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Item 1. Financial Statements

2022-10-25 compared with 2022-07-26 · 259 added, 190 removed, 455 unchanged (50% of the section changed)

3 unchanged sentences

(dollars in thousands, except per share data)

June 30, December 31,

September 30, December 31,

Real estate properties:

14 unchanged sentences

Revolving credit facility $ — $ 182,000

Bridge loan facility 1,379,983 —

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

Mortgages and notes payable, net 4,243,271 646,124

Assumed real estate lease obligations, net 23,633 12,435

12 unchanged sentences

Total equity attributable to common shareholders 812,421 1,038,042

Noncontrolling interest 581,346 —

Total equity attributable to noncontrolling interest 549,089 —

Total equity 1,361,510 1,038,042

4 unchanged sentences

(amounts in thousands, except per share data)

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

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

2022 2021 2022 2021

3 unchanged sentences

Depreciation and amortization 48,519 12,694 114,096 37,202

Acquisition and certain other transaction costs — 646 — 646

Acquisition and other transaction related costs 586 — 586 646

General and administrative 9,110 4,728 24,896 12,718

4 unchanged sentences

( 89,739 ) ( 9,084 ) ( 208,286 ) ( 26,468 )

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

Gain (loss) on sale of real estate — 940 ( 10 ) 940

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

Loss on early extinguishment of debt ( 21,370 ) — ( 22,198 ) —

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

(Loss) income before income tax expense and equity in earnings of unconsolidated joint venture ( 87,243 ) 17,381 ( 251,603 ) 51,197

Income tax expense ( 28 ) ( 72 ) ( 113 ) ( 177 )

Equity in earnings of investees 1,610 1,876 3,337 4,457

Equity in earnings of unconsolidated joint venture 3,297 998 6,634 5,455

Net (loss) income ( 83,974 ) 18,307 ( 245,082 ) 56,475

34 unchanged sentences

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

Net (loss) income — — — ( 45,627 ) — — ( 45,627 ) ( 38,347 ) ( 83,974 )

Share grants 173,300 2 620 — — — 622 — 622

Share repurchases ( 31,455 ) — ( 232 ) — — — ( 232 ) — ( 232 )

Share forfeitures ( 600 ) — ( 4 ) — — — ( 4 ) — ( 4 )

Net current period other comprehensive income — — — — 4,728 — 4,728 4,119 8,847

Contributions from noncontrolling interest — — — — — — — 1,971 1,971

Distributions to common shareholders — — — — — ( 654 ) ( 654 ) — ( 654 )

Balance at September 30, 2022 65,568,704 $ 656 $ 1,013,802 $ 148,228 $ 12,300 $ ( 362,565 ) $ 812,421 $ 549,089 $ 1,361,510

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

6 unchanged sentences

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

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

Net income — — — 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

Net income — — — 18,831 — 18,831

Share grants 21,000 — 780 — — 780

2 unchanged sentences

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

Net income — — — 18,307 — 18,307

Share grants 118,800 1 916 — — 917

Share repurchases ( 27,576 ) — ( 713 ) — — ( 713 )

Share forfeitures ( 700 ) — ( 4 ) — — ( 4 )

Distributions to common shareholders — — — — ( 21,554 ) ( 21,554 )

Balance at September 30, 2021 65,404,879 $ 654 $ 1,011,835 $ 280,701 $ ( 297,161 ) $ 996,029

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

2 unchanged sentences

(dollars in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

6 unchanged sentences

Amortization of deferred leasing costs 1,170 620

Loss (gain) on sale of real estate 10 ( 940 )

Loss on equity securities 5,758 —

2 unchanged sentences

Other non-cash expenses 4,443 1,932

Unconsolidated joint venture distributions 2,642 1,320

Equity in earnings of investees ( 3,337 ) ( 4,457 )

Distributions of earnings from unconsolidated joint venture 3,962 1,980

Equity in earnings of unconsolidated joint venture ( 6,634 ) ( 5,455 )

Change in assets and liabilities:

12 unchanged sentences

Proceeds from sale of marketable securities 140,792 —

Proceeds from sale of real estate — 1,206

Proceeds from sale of joint venture — 804

1 unchanged sentence

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of mortgage notes payable 2,100,000 —

Proceeds from issuance of mortgages and notes payable 3,335,000 —

Repayment of mortgage notes payable ( 12,591 ) —

Proceeds from secured bridge loan facility 1,385,158 —

Repayment of secured bridge loan facility ( 1,385,158 ) —

Borrowings under revolving credit facility 3,000 246,000

Repayments of revolving credit facility ( 185,000 ) ( 113,000 )

Repayment of mortgage notes payable ( 7,161 ) —

Payment of debt issuance costs ( 211,996 ) —

Distributions to common shareholders ( 43,821 ) ( 64,653 )

Proceeds from noncontrolling interest, net 587,440 —

Proceeds from sale of noncontrolling interest, net 589,411 —

Repurchase of common shares ( 239 ) ( 915 )

Distributions to noncontrolling interest ( 1,365 ) —

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

Net cash provided by financing activities 3,472,399 67,432

Increase in cash, cash equivalents and restricted cash 97,272 21,259

5 unchanged sentences

(dollars in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

SUPPLEMENTAL DISCLOSURES:

9 unchanged sentences

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 June 30,

As of September 30,

Cash and cash equivalents $ 26,381 $ 44,093

25 unchanged sentences

Real Estate Investments

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.

As of September 30, 2022, our portfolio was comprised of 413 consolidated properties containing approximately 59,962,000 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 187 properties containing approximately 43,233,000 rentable square feet of industrial properties located in 38 other states, or our Mainland Properties, which includes 94 properties owned by a consolidated joint venture arrangement in which we own a 61 % equity interest.

As of September 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 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.

For the three months ended September 30, 2022 and 2021, approximately 26.8 % and 50.5 %, respectively, of our rental income was from our Hawaii Properties.

For the nine months ended September 30, 2022 and 2021, approximately 30.6 % and 50.7 %, 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.

As of September 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

Rentable Number Remaining

Square of Lease Term Rental Income Rental Income

Feet States (in years) Three Months Ended Nine Months Ended

Tenant As of September 30, 2022 9/30/2022 9/30/2021 9/30/2022 9/30/2021

Federal Express Corporation/ FedEx Ground Package System, Inc.

12 unchanged sentences

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 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.

The investor acquired a 39 % equity interest in the joint venture from us for $ 589,411 , as of the completion of this transaction, 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 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.

See Notes 4, 9, 10 and 11 for more information regarding this joint venture and related loans.

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

INDUSTRIAL LOGISTICS PROPERTIES TRUST

1 unchanged sentence

(dollars in thousands, except per share data)

average annual interest rate of 4.42 %.

The Bridge Loan was scheduled to mature in February 2023 and required that interest be paid at an annual rate of SOFR plus a weighted average premium of 2.92 %.

The Bridge Loan was repaid in full on September 22, 2022.

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

See Note 4 for more information regarding the Loans.

We used the proceeds from our sale of the equity interest in our joint venture in which we retained a 61 % equity interest to partially fund our acquisition of MNR.

We funded our equity interest in that joint venture and the balance of the acquisition of MNR with proceeds from our Bridge Loan and our Fixed Rate Loan.

We funded our equity interest in that joint venture and the balance of the acquisition of MNR with proceeds from the Bridge Loan and the Fixed Rate Loan.

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.

3 unchanged sentences

Acquired real estate leases (1)

Assets of properties held for sale 724,073

Other assets, net 14,194

4 unchanged sentences

Assumed real estate lease obligations ( 17,829 )

Liabilities of properties held for sale ( 3,596 )

Equity attributable to noncontrolling interest on the joint venture ( 3,827 )

3 unchanged sentences

Purchase price $ 3,739,048

(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.

(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 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 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.

In general, we do not have insurance designated to limit any losses that we may incur as a result of known or unknown environmental conditions which are not caused by an insured event, such as fire or flood, although some of our tenants may maintain such insurance that may benefit us.

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.

During the nine months ended September 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 nine months ended September 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 $ 38,053 , including acquisition related costs of $ 53 .

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

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

Purchase Buildings and Acquired Real Estate

Price Land Improvements Leases

$ 38,053 $ 3,818 $ 30,780 $ 3,455

This property was one of two committed MNR property acquisitions at the time of the Merger and was acquired directly by our consolidated joint venture.

In September 2022, our consolidated joint venture terminated the agreement for the other committed MNR property acquisition.

During the nine months ended September 30, 2022, we committed $ 15,304 for expenditures related to leasing related costs for leases executed during the period for approximately 6,442,000 square feet.

As of September 30, 2022, committed, but unspent, tenant related obligations based on existing leases were $ 25,939 .

INDUSTRIAL LOGISTICS PROPERTIES TRUST

1 unchanged sentence

(dollars in thousands, except per share data)

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

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

As of both September 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 the maintenance of our properties for their current uses, and, because of the indeterminable timing of the remediation, these amounts have not been discounted to present value.

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

Disposition Activities

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.

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.

During the nine months ended September 30, 2022, we recorded a $ 100,747 loss on impairment of real estate to adjust the carrying value of 25 properties to their estimated fair value, due to a change in plans to sell and the reclassification of those properties from held for sale to held and used.

See Note 5 for further information on these properties.

Joint Venture Activities

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

As of September 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 June 30, 2022 Properties Location Feet

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

Mountain Industrial REIT LLC Consolidated 61 % N/A 94

3 unchanged sentences

Principal Balance

Coupon at June 30,

Interest at September 30,

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

4 unchanged sentences

Weighted average/total 5.27 % $ 1,710,842

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

(1) Amounts are not adjusted for our interest;

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

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

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

Principal Balance

Coupon at June 30,

Interest at September 30,

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

3 unchanged sentences

(2) 11/7/2029 350,000

Mortgage notes payable (secured by 5 properties in four states)

4.22 % 10/1/2027 97,000

Weighted average/total 3.53 % (2) $ 503,980

6 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 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 investor acquired a 39 % noncontrolling equity interest in the joint venture from us for $ 589,411 , as of the completion of this transaction, and we retained the remaining 61 % equity interest in the joint venture.

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

In July 2022, our consolidated joint venture completed one of the two committed MNR property acquisitions, and in September 2022, our consolidated joint venture terminated the agreement for the other committed MNR property acquisition.

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 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.

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

The portion of this joint venture's net loss not attributable to us, or $ 38,318 and $ 49,360 for the three and nine months ended September 30, 2022, respectively, is reported as noncontrolling interest in our condensed consolidated statements of comprehensive income (loss).

During the nine months ended September 30, 2022, this 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.

No distributions were made during the three months ended September 30, 2022.

See Notes 1, 4, 5, 9, 10 and 11 for more information regarding this joint venture.

Unconsolidated Joint Venture - The Industrial Fund REIT LLC

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.

As of September 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.

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.

We recorded a change in the fair value of our investment in the unconsolidated joint venture of $ 3,297 and $ 998 for the three months ended September 30, 2022 and 2021, respectively, and $ 6,634 and $ 5,455 for the nine months ended September 30, 2022 and 2021, respectively, as equity in earnings of unconsolidated joint venture in our condensed consolidated statements of comprehensive income (loss).

In addition, the unconsolidated joint venture made aggregate cash distributions to us of $ 1,320 and $ 660 during the three months ended September 30, 2022 and 2021, respectively, and $ 3,962 and $ 1,980 , during the nine months ended September 30, 2022 and 2021, respectively.

In October 2022, the unconsolidated joint venture made a cash distribution to us of $ 20,900 , including amounts related to a debt financing.

See Notes 1, 4, 5, 9, 10 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 $ 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.

In connection with our acquisition of MNR, we assumed the lease for MNR’s former corporate headquarters, which expires on December 31, 2029, and three of the properties we acquired as part of the MNR acquisition were subject to ground leases under which we are the lessee.

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

Such payments totaled $ 16,664 and $ 9,478 for the three months ended September 30, 2022 and 2021, respectively, of which tenant reimbursements totaled $ 16,419 and $ 9,233 , respectively, and $ 46,071 and $ 28,341 for the nine months ended September 30, 2022 and 2021, respectively, of which tenant reimbursements totaled $ 45,336 and $ 27,606 , respectively.

We increased rental income to record revenue on a straight line basis by $ 3,794 and $ 1,678 for the three months ended September 30, 2022 and 2021, respectively, and $ 8,170 and $ 5,673 for the nine months ended September 30, 2022 and 2021, respectively.

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.

Right of use asset and lease liability.

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 September 30, 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 $ 4,959 and $ 5,019 , 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.

1 unchanged sentence

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

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

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

Principal Balance as of of Collateral

June 30, December 31, Interest At June 30,

September 30, December 31, Interest At September 30,

Entity Type Secured By:

2 unchanged sentences

Unsecured $ — $ 182,000 N/A N/A $ —

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

ILPT Fixed Rate - Interest only 186 Properties 650,000 650,000 4.31 % Feb 2029 490,680

ILPT Fixed Rate - Interest only 17 Properties 700,000 — 4.42 % Mar 2032 524,821

Floating Rate - Interest only 82 Properties 1,400,000 — 4.04 % Mar 2024 (4)

Fixed Rate - Amortizing One Property 13,329 — 3.67 % May 2031 31,125

Fixed Rate - Amortizing One Property 27,025 — 3.10 % Jun 2035 48,380

Fixed Rate - Amortizing One Property 15,191 — 3.56 % Sep 2030 51,401

Fixed Rate - Amortizing One Property 44,771 — 4.13 % Nov 2033 131,556

Fixed Rate - Amortizing One Property 14,739 — 4.14 % Jul 2032 45,411

Fixed Rate - Amortizing One Property 32,078 — 4.02 % Oct 2033 87,440

Fixed Rate - Amortizing One Property 5,150 — 3.77 % Apr 2030 40,279

Fixed Rate - Amortizing One Property 5,445 — 3.85 % Apr 2030 40,279

Fixed Rate - Amortizing One Property 43,395 — 2.95 % Jan 2036 102,412

Fixed Rate - Amortizing One Property 47,203 — 4.27 % Nov 2037 113,738

Fixed Rate - Amortizing One Property 53,357 — 3.25 % Jan 2038 117,251

Fixed Rate - Amortizing One Property 14,588 — 3.76 % Oct 2028 63,343

4,451,429 832,000 $ 4,934,529

ILPT Floating Rate - Interest only (3)

104 Properties

1,235,000 — 6.18 % Oct 2024 1,077,796

ILPT Fixed Rate - Interest only 186 Properties

650,000 650,000 4.31 % Feb 2029 490,602

ILPT Fixed Rate - Interest only 17 Properties

700,000 — 4.42 % Mar 2032 521,785

Floating Rate - Interest only (5)

82 Properties

1,400,000 — 5.62 % Mar 2024 1,923,147

Fixed Rate - Amortizing One Property

14,074 — 3.76 % Oct 2028 63,829

Fixed Rate - Amortizing One Property

5,008 — 3.77 % Apr 2030 40,002

Fixed Rate - Amortizing One Property

5,295 — 3.85 % Apr 2030 40,002

Fixed Rate - Amortizing One Property

14,793 — 3.56 % Sep 2030 51,100

Fixed Rate - Amortizing One Property

13,012 — 3.67 % May 2031 30,962

Fixed Rate - Amortizing One Property

14,443 — 4.14 % Jul 2032 45,094

Fixed Rate - Amortizing One Property

31,517 — 4.02 % Oct 2033 87,730

Fixed Rate - Amortizing One Property

43,999 — 4.13 % Nov 2033 131,986

Fixed Rate - Amortizing One Property

26,602 — 3.10 % June 2035 48,049

Fixed Rate - Amortizing One Property

42,743 — 2.95 % Jan 2036 102,593

Fixed Rate - Amortizing One Property

46,659 — 4.27 % Nov 2037 113,839

Fixed Rate - Amortizing One Property

52,697 — 3.25 % Jan 2038 117,386

Total indebtedness 4,295,842 832,000 $ 4,885,902

Unamortized debt issuance costs ( 52,571 ) ( 3,876 )

$ 4,410,568 $ 828,124

Total indebtedness, net $ 4,243,271 $ 828,124

(1) The principal balances are the amounts stated in contracts.

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(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) This loan matures in October 2024, subject to three , one year extension options, and requires that interest be paid at an annual rate of SOFR plus a weighted average premium of 3.93 %.

We also purchased an interest rate cap through October 2024 with a SOFR strike rate equal to 2.25 %.

(4) 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 June 30, 2022 were:

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

(2) $ 1,400,000 outstanding principal amount of the Floating Rate Loan;

(3) $ 700,000 outstanding principal amount of the Fixed Rate Loan;

(4) $ 650,000 outstanding principal amount of a mortgage loan secured by 186 of our properties;

and (5) $ 316,271 aggregate principal amount of mortgages secured by 11 properties owned by our consolidated joint venture in which we own a 61 % equity interest.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

(5) This loan matures in March 2024, subject to three , one year extension options, and requires that interest be paid at an annual rate of SOFR plus a premium of 2.77 %.

We also purchased an interest rate cap through March 2024 with a SOFR strike rate equal to 3.40 %.

As of December 31, 2021, we had a $ 750,000 unsecured revolving credit facility that was available for our general business purposes, including acquisitions.

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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 % 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.

The weighted average annual interest rate for borrowings under this revolving credit facility was 1.42 % for the three months ended September 30, 2021 and 1.41 % and 1.46 % for the period from January 1, 2022 to February 25, 2022 and the nine months ended September 30, 2021, respectively.

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 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.

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

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

On February 25, 2022, subsidiaries of our consolidated joint venture entered into a loan agreement with a group of institutional lenders, or the Floating Rate Lenders, pursuant to which this joint venture obtained the Floating Rate Loan.

Also on February 25, 2022, our consolidated joint venture entered into a guaranty in favor of the Floating Rate Lenders, pursuant to which this joint venture guaranteed certain limited recourse obligations of its subsidiaries with respect to the Floating Rate Loan.

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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 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.

We also purchased an interest rate cap through March 2024 with a SOFR strike rate equal to 3.40 %.

As of September 30, 2022, the weighted average annual interest rate payable under the Floating Rate Loan was 5.62 % and the weighted average interest rate for borrowings under the Floating Rate Loan was 4.94 % and 4.23 % for the three months ended September 30, 2022 and the period from February 25, 2022 to September 30, 2022, respectively.

Also on February 25, 2022, certain of our subsidiaries entered into a loan agreement with a group of institutional lenders, or 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.

Also on February 25, 2022, we entered into a guaranty in favor of the Bridge Lenders and the Bridge Mezz Lender, pursuant to which we guaranteed certain limited recourse obligations of its subsidiaries with respect to the Bridge Loan.

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 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.

The Bridge Loan was scheduled to mature in February 2023 and required that interest only 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.

We also purchased an interest rate cap with a SOFR strike rate equal to 2.70 %.

The Bridge Loan was repaid in full on September 22, 2022 with cash on hand and proceeds from our $ 1,235,000 floating rate loan, which is further described below.

During the three and nine months ended September 30, 2022, we recorded a $ 22,231 loss on early extinguishment of debt to write off unamortized costs related to the Bridge Loan and related interest rate cap.

The weighted average annual interest rate for borrowings under the Bridge Loan was 5.01 % and 4.24 % for the period from July 1, 2022 to September 22, 2022 and the period from February 25, 2022 to September 22, 2022, respectively.

Also on February 25, 2022, certain of our subsidiaries entered into a loan agreement with a group of institutional lenders, or the Fixed Rate Lenders, and mezzanine loan agreements with a separate group of institutional lenders, or the Fixed Mezz Lenders, pursuant to which we obtained the Fixed Rate Loan.

Also on February 25, 2022, we entered into a guaranty in favor of the Fixed Rate Lenders and the Fixed Mezz Lenders, pursuant to which we guaranteed certain limited recourse obligations of our subsidiaries with respect to the Fixed Rate Loan.

The Fixed Rate Loan matures in March 2032 and requires that interest be paid at a weighted average annual fixed rate of 4.42 %.

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 their respective initial terms, subject to certain conditions set forth in the applicable loan agreement.

The interest only Fixed Rate Loan matures in March 2032 and requires that interest be paid at a weighted average annual fixed rate of 4.42 %.

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

Principal payments on the Floating Rate Loan and Fixed Rate Loan 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:

(1) to prepay up to $ 280,000 of the Floating Rate Loan after March 2023, at par with no premium, and to prepay the balance of the Floating Rate Loan at any time, subject to a premium;

(2) to prepay the Bridge Loan, in full or in part at any time, subject to breakage costs;

and (2) to prepay the Fixed Rate Loan in full or part at any time, subject to a premium, and beginning in September 2031, without a premium.

The agreements governing the Loans contain customary covenants and provide for acceleration of payment of all amounts due thereunder upon the occurrence and continuation of certain events of default.

On September 22, 2022, certain of our subsidiaries entered into a loan agreement with a group of institutional lenders, or the ILPT Floating Rate Lenders, and a mezzanine loan agreement with a separate group of institutional lenders, or the ILPT Floating Rate Mezz Lenders, pursuant to which we obtained the ILPT Floating Rate Loan, secured by 104 of our properties.

The ILPT Floating Rate Loan is comprised of a $ 1,100,000 mortgage loan and a $ 135,000 mezzanine loan.

Also, on September 22, 2022, we entered into a guaranty in favor of the ILPT Floating Rate Lenders and the ILPT Floating Rate Mezz Lenders, pursuant to which we guaranteed certain limited recourse obligations of our subsidiaries with respect to the ILPT Floating Rate Loan.

The interest only ILPT Floating Rate Loan matures on October 9, 2024, subject to three , one year extension options, and requires that interest be paid at an annual rate of SOFR, which is capped at an annual rate of 2.25 % for the initial term of the ILPT Floating Rate Loan, plus a weighted average premium of 3.93 %.

The weighted average interest rate payable under the ILPT Floating Rate Loan as of September 30, 2022 and for the period from September 22, 2022 to September 30, 2022 was 6.18 %.

See Notes 5 and 10 for further information on our interest rate caps.

The agreements governing the Floating Rate Loan, Fixed Rate Loan and the ILPT Floating Rate Loan contain customary covenants and provide for acceleration of payment of all amounts due thereunder upon the occurrence and continuation of certain events of default.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

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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 former 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 of $ 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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Fair Value of Assets and Liabilities

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 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

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

At September 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 September 30, 2022 At December 31, 2021

Carrying Estimated Carrying Estimated

Fair Value Value (1)

Mortgage notes payable, 4.31 % interest rate, due in 2029

Fixed rate loan, 4.31 % interest rate, due in 2029

$ 646,532 $ 587,730 $ 646,124 $ 709,198

Bridge Loan, 4.20 % weighted average interest rate, due in 2023

ILPT Floating Rate Loan, 6.18 % weighted average interest rate, due in 2024 (2)

1,213,336 1,213,336 — —

Mortgage notes payable, 4.04 % interest rate, due in 2024 (2)

Floating Rate Loan, 5.62 % interest rate, due in 2024 (3)

1,378,000 1,378,000 — —

Mortgage notes payable, 4.42 % interest rate, due in 2032

Fixed Rate Loan, 4.42 % interest rate, due in 2032

694,561 626,128 — —

Mortgage note payable, 3.67 % interest rate, due in 2031

Fixed rate loan, 3.76 % interest rate, due in 2028

14,074 13,105 — —

Mortgage note payable, 3.10 % interest rate, due in 2035

Fixed rate loan, 3.77 % interest rate, due in 2030

5,008 4,637 — —

Mortgage note payable, 3.56 % interest rate, due in 2030

Fixed rate loan, 3.85 % interest rate, due in 2030

5,295 4,918 — —

Mortgage note payable, 4.13 % interest rate, due in 2033

Fixed rate loan, 3.56 % interest rate, due in 2030

14,793 13,551 — —

Mortgage note payable, 4.14 % interest rate, due in 2032

Fixed rate loan, 3.67 % interest rate, due in 2031

13,012 11,900 — —

Mortgage note payable, 4.02 % interest rate, due in 2033

Fixed rate loan, 4.14 % interest rate, due in 2032

14,443 13,355 — —

Mortgage note payable, 3.77 % interest rate, due in 2030

Fixed rate loan, 4.02 % interest rate, due in 2033

31,517 28,715 — —

Mortgage note payable, 3.85 % interest rate, due in 2030

Fixed rate loan, 4.13 % interest rate, due in 2033

43,999 40,292 — —

Mortgage note payable, 2.95 % interest rate, due in 2036

Fixed rate loan, 3.10 % interest rate, due in 2035

26,602 22,671 — —

Mortgage note payable, 4.27 % interest rate, due in 2037

Fixed rate loan, 2.95 % interest rate, due in 2036

42,743 35,855 — —

Mortgage note payable, 3.25 % interest rate, due in 2038

Fixed rate loan, 4.27 % interest rate, due in 2037

46,659 42,183 — —

Mortgage note payable, 3.76 % interest rate, due in 2028

Fixed rate loan, 3.25 % interest rate, due in 2038

52,697 44,184 — —

$ 4,243,271 $ 4,080,560 $ 646,124 $ 709,198

(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.

(1) Includes unamortized debt issuance costs of $ 52,571 and $ 3,876 as of September 30, 2022 and December 31, 2021, respectively.

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

(3) The Floating Rate Loan, entered into by our consolidated joint venture, matures in March 2024, subject to three , one year extension options.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

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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 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:

The table below presents certain of our assets measured on a recurring basis at fair value at September 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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The significant unobservable inputs used in the fair value are discount rates of between 5.25 % and 7.00 %, exit capitalization rates of between 4.50 % and 6.00 %, 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.

Our assumptions are based on the location, type and nature of each property, and current and anticipated market conditions, which are derived from appraisers, industry publications and our experience.

See Note 2 for further information regarding our investment in this joint venture.

(2) Our derivative assets are carried at fair value as required by GAAP.

The estimated fair values of the derivative assets are based on current market prices for similar instruments.

Given the meaningful level of secondary market activity for derivative contracts, active pricing is available for similar assets and accordingly, we classify our derivative assets as Level 2.

The estimated fair values of the derivative assets are based on current market prices in secondary markets for similar derivative contracts, (Level 2 inputs).

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

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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 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.

On September 14, 2022, we awarded under our equity compensation plan an aggregate of 173,300 of our common shares, valued at $ 6.83 per share, the closing price of our common shares on Nasdaq on that day, to our officers and certain other employees of The RMR Group LLC, or RMR.

Common Share Purchases:

During the three and nine months ended September 30, 2022, we purchased an aggregate of 31,455 and 31,788 of our common shares, respectively, valued at a weighted average price of $ 7.40 and $ 7.56 per common share, respectively, from our officers and certain other current and former officers and employees of RMR, in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares.

Distributions:

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

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

Declaration Date Record Date Payment Date Distribution Per Share Total Distribution

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

July 14, 2022 July 25, 2022 August 18, 2022 0.01 654

$ 0.67 $ 43,821

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

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

On October 13, 2022, we declared a quarterly distribution to common shareholders of record on October 24, 2022 in the amount of $ 0.01 per share, or approximately $ 656 .

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

Per Common Share Amounts

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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,

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

2022 2021 2022 2021

Net (loss) income attributable to common shareholders $ ( 45,627 ) $ 18,307 $ ( 195,680 ) $ 56,475

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

Loss attributable to unvested share awards ( 2 ) ( 43 ) ( 128 ) ( 140 )

Net (loss) income attributable to common shareholder used in calculating earnings per share $ ( 45,629 ) $ 18,264 $ ( 195,808 ) $ 56,335

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Net (loss) income attributable to common shareholders per common share - diluted $ ( 0.70 ) $ 0.28 $ ( 3.00 ) $ 0.86

(1) For purposes of calculating diluted earnings per share, we did not include 205 and 196 of unvested share awards for the three and nine months ended September 30, 2022, respectively, because to do so would have been antidilutive.

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 $ 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.

Pursuant to our business management agreement with RMR, we recognized net business management fees of $ 6,465 and $ 17,821 for the three and nine months ended September 30, 2022, respectively, and $ 2,708 and $ 7,832 for the three and nine months ended September 30, 2021, respectively.

Based on our common share total return, as defined in our business management agreement, as of September 30, 2022 and 2021, no incentive fees are included in the net business management fees we recognized for the three and nine months ended September 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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We include business management fees in general and administrative expenses in our condensed consolidated statements of comprehensive income (loss).

RMR provides management services to our two joint ventures.

RMR provides management services to our two

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

joint ventures.

See Note 9 for further information regarding our joint ventures’ management arrangements with RMR and the related impact on our management fees payable to RMR.

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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 $ 2,764 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.

Pursuant to our property management agreement with RMR, we recognized aggregate property management and construction supervision fees of $ 3,270 and $ 8,797 for the three and nine months ended September 30, 2022, respectively, and $ 1,675 and $ 4,860 for the three and nine months ended September 30, 2021, respectively.

Of these amounts, for the three and nine months ended September 30, 2022, $ 2,976 and $ 8,104 , respectively, were expensed to other operating expenses in our condensed consolidated financial statements and $ 294 and $ 693 , respectively, were capitalized as building improvements in our condensed consolidated balance sheets.

For the three and nine months ended September 30, 2021, $ 1,598 and $ 4,751 , respectively, were expensed to other operating expenses in our condensed consolidated financial statements and $ 77 and $ 109 , 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 $ 1,704 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.

We reimbursed RMR $ 1,847 and $ 5,155 for these expenses and costs for the three and nine months ended September 30, 2022, respectively, and $ 1,184 and $ 3,451 for the three and nine months ended September 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).

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

See Note 6 for information relating to the awards of our common shares we made in September 2022 to our officers and certain other employees of RMR and common shares we purchased from our officers and certain other current and former officers and employees of RMR in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares.

We include amounts recognized as expense for awards of our common shares to our officers and RMR employees in general and administrative expenses 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)

Our Manager, RMR .

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

MNR Acquisition and Related Joint Venture .

On February 25, 2022, we acquired MNR.

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 .

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.

We have two separate joint venture arrangements.

One of these joint ventures is with two , third party institutional investors.

This joint venture owns 18 properties.

We own a 22 % equity interest in this joint venture.

We entered into this joint venture prior to January 1, 2021.

The other joint venture we entered into in connection with the Merger is with one , third party institutional investor.

This joint venture owns 94 properties.

We own a 61 % equity interest in the joint venture and the other joint venture investor acquired a 39 % equity interest in the joint venture from us for $ 589,411 , as of the completion of this transaction, in connection with the joint venture’s formation in February 2022.

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.

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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 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.

As of December 31, 2021 and September 30, 2022, we owed $ 225 and $ 554 , 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.

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

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

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The only risk currently managed by us using derivative instruments is a part of our interest rate risk.

We have an interest rate cap agreement to manage our interest rate risk exposure on each of the Bridge Loan and the Floating Rate Loan, both with interest payable at a rate equal to SOFR plus a premium.

We have an interest rate cap agreement to manage our interest rate risk exposure on each of the ILPT Floating Rate Loan and the Floating Rate Loan, both with interest payable at a rate equal to SOFR plus a premium.

The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements are not able to perform under the agreements.

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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 June 30, 2022:

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

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

Interest Rate Derivative Balance Sheet Line Item Underlying Instrument Number of Instruments Strike Rate Notional Amount Fair Value at September 30, 2022

Interest Rate Cap Other assets Floating Rate Loan (1)

Interest Rate Cap Other assets Bridge Loan Facility 2 2.70 % $ 1,385,158 $ 4,275

1 3.40 % $ 1,400,000 $ 19,485

Interest Rate Cap Other assets ILPT Floating Rate Loan 2 2.25 % $ 1,235,000 $ 48,513

(1) The Floating Rate Loan was entered into by our consolidated joint venture.

Interest rate caps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium.

3 unchanged sentences

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 June 30, 2022

Six Months Ended June 30, 2022

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

In September 2022, in conjunction with the repayment of the Bridge Loan, we sold two interest rate cap instruments with an aggregate notional amount of $ 1,385,158 , a strike rate equal to 2.70 % and an original expiration date of March 15, 2023 for $ 7,740 .

As the underlying debt instrument that these interest rate caps were intended to hedge was repaid in its entirety and the related interest expense was no longer probable to occur, these interest rate caps were no longer designated as cash flow hedges and the remaining deferred gain was reclassified from cumulative other comprehensive income as a reduction of loss on early extinguishment of debt.

Three Months Ended September 30, 2022

Nine Months Ended September 30, 2022

Amount of gain recognized in cumulative other comprehensive income $ 15,047 $ 24,200

Amount reclassified from cumulative other comprehensive income into interest expense 761 1,678

Unrealized gain on derivative instrument $ 4,438 $ 10,070

Amount reclassified from cumulative other comprehensive income into loss on early extinguishment of debt ( 6,961 ) ( 6,961 )

Unrealized gain on derivative instrument recognized in cumulative other comprehensive income $ 8,847 $ 18,917

Noncontrolling Interest

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 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 investor acquired a 39 % noncontrolling equity interest in the joint venture for $ 589,411 , as of the completion of this transaction, and we retained the remaining 61 % equity interest in the joint venture.

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 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.

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

No distributions were made during the three months ended September 30, 2022.

See Notes 1, 2, 4, 5, 9 and 11 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 $ 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).

The portion of this property’s net loss not attributable to us, or $ 29 and $ 42 for the three and nine months ended September 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