What changed in this filing

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Item 1. Financial Statements

2022-07-26 compared with 2022-04-27 · 176 added, 121 removed, 469 unchanged (39% of the section changed)

3 unchanged sentences

(dollars in thousands, except per share data)

March 31, December 31,

June 30, December 31,

Real estate properties:

4 unchanged sentences

Total real estate properties, net 4,915,172 1,581,343

Assets of properties held for sale 731,964 —

Investment in unconsolidated joint venture 143,716 143,021

10 unchanged sentences

Mortgage notes payable, net 3,030,585 646,124

Liabilities of properties held for sale 10,516 —

Assumed real estate lease obligations, net 24,759 12,435

13 unchanged sentences

Noncontrolling interest 581,346 —

Total equity attributable to noncontrolling interest 589,719 —

Total equity 1,434,934 1,038,042

4 unchanged sentences

(amounts in thousands, except per share data)

Three Months Ended March 31,

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

2022 2021 2022 2021

Rental income $ 107,222 $ 54,180 $ 178,597 $ 108,397

2 unchanged sentences

Depreciation and amortization 42,699 11,830 65,577 24,508

Acquisition and certain other transaction costs — 646 — 646

General and administrative 9,709 4,234 15,786 7,990

Loss on impairment of real estate 100,747 — 100,747 —

Total expenses 173,483 28,540 218,646 57,197

Realized gain on sale of equity securities 1,232 —

Unrealized gain on equity securities 2,460 —

Dividend income 478 —

Interest and other income 354 — 832 —

Interest expense (including net amortization of debt issuance costs, premiums and discounts of $ 34,448 , $ 506 , $ 54,769 and $ 1,011 , respectively)

( 77,548 ) ( 8,643 ) ( 118,547 ) ( 17,384 )

Loss on sale of real estate ( 10 ) — ( 10 ) —

Loss on equity securities ( 9,450 ) — ( 5,758 ) —

Loss on early extinguishment of debt — — ( 828 ) —

Income (loss) before income tax expense and equity in earnings of investees ( 11,445 ) 16,819

(Loss) income before income tax expense and equity in earnings of investees ( 152,915 ) 16,997 ( 164,360 ) 33,816

Income tax expense ( 16 ) ( 42 ) ( 85 ) ( 105 )

29 unchanged sentences

Balance at March 31, 2022 65,403,859 $ 654 $ 1,012,622 $ 337,394 $ 3,908 $ ( 340,328 ) $ 1,014,250 $ 589,719 $ 1,603,969

Net (loss) income — — — ( 143,539 ) — — ( 143,539 ) ( 7,782 ) ( 151,321 )

Share grants 24,500 — 800 — — — 800 — 800

Share forfeitures ( 900 ) — ( 4 ) — — — ( 4 ) — ( 4 )

Net current period other comprehensive income — — — — 3,664 — 3,664 774 4,438

Distributions to noncontrolling interest — — — — — — — ( 1,365 ) ( 1,365 )

Distributions to common shareholders — — — — — ( 21,583 ) ( 21,583 ) — ( 21,583 )

Balance at June 30, 2022 65,427,459 $ 654 $ 1,013,418 $ 193,855 $ 7,572 $ ( 361,911 ) $ 853,588 $ 581,346 $ 1,434,934

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

INDUSTRIAL LOGISTICS PROPERTIES TRUST

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(dollars in thousands)

Number of Additional Cumulative

Common Common Paid In Cumulative Common Total

Shares Shares Capital Net Income Distributions Equity

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

Net income — — — 19,337 — — 19,337 — 19,337

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

Share grants — — 239 — — 239

1 unchanged sentence

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

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

Share grants 21,000 — 780 — — 780

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

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

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

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

2 unchanged sentences

(dollars in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

2 unchanged sentences

Depreciation 43,375 15,257

Loss on impairment of real estate 100,747 —

Net amortization of debt issuance costs, premiums and discounts 54,769 1,011

1 unchanged sentence

Amortization of deferred leasing costs 735 402

Unrealized gain on equity securities ( 2,460 ) —

Realized gain on sale of equity securities ( 1,232 ) —

Loss on equity securities 5,758 —

Straight line rental income ( 4,376 ) ( 3,995 )

17 unchanged sentences

Proceeds from sale of marketable securities 140,792 —

Proceeds from sale of joint venture — 804

Net cash used in investing activities ( 3,416,022 ) ( 34,628 )

8 unchanged sentences

Proceeds from noncontrolling interest, net 587,440 —

Net cash (used in) provided by financing activities 3,777,878 ( 25,550 )

Repurchase of common shares ( 7 ) ( 202 )

Distributions to noncontrolling interest ( 1,365 ) —

Net cash provided by (used in) financing activities 3,742,638 ( 20,301 )

Increase in cash, cash equivalents and restricted cash 407,547 7,678

5 unchanged sentences

(dollars in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

SUPPLEMENTAL DISCLOSURES:

1 unchanged sentence

Income taxes paid $ 195 $ 167

Interest capitalized $ 15 $ —

NON-CASH INVESTING ACTIVITIES:

3 unchanged sentences

Assumption of mortgage notes payable $ ( 323,432 ) $ —

Increase in deferred financing fees $ 14,537 $ —

SUPPLEMENTAL DISCLOSURE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH:

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets to the amounts shown in the condensed consolidated statements of cash flows:

As of March 31,

As of June 30,

Cash and cash equivalents $ 291,866 $ 30,512

16 unchanged sentences

On February 25, 2022, we acquired Monmouth Real Estate Investment Corporation, or MNR, pursuant to the merger of MNR with and into one of our wholly owned subsidiaries, or the Merger, as further described below.

In connection with the Merger, we entered into a new joint venture arrangement for 95 of the acquired MNR properties, including two committed, but not yet completed, property acquisitions, located in the mainland United States, in which we retained a 61 % equity interest.

In connection with the Merger, we entered into a new joint venture arrangement for 95 of the acquired MNR properties, including two then committed, but not yet then completed, property acquisitions, located in the mainland United States, in which we retained a 61 % equity interest.

We have determined that this joint venture is not a variable interest entity, or VIE, as defined under the Consolidation Topic of the Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, and we evaluated such entity under the voting model and concluded we should consolidate the entity.

6 unchanged sentences

Real Estate Investments

As of March 31, 2022, our portfolio was comprised of 412 consolidated properties containing approximately 59,736,000 rentable square feet, including 226 buildings, leasable land parcels and easements containing approximately 16,729,000 rentable square feet of primarily industrial lands located on the island of Oahu, Hawaii, or our Hawaii Properties, and 186 properties containing approximately 43,007,000 rentable square feet of industrial properties located in 38 other states, or our Mainland Properties, which includes 93 properties owned by a consolidated joint venture arrangement in which we own a 61 % equity interest.

As of March 31, 2022, we also owned a 22 % equity interest in an unconsolidated joint venture which owns 18 properties located in 12 states totaling approximately 11,726,000 rentable square feet.

As of June 30, 2022, our portfolio was comprised of 412 consolidated properties containing approximately 59,736,000 rentable square feet, including 226 buildings, leasable land parcels and easements containing approximately 16,729,000 rentable square feet of primarily industrial lands located on the island of Oahu, Hawaii, or our Hawaii Properties, and 186 properties containing approximately 43,007,000 rentable square feet of industrial properties located in 38 other states, or our Mainland Properties, which includes 93 properties owned by a consolidated joint venture arrangement in which we own a 61 % equity interest.

As of June 30, 2022, we also owned a 22 % equity interest in an unconsolidated joint venture which owns 18 properties located in 12 states totaling approximately 11,726,000 rentable square feet.

We operate in one business segment:

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

For the three months ended March 31, 2022 and 2021, approximately 37.4 % and 50.2 %, respectively, of our rental income was from our Hawaii Properties.

In addition, we have a concentration of Mainland Properties leased to FedEx Corporation and certain of its subsidiaries, or FDX, which, as of March 31, 2022, consisted of approximately 21.6 % of our rentable square feet located in 34 states with a weighted average remaining lease term of 7.5 years and accounted for $ 13,468 , or 18.9 %, and $ 2,751 , or 5.1 %, of our rental income for the three months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022, the only other tenants that leased over 5% of our total rentable square footage were subsidiaries of Amazon.com, Inc., which accounted for $ 5,615 , or 7.9 %, and $ 5,538 , or 10.2 %, of our rental income for the three months ended March 31, 2022 and 2021, respectively.

For the three months ended June 30, 2022 and 2021, approximately 29.8 % and 51.3 %, respectively, of our rental income was from our Hawaii Properties.

For the six months ended June 30, 2022 and 2021, approximately 32.8 % and 50.8 %, respectively, of our rental income was from our Hawaii properties.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

1 unchanged sentence

(dollars in thousands, except per share data)

As of June 30, 2022, we had a concentration of properties leased to tenants, including their applicable subsidiaries, that leased over 5% of our total rentable square footage.

The impact of these tenants on our revenue are as follows:

Rentable Number Remaining Rental Income Rental Income

Square of Lease Term Three Months Ended Six Months Ended

Tenant Feet States (in years) 6/30/2022 6/30/2021 6/30/2022 6/30/2021

Federal Express Corporation/ FedEx Ground Package System, Inc.

21.8 % 34 7.4 $ 31,063 29.0 % $ 2,695 5.0 % $ 44,531 24.9 % $ 5,446 5.0 %

Amazon.com Services, Inc./ Amazon.com Services LLC 7.7 % 6 6.4 7,236 6.7 % 5,348 9.9 % 12,852 7.2 % 10,886 10.0 %

Home Depot U.S.A., Inc.

5.7 % 3 26.5 6,540 6.1 % 1,312 2.4 % 6,822 3.8 % 2,625 2.4 %

Total 35.2 % 34 10.3 $ 44,839 41.8 % $ 9,355 17.3 % $ 64,205 35.9 % $ 18,957 17.4 %

Acquisition Activities

1 unchanged sentence

At the effective time on February 25, 2022, or the Effective Time, MNR merged with and into Merger Sub, with Merger Sub continuing as the surviving entity, and the separate existence of MNR ceased.

MNR’s portfolio included 124 Class A, single tenant, net leased, e-commerce focused industrial properties containing approximately 25,745,000 rentable square feet and two committed, but not yet completed, property acquisitions.

The aggregate value of the consideration paid in the Merger was $ 3,734,485 , including the assumption of $ 323,432 aggregate principal amount of existing MNR mortgage debt, the repayment of $ 885,269 of MNR debt and the payment of certain transaction fees and expenses, net of MNR’s cash on hand, and excluding two pending property acquisitions for an aggregate purchase price of $ 78,843 , excluding acquisition related costs.

MNR’s portfolio included 124 Class A, single tenant, net leased, e-commerce focused industrial properties containing approximately 25,745,000 rentable square feet and two then committed, but not yet then completed, property acquisitions.

The aggregate value of the consideration paid in the Merger was $ 3,734,485 , including the assumption of $ 323,432 aggregate principal amount of former MNR mortgage debt, the repayment of $ 885,269 of MNR debt and the payment of certain transaction fees and expenses, net of MNR’s cash on hand, and excluding two then pending property acquisitions for an aggregate purchase price of $ 78,843 , excluding acquisition related costs.

Pursuant to the terms set forth in the Merger Agreement, at the Effective Time, each share of common stock, par value $ 0.01 per share, of MNR that was issued and outstanding immediately prior to the Effective Time was automatically converted into the right to receive $ 21.00 per share in cash, or the Common Stock Consideration, and each share of 6.125 % Series C Cumulative Redeemable Preferred Stock, par value $ 0.01 per share, of MNR, that was issued and outstanding immediately prior to the Effective Time was automatically converted into the right to receive an amount in cash equal to $ 25.00 plus accumulated and unpaid dividends, or the Preferred Stock Consideration.

1 unchanged sentence

Any out-of-money stock options were canceled for no consideration.

Immediately following the closing of the Merger, we entered into a joint venture arrangement with an institutional investor for 95 MNR properties, including two committed, but not yet completed, property acquisitions.

Immediately following the closing of the Merger, we entered into a joint venture arrangement with an institutional investor for 95 MNR properties, including two then committed, but not yet completed, property acquisitions.

The investor acquired a 39 % equity interest in the joint venture from us for $ 587,440 , and we retained the remaining 61 % equity interest in the joint venture.

In connection with the transaction, the joint venture assumed $ 323,432 aggregate principal amount of existing MNR mortgage debt secured by 11 properties and entered into a $ 1,400,000 floating rate CMBS loan secured by 82 properties, or the Floating Rate Loan.

In connection with the transaction, the joint venture assumed $ 323,432 aggregate principal amount of former MNR mortgage debt secured by 11 properties and entered into a $ 1,400,000 floating rate CMBS loan secured by 82 properties, or the Floating Rate Loan.

The Floating Rate Loan matures in March 2024, subject to three one year extension options, and requires that interest be paid at an annual rate based on the secured overnight financing rate, or SOFR, plus a premium of 2.77 %.

See Notes 4, 9 and 11 for more information regarding this joint venture.

In connection with the closing of the Merger, we entered into a $ 1,385,158 bridge loan facility, secured by 109 properties not owned by the joint venture in which we retained a 61 % equity interest, or the Bridge Loan.

In connection with the closing of the Merger, we entered into a $ 1,385,158 bridge loan facility secured by 109 of our properties, or the Bridge Loan.

We also entered into a $ 700,000 fixed rate CMBS loan secured by 17 of our properties, or the Fixed Rate Loan.

The Bridge Loan matures in February 2023 and requires that interest be paid at an annual rate of SOFR plus a weighted average premium of 2.92 %.

The Fixed Rate Loan matures in March 2032 and requires that interest be paid at a weighted average annual interest rate of 4.417 %.

The Fixed Rate Loan matures in March 2032 and requires that interest be paid at a weighted

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

average annual interest rate of 4.42 %.

The Floating Rate Loan, the Bridge Loan and the Fixed Rate Loan are collectively referred to as the Loans.

2 unchanged sentences

In connection with the Merger and the Loans, we repaid the outstanding principal balance under our $ 750,000 unsecured revolving credit facility and then terminated the agreement governing the facility, which was scheduled to expire in June 2022, in accordance with its terms and without penalty.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

The following table summarizes the purchase price allocation for the Merger:

16 unchanged sentences

(1) As of the date of acquisition, the weighted average amortization periods for the above market lease values, lease origination value and capitalized below market lease values were 11.05 years, 8.50 years and 7.83 years, respectively.

(2) As part of the Merger, we acquired a portfolio of marketable securities and classified them as held for sale.

During the three months ended March 31, 2022, we sold securities with a cost of $ 114,503 for net proceeds of $ 115,735 , resulting in a $ 1,232 realized gain on sale of equity securities for the three months ended March 31, 2022.

As of March 31, 2022, we owned securities with a cost of $ 32,047 and a fair value of $ 34,508 resulting in a $ 2,460 unrealized gain on equity securities for the three months ended March 31, 2022.

The securities are included in other assets, net on our condensed consolidated balance sheet as of March 31, 2022.

We expect to complete the sales of these marketable securities during the second quarter of 2022.

See Note 5 for more information regarding these marketable securities.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

During the three months ended March 31, 2022, we committed $ 4,772 for expenditures related to leasing related costs for leases executed during the period for approximately 885,000 square feet.

Committed, but unspent, tenant related obligations based on existing leases as of March 31, 2022 were $ 28,700 .

(2) As part of the Merger, we acquired a portfolio of marketable securities and classified them as available for sale.

During the six months ended June 30, 2022, we sold all of these securities with a cost of $ 146,550 for net proceeds of $ 140,792 , resulting in a $ 5,758 realized loss on sale of equity securities for the six months ended June 30, 2022.

In July 2022, our consolidated joint venture acquired a property located in Augusta, GA containing 226,000 rentable square feet for a purchase price of approximately $ 38,000 , excluding acquisition related costs.

This property is 100 % leased to a single tenant with a remaining lease term of approximately 14.9 years.

This property was a committed MNR acquisition at the time we acquired MNR and was purchased directly by our consolidated joint venture.

During the six months ended June 30, 2022, we committed $ 10,742 for expenditures related to leasing related costs for leases executed during the period for approximately 4,757 square feet.

Committed, but unspent, tenant related obligations based on existing leases as of June 30, 2022 were $ 27,998 .

Certain of our industrial lands in Hawaii may require environmental remediation, especially if the use of those lands is changed;

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

As of both March 31, 2022 and December 31, 2021, accrued environmental remediation costs of $ 6,940 were included in accounts payable and other liabilities in our condensed consolidated balance sheets.

As of both June 30, 2022 and December 31, 2021, accrued environmental remediation costs of $ 6,940 were included in accounts payable and other liabilities in our condensed consolidated balance sheets.

These accrued environmental remediation costs relate to maintenance of our properties for current uses, and, because of the indeterminable timing of the remediation, these amounts have not been discounted to present value.

1 unchanged sentence

While we do not believe that there are environmental conditions at any of our properties that will have a material adverse effect on us, we cannot be sure that such conditions are not present at our properties or that costs we incur to remediate contamination will not have a material adverse effect on our business or financial condition.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

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

1 unchanged sentence

As of March 31, 2022, we classified 30 properties we acquired as part of the MNR acquisition as held for sale in our condensed consolidated balance sheet.

We are currently marketing these properties for sale, which contain approximately 4,921,000 rentable square feet.

We cannot be sure we will sell any properties we are marketing for prices in excess of our carrying values or that we will not recognize impairment losses or losses on sale with respect to these properties.

During the three months ended June 30, 2022, we reclassified those properties to held and used due to a change in plans to sell as a result of market conditions and recorded a $ 100,747 loss on impairment of real estate to adjust the carrying value of 25 of those 30 properties to their estimated fair value.

Joint Venture Activities

As of March 31, 2022, we have equity investments in our joint ventures that consist of the following:

As of June 30, 2022, we have equity investments in our joint ventures that consist of the following:

ILPT Carrying Value

ILPT of Investment Number of Square

Joint Venture Presentation Ownership at March 31, 2022 Properties Location Feet

Joint Venture Presentation Ownership at June 30, 2022 Properties Location Feet

Mountain Industrial REIT LLC Consolidated 61 % N/A 93

3 unchanged sentences

Principal Balance

Joint Venture (Consolidated) Coupon Rate Maturity Date 2022 (1)

Coupon at June 30,

Joint Venture (Consolidated) Rate Maturity Date 2022 (1)

Mortgage notes payable (secured by 11 properties in 10 states)

3 unchanged sentences

Weighted average/total 3.97 % $ 1,716,721

(1) Amounts are not adjusted for our minority interest;

none of the debt is recourse to us, subject to certain limitations.

(2) Represents weighted average interest rate as of June 30, 2022.

Principal Balance

Joint Venture (Unconsolidated) Coupon Rate (2)

Maturity Date 2022 (1)

Coupon at June 30,

Joint Venture (Unconsolidated) Rate Maturity Date 2022 (1)

Mortgage notes payable (secured by one property in Florida)

10 unchanged sentences

Consolidated Joint Venture - Mountain Industrial REIT LLC

Immediately following the closing of the Merger, we entered into a joint venture arrangement with an institutional investor for 95 of the acquired MNR properties in 27 states, including two committed, but not yet completed, property acquisitions.

Immediately following the closing of the Merger, we entered into a joint venture arrangement with an institutional investor for 95 of the acquired MNR properties in 27 states, including two then committed, but not yet completed, property acquisitions.

The investor acquired a 39 % noncontrolling equity interest in the joint venture from us for $ 587,440 , and we retained the remaining 61 % equity interest in the joint venture.

The joint venture assumed $ 323,432 aggregate principal amount of existing MNR mortgage debt on certain of the properties.

The joint venture assumed $ 323,432 aggregate principal amount of former MNR mortgage debt on certain of the properties.

We control this joint venture and therefore account for the properties on a consolidated basis in our condensed consolidated financial statements.

We recognized a 39 % noncontrolling interest in our condensed consolidated financial statements for the three months ended March 31, 2022.

The portion of this joint venture's net loss not attributable to us, or $ 3,261 for the three months ended March 31, 2022, is reported as noncontrolling interest in our condensed consolidated statements of comprehensive income (loss).

There were no distributions made by this joint venture during the three months ended March 31, 2022.

We recognized a 39 % noncontrolling interest in our condensed consolidated financial statements for the six months ended June 30, 2022.

The portion of this joint venture's net loss not attributable to us, or $ 7,781 and $ 11,042 for the three and six months ended June 30, 2022, respectively, is reported as noncontrolling interest in our condensed consolidated statements of comprehensive income (loss).

During the three and six months ended June 30, 2022, this joint venture made aggregate cash distributions of $ 1,365 to the other joint venture investor, which are reflected as a decrease in total equity attributable to noncontrolling interest in our condensed consolidated balance sheets.

See Notes 1, 9 and 11 for more information regarding this joint venture.

Unconsolidated Joint Venture - The Industrial Fund REIT LLC

As of March 31, 2022 and December 31, 2021, we also owned an interest in an unconsolidated joint venture with 18 properties in 12 states.

As of June 30, 2022 and December 31, 2021, we also owned a 22 % interest in an unconsolidated joint venture with 18 properties in 12 states.

We account for the unconsolidated joint venture under the equity method of accounting under the fair value option.

During the three months ended March 31, 2022 and 2021, we recorded a change in the fair value of our investment in the unconsolidated joint venture of $ 1,727 and $ 2,581 , respectively, as equity in earnings of investees in our condensed consolidated statements of comprehensive income (loss).

In addition, during the three months ended March 31, 2022 and 2021, the unconsolidated joint venture made aggregate cash distributions of $ 1,320 and $ 660 , respectively, to us.

We recorded a change in the fair value of our investment in the unconsolidated joint venture of $ 1,610 and $ 1,876 for the three months ended June 30, 2022 and 2021, respectively, and $ 3,337 and $ 4,457 for the six months ended June 30, 2022 and 2021, respectively, as equity in earnings of investees in our condensed consolidated statements of comprehensive income (loss).

In addition, the unconsolidated joint venture made aggregate cash distributions of $ 1,322 and $ 660 during the three months ended June 30, 2022 and 2021, respectively, and $ 2,642 and $ 1,320 , during the six months ended June 30, 2022 and 2021, respectively, to us.

See Notes 1, 5, 9 and 11 for more information regarding our joint ventures.

6 unchanged sentences

We do not include in our measurement of our lease receivables certain variable payments, including payments determined by changes in the index or market-based indices after the inception of the lease, certain tenant reimbursements and other income until the specific events that trigger the variable payments have occurred.

Such payments totaled $ 12,380 and $ 9,872 for the three months ended March 31, 2022 and 2021, respectively, of which tenant reimbursements totaled $ 12,135 and $ 9,627 , respectively.

We increased rental income to record revenue on a straight line basis by $ 1,156 and $ 2,044 for the three months ended March 31, 2022 and 2021, respectively.

Such payments totaled $ 16,828 and $ 9,383 for the three months ended June 30, 2022 and 2021, respectively, of which tenant reimbursements totaled $ 16,583 and $ 9,138 , respectively, and $ 29,407 and $ 19,255 for the six months ended June 30, 2022 and 2021, respectively, of which tenant reimbursements totaled $ 28,917 and $ 18,765 , respectively.

We increased rental income to record revenue on a straight line basis by $ 3,220 and $ 1,951 for the three months ended June 30, 2022 and 2021, respectively, and $ 4,376 and $ 3,995 for the six months ended June 30, 2022 and 2021, respectively.

Right of use asset and lease liability.

1 unchanged sentence

For leases under which we are the lessee, we are required to record a right of use asset and lease liability for all leases with a term greater than 12 months.

As of March 31, 2022, the value of the right of use asset and related liability representing our future obligations under the lease arrangements under which we are the lessee were $ 5,147 and $ 5,192 , respectively.

The right of use asset and related lease liability are included in other assets, net and accounts payable and other liabilities, respectively, in our condensed consolidated balance sheets.

As of June 30, 2022, the value of the right of use asset and related liability representing our future obligations under the lease arrangements under

INDUSTRIAL LOGISTICS PROPERTIES TRUST

1 unchanged sentence

(dollars in thousands, except per share data)

which we are the lessee were $ 5,053 and $ 5,106 , respectively.

The right of use asset and related lease liability are included in other assets, net and accounts payable and other liabilities, respectively, in our condensed consolidated balance sheets.

Generally, payments of ground lease obligations are made by our tenants.

However, if a tenant does not perform obligations under a ground lease or does not renew any ground lease, we may have to perform obligations under, or renew, the ground lease in order to protect our investment in the affected property.

As of March 31, 2022, our outstanding indebtedness consisted of the following:

As of June 30, 2022, our outstanding indebtedness consisted of the following:

Principal Balance as of of Collateral

March 31, December 31, Interest At March 31,

June 30, December 31, Interest At June 30,

Entity Type Secured By:

1 unchanged sentence

ILPT Revolving credit facility (2)

Unsecured $ — $ 182,000 1.410 % N/A $ —

Unsecured $ — $ 182,000 N/A N/A $ —

ILPT Bridge Loan Facility 109 Properties 1,385,158 — 4.20 % Feb 2023 1,109,537

20 unchanged sentences

(2) In February 2022, we repaid the outstanding principal balance under our $ 750,000 unsecured revolving credit facility and then terminated the agreement governing the facility in accordance with its terms and without penalty.

(3) Mountain is Mountain Industrial REIT LLC.

(3) Mountain is Mountain Industrial REIT LLC, our consolidated joint venture, in which we own a 61 % equity interest.

(4) The Floating Rate Loan matures in March 2024, subject to three , one year extension options.

Our principal debt obligations at March 31, 2022 were:

Our principal debt obligations at June 30, 2022 were:

(1) $ 1,385,158 outstanding principal amount of the Bridge Loan;

9 unchanged sentences

As of December 31, 2021, the annual interest rate payable on borrowings under this revolving credit facility was 1.41 %.

The weighted average annual interest rate for borrowings under this revolving credit facility was 1.41 % and 1.57 % for the period from January 1, 2022 to February 25, 2022 and the three months ended 2021, respectively.

The weighted average annual interest rate for borrowings under this revolving credit facility was 1.41 % for both the period from January 1, 2022 to February 25, 2022 and the three months ended June 30, 2021 and 1.49 % for the six months ended June 30, 2021.

In connection with the closing of the Merger, we entered into the Loans, and repaid the outstanding principal balance under this revolving credit facility and then terminated the agreement governing the facility in accordance with its terms and without penalty.

During the three months ended March 31, 2022, we recorded a $ 828 loss on extinguishment of debt to write off any unamortized costs related to this facility.

During the six months ended June 30, 2022, we recorded a $ 828 loss on extinguishment of debt to write off any unamortized costs related to this facility.

On February 25, 2022, subsidiaries of our consolidated joint venture entered into a loan agreement with Citi Real Estate Funding Inc., UBS AG, Bank of America, N.A., Bank of Montreal and Morgan Stanley Bank, N.A., or collectively, the Floating Rate Lenders, pursuant to which this joint venture obtained the Floating Rate Loan.

2 unchanged sentences

Effective in March 2022, the Floating Rate Lenders exercised their option to increase the premium in connection with the securitization of the Floating Rate Loan, resulting in an increase of 51.5 basis points in the premium.

As of March 31, 2022, the weighted average annual interest rate payable under our Floating Rate Loan was 3.060 % and the weighted average interest rate for borrowings under the Floating Rate Loan was 3.011 % for the period from February 25, 2022 to March 31, 2022.

As of June 30, 2022, the weighted average annual interest rate payable under our Floating Rate Loan was 4.04 % and the weighted average interest rate for borrowings under the Floating Rate Loan was 3.61 % and 3.38 % for the three months ended June 30, 2022 and the period from February 25, 2022 to June 30, 2022, respectively.

Also on February 25, 2022, certain of our subsidiaries entered into a loan agreement with Citibank, N.A., UBS AG, Bank of America, N.A., Bank of Montreal and Morgan Stanley Bank, N.A., or collectively, the Bridge Lenders, and a mezzanine loan agreement with an institutional lender, or the Bridge Mezz Lender, together pursuant to which we obtained the Bridge Loan.

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The Bridge Loan matures in February 2023 and requires that interest be paid at an annual rate of SOFR plus a premium of 1.75 % under the loan agreement and a premium of 8.0 % under the mezzanine loan agreement.

As of March 31, 2022, the weighted average annual interest rate payable under our Bridge Loan was 3.214 % and the weighted average annual interest rate for borrowings under the Bridge Loan was 3.143 % for the period from February 25, 2022 to March 31, 2022.

As of June 30, 2022, the weighted average annual interest rate payable under our Bridge Loan was 4.20 % and the weighted average annual interest rate for borrowings under the Bridge Loan was 5.29 % and 5.23 % for the three months ended June 30, 2022 and the period from February 25, 2022 to June 30, 2022, respectively.

Also on February 25, 2022, certain of our subsidiaries entered into a loan agreement with Citi Real Estate Funding Inc., UBS AG, Bank of America, N.A., Bank of Montreal and Morgan Stanley Bank, N.A., or collectively, the Fixed Rate Lenders, and mezzanine loan agreements with Citigroup Global Markets Realty Corp., UBS AG, Bank of America, N.A., Bank of Montreal and Morgan Stanley Mortgage Capital Holdings LLC, or collectively the Fixed Mezz Lenders, pursuant to which we obtained the Fixed Rate Loan.

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We used the aggregate net proceeds from the Loans to fund the acquisition of MNR.

Principal payments on the Loans are not required prior to the end of the respective initial term, subject to certain conditions set forth in the applicable loan agreement.

Principal payments on the Loans are not required prior to the end of their respective initial terms, subject to certain conditions set forth in the applicable loan agreement.

Subject to the satisfaction of certain stated conditions, we have the option under the applicable loan agreement:

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(dollars in thousands, except per share data)

In connection with the Merger, our consolidated joint venture in which we own a 61 % equity interest assumed an aggregate $ 323,432 of existing MNR mortgages secured by 11 properties which are owned by this joint venture.

In connection with the Merger, our consolidated joint venture in which we own a 61 % equity interest assumed an aggregate $ 323,432 of former MNR mortgages secured by 11 properties which are owned by this joint venture.

These amortizing mortgages require monthly payments of principal and interest until maturity.

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Our financial instruments include cash and cash equivalents, restricted cash, rents receivable, the Floating Rate Loan, the Bridge Loan, the Fixed Rate Loan, mortgage notes payable, accounts payable, rents collected in advance, marketable securities available for sale, interest rate caps, security deposits and amounts due from or to related persons.

At March 31, 2022 and December 31, 2021, the fair value of our financial instruments approximated their carrying values in our condensed consolidated financial statements, due to their short term nature or floating interest rates, except as follows:

At March 31, 2022 At December 31, 2021

At June 30, 2022 and December 31, 2021, the fair value of our financial instruments approximated their carrying values in our condensed consolidated financial statements, due to their short term nature or floating interest rates, except as follows:

At June 30, 2022 At December 31, 2021

Carrying Estimated Carrying Estimated

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$ 4,410,568 $ 4,376,447 $ 646,124 $ 709,198

(1) Includes unamortized debt issuance costs of $ 68,383 and $ 3,876 as of March 31, 2022 and December 31, 2021, respectively.

(1) Includes unamortized debt issuance costs of $ 40,861 and $ 3,876 as of June 30, 2022 and December 31, 2021, respectively.

(2) The Floating Rate Loan matures in March 2024, subject to three , one year extension options.

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As Level 3 inputs are unobservable, our estimated fair value may differ materially from the actual fair value.

The table below presents certain of our assets measured on a recurring basis at fair value at March 31, 2022, categorized by the level of inputs as defined in the fair value hierarchy under GAAP, used in the valuation of each asset:

The table below presents certain of our assets measured on a recurring basis at fair value at June 30, 2022, categorized by the level of inputs as defined in the fair value hierarchy under GAAP, used in the valuation of each asset:

Quoted Prices in Significant Other Significant

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$ 13,637 $ — $ 13,637 $ —

Investment in marketable securities held for sale (3)

Non-recurring fair value measurements

Real estate properties (3)

$ 555,123 $ — $ — $ 555,123

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See Note 10 for more information regarding our derivatives and hedging activities.

(3) See Note 2 for more information regarding our investments in marketable securities held for sale.

(3) We recorded a loss on impairment of real estate of $ 100,747 to reduce the carrying value of 25 properties in our condensed consolidated balance sheet to their estimated fair value (Level 3 inputs as defined in the fair value hierarchy under GAAP).

See Note 3 for more information.

Shareholders’ Equity

Common Share Awards:

On June 1, 2022, in accordance with our Trustee compensation arrangements, we awarded to each of our seven Trustees 3,500 of our common shares, valued at $ 15.07 per share, the closing price of our common shares on The Nasdaq Stock Market LLC on that day.

Common Share Purchase:

During the three months ended March 31, 2022, we purchased 333 of our common shares at a price of $ 22.67 per common share, from a former employee of The RMR Group LLC, or RMR, in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares.

During the six months ended June 30, 2022, we purchased 333 of our common shares at a price of $ 22.67 per common share, from a former employee of The RMR Group LLC, or RMR, in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares.

Distributions:

During the three months ended March 31, 2022 , we declared and paid a regular quarterly distribution to common shareholders as follows:

Record Date Payment Date Distribution Per Share Total Distribution

January 24, 2022 February 17, 2022 $ 0.33 $ 21,584

On April 14, 2022, we declared a regular quarterly distribution to common shareholders of record on April 25, 2022 of $ 0.33 per share, or approximately $ 21,600 .

We expect to pay this distribution to our shareholders on or about May 19, 2022.

During the six months ended June 30, 2022 , we declared and paid regular quarterly distributions to common shareholders as follows:

Declaration Date Record Date Payment Date Distribution Per Share Total Distribution

January 13, 2022 January 24, 2022 February 17, 2022 $ 0.33 $ 21,584

April 14, 2022 April 25, 2022 May 19, 2022 0.33 21,583

$ 0.66 $ 43,167

On July 14, 2022, we declared a quarterly distribution to common shareholders of record on July 25, 2022 in the amount of $ 0.01 per share, or approximately $ 650 .

We expect to pay this distribution to our shareholders on or about August 18, 2022.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

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Per Common Share Amounts

The following table provides a reconciliation of the weighted average number of common shares used in the calculation of basic and diluted earnings per share (in thousands):

Three Months Ended March 31,

We calculate basic earnings per common share by dividing net income (loss) 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 the related impact on earnings, are considered when calculating dilutive earnings per share.

For purposes of calculating diluted earnings per share, we did not include 190 and 191 of unvested share awards for the three and six months ended June 30, 2022, respectively, because to do so would have been antidilutive.

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

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

2022 2021 2022 2021

Net (loss) income attributable to common shareholders $ ( 143,539 ) $ 18,831 $ ( 150,053 ) $ 38,168

Income attributable to unvested share awards ( 63 ) ( 47 ) ( 126 ) ( 95 )

Net (loss) income attributable to common shareholder used in calculating earnings per share $ ( 143,602 ) $ 18,784 $ ( 150,179 ) $ 38,073

Denominators:

Weighted average common shares for basic earnings per share 65,221 65,146 65,217 65,142

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Weighted average common shares for diluted earnings per share 65,221 65,207 65,217 65,192

65,212 65,177

(1) For the three months ended March 31, 2022, 18 unvested common shares were not included in the calculation of diluted earnings per share because doing so would have been antidilutive.

Net (loss) income attributable to common shareholders per common share - basic $ ( 2.20 ) $ 0.29 $ ( 2.30 ) $ 0.58

Net (loss) income attributable to common shareholders per common share - diluted $ ( 2.20 ) $ 0.29 $ ( 2.30 ) $ 0.58

Business and Property Management Agreements with RMR

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

Pursuant to our business management agreement with RMR, we recognized net business management fees of $ 4,399 and $ 2,544 for the three months ended March 31, 2022 and 2021, respectively.

Based on our common share total return, as defined in our business management agreement, as of March 31, 2022 and 2021, no incentive fees are included in the net business management fees we recognized for the three months ended March 31, 2022 or 2021.

Pursuant to our business management agreement with RMR, we recognized net business management fees of $ 6,957 and $ 11,356 for the three and six months ended June 30, 2022, respectively, and $ 2,580 and $ 5,124 for the three and six months ended June 30, 2021, respectively.

Based on our common share total return, as defined in our business management agreement, as of June 30, 2022 and 2021, no incentive fees are included in the net business management fees we recognized for the three and six months ended June 30, 2022 or 2021.

The actual amount of annual incentive fees for 2022, if any, will be based on our common share total return, as defined in our business management agreement, for the three-year period ending December 31, 2022, and will be payable in January 2023.

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REIT Industrial Index.

Pursuant to our property management agreement with RMR, we recognized aggregate property management and construction supervision fees of $ 2,763 and $ 1,594 for the three months ended March 31, 2022 and 2021, respectively.

Of these amounts, for the three months ended March 31, 2022 and 2021, $ 2,098 and $ 1,582 , respectively, were expensed to other operating expenses in our condensed consolidated financial statements and $ 31 and $ 12 , respectively, were capitalized as building improvements in our condensed consolidated balance sheets.

Pursuant to our property management agreement with RMR, we recognized aggregate property management and construction supervision fees of $ 2,764 and $ 5,527 for the three and six months ended June 30, 2022, respectively, and $ 1,591 and $ 3,185 for the three and six months ended June 30, 2021, respectively.

Of these amounts, for the three and six months ended June 30, 2022, $ 2,396 and $ 5,128 , respectively, were expensed to other operating expenses in our condensed

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

consolidated financial statements and $ 368 and $ 399 , respectively, were capitalized as building improvements in our condensed consolidated balance sheets.

For the three and six months ended June 30, 2021, $ 1,571 and $ 3,153 , respectively, were expensed to other operating expenses in our condensed consolidated financial statements and $ 20 and $ 32 , respectively, were capitalized as building improvements in our condensed consolidated balance sheets.

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

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

We reimbursed RMR $ 1,604 and $ 1,141 for these expenses and costs for the three months ended March 31, 2022 and 2021, respectively.

We reimbursed RMR $ 1,704 and $ 3,308 for these expenses and costs for the three and six months ended June 30, 2022, respectively, and $ 1,125 and $ 2,267 for the three and six months ended June 30, 2021, respectively.

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

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

See Note 9 for further information regarding our relationships, agreements and transactions with RMR.

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and an officer and employee of RMR.

John Murray, our other Managing Trustee and our former President and Chief Executive Officer until March 31, 2022, also serves as an officer and employee of RMR, and each of our other officers is also an officer and employee of RMR.

Matthew Jordan, our other Managing Trustee, is an executive vice president and the chief financial officer and treasurer of RMR Inc.

and an officer and employee of RMR.

John Murray, one of our Managing Trustees until June 1, 2022 and our President and Chief Executive Officer until March 31, 2022, also serves as an officer and employee of RMR, and each of our other officers is also an officer and employee of RMR.

Some of our Independent Trustees also serve as independent trustees or independent directors of other public companies to which RMR or its subsidiaries provide management services.

Adam Portnoy serves as chair of the boards and as a managing trustee or managing director of those companies.

Other officers of RMR, including Mr.

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

Other officers of RMR, including Messrs.

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

Our Manager, RMR .

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On February 25, 2022, we acquired MNR.

In connection with the Merger, we entered into a new joint venture arrangement with an institutional investor for 95 of the acquired MNR properties, including two committed, but not yet completed, property acquisitions.

In connection with that acquisition, we entered into a new joint venture arrangement with an institutional investor for 95 of the acquired MNR properties, including two then committed, but not yet completed, property acquisitions.

The investor acquired a 39 % equity interest in the joint venture from us for $ 587,440 .

Joint Ventures .

Following the Merger, we have two separate joint venture arrangements, one with two , third party institutional investors for 18 properties in which we own a 22 % equity interest, and the other with one , third party institutional investor for 95 properties, including two committed, but not yet completed, property acquisitions, in which we own a 61 % equity interest.

We entered into our joint venture that currently owns 18 properties prior to January 1, 2021, and we entered into the other joint venture that currently owns 95 MNR properties, including two committed, but not yet completed,property acquisitions, in February 2022 in connection with the Merger.

We have two separate joint venture arrangements, one with two , third party institutional investors for 18 properties in which we own a 22 % equity interest, and the other with one , third party institutional investor for 95 properties, including two then committed, but not yet completed, property acquisitions, in which we own a 61 % equity interest.

We entered into our joint venture that currently owns 18 properties prior to January 1, 2021, and we entered into the other joint venture that currently owns 95 MNR properties, including two then committed, but not yet then completed, property acquisitions, in February 2022 in connection with the Merger.

RMR provides management services to both of these joint ventures.

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however, that joint venture pays management fees directly to RMR, and any such fees paid by that joint venture are credited against the fees payable by us to RMR.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

In December 2021, we sold six properties to our then existing joint venture.

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

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

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

As of December 31, 2021 and March 31, 2022, we owed $ 225 and $ 629 , respectively, to that joint venture for rents that we collected on behalf of that joint venture.

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

We paid the amount we owed as of December 31, 2021 in January 2022.

As of December 31, 2021 and June 30, 2022, we owed $ 225 and $ 3,192 , respectively, to that joint venture for rents that we collected on behalf of that joint venture.

These amounts are presented as due to related persons in our condensed consolidated balance sheet.

We paid the amounts we owed as of December 31, 2021 in January 2022 and the amounts we owed as of June 30, 2022 in July 2022.

See Notes 2, 4, 5 and 11 for further information regarding our joint ventures.

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For further information about these and other such relationships and certain other related person transactions, see our 2021 Annual Report.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

Derivatives and Hedging Activities

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As required by ASC 815, Derivatives and Hedging , we record all derivatives on the balance sheet at fair value.

The following table summarizes the terms of our outstanding interest rate cap agreements designated as cash flow hedges of interest rate risk as of March 31, 2022:

Interest Rate Derivative Balance Sheet Line Item Debt Number of Instruments Strike Rate Notional Amount Fair Value at March 31, 2022

The following table summarizes the terms of our outstanding interest rate cap agreements designated as cash flow hedges of interest rate risk as of June 30, 2022:

Interest Rate Derivative Balance Sheet Line Item Debt Number of Instruments Strike Rate Notional Amount Fair Value at June 30, 2022

Interest Rate Cap Other assets Floating Rate Loan 1 3.40 % $ 1,400,000 $ 9,362

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Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on our applicable debt.

Three Months Ended March 31, 2022

Balance at December 31, 2021 $ —

Three Months Ended June 30, 2022

Six Months Ended June 30, 2022

Amount of income recognized in cumulative other comprehensive income $ 3,778 $ 9,153

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On February 25, 2022, we completed the acquisition of MNR.

In connection with the Merger, we entered into a joint venture arrangement with an institutional investor for 95 of the acquired MNR properties, including two committed, but not yet completed, property acquisitions.

In connection with the Merger, we entered into a joint venture arrangement with an institutional investor for 95 of the acquired MNR properties, including two then committed, but not yet completed, property acquisitions.

The investor acquired a 39 % noncontrolling equity interest in the joint venture for $ 587,440 , and we retained the remaining 61 % equity interest in the joint venture.

The joint venture assumed $ 323,432 aggregate principal amount of existing MNR mortgage debt on certain of the properties.

The joint venture assumed $ 323,432 aggregate principal amount of former MNR mortgage debt on certain of the properties.

We control this joint venture and therefore account for the properties on a consolidated basis in our condensed consolidated financial statements.

We recognized a 39 % noncontrolling interest in our condensed consolidated financial statements for the three months ended March 31, 2022.

There were no distributions made by the joint venture during the three months ended March 31, 2022.

We recognized a 39 % noncontrolling interest in our condensed consolidated financial statements for the three and six months ended June 30, 2022.

During the three and six months ended June 30, 2022, the joint venture made aggregate cash distributions of $ 1,365 to the other joint venture investor, which is reflected as a decrease in total equity attributable to noncontrolling interest in our condensed consolidated balance sheets.

See Notes 1, 2, 4 and 5 for further information regarding this joint venture.

An unrelated third party owns an approximate 33 % tenancy in common interest in one of the properties we acquired as part of the MNR acquisition located in Somerset, New Jersey, and we own the remaining 67 % tenancy in common interest in this property.

The portion of this property’s net loss not attributable to us, or $ 12 for the three months ended March 31, 2022, is reported as noncontrolling interest in our condensed consolidated statements of comprehensive income (loss).

The portion of this property’s net loss not attributable to us, or $ 1 and $ 13 for the three and six months ended June 30, 2022, respectively, is reported as noncontrolling interest in our condensed consolidated statements of comprehensive income (loss).

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

What changed 10-Q

Item 1. Financial Statements