What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2024-02-20 compared with 2023-02-14 · 136 added, 91 removed, 692 unchanged (25% of the section changed)

1 unchanged sentence

We own and lease industrial and logistics properties throughout the United States.

As of December 31, 2022, our portfolio was comprised of 413 consolidated properties that were approximately 99.1% leased to 301 different tenants with a weighted average (by annualized rental revenues) remaining lease term of 9.0 years.

The 413 properties consisted of 226 buildings, leasable land parcels and easements containing approximately 16.7 million rentable square feet (all square footage amounts included within this Annual Report on Form 10-K are unaudited) that were primarily industrial lands located on the island of Oahu, Hawaii, or our Hawaii Properties, and 187 properties containing approximately 43.3 million rentable square feet that were industrial and logistics properties located in 38 other states, or our Mainland Properties.

As of December 31, 2022, our 413 consolidated properties included 94 properties we own in a consolidated joint venture in which we own a 61% equity interest.

As of December 31, 2023, our portfolio was comprised of 411 properties containing approximately 59,951,000 rentable square feet located in 39 states, including 226 buildings, leasable land parcels and easements containing approximately 16,729,000 rentable square feet (all square footage amounts included within this Annual Report on Form 10-K are unaudited) that were primarily industrial lands located on the island of Oahu, Hawaii, or our Hawaii Properties, and 185 properties containing approximately 43,222,000 rentable square feet that were industrial and logistics properties located in 38 other states, or our Mainland Properties.

As of December 31, 2023, we also owned a 22% equity interest in an unconsolidated joint venture, or the unconsolidated joint venture.

As of December 31, 2023, our Mainland Properties represented 72.1% of our annualized rental revenues and our Hawaii Properties represented 27.9% of our annualized rental revenues.

We define the term annualized rental revenues as used in this Annual Report on Form 10-K as the annualized contractual rents as of December 31, 2022, including straight line rent adjustments and excluding lease value amortization, adjusted for tenant concessions including free rent and amounts reimbursed to tenants, plus estimated recurring expense reimbursements from tenants.

As of December 31, 2022, we also owned a 22% equity interest in an unconsolidated joint venture that owns 18 properties located in 12 states in the mainland United States containing approximately 11.7 million rentable square feet that were 100% leased with an average (by annualized rental revenues) remaining lease term of 5.6 years.

We define the term annualized rental revenues used in this Annual Report on Form 10-K as the annualized contractual base rents from our tenants pursuant to their leases as of the measurement date, including straight line rent adjustments and estimated recurring expense reimbursements to be paid to us, and excluding lease value amortization.

Our principal executive offices are located at Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458-1634, and our telephone number is (617) 219-1460.

Acquisition of Monmouth Real Estate Investment Corporation

On February 25, 2022, we completed the acquisition of MNR pursuant to the merger of MNR with and into one of our wholly owned subsidiaries, or the Merger.

MNR’s portfolio included 124 class A, single tenant, net leased, e-commerce focused industrial properties containing approximately 25.7 million rentable square feet and two then committed, but not yet then 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 the two committed MNR property acquisitions, one of which was subsequently completed.

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

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.

In connection with the Merger, we entered into a joint venture arrangement, or our consolidated joint venture, with an institutional investor for 95 of the acquired MNR properties, including the two committed MNR property acquisitions, one of which was subsequently completed.

Our consolidated joint venture subsequently terminated the agreement for the other committed MNR property acquisition.

2 unchanged sentences

We believe our current properties provide a stable base of increasing income.

We intend to expand our business by acquiring additional industrial and logistics properties in the United States that may benefit from the growth of e-commerce or demand for logistics properties.

Internal Growth through Rent Resets and Leasing Activity, Fixed Rent Increases in Our Leases and Selective Development.

We seek to extend or enter new leases as leases approach expiration and selectively develop industrial and logistics properties in the United States.

Our internal growth strategy is to increase rents and corresponding cash flows we receive from our current properties .

Certain of the leases for our Hawaii Properties provide for rents to be reset to fair market value periodically during the lease terms.

2 unchanged sentences

In addition to the internal rent growth which may result from our rent resets and lease activity at our Hawaii Properties, a majority of the leases at our Mainland Properties and certain leases at our Hawaii Properties include periodic set dollar amount or percentage increases that raise the cash rent payable to us.

Tabl e of Contents

Since the time, in some cases 40 to 50 years ago, certain of our Hawaii Properties’ leases were originally entered into, the characteristics of the neighborhoods in the vicinity of some of those properties have changed.

In such circumstances, we have sometimes engaged in redevelopment activities to change the character of certain properties in order to increase rents.

As our Hawaii Properties are currently experiencing strong demand for their current uses, we do not currently expect redevelopment

efforts in Hawaii to become a major activity in the near term;

In such circumstances, we have engaged in redevelopment activities to change the character of certain properties in order to increase rents.

As our Hawaii Properties are currently experiencing strong demand for their current uses, we do not currently expect redevelopment efforts in Hawaii to become a major activity in the near term;

however, we may undertake such activities on a selective basis.

Also, we and our predecessors have sometimes built expansions for tenants at our Mainland Properties in return for lease extensions and rent increases, and we expect to continue such activities.

We currently have one Mainland Property under development and may seek to develop additional properties in the future.

External Growth through Acquisitions.

Our external growth strategy is to acquire industrial and logistics properties that we believe will produce NOI in excess of our cost of capital used to purchase the properties.

We intend to grow our business by investing primarily in industrial and logistics properties that serve the growing needs of e-commerce.

We believe that e-commerce sales will continue to grow, in dollar value and volume of units sold and as a percentage of total retail sales, and that this will create strong demand for industrial and logistics properties and rental growth for the next several years.

We are focused on acquiring industrial and logistics properties that are of strategic importance to our tenants’ businesses, such as build to suit properties, strategic distribution hubs or other properties in which tenants have invested a significant amount of capital.

We target occupied properties, where tenants are financially responsible for all, or substantially all, property operating expenses, including increases with respect thereto.

As there are a limited number of industrial and logistics properties in Hawaii, we expect that most of our acquisitions will be in other states.

Our external growth strategy is further defined by our investment policies.

Also, we and our predecessors have sometimes built expansions for tenants at our Mainland Properties in return for lease extensions and rent increases, and we may continue such activities on a selective basis.

Our external growth strategy is defined by our investment, disposition and financing policies as described below.

Our investment, financing and disposition policies and business strategies are established by our Board of Trustees and may be changed by our Board of Trustees at any time without shareholder approval.

The following is an overview of the general lease terms for our properties.

3 unchanged sentences

Many of our Mainland Properties’ leases require us to maintain the roof, exterior walls, foundation and other structural elements of the buildings at our expense;

however, as we believe our Mainland Properties are being well maintained, we do not believe these expenses will be material to us during the remaining lease terms.

however, as we believe our Mainland Properties are well maintained, we do not believe these expenses will be material to us during the remaining lease terms.

Our Mainland Properties are currently 98.9% leased.

1 unchanged sentence

Also, some of the tenant renewal options at our Mainland Properties provide for rents to be reset to fair market values, and we may be able to raise rents if and when these options are exercised.

We regularly confer with tenants at our Mainland Properties to determine if they are interested in our expanding or otherwise improving their leased properties in return for increased rents and extended terms.

We regularly confer with tenants at our Mainland Properties to determine if they are interested in expanding or otherwise improving their leased properties in return for increased rents and extended terms.

Hawaii Properties’ Leases.

In general, our Hawaii Properties are subject to leases pursuant to which the tenants pay fixed annual rent on a monthly, quarterly or semi-annual basis, and also pay or reimburse us for all, or substantially all, property level operating and maintenance expenses, such as real estate taxes, insurance, utilities and repairs, including increases with respect thereto.

In general, our Hawaii Properties are subject to leases pursuant to which the tenants pay fixed annual rents on a monthly, quarterly or semi-annual basis, and also pay or reimburse us for all, or substantially all, property level operating and maintenance expenses, such as real estate taxes, insurance, utilities and repairs, including increases with respect thereto.

Certain of our Hawaii Properties are leased for fixed annual rents that periodically reset based on fair market values and others are subject to leases with fixed increases.

5 unchanged sentences

Historically, this process has resulted in significant reset amounts.

As of December 31, 2022, we leased 84 properties containing approximately 13.1 million rentable square feet located in 34 states to subsidiaries of FedEx Corporation, or FedEx, with an aggregate carrying value of $2.1 billion, or 39.7% of our gross real estate assets.

Tabl e of Contents

Tenants representing 1% or more of our total annualized rental revenues as of December 31, 2023 were as follows:

4 unchanged sentences

Various (34 States) 80 12,851 21.7 % 29.7 %

Amazon.com Services, Inc./ Amazon.com Services LLC AL, IN, OK, SC, TN, VA 8 4,539,084 7.6 % 6.7 %

Amazon.com Services, Inc.

/ Amazon.com Services LLC AL, IN, OK, SC, TN, VA 8 4,539 7.7 % 6.7 %

Home Depot U.S.A., Inc.

GA, HI, IL 4 3,364,679 5.7 % 4.4 %

GA, HI 2 956 1.6 % 2.1 %

UPS Supply Chain Solutions, Inc.

NH, NY 3 794 1.3 % 1.6 %

American Tire Distributors, Inc.

CO, LA, NE, NY, OH 5 722 1.2 % 1.5 %

Restoration Hardware, Inc.

2 unchanged sentences

HI 7 629 1.1 % 1.4 %

American Tire Distributors, Inc.

CO, LA, NE, NY, OH 5 722,267 1.2 % 1.3 %

Par Pacific Holdings Inc.

HI 3 3,148 5.3 % 1.2 %

TD SYNNEX Corporation OH 2 939 1.6 % 1.1 %

Berkshire Hathaway Inc.

GA 1 832 1.4 % 1.0 %

112 26,605 44.9 % 47.8 %

(1) Leased square feet is pursuant to existing leases as of December 31, 2022 and includes (i) space being fitted out for occupancy, if any, and (ii) space which is leased but is not occupied or is being offered for sublease by tenants, if any.

(2) Includes an executed lease for 2,238,000 square feet in Hawaii that is expected to commence in the second quarter of 2024.

(1) Leased square feet is pursuant to existing leases as of December 31, 2023, and includes space being fitted out for occupancy, if any, and space which is leased but is not occupied.

Our Investment Policies

11 unchanged sentences

• the type of property (e.g., bulk distribution, last-mile distribution, etc.);

• the tax and regulatory circumstances of the market area in which the property is located;

• the occupancy and demand for similar properties in the same or nearby locations;

5 unchanged sentences

• the existence of alternative sources, uses or needs for our capital;

Tabl e of Contents

• the tenants’ historic and expected adoption of environmental sustainability in connection with their operations;

• the tax and regulatory circumstances of the market area in which the property is located.

Also, we may invest in or enter into real estate joint ventures.

We currently own a 61% equity interest in a consolidated joint venture, a 22% equity interest in an unconsolidated joint venture, and a 67% tenancy in common interest in one of the properties we acquired as part of the MNR acquisition.

In the future, we may invest in or enter into additional real estate joint ventures, or acquire additional properties with the intention of contributing such properties to our existing joint venture, if we conclude that by doing so we may benefit from the participation of co-venturers or that our opportunity to participate in the investment is contingent on the use of a joint venture structure or to take advantage of property valuation differences among private and public sources of equity capital.

We currently own a 61% equity interest in our consolidated joint venture, a 22% equity interest in the unconsolidated joint venture and a 67% tenancy in common interest in one of our Mainland Properties.

In the future, we may invest in or enter into additional real estate joint ventures, or acquire additional properties with the intention of contributing such properties to our existing joint ventures, if we conclude that by doing so we may benefit from the participation of co-venturers or that our opportunity to participate in the investment is contingent on the use of a joint venture structure or to take advantage of property valuation differences among private and public sources of equity capital.

We have no limitations on the amount or percentage of our total assets that may be invested in any one property and no limits on the concentration of investments in any one location.

However, we believe it is prudent to seek portfolio diversification, not concentration.

Our Board of Trustees may change our acquisition and investment policies at any time without a vote of, or advance notice to, our shareholders.

Our Board of Trustees may change our investment policies at any time without a vote of, or advance notice to, our shareholders.

We may in the future adopt policies with respect to investments in real estate mortgages or securities of other entities engaged in real estate activities.

2 unchanged sentences

We generally consider ourselves to be a long-term owner of our properties.

We expect our decision to sell properties, additional equity interests in our consolidated joint venture or a stake in some of our properties will be based upon the following considerations, among others, which may be relevant to a particular property at a particular time:

We expect our decision to sell properties, equity interests in our joint ventures or a stake in some of our properties will be based upon the following considerations, among others, which may be relevant to a particular property at a particular time:

• the terms of any debt that may secure the property;

• whether the property is leased and, if so, the remaining lease term and likelihood of lease renewal;

• whether the property’s tenants are current on their lease obligations;

• our evaluation of the property’s tenants’ abilities to pay their contractual rents;

• our ability to identify new tenants if the property has or is likely to develop vacancies;

4 unchanged sentences

• our intended use of the proceeds we may realize from the sale of a property;

• the benefits we believe we will achieve from selling additional equity interests in our joint ventures or contributing additional properties to our existing joint ventures or any new joint venture;

• the tax implications to us and our shareholders;

• the existence of alternative sources, uses or needs for capital;

• the terms of any debt that may secure the property;

• the tax implications to us and our shareholders of any proposed disposition.

• the benefits we believe we will achieve from selling equity interests in our joint ventures or contributing additional properties to our existing joint ventures or any new joint venture.

Our Board of Trustees may change our disposition policies at any time without a vote of, or notice to, our shareholders.

Tabl e of Contents

Our Financing Policies

To qualify for taxation as a REIT under the IRC, we generally are required to distribute annually at least 90% of our REIT taxable income, subject to specified adjustments and excluding any net capital gain.

To qualify for taxation as a REIT under the Internal Revenue Code of 1986, as amended, or the IRC, we generally are required to distribute annually at least 90% of our REIT taxable income, subject to specified adjustments and excluding any net capital gain.

We expect to repay our debts, invest in our properties or fund acquisitions, developments or redevelopments by utilizing future financing arrangements, selling properties and/or joint venture interests and issuing equity or debt securities or using retained cash from operations that may exceed distributions paid.

We also expect that our operating and investing activities will be financed by rents from tenants at our properties in excess of planned distributions to our shareholders and by using cash on hand and proceeds from any future financing arrangements we may obtain.

We will decide when and whether to issue equity or new debt depending primarily upon our success in operating our business and upon market conditions.

We also expect that our operating and investing activities will be funded by rents from tenants at our properties in excess of planned distributions to our shareholders and by using cash on hand and proceeds from any future financing arrangements we may obtain.

We will decide when and whether to issue equity, incur new debt or refinance existing debt depending primarily upon our success in operating our business and upon market conditions.

Because our ability to raise capital will depend, in large part, upon market conditions, we cannot be sure that we will be able to raise sufficient capital to repay our debts or to fund our growth strategies.

For more information regarding our financing sources and activities, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Our Investing and Financing Liquidity and Resources” of this Annual Report on Form 10-K and Note 3 to the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

For more information regarding our financing sources and activities, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Our Investing and Financing Liquidity and Resources” included in Part II, Item 7 of this Annual Report on Form 10-K and Note 3 to our consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

We do not have policies limiting the amount of debt we may incur or the number or amount of mortgages that may be placed on our properties.

6 unchanged sentences

Although we do not believe that there are environmental conditions at any of our properties that will materially and adversely affect us, we cannot be sure that such conditions or costs we may be required to incur in the future to address environmental contamination will not materially and adversely affect us.

Investing in and operating real estate is a very competitive business.

Owning and operating real estate is a highly competitive business.

We compete against publicly traded and private REITs, numerous financial institutions, individuals and public and private companies.

1 unchanged sentence

We believe the experience and abilities of our management and our manager, the quality of our properties, the diversity and credit qualities of our tenants and the structure of our leases may afford us some competitive advantages and allow us to operate our business successfully despite the competitive nature of our business.

For more information, see “Risk Factors—Risks Related to Our Business—We face significant competition” in this Annual Report on Form 10-K.

is a holding company and substantially all of its business is conducted by its majority owned subsidiary, RMR.

For more information, see “Risk Factors—Risks Related to Our Business—We face significant competition” included in Part I, Item 1A of this Annual Report on Form 10-K.

The RMR Group Inc., or RMR Inc., is a holding company and substantially all of its business is conducted by its majority owned subsidiary, RMR.

Portnoy, the Chair of our Board of Trustees and one of our Managing Trustees, is the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of RMR Inc., chair of the board of directors, a managing director and the president and chief executive officer of RMR Inc.

5 unchanged sentences

RMR has a principal place of business at Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458-1634, and its telephone number is (617) 796-8390.

Tabl e of Contents

RMR is an alternative asset management company that is focused on commercial real estate and related businesses.

RMR or its subsidiaries also act as a manager to other publicly traded real estate companies, privately held real estate funds and real estate related operating businesses.

In addition, RMR provides management services to our existing joint ventures.

As of the date of this Annual Report on Form 10-K, the executive officers of RMR are:

Adam Portnoy, President and Chief Executive Officer;

In addition, RMR provides management services to our joint ventures.

As of February 16, 2024, the executive officers of RMR are:

Portnoy, president and chief executive officer;

Christopher J.

Bilotto, executive vice president;

Clark, executive vice president, general counsel and secretary;

Francis, Executive Vice President;

Jordan, executive vice president, chief financial officer and treasurer;

Murray, executive vice president.

and Jonathan M.

Pertchik, Executive Vice President.

Our President and Chief Operating Officer, Yael Duffy, and our Chief Financial Officer and Treasurer, Brian E.

Donley, are Senior Vice Presidents of RMR.

Donley and other officers of RMR also serve as officers of other companies to which RMR or its subsidiaries provide management services.

Our President and Chief Operating Officer, Yael Duffy, is a senior vice president of RMR and our Chief Financial Officer and Treasurer, Tiffany R.

Sy, is a vice president of RMR.

Other officers of RMR also serve as officers of other companies to which RMR or its subsidiaries provide management services.

We have no employees.

Services which would otherwise be provided to us by employees are provided by RMR and by our Managing Trustees and officers.

As of December 31, 2022, RMR had nearly 600 full time employees in its headquarters and regional offices located throughout the United States.

Board Diversity

As of December 31, 2022, our Board of Trustees was comprised of seven Trustees, of which five were independent trustees.

Our Board of Trustees is comprised of 28.6% women and 14.3% members of underrepresented minorities.

As of December 31, 2023, RMR had over 1,100 full time employees located at its headquarters and regional offices throughout the United States.

Corporate Sustainability

Our business strategy incorporates a focus on sustainable approaches to operating our properties in a manner that benefits our shareholders, tenants and the communities in which we are located.

We seek to have our properties operated in ways that improve the economic performance of their operations, while simultaneously ensuring tenant comfort and safety, managing energy and water consumption, as well as greenhouse gas emissions.

Our ESG initiatives are primarily implemented by our manager, RMR, and focus on a complementary set of objectives, including responsible investment, environmental stewardship, investments in human capital, being a responsible corporate citizen and diversity and inclusion.

RMR’s annual Sustainability Report may be accessed on RMR Inc.’s website at www.rmrgroup.com/corporate-sustainability/default.aspx.

Our manager, RMR, periodically publishes its Sustainability Report, which summarizes the environmental, social and governance, or ESG, initiatives employed by RMR and its client companies, including us.

RMR’s Sustainability Report may be accessed on the RMR Inc.

website at www.rmrgroup.com/corporate-sustainability/default.aspx.

The information on or accessible through RMR Inc.’s website is not incorporated by reference into this Annual Report on Form 10-K.

We believe corporate sustainability is a strategic part of our focus on operational practices, enhancing our competitive position, development and redevelopment efforts and economic performance.

Our sustainability practices, which align with those of our manager, RMR — minimizing our impact on the environment, embracing the communities where we operate and attracting top professionals — are critical elements supporting our long-term success.

We recognize our responsibility to minimize the impact of our business on the environment and seek to preserve natural resources and maximize efficiencies in order to reduce the impact our properties have on the planet.

Our environmental sustainability strategies and best practices help to mitigate our properties’ environmental footprint, optimize operational efficiency and enhance our competitiveness in the marketplace.

Our sustainability and community engagement strategies focus on a complementary set of objectives, including the following:

• Responsible Investment.

We seek to invest capital in our properties that both improves environmental performance and enhances asset value.

During the property acquisition due diligence and annual budgeting processes, RMR assesses, among other things, environmental sustainability opportunities and physical and policy driven climate related risks.

• Environmental Stewardship.

We seek to improve the environmental footprint of our properties, including by reducing carbon emissions, energy consumption and water usage, especially when doing so may reduce operating costs and exposure to policies that call for a carbon tax or other emissions-based penalties and enhance the properties’ competitive position.

Our existing business practices are intended to align with the Task Force on Climate-Related Financial Disclosures framework across both the physical and transition risks and opportunities.

With respect to our development and redevelopment activities, RMR considers how to best incorporate sustainability goals as part of the overall goal of any development or redevelopment project at our properties.

In 2022, RMR announced its commitment to a goal of net zero emissions by 2050 with a 50% reduction commitment by 2030 from a 2019 baseline as it relates to Scope 1 and 2 emissions for all properties for which it directly manages energy.

Tabl e of Contents

Furthermore, properties that reach specified levels of sustainability and energy efficiency may receive potential environmental designations and certifications, such as Leadership in Energy and Environmental Design, or LEED®, designations and/or “ENERGY STAR” certifications.

LEED designations are administered by the U.S.

Green Building Council.

The ENERGY STAR program is a joint program of the U.S.

Environmental Protection Agency and the U.S.

Department of Energy which is focused on promoting energy efficient products and properties.

Government’s “green lease” policies permit government tenants to require LEED® designation in selecting new premises or renewing leases at existing premises and the General Services Administration gives preference to properties for lease that have received an ENERGY STAR certification.

Our property manager, RMR, is a member of the ENERGY STAR program.

As of December 31, 2023, our LEED designations and ENERGY STAR certifications were as follows:

Four of our properties containing approximately 1.3 million rentable square feet (2.0% and 3.0% of our eligible properties and eligible rentable square feet, respectively).

• Building Owners and Managers Association (BOMA) 360:

28 of our properties containing approximately 5.4 million rentable square feet (14.1% and 12.4% of our eligible properties and eligible rentable square feet, respectively).

• ENERGY STAR:

Three of our properties containing approximately 284,000 rentable square feet (1.5% and 0.7% of our eligible properties and eligible rentable square feet, respectively).

• Investments in Human Capital.

We have no employees.

We rely on our manager, RMR, to hire, train, and develop a workforce that meets the needs of our business, contributes positively to our society and helps reduce our impact on the natural environment.

• Corporate Citizenship.

We seek to be a responsible corporate citizen and to strengthen the communities in which we own properties.

Our manager, RMR, regularly encourages its employees to engage in a variety of charitable and community programs, including participation in a company-wide service day and a charitable giving matching program.

• Diversity and Inclusion.

We value a diversity of backgrounds, experience and perspectives.

As of December 31, 2023, our Board of Trustees was comprised of seven Trustees, of which five were independent trustees, two, or approximately 28.6%, were female and one, or approximately 14.3%, was a member of under-represented communities.

RMR is an equal opportunity employer, with all qualified applicants receiving consideration for employment without regard to race, color, religion, sex, sexual orientation, gender identity, national origin, disability or protected veteran status.

For more information, see “Risk Factors—Risks Related to Our Business—Ownership of real estate is subject to environmental risks and liabilities”, “Risk Factors—Risks Related to Our Business—We are subject to risks from adverse weather, natural disasters and adverse impacts from global climate change, and we incur significant costs and invest significant amounts with respect to these matters” included in Part I, Item 1A of this Annual Report on Form 10-K and “Management's Discussion and Analysis of Financial Condition and Results of Operations—Impact of Climate Change” included in Part II, Item 7 of this Annual Report on Form 10-K.

The leases for our properties generally provide that our tenants are responsible for the costs of insurance for the properties we lease to them and the operations conducted on them, including for casualty, liability, fire, extended coverage and rental or business interruption losses.

Under the leases for our Hawaii Properties, our tenants generally are responsible for maintaining insurance;

and, under the leases for our Mainland Properties, our tenants generally are either required to reimburse us for the costs of maintaining the insurance coverage or to purchase such insurance directly and list us as an insured party.

Under the leases for our Hawaii Properties, our tenants generally are responsible for maintaining insurance and, under the leases for our Mainland Properties, our tenants generally are either required to reimburse us for the costs of maintaining the insurance coverage or to purchase such insurance directly and list us as an insured party.

Other Matters

Legislative and regulatory developments may occur at the federal, state and local levels that have direct or indirect impact on the ownership, leasing and operation of our properties.

Legislative and regulatory developments may occur at the federal, state and local levels that have direct or indirect impacts on the ownership, leasing and operation of our properties.

We may need to make expenditures due to changes in federal, state or local laws and regulations, or the application of these laws and regulations to our properties, including the Americans with Disabilities Act, fire and safety regulations, building codes, land use regulations or environmental regulations for containment, abatement or removal of hazardous substances.

Under some of our leases, some of these costs are required to be paid or reimbursed to us by our tenants.

Tabl e of Contents

Internet Website

2 unchanged sentences

We also have a policy outlining procedures for handling concerns or complaints about accounting, internal accounting controls or auditing matters and a governance hotline accessible on our website that shareholders can use to report concerns or complaints about accounting, internal accounting controls or auditing matters or violations or possible violations of our Code of Conduct.

We make available, free of charge, through the “Investors” section of our website, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, as soon as reasonably practicable after these forms are filed with, or furnished to the Securities and Exchange Commission, or SEC.

Any material we file with or furnish to the SEC is also maintained on the SEC website, www.sec.gov.

Security holders may send communications to our Board of Trustees or individual Trustees by writing to the party for whom the communication is intended at c/o Secretary, Industrial Logistics Properties Trust, Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458-1634 or by email at secretary@ilptreit.com.

Securityholders may send communications to our Board of Trustees or individual Trustees by writing to the party for whom the communication is intended at c/o Secretary, Industrial Logistics Properties Trust, Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458-1634 or by email at secretary@ilptreit.com.

Our website address is included several times in this Annual Report on Form 10-K as a textual reference only.

6 unchanged sentences

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

For more information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

For more information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Part II, Item 7 of this Annual Report on Form 10-K and our consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

12 unchanged sentences

• a person who owns 10% or more (by vote or value, directly or constructively under the IRC) of any class of our shares;

Tabl e of Contents

shareholder (as defined below) whose investment in our shares is effectively connected with the conduct of a trade or business in the United States;

13 unchanged sentences

For all these reasons, we urge you and any holder of or prospective acquirer of our shares to consult with a tax advisor about the federal income tax and other tax consequences of the acquisition, ownership and disposition of our shares.

Our intentions and beliefs described in this summary are based upon our understanding of applicable laws and regulations that are in effect as of the date of this Annual Report on Form 10-K.

Our intentions and beliefs described in this summary are based upon our understanding of applicable laws and regulations that are in effect as of February 16, 2024.

If new laws or regulations are enacted which impact us directly or indirectly, we may change our intentions or beliefs.

13 unchanged sentences

Any entity (or other arrangement) treated as a partnership for federal income tax purposes that is a holder of our shares and the partners in such a partnership (as determined for federal income tax purposes) are urged to consult their own tax advisors about the federal income tax consequences and other tax consequences of the acquisition, ownership and disposition of our shares.

Tabl e of Contents

Taxation as a REIT

26 unchanged sentences

• We will be taxed at regular corporate income tax rates on any undistributed “real estate investment trust taxable income”, determined by including our undistributed ordinary income and net capital gains, if any.

We may elect to retain and pay income tax on our net capital gain.

We may elect to retain and pay income tax on our net capital gains.

In addition, if we so elect by making a timely designation to our shareholders, a shareholder would be taxed on its proportionate share of our undistributed capital gain and would generally be expected to receive a credit or refund for its proportionate share of the tax we paid.

Tabl e of Contents

• If we have net income from the disposition of “foreclosure property”, as described in Section 856(e) of the IRC, that is held primarily for sale to customers in the ordinary course of a trade or business or other nonqualifying income from foreclosure property, we will be subject to tax on this income at the highest regular corporate income tax rate.

13 unchanged sentences

In such case, MNR would be deemed to have retained its qualification for taxation as a REIT and the relevant penalties or sanctions for remediation would fall upon us in a manner comparable to the above.

Tabl e of Contents

• As discussed below, we are invested in real estate through subsidiaries that we believe qualify for taxation as REITs.

If it is determined that one of these entities failed to qualify for taxation as a REIT, we may fail one or more of the REIT asset tests.

In such case, we expect that we would be able to avail ourselves of the relief

provisions described below, but would be subject to a tax equal to the greater of $50,000 or the highest regular corporate income tax rate multiplied by the net income we earned from this subsidiary.

In such case, we expect that we would be able to avail ourselves of the relief provisions described below, but would be subject to a tax equal to the greater of $50,000 or the highest regular corporate income tax rate multiplied by the net income we earned from this subsidiary.

If we fail to qualify for taxation as a REIT in any year, then we will be subject to federal income tax in the same manner as a regular C corporation.

25 unchanged sentences

A shareholder that fails or refuses to comply with the request is required by Treasury regulations to submit a statement with its federal income tax return disclosing its actual ownership of our shares and other information.

Tabl e of Contents

For purposes of condition (6), an “individual” generally includes a natural person, a supplemental unemployment compensation benefit plan, a private foundation, or a portion of a trust permanently set aside or used exclusively for charitable purposes, but does not include a qualified pension plan or profit-sharing trust.

As a result, REIT shares owned by an entity that is not an “individual” are considered to be owned by the direct and indirect owners of the entity that are individuals (as so

defined), rather than to be owned by the entity itself.

As a result, REIT shares owned by an entity that is not an “individual” are considered to be owned by the direct and indirect owners of the entity that are individuals (as so defined), rather than to be owned by the entity itself.

Similarly, REIT shares held by a qualified pension plan or profit-sharing trust are treated as held directly by the individual beneficiaries in proportion to their actuarial interests in such plan or trust.

19 unchanged sentences

In such a situation, the REIT parent’s own qualification and taxation as a REIT could be jeopardized on account of the subsidiary’s failure cascading up to the REIT parent, all as described below under the heading “—Asset Tests”.

Tabl e of Contents

We have joined with our subsidiary REITs in filing protective TRS elections, and we may continue to annually make such elections unless and until our ownership of these subsidiaries falls below 10%.

18 unchanged sentences

We cannot be sure that arrangements involving our TRSs will not result in the imposition of one or more of these restrictions or sanctions, but we do not believe that we or our TRSs are or will be subject to these impositions.

Tabl e of Contents

Income Tests.

8 unchanged sentences

• Rents generally do not qualify if the REIT owns 10% or more by vote or value of stock of the tenant (or 10% or more of the interests in the assets or net profits of the tenant, if the tenant is not a corporation), whether directly or after application of attribution rules.

We generally do not intend to lease property to any party if rents from that

property would not qualify as “rents from real property,” but application of the 10% ownership rule is dependent upon complex attribution rules and circumstances that may be beyond our control.

We generally do not intend to lease property to any party if rents from that property would not qualify as “rents from real property”, but application of the 10% ownership rule is dependent upon complex attribution rules and circumstances that may be beyond our control.

Our declaration of trust generally disallows transfers or purported acquisitions, directly or by attribution, of our shares to the extent necessary to maintain our qualification for taxation as a REIT under the IRC.

8 unchanged sentences

The portion of rental income treated as attributable to personal property is determined according to the ratio of the fair market value of the personal property to the total fair market value of the real and personal property that is rented.

Tabl e of Contents

• In addition, “rents from real property” includes both charges we receive for services customarily rendered in connection with the rental of comparable real property in the same geographic area, even if the charges are separately stated, as well as charges we receive for services provided by our TRSs when the charges are not separately stated.

16 unchanged sentences

• which is more than 90 days after the day on which the REIT acquired the property and the property is used in a trade or business which is conducted by the REIT, other than through an independent contractor from whom the REIT itself does not derive or receive any income or a TRS.

Tabl e of Contents

Other than sales of foreclosure property, any gain that we realize on the sale of property held as inventory or other property held primarily for sale to customers in the ordinary course of a trade or business, together known as dealer gains, may be treated as income from a prohibited transaction that is subject to a penalty tax at a 100% rate.

25 unchanged sentences

• Not more than 20% of the value of our total assets may be represented by stock or other securities of our TRSs.

Tabl e of Contents

• Not more than 25% of the value of our total assets may be represented by “nonqualified publicly offered REIT debt instruments” as defined in Section 856(c)(5)(L)(ii) of the IRC.

9 unchanged sentences

The IRC also provides an excepted securities safe harbor to the 10% value test that includes among other items (a) “straight debt” securities, (b) specified rental agreements in which payment is to be made in subsequent years, (c) any obligation to pay “rents from real property”, (d) securities issued by governmental entities that are not dependent in whole or in part on the profits of or payments from a nongovernmental entity, and (e) any security issued by another REIT.

In addition, any debt instrument issued by an entity classified as a partnership for federal income tax purposes, and not otherwise excepted from the definition of

a security for purposes of the above safe harbor, will not be treated as a security for purposes of the 10% value test if at least 75% of the partnership’s gross income, excluding income from prohibited transactions, is qualifying income for purposes of the 75% gross income test.

In addition, any debt instrument issued by an entity classified as a partnership for federal income tax purposes, and not otherwise excepted from the definition of a security for purposes of the above safe harbor, will not be treated as a security for purposes of the 10% value test if at least 75% of the partnership’s gross income, excluding income from prohibited transactions, is qualifying income for purposes of the 75% gross income test.

We have maintained and will continue to maintain records of the value of our assets to document our compliance with the above asset tests and intend to take actions as may be required to cure any failure to satisfy the tests within thirty days after the close of any quarter or within the six month periods described above.

5 unchanged sentences

For these purposes, our “real estate investment trust taxable income” is as defined under Section 857 of the IRC and is computed without regard to the dividends paid deduction and our net capital gain and will generally be reduced by specified corporate-level income taxes that we pay (e.g., taxes on built-in gains or foreclosure property income).

Tabl e of Contents

The IRC generally limits the deductibility of net interest expense paid or accrued on debt properly allocable to a trade or business to 30% of “adjusted taxable income”, subject to specified exceptions.

19 unchanged sentences

Our shareholders would then increase the adjusted tax basis of their shares by the difference between (a) the amount of capital gain dividends that we designated and that they included in their taxable income, and (b) the tax that we paid on their behalf with respect to that capital gain.

Tabl e of Contents

Acquisitions of C Corporations

24 unchanged sentences

We believe that MNR qualified for taxation as a REIT for the period prior to the date we acquired it.

As a result of this acquisition, one of our joint ventures is generally liable for unpaid taxes, including penalties and interest (if any),

As a result of this acquisition, one of our joint ventures is generally liable for unpaid taxes, including penalties and interest (if any), of MNR.

If MNR is deemed to have lost its qualification for taxation as a REIT prior to the date of our acquisition and no relief is available, we or one of our joint ventures would face the following tax consequences:

• as a successor, we or one of our joint ventures would generally inherit any corporate income tax liabilities of MNR, including penalties and interest;

• we or one of our joint ventures would be subject to tax on the built-in gain on each asset of MNR existing at the time we acquired it if we or one of our joint ventures were to dispose of such an asset during the five-year period following the date that we acquired MNR;

• we or one of our joint ventures could be required to pay a special distribution and/or employ applicable deficiency dividend procedures (including interest payments to the IRS) to eliminate any earnings and profits accumulated by MNR for taxable periods that it did not qualify for taxation as a REIT.

inherit, as successor to MNR, any corporate income tax liabilities of MNR, including penalties and interest;

be subject to tax on the built-in gain on each asset of MNR existing at the time we acquired MNR if such an asset were disposed of during the five-year period following the date that we acquired MNR;

be required to eliminate any earnings and profits accumulated by MNR for taxable periods that it did not qualify for taxation as a REIT, through a special distribution and/or employing applicable deficiency dividend procedures (including interest payments to the IRS).

Tabl e of Contents

It is unclear whether the IRC provisions that are generally available to remediate REIT compliance failures will be available to us or one of our joint ventures as a successor in respect of any determination that MNR failed to qualify for taxation as a REIT.

30 unchanged sentences

(1) long-term capital gains, if any, recognized on the disposition of our shares;

Tabl e of Contents

(2) our distributions designated as long-term capital gain dividends (except to the extent attributable to real estate depreciation recapture, in which case the distributions are subject to a maximum 25% federal income tax rate);

31 unchanged sentences

In addition, any loss upon a sale or exchange of our shares held for six months or less will generally be treated as a long-term capital loss to the extent of any long-term capital gain dividends we paid on such shares during the holding period.

Tabl e of Contents

shareholders who are individuals, estates or trusts are generally required to pay a 3.8% Medicare tax on their net investment income (including dividends on our shares (without regard to any deduction allowed by Section 199A of the IRC) and gains from the sale or other disposition of our shares), or in the case of estates and trusts on their net investment income that is not distributed, in each case to the extent that their total adjusted income exceeds applicable thresholds.

13 unchanged sentences

If you are a tax-exempt shareholder, we urge you to consult your own tax advisor to determine the impact of federal, state, local and foreign tax laws, including any tax return filing and other reporting requirements, with respect to your acquisition of or investment in our shares.

We expect that shareholders that are tax-exempt pension plans, individual retirement accounts or other qualifying tax-exempt entities, and that receive (a) distributions from us, or (b) proceeds from the sale of our shares, should not have such amounts treated as UBTI, provided in each case (x) that the shareholder has not financed its acquisition of our shares with “acquisition indebtedness” within the meaning of the IRC, (y) that the shares are not otherwise used in an unrelated trade or business of the tax-exempt entity, and (z) that, consistent with our present intent, we do not hold a residual interest in a real

estate mortgage investment conduit or otherwise hold mortgage assets or conduct mortgage securitization activities that generate “excess inclusion” income.

Taxation of Non-U.S.

15 unchanged sentences

however, we cannot be sure that our shares will continue to be so listed in future taxable years or that any class of our shares that we may issue in the future will be so listed.

Tabl e of Contents

Distributions.

34 unchanged sentences

shareholder holding those shares would be taxed as if the distribution was gain effectively connected with a trade or business in the United States conducted by the non-U.S.

In addition, the applicable withholding agent would be required to withhold from

a distribution to such a non-U.S.

In addition, the applicable withholding agent would be required to withhold from a distribution to such a non-U.S.

shareholder, and remit to the IRS, up to 21% of the maximum amount of any distribution that was or could have been designated as a capital gain dividend.

18 unchanged sentences

We expect that our shares will not be USRPIs because one or both of the following exemptions will be available at all times.

Tabl e of Contents

First, for so long as a class of our shares is listed on a U.S.

34 unchanged sentences

shareholder has established on a properly executed IRS Form W-9 or substantially similar form that it comes within an enumerated exempt category, distributions or proceeds on our shares paid to it during the calendar year, and the amount of tax withheld, if any, will be reported to it and to the IRS.

Tabl e of Contents

Distributions on our shares to a non-U.S.

40 unchanged sentences

federal income tax consequences discussed above.

Tabl e of Contents

ERISA PLANS, KEOGH PLANS AND INDIVIDUAL RETIREMENT ACCOUNTS

19 unchanged sentences

Fiduciaries considering an investment in our securities should consult their own legal advisors as to whether the ownership of our securities involves a non-exempt prohibited transaction.

Tabl e of Contents

“Plan Assets” Considerations

18 unchanged sentences

This opinion is conditioned upon certain assumptions and representations, as discussed above under the heading “Material United States Federal Income Tax Considerations—Taxation as a REIT.”

Tabl e of Contents

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

What changed 10-K

Item 1. Business