties consisted of 226 buildings, leasable land parcels and easements containing approximately 16.7 million rentable square feet (all square footage amounts included within this Annual Report on Form 10-K are unaudited) that were primarily industrial lands located on the island of Oahu, HI and 62 buildings containing approximately 17.3 million rentable square feet that were industrial and logistics properties located in 30 other states.

As of December 31, 2021, we also owned a 22 % equity interest in an unconsolidated joint venture that owns 18 properties located in 12 states in the mainland United States containing approximately 11.7 million rentable square feet.

Summary of Significant Accounting Policies

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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.

We record properties at cost.

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.

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.

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If a lease is terminated prior to its stated expiration, we write off the unamortized amounts relating to that lease.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

As of December 31, 2021 and 2020, our acquired real estate leases and assumed real estate lease obligations were as follows:

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Assumed real estate lease obligations, net $ 12,435 $ 14,630

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

As of December 31, 2021, the weighted average amortization periods for capitalized above market lease values, lease origination value and capitalized below market lease values were 10.5 years, 6.2 years, and 11.8 years, respectively.

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

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

Capitalization Policy.

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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 include capitalized brokerage costs and inducements associated with our entering leases.

We amortize deferred leasing costs, which are included in depreciation and amortization expense, and inducements, which are included as a reduction to rental income, each on a straight line basis over the terms of the respective leases.

Legal costs associated with the execution of our leases are expensed as incurred and included in general and administrative expenses in our consolidated statements of comprehensive income.

Deferred leasing costs totaled $ 12,918 and $ 8,116 at December 31, 2021 and 2020, respectively, and accumulated amortization of deferred leasing costs totaled $ 4,035 and $ 3,521 at December 31, 2021 and 2020, respectively.

Future amortization of deferred leasing costs to be recognized during the current terms of our existing leases as of December 31, 2021, are estimated to be $ 1,222 in 2022, $ 1,017 in 2023, $ 953 in 2024, $ 885 in 2025, $ 786 in 2026 and $ 4,020 thereafter.

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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.

As of December 31, 2021 and 2020, we had debt issuance costs for our revolving credit facility totaling $ 6,711 and $ 5,907 , respectively, and accumulated amortization of debt issuance costs for our revolving credit facility were $ 5,907 and $ 4,430 , respectively.

Debt issuance costs, net of accumulated amortization, for our mortgage notes payable are presented as a direct deduction from the associated debt liability in our consolidated balance sheets.

As of December 31, 2021 and 2020, we had debt issuance costs, net of accumulated amortization, of $ 3,876 and $ 4,421 , respectively, for certain of our mortgage notes payable.

Future amortization of debt issuance costs to be recognized with respect to our revolving credit facility and mortgage notes payable as of December 31, 2021 are estimated to be $ 1,351 in 2022, $ 547 in 2023, $ 547 in 2024, $ 547 in 2025, $ 547 in 2026 and $ 1,141 thereafter.

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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.

We previously accounted for our investment in Affiliates Insurance Company, or AIC, until AIC was dissolved on February 13, 2020.

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.

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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).

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.

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

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.

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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.

We have determined that all our leases qualify for the

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

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 Accounting Standards Codification, or ASC, 842, Leases , to the combined component.

Income derived by our leases is recorded in rental income in our consolidated statements of comprehensive income.

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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 have elected to be taxed as a REIT under the United States Internal Revenue Code of 1986, as amended, and, accordingly, we generally are not, and will not be, subject to 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.

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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.

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.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

As of December 31, 2021, our portfolio was comprised of 288 wholly owned properties containing approximately 33,991,000 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, HI, or our Hawaii Properties, and 62 properties containing approximately 17,262,000 rentable square feet of industrial properties located in 30 other states, or our Mainland Properties.

As of December 31, 2021, we also owned a 22 % equity interest in an unconsolidated joint venture which owns 18 properties located in 12 states in the mainland United States totaling approximately 11,726,000 rentable square feet that were 100 % leased.

We operate in one business segment:

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For the years ended December 31, 2021, 2020 and 2019, approximately 50.6 %, 42.2 % and 43.9 %, 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

In addition, subsidiaries of Amazon.com, Inc.

that are tenants at certain of our Mainland Properties accounted for $ 21,440 , $ 38,241 and $ 31,623 of our rental income for the years ended December 31, 2021, 2020 and 2019, respectively.

During the year ended December 31, 2021, we committed $ 10,544 for expenditures related to tenant improvements and leasing costs for leases executed during the period for approximately 3,103,000 square feet.

Committed, but unspent tenant related obligations based on existing leases as of December 31, 2021, were $ 2,224 , of which $ 1,671 is expected to be spent during the next 12 months.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

Joint Venture Investments

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

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Joint Venture Ownership 2021 Properties Location Feet

12 properties in nine states

18 properties in 12 states

22 % $ 143,021 18 Various 11,726,000

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(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.

In the first quarter of 2020, we entered into agreements related to our joint venture for 12 of our properties in the mainland United States with an unrelated third party institutional investor and contributed those 12 properties to our joint venture.

We received an aggregate amount of $ 108,676 , which includes $ 734 of costs associated with the formation of our joint venture from that investor for a 39 % equity interest in our joint venture and we retained the remaining 61 % equity interest in our joint venture.

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 included 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 for the year ended December 31, 2020, which is included in gain on sale of real estate in our consolidated statements of comprehensive income.

After giving effect to the sale in November 2020, 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 such 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 the sale of our equity interests in the joint venture to reduce outstanding borrowings under our revolving credit facility.

See Note 6 for more information regarding the use of the equity method for our joint venture.

We recognized a noncontrolling interest in our consolidated balance sheet of $ 98,375 as of the completion of this transaction in the first quarter of 2020, 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.

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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 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 Financial Accounting Standards Boards, or FASB, ASC.

We concluded that we must consolidate this VIE, and we did so, until we sold an additional 39 % equity interest in our 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.

In December 2021, we sold six recently acquired properties to our existing joint venture for an aggregate price of approximately $ 205,789 .

We received proceeds from the investors, who own an aggregate of 78 % equity interest in the joint venture, for an aggregate amount of $ 160,516 and recognized a net gain on sale of $ 11,114 on this transaction, which is

INDUSTRIAL LOGISTICS PROPERTIES TRUST

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(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)

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.

included in gain on sale of real estate in our consolidated statements of comprehensive income.

We used the $ 160,516 of proceeds from this transaction to reduce amounts outstanding under our $ 750,000 unsecured revolving credit facility.

During the year ended December 31, 2021, we recorded an increase in the fair value of our investment in our joint venture of $ 45,273 as equity in earnings of investees in our consolidated statements of comprehensive income.

In addition, during the year ended December 31, 2021 our joint venture made aggregate cash distributions of $ 2,640 to us.

See Note 6 for more information regarding our joint venture.

2021 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 .

During the year ended December 31, 2021, we acquired four industrial properties and one parcel of developable land containing 1,644,508 rentable square feet for an aggregate purchase price of $ 134,730 , including acquisition related costs of $ 1,030 .

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 Acquired

of Square Purchase and Real Estate Real Estate

Date Market Area Properties Feet Price Land Improvements Leases Lease Obligations

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

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

August 2021 Memphis, TN 3 1,287,004 100,649 5,922 87,600 7,192 ( 65 )

5 1,644,508 $ 134,730 $ 9,732 $ 115,007 $ 10,056 $ ( 65 )

Monmouth Transaction:

In November 2021, we, our wholly owned subsidiary and Monmouth Real Estate Investment Corporation, or Monmouth, entered into an Agreement and Plan of Merger, pursuant to which we have agreed to acquire all of the outstanding shares of Monmouth for $ 21.00 per Monmouth share in cash, in a transaction valued at approximately $ 4,000,000 , including the assumption of existing Monmouth mortgage debt, as well as transaction costs, referred to as the Monmouth Transaction.

The Monmouth Transaction will add 126 new, Class A, single tenant, net leased, e-commerce focused industrial properties containing over 26 million square feet with a weighted average remaining lease term of approximately eight years to our portfolio.

The Monmouth Transaction is expected to close in the first quarter of 2022.

The Monmouth Transaction is subject to the satisfaction of conditions, including the receipt of requisite approval by Monmouth’s stockholders.

We cannot be sure that these conditions will be satisfied.

Accordingly, the Monmouth Transaction may not close when expected or at all, or the terms of the Monmouth Transaction may change.

2020 Acquisitions:

During the year ended December 31, 2020, we acquired two industrial 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

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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.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

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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 .

During the year ended December 31, 2019, we acquired 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:

Number Rentable Buildings Acquired Real Estate Discount

of Square Purchase and Real Estate Lease on Assumed

Acquired Acquired Discount

Number Rentable Buildings Real Real Estate on

of Square Purchase and Estate Lease Assumed

Date Market Area Properties Feet Price Land Improvements Leases Obligations Debt

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30 13,288,180 $ 941,550 $ 77,314 $ 777,839 $ 87,030 $ ( 1,965 ) $ 1,332

2021 Disposition:

As a result of an eminent domain taking in September 2021, we sold a portion of a land parcel located in Rock Hill, South Carolina for $ 1,400 , excluding closing costs, resulting in a net gain on sale or real estate of $ 940 .

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 table below, 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.

Number of Square Gross Gain on Sale of

Date of Sale Properties Location Feet Sale Price (1)

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.

We did not dispose of any properties during the year ended December 31, 2019.

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.

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Such payments totaled $ 38,732 , $ 45,858 and $ 40,898 for the years ended December 31, 2021, 2020 and 2019, respectively, of which tenant reimbursements totaled $ 37,379 , $ 44,878 and $ 38,755 , 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:

2021 $ 169,312

Thereafter 991,913

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.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

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(dollars in thousands, except per share data)

The following operating lease maturity analysis presents the future contractual lease payments to be received by us through 2064 as of December 31, 2021:

2022 $ 168,063

Thereafter 1,031,288

As of December 31, 2021 and 2020, our outstanding indebtedness consisted of the following:

Principal Balance as of Value

December 31, of Collateral

Interest At December 31,

Principal Balance as of of Collateral

December 31, Interest At December 31,

Rate Maturity 2021

Unsecured revolving credit facility (2)

$ 221,000 $ 310,000 1.70 % Dec 2021 $ —

$ 182,000 $ 221,000 1.41 % Jun 2022 $ —

Mortgage notes payable (secured by 186 properties in Hawaii)

650,000 650,000 4.31 % Feb 2029 491,235

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 —

832,000 871,000 $ 491,235

Unamortized debt issuance costs, premiums and discounts ( 4,421 ) ( 9,122 )

Unamortized debt issuance costs ( 3,876 ) ( 4,421 )

$ 828,124 $ 866,579

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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.

(2) The maturity date of our revolving credit facility is June 29, 2022 and we have the option to extend the maturity date for one six month period through December 29, 2022.

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.

The maturity date of our revolving credit facility was December 29, 2021.

In November 2021, we exercised our first option to extend the maturity date of the facility by six months to June 29, 2022.

We have an additional option to extend the maturity date of our revolving credit facility for one six month period, subject to payment of extension fees and satisfaction of other conditions.

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, 2021 and 2020, interest payable on the amount outstanding under our revolving credit facility was LIBOR plus 130 basis points and 155 basis points, respectively.

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

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As of December 31, 2021 and February 11, 2022, we had $ 182,000 outstanding under our revolving credit facility, and $ 568,000 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

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,

INDUSTRIAL LOGISTICS PROPERTIES TRUST

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(dollars in thousands, except per share data)

payments of interest only at a fixed rate of 4.31 % per annum.

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, 2021.

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 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.

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(1) Total debt outstanding as of December 31, 2021, including unamortized debt issuance costs of $ 3,876 , was $ 828,124 .

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

Fair Value of Assets and Liabilities

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(1) Includes unamortized debt issuance costs, premiums and discounts of $ 3,876 and $ 4,421 as of December 31, 2021 and 2020, respectively.

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

The table below presents certain of our assets measured on a recurring basis at fair value categorized by the level of inputs as defined in the fair value hierarchy under GAAP, used in the valuation of each asset:

Quoted Significant

Prices in Other Significant

Active Markets for Observable Unobservable

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Recurring fair value measurements

At December 31, 2021

Investment in unconsolidated joint venture (1)

$ 143,021 $ — $ — $ 143,021

At December 31, 2020

Investment in unconsolidated joint venture $ 60,590 $ — $ — $ 60,590

(1) We own a 22 % equity interest in a joint venture that owns 18 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 significant unobservable inputs used in the fair value are discount rates of between 5.25 % and 6.50 %, exit capitalization rates of between 4.50 % and 5.50 %, direct capitalization rates of between 4.00 % and 4.50 %, 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 3 for further information regarding our joint venture .

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

Shareholders’ Equity

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During the years ended December 31, 2021, 2020 and 2019, we awarded to our officers and other employees of RMR LLC annual share awards of 118,800 , 108,600 and 104,200 of our common shares, respectively, valued at $ 3,086 , $ 2,460 and $ 2,260 , 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).

In accordance with our Trustee compensation arrangements, we awarded each of our six Trustees 3,500 of our common shares in 2021 with an aggregate value of $ 538 ($ 90 per Trustee) as part of their annual compensation.

During the year ended December 31, 2020, we awarded each of our then seven Trustees 3,500 of our common shares with an aggregate value of $ 460 ($ 66 per Trustee) as part of their annual compensation.

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.

During 2019, we awarded each of our then five Trustees 3,000 of our common shares with an aggregate value of $ 281 ($ 56 per Trustee) as part of their annual compensation.

The values of the share awards were based upon the closing price of our common shares trading on The Nasdaq Stock Market LLC, or Nasdaq, on the dates of awards.

The common shares awarded to our Trustees vested immediately.

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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:

A summary of shares awarded, vested and forfeited under the terms of the 2018 Plan for the years ended December 31, 2021, 2020 and 2019 is as follows:

December 31, 2021 December 31, 2020 December 31, 2019

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Unvested at end of year 192,380 $ 24.15 162,200 $ 22.37 108,200 $ 22.08

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

The 192,380 unvested shares as of December 31, 2021 are scheduled to vest as follows:

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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.

During the years ended December 31, 2021, 2020 and 2019, we repurchased an aggregate of 35,596 , 18,060 and 11,963 of our common shares, respectively, at weighted average prices of $ 25.91 , $ 21.16 and $ 21.19 per common share, respectively, from certain of our Trustees and certain 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

Distributions:

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Annual Per Characterization of Distribution

Share Total Return of Ordinary

Year Distribution Distribution Capital Income

Share Total Return of Ordinary Capital

Year Distribution Distribution Capital Income Gain

2021 $ 1.32 $ 86,236 — % 93.2 % 6.8 %

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2019 $ 1.32 $ 85,937 21.8 % 78.2 % — %

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.

On January 13, 2022, we declared a regular quarterly distribution of $ 0.33 per common share, or approximately $ 21,600 , to shareholders of record on January 24, 2022.

We expect to pay this distribution to our shareholders on or about February 17, 2022.

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):

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:

Year Ended December 31,

2021 2020 2019

Net income attributable to common shareholders $ 119,682 $ 82,071 $ 52,498

Income attributable to unvested participating securities ( 307 ) ( 154 ) ( 48 )

Net income attributable to common shareholders used in calculating earnings per share $ 119,375 $ 81,917 $ 52,450

Denominators:

Weighted average common shares for basic earnings per share 65,169 65,104 65,049

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Weighted average common shares for diluted earnings per share 65,211 65,114 65,055

Net income attributable to common shareholders per common share - basic $ 1.83 $ 1.26 $ 0.81

Net income attributable to common shareholders per common share - diluted $ 1.83 $ 1.26 $ 0.81

Business and Property Management Agreements with RMR LLC

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The annual base management fee payable to RMR LLC by us for each applicable period is equal to the lesser of:

INDUSTRIAL LOGISTICS PROPERTIES TRUST

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(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 ;

◦ 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 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 ;

◦ 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 .

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– 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.

Effective as of August 1, 2021, we and RMR LLC amended our business management agreement to replace the benchmark index used in the calculation of incentive management fees.

Pursuant to the amendment, for periods beginning on and after August 1, 2021, the MSCI U.S.

REIT/Industrial REIT Index replaced the discontinued SNL U.S.

REIT Industrial Index and will be used to calculate benchmark returns per share for purposes of determining any incentive management fee payable by us to RMR LLC.

For periods prior to August 1, 2021, the SNL U.S.

REIT Industrial Index will continue to be used.

Accordingly, the calculation of incentive management fees for the next two measurement periods will continue to use the SNL U.S.

REIT Industrial Index in calculating the benchmark returns for periods through July 31, 2021.

This change of index was due to S&P Global ceasing to publish the SNL U.S.

REIT Industrial Index.

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

INDUSTRIAL LOGISTICS PROPERTIES TRUST

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(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).

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.

◦ 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 in any year, 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 in any year, determined on a cumulative basis (i.e., between 200 basis points and 500 basis points per year multiplied by the number of years in the measurement period and below the applicable market index).

◦ The incentive management fee is subject to a cap.

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◦ 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.

Pursuant to our business management agreement with RMR LLC, we recognized net business management fees of $ 10,562 , $ 12,983 and $ 11,897 for the years ended December 31, 2021, 2020 and 2019.

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.

See Note 3 for further information regarding this joint venture and the fee payments to RMR LLC with respect to this 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, 2021, 2020 and 2019.

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.

We did no t incur any incentive management fee pursuant to our business management agreement for the years ended December 31, 2021, 2020 and 2019.

• 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.

Pursuant to our property management agreement with RMR LLC, we recognized aggregate property management and construction supervision fees of $ 6,606 , $ 7,472 and $ 7,548 for the years ended December 31, 2021, 2020 and 2019, respectively.

For the years ended December 31, 2021, 2020 and 2019, $ 6,395 , $ 7,267 and $ 6,697 , 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 $ 211 , $ 205 and $ 851 , respectively, were capitalized as building improvements in our consolidated balance sheets.

The amounts capitalized are being depreciated over the estimated useful lives of the related capital assets.

• 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

We are generally not responsible for payment of RMR

INDUSTRIAL LOGISTICS PROPERTIES TRUST

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(dollars in thousands, except per share data)

$ 2,908 for the period from January 17, 2018 through December 31, 2018.

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 $ 4,786 , $ 4,948 and $ 4,269 for these expenses and costs for the years ended December 31, 2021, 2020 and 2019, respectively.

These amounts are included in other operating expenses and general and administrative expenses, as applicable, for these periods.

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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.

RMR LLC provides management services to 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.

Starting in November 2020, our joint venture is no longer our consolidated subsidiary and, as a result, we are no

INDUSTRIAL LOGISTICS PROPERTIES TRUST

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(dollars in thousands, except per share data)

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.

Related Person Transactions

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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.

Adam Portnoy serves as chair of the boards 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.

Our Manager, RMR LLC .

We have two agreements with RMR LLC to provide management services to us.

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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.

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.

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 paid aggregate annual premiums, including taxes and fees, of $ 266 in connection with this insurance program for the policy year ended 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, an additional liquidating distribution of approximately $ 287 in June 2020 and a final liquidating distribution of $ 12 in December 2021.

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, 2021 or 2020.

As of December 31, 2020, our investment in AIC had a carrying value of $ 12 .

This amount is included in other assets in our consolidated balance sheets.

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.

Our joint venture paid these amounts due to us during the year ended December 31, 2021.

This amount is presented as due from related persons in our consolidated balance sheet.

In December 2021, we sold six additional recently acquired properties to our joint venture.

We received proceeds of approximately $ 160,516 from the other equity investors in connection with this sale.

We and the other equity investors maintained our respective percentage equity interests in our joint venture following this transaction.

As of December 31, 2021, we owed $ 225 to our joint venture for rents that we collected on the behalf of our joint venture.

This amount is presented as due to related persons in our consolidated balance sheet.

We paid these amounts to our joint venture in January 2022.

See Note 3 for further information regarding our joint venture.

TravelCenters of America Inc.

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 .

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

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 3 for further information regarding this acquisition.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

REAL ESTATE AND ACCUMULATED DEPRECIATION

3 unchanged sentences

Company Capitalized Close of Period (4)

Buildings and Subsequent to Buildings and Accumulated Date Construction

Buildings Buildings

and Subsequent to and Accumulated Date Construction

Property Location State Property Type Encumbrances (1)

3 unchanged sentences

1 4501 Industrial Drive Fort Smith AR Mainland Properties $ 900 $ 3,485 $ — $ 901 $ 3,484 $ 4,385 $ ( 603 ) 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

2 955 Aeroplaza Drive Colorado Springs CO Mainland Properties 800 7,412 39 800 7,451 8,251 ( 1,292 ) 1/29/2015 2012

25 unchanged sentences

29 120B Mokauea Street Honolulu HI Hawaii Properties (A) 1,953 — — 1,953 — 1,953 — 12/5/2003 1970

30 125 Puuhale Road Honolulu HI Hawaii Properties (A) 1,630 — — 1,630 — 1,630 — 12/5/2003 —

Initial Cost to Costs Gross Amount Carried at

Company Capitalized Close of Period (4)

Buildings and Subsequent to Buildings and Accumulated Date Construction

Buildings Buildings

and Subsequent to and Accumulated Date Construction

Property Location State Property Type Encumbrances (1)

2 unchanged sentences

Acquired Date

31 125 Puuhale Road Honolulu HI Hawaii Properties (A) 1,630 — — 1,630 — 1,630 — 12/5/2003 —

31 125B Puuhale Road Honolulu HI Hawaii Properties (A) 2,815 — — 2,815 — 2,815 — 12/5/2003 —

26 unchanged sentences

58 2139 Kaliawa Street Honolulu HI Hawaii Properties (A) 885 — — 885 — 885 — 12/5/2003 —

59 214 Sand Island Access Road Honolulu HI Hawaii Properties (A) 1,864 — 593 1,864 593 2,457 ( 127 ) 12/5/2003 1981

Initial Cost to Costs Gross Amount Carried at

Company Capitalized Close of Period (4)

Buildings and Subsequent to Buildings and Accumulated Date Construction

Buildings Buildings

and Subsequent to and Accumulated Date Construction

Property Location State Property Type Encumbrances (1)

2 unchanged sentences

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

60 2140 Kaliawa Street Honolulu HI Hawaii Properties (A) 931 — — 931 — 931 — 12/5/2003 —

28 unchanged sentences

89 2819 Mokumoa Street - B Honolulu HI Hawaii Properties (A) 1,816 — — 1,816 — 1,816 — 12/5/2003 —

Initial Cost to Costs Gross Amount Carried at

Company Capitalized Close of Period (4)

Buildings and Subsequent to Buildings and Accumulated Date Construction

90 2819 Pukoloa Street Honolulu HI Hawaii Properties (A) 2,090 — 34 2,090 34 2,124 ( 11 ) 12/5/2003 —

Initial Cost to Gross Amount Carried at

Company Costs Close of Period (4)

Buildings Capitalized Buildings Original

and Subsequent to and Accumulated Date Construction

Property Location State Property Type Encumbrances (1)

2 unchanged sentences

Acquired Date

91 2819 Pukoloa Street Honolulu HI Hawaii Properties (A) 2,090 — 34 2,090 34 2,124 ( 10 ) 12/5/2003 —

91 2821 Kilihau Street Honolulu HI Hawaii Properties (A) 287 — — 287 — 287 — 12/5/2003 —

28 unchanged sentences

120 2858 Kaihikapu Street Honolulu HI Hawaii Properties (A) 1,801 — — 1,801 — 1,801 — 12/5/2003 —

121 2861 Mokumoa Street Honolulu HI Hawaii Properties (A) 3,867 — — 3,867 — 3,867 — 12/5/2003 —

Initial Cost to Costs Gross Amount Carried at

Company Capitalized Close of Period (4)

Buildings and Subsequent to Buildings and Accumulated Date Construction

Buildings Buildings

and Subsequent to and Accumulated Date Construction

Property Location State Property Type Encumbrances (1)

2 unchanged sentences

Acquired Date

122 2861 Mokumoa Street Honolulu HI Hawaii Properties (A) 3,867 — — 3,867 — 3,867 — 12/5/2003 —

122 2864 Awaawaloa Street Honolulu HI Hawaii Properties (A) 1,836 — 7 1,836 7 1,843 ( 6 ) 12/5/2003 —

28 unchanged sentences

151 669 Ahua Street Honolulu HI Hawaii Properties (A) 1,801 14 62 1,801 76 1,877 ( 29 ) 12/5/2003 —

152 673 Ahua Street Honolulu HI Hawaii Properties (A) 1,801 — — 1,801 — 1,801 — 12/5/2003 —

Initial Cost to Costs Gross Amount Carried at

Company Capitalized Close of Period (4)

Buildings and Subsequent to Buildings and Accumulated Date Construction

Buildings Buildings

and Subsequent to and Accumulated Date Construction

Property Location State Property Type Encumbrances (1)

2 unchanged sentences

Acquired Date

153 673 Ahua Street Honolulu HI Hawaii Properties (A) 1,801 — — 1,801 — 1,801 — 12/5/2003 —

153 675 Mapunapuna Street Honolulu HI Hawaii Properties (A) 1,081 — — 1,081 — 1,081 — 12/5/2003 —

28 unchanged sentences

182 850 Ahua Street Honolulu HI Hawaii Properties (A) 2,682 2 — 2,682 2 2,684 ( 2 ) 12/5/2003 —

183 852 Mapunapuna Street Honolulu HI Hawaii Properties (A) 1,801 — — 1,801 — 1,801 — 12/5/2003 —

Initial Cost to Costs Gross Amount Carried at

Company Capitalized Close of Period (4)

Buildings and Subsequent to Buildings and Accumulated Date Construction

Buildings Buildings

and Subsequent to and Accumulated Date Construction

Property Location State Property Type Encumbrances (1)

2 unchanged sentences

Acquired Date

184 852 Mapunapuna Street Honolulu HI Hawaii Properties (A) 1,801 — — 1,801 — 1,801 — 12/5/2003 —

184 855 Ahua Street Honolulu HI Hawaii Properties (A) 1,834 — — 1,834 — 1,834 — 12/5/2003 —

28 unchanged sentences

213 91-120 Kauhi Kapolei HI Hawaii Properties 567 — 411 567 411 978 — 6/15/2005 1990

214 91-210 Olai Kapolei HI Hawaii Properties 706 — — 706 — 706 — 6/15/2005 —

Initial Cost to Costs Gross Amount Carried at

Company Capitalized Close of Period (4)

Buildings and Subsequent to Buildings and Accumulated Date Construction

Buildings Buildings

and Subsequent to and Accumulated Date Construction

Property Location State Property Type Encumbrances (1)

3 unchanged sentences

215 91-218 Olai Kapolei HI Hawaii Properties 1,622 — 62 1,622 62 1,684 ( 30 ) 6/15/2005 —

216 91-218 Olai Kapolei HI Hawaii Properties 1,622 — 62 1,622 62 1,684 ( 26 ) 6/15/2005 —

216 91-220 Kalaeloa Kapolei HI Hawaii Properties 242 1,457 141 242 1,598 1,840 ( 635 ) 6/15/2005 1991

28 unchanged sentences

245 6825 West County Road 400 North Greenfield IN Mainland Properties 918 14,300 924 918 15,224 16,142 ( 1,262 ) 2/14/2019 2008

246 900 Commerce Parkway West Drive Greenwood IN Mainland Properties 1,483 16,253 — 1,483 16,253 17,736 ( 1,338 ) 2/14/2019 2007

Initial Cost to Costs Gross Amount Carried at

Company Capitalized Close of Period (4)

Buildings and Subsequent to Buildings and Accumulated Date Construction

Buildings Buildings

and Subsequent to and Accumulated Date Construction

Property Location State Property Type Encumbrances (1)

2 unchanged sentences

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

247 9347 E Pendleton Pike Lawrence IN Mainland Properties 3,763 34,877 1 3,763 34,878 38,641 ( 2,870 ) 2/14/2019 2009

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271/272/273 1580, 1590 & 1600 Williams Road Columbus OH Mainland Properties 2,060 29,143 — 2,060 29,143 31,203 ( 2,650 ) 4/9/2019 1992

274 7303 Rickenbacker Parkway Trust Columbus OH Mainland Properties 1,491 27,407 — 1,491 27,407 28,898 ( 413 ) 6/21/2021 2020

275 5300 Centerpoint Parkway Groveport OH Mainland Properties 2,700 29,863 68 2,700 29,931 32,631 ( 5,173 ) 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 ( 1,543 ) 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

277 301 Commerce Drive South Point OH Mainland Properties 600 4,530 — 600 4,530 5,130 ( 783 ) 1/29/2015 2013

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279 1990 Hood Road Greer SC Mainland Properties 400 10,702 — 400 10,702 11,102 ( 834 ) 4/9/2019 2015

280 996 Paragon Way Rock Hill SC Mainland Properties 2,334 35,920 ( 1 ) 2,334 35,919 38,253 ( 6,212 ) 1/29/2015 2014

Initial Cost to Costs Gross Amount Carried at

Company Capitalized Close of Period (4)

Buildings and Subsequent to Buildings and Accumulated Date Construction

Buildings Buildings

and Subsequent to and Accumulated Date Construction

Property Location State Property Type Encumbrances (1)

2 unchanged sentences

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

281 700 Marine Drive Rock Hill SC Mainland Properties 820 8,381 669 820 9,050 9,870 ( 829 ) 4/9/2019 1986

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Jackson Parkway Murfreesboro TN Mainland Properties 7,500 55,259 299 7,500 55,558 63,058 ( 9,575 ) 1/29/2015 2012

286 2500, 2526, & 2614 Big Town Boulevard Mesquite TX Mainland Properties 2,319 — 681 2,319 681 3,000 — 5/7/2021 —

287 1095 South 4800 West Salt Lake City UT Mainland Properties 1,500 6,913 20 1,500 6,933 8,433 ( 1,200 ) 1/29/2015 2012

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Additions 873,568 ( 38,177 )

Disposals ( 104 ) 104

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 )

20 unchanged sentences

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-K

Item 9A. Controls and Procedures