What changed in this filing

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Item 4. Controls and Procedures

2022-07-26 compared with 2022-04-27 · 32 added, 29 removed, 77 unchanged (44% of the section changed)

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Based upon that evaluation, our Managing Trustees, our President and Chief Operating Officer and our Chief Financial Officer and Treasurer concluded that our disclosure controls and procedures are effective.

There have been no changes in our internal control over financial reporting during the quarter ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no changes in our internal control over financial reporting during the quarter ended June 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Warning Concerning Forward-Looking Statements

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• Our tenants’ ability and willingness to pay their rent obligations to us,

• Our ability to complete our long term financing plan for the acquisition of MNR,

• The likelihood that our tenants will renew or extend their leases or that we will be able to obtain replacement tenants on terms as favorable to us as the terms of our existing leases,

• Changes in global supply chain conditions,

• Our belief that the industrial and logistics sector and many of our tenants are critical to sustaining a resilient supply chain and that our business will benefit as a result,

• Our acquisitions or sales of properties,

• The development, redevelopment or repositioning of our properties,

• Our ability to compete for tenancies and acquisitions effectively,

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• Our ability to appropriately balance our use of debt and equity capital,

• Our ability to expand our existing, or enter into additional, real estate joint ventures or to attract co-venturers and benefit from our existing joint ventures or any real estate joint ventures we may enter into,

• Our ability to expand by selling additional equity interests in our existing, or enter into additional, real estate joint ventures or to attract co-venturers and benefit from our existing joint ventures or any real estate joint ventures we may enter into,

• Whether we may contribute additional properties to our joint ventures and receive proceeds from the other investors in our joint ventures in connection with any such contributions,

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• Changes in environmental laws or in their interpretations or enforcement as a result of climate change or otherwise, or our incurring environmental remediation costs or other liabilities,

• Changes in global supply chain conditions, and

• The development, redevelopment or repositioning of our properties, and

• Other matters.

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Risks, uncertainties and other factors that could have a material adverse effect on our forward-looking statements and upon our business, results of operations, financial condition, FFO attributable to common shareholders, Normalized FFO attributable to common shareholders, NOI, cash flows, liquidity and prospects include, but are not limited to:

• The impact of economic conditions and the capital markets on us and our tenants, including if the current inflationary environment continues or intensifies,

• The impact of economic conditions, including increasing interest rates, inflation and a possible recession, and the capital markets on us and our tenants,

• Competition within the real estate industry, particularly for industrial and logistics properties in those markets in which our properties are located,

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• Acts of terrorism, outbreaks of pandemics, war or other hostilities, further material or prolonged disruption to supply chains, or other manmade or natural disasters beyond our control.

• On July 14, 2022, we reduced our quarterly distribution rate to $0.01 per common share to enhance our liquidity.

Our distribution rate may be set and reset from time to time by our Board of Trustees.

Our Board of Trustees considers many factors when setting our distributions to shareholders, including FFO attributable to common shareholders, Normalized FFO attributable to common shareholders, requirements to maintain our qualification for taxation as a REIT, limitations in the agreements governing our debt, the availability to us of debt and equity capital, our dividend yield and our dividend yield compared to the dividend yields of other industrial REITs, our expectation of our future capital requirements and operating performance and our expected needs for and availability of cash to pay our obligations and other factors deemed relevant by our Board of Trustees in its discretion.

Future distributions may remain at this level for an indefinite period or be eliminated.

Further, in order to preserve liquidity, we may elect to pay distributions to our shareholders in part in a form other than cash, such as issuing additional common shares of ours to our shareholders, as permitted by the applicable tax rules,

• If interest rates continue to increase and general real estate market conditions further deteriorate, the actions taken by us may not provide sufficient liquidity and our long term financing plan for the MNR acquisition may be further delayed, cost more than expected or never be completed.

Further, unanticipated events may require us to expend amounts not currently planned.

As a result, we may not be successful in enhancing our liquidity and reducing our leverage as expected,

• We may not resume paying regular quarterly dividends on our common shares at or close to historical levels as or when expected, and the reduction of our quarterly dividend on our common shares may extend for an indefinite period.

Moreover, capital market conditions may not improve or our own financial circumstances may change so that we become unable or unwilling to increase our quarterly dividends on our common shares.

Also, the distribution rate on our common shares may be changed because of changes in our earnings, liquidity, financial leverage or other circumstances,

• Our ability to make future distributions to our shareholders and to make payments of principal and interest on our indebtedness depends upon a number of factors, including our receipt of rent from our tenants, future earnings, the capital costs we incur to lease our properties and our working capital requirements.

We may be unable to pay our debt obligations or to increase or maintain our current rate of distributions on our common shares and future distributions may be reduced or eliminated,

We may be unable to pay our

debt obligations or to maintain our current rate of distributions on our common shares and future distributions may be reduced or eliminated,

• Actual costs under our floating rate debt will be higher than the stated rate plus a premium because of fees and expenses associated with the applicable facility,

• We may incur additional debt.

Additional debt leverage may limit our ability to make acquisitions, pay distributions and pursue other opportunities we may deem desirable.

Further, increased leverage may increase our cost of capital,

• We may not be able to obtain replacement financing on desirable terms or otherwise when our debts mature,

• Our ability to grow our business and increase our distributions depends in large part upon our ability to acquire properties and lease them for rents, less their property operating costs, that exceed our capital costs.

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• Contingencies in our acquisition and sale agreements may not be satisfied and any expected acquisitions and sales may not occur, may be delayed or the terms of such transactions may change,

• We may not be able to sell the MNR properties we acquired and are seeking to sell, and any such sales may be at prices lower than the carrying values,

• The sales of the former MNR properties we anticipated to sell have been delayed due to current market conditions and such sales may not occur, may be further delayed or may be at prices lower than the carrying values,

• We may experience declining rents or incur significant costs when we renew our leases with current tenants or lease our properties to new tenants or when our rents reset at our properties in Hawaii,

• Leasing for some of our properties depends on a single tenant and we may be adversely affected by the bankruptcy, insolvency, downturn of business or lease termination of a single tenant at these properties,

• Any existing or possible development, redevelopment or repositioning of our properties may not be successful and may cost more or take longer to complete than we currently expect or than we expected when the project commenced.

In addition, we may not realize the returns we expect from these projects and we may incur losses from these projects,

• It is difficult to accurately estimate leasing related obligations and costs of development and tenant improvement costs.

Our leasing related obligations, development projects and tenant improvements may cost more and may

take longer to complete than we currently expect or than we expected when the project commenced, and we may incur increasing amounts for these and similar purposes in the future,

• Economic conditions in areas where our properties are located may decline in the future.

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However, we may not succeed in this regard and we may not have reasonable access to capital,

• Actual costs under our floating rate debt will be higher than the stated rate plus a premium because of fees and expenses associated with the applicable facility,

• We may incur additional debt.

Additional debt leverage may limit our ability to make acquisitions, pay distributions and pursue other opportunities we may deem desirable.

Further, increased leverage may increase our cost of capital,

• We may not be able to obtain replacement financing on desirable terms when our debts mature,

In addition, we may not realize the returns we expect from these projects and we may incur losses from these projects,

• It is difficult to accurately estimate leasing related obligations and costs of development and tenant improvement costs.

Our leasing related obligations, development projects and tenant improvements may cost more and may take longer to complete than we currently expect or than we expected when the project commenced, and we may incur increasing amounts for these and similar purposes in the future,

• Our existing, and any future, derivative contracts we are party to or may enter into may not have the intended or desired beneficial impact, and may expose us to additional risks such as counterparty credit risk and may involve additional costs,

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• Our existing joint ventures and any additional joint ventures we may enter into in the future may not be successful, and we may not be able to sell any additional equity interests in our existing joint ventures at expected prices or at all,

• Our Board of Trustees considers, among other factors, our dividend yield and our dividend yield compared to the dividend yields of other industrial REITs when setting our distributions to shareholders.

This may imply that we will maintain or seek to maintain a specific dividend yield on our common shares.

However, the dividend yield is only one of many factors our Board of Trustees considers in its discretion when setting our distributions to shareholders.

Further, various market and other factors impact trading prices for our and our competitors’ securities and the corresponding yields on those securities.

As a result, the trading prices on our common shares

and the yields on our common shares are subject to change and may fluctuate significantly.

We do not intend to maintain or to seek to maintain any specific yield on our common shares,

• The business and property management agreements between us and RMR have continuing 20 year terms.

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• We expect that we will benefit from RMR’s Environmental, Social and Governance, or ESG, program and initiatives.

However, we may incur extensive costs and may not realize the benefits we expect from such program and initiatives and we or RMR may not succeed in meeting existing or future standards, or investors’ expectations, regarding ESG,

• We believe that our relationships with our related parties, including RMR, RMR Inc.

and others affiliated with them may benefit us and provide us with competitive advantages in operating and growing our business.

However, the advantages we believe we may realize from these relationships may not materialize, and

• We may not succeed in selling the marketable securities acquired as part of the MNR acquisition on the expected timeline or at all.

Currently unexpected results could occur due to many different circumstances, some of which are beyond our control, such as acts of terrorism, war or other hostilities, pandemics, natural disasters, climate change and climate related events, changes in our tenants’ financial conditions, the market demand for leased space or changes in capital markets or the economy generally.

However, the advantages we believe we may realize from these relationships may not materialize.

Currently unexpected results could occur due to many different circumstances, some of which are beyond our control, such as acts of terrorism, war or other hostilities, pandemics, natural disasters, climate change and climate related events, changes in our tenants’ financial conditions, the market demand for leased space, economic conditions, including interest rates, high inflation and a possible recession or other changes in capital markets or the economy generally.

The information contained elsewhere in this Quarterly Report on Form 10-Q and in our 2021 Annual Report or in our other filings with the SEC, including under the caption “Risk Factors”, or incorporated herein or therein, identifies other important factors that could cause differences from our forward-looking statements.

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Other Information

There have been no material changes to the risk factors from those we previously provided in our 2021 Annual Report.

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 4. Controls and Procedures