What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-04-30 compared with 2023-10-25 · 179 added, 306 removed, 252 unchanged (66% of the section changed)

3 unchanged sentences

(dollars in thousands, except per share data)

September 30, December 31,

March 31, December 31,

Real estate properties:

4 unchanged sentences

Total real estate properties, net 4,741,804 4,772,098

Assets of properties held for sale 57,606 —

Investment in unconsolidated joint venture 116,093 115,360

1 unchanged sentence

Cash and cash equivalents 128,394 112,341

Restricted cash 139,220 92,519

Restricted cash and cash equivalents

108,083 133,382

Rents receivable, including straight line rents of $ 97,798 and $ 94,309 , respectively

4 unchanged sentences

Mortgages and notes payable, net $ 4,307,999 $ 4,305,941

Liabilities of properties held for sale 1,156 —

Accounts payable and other liabilities 73,923 72,455

8 unchanged sentences

Additional paid in capital 1,016,067 1,015,777

Cumulative net income 40,436 117,185

Cumulative net (deficit) income ( 14,207 ) 9,196

Cumulative other comprehensive income 7,213 10,171

2 unchanged sentences

Noncontrolling interest 479,275 491,825

504,623 540,047

Total equity 1,122,500 1,161,779

4 unchanged sentences

(amounts in thousands, except per share data)

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

2023 2022 2023 2022

Three Months Ended March 31,

Rental income $ 112,235 $ 110,258

3 unchanged sentences

General and administrative 7,689 7,907

Acquisition and other transaction related costs — 586 — 586

Loss on impairment of real estate — — 254 100,747

Total expenses 77,449 79,149

Interest and other income 2,852 1,146

Interest expense (including net amortization of debt issuance costs, premiums and discounts of $ 6,743 , $ 35,496 , $ 20,177 , and $ 90,265 , respectively)

Interest expense

( 73,230 ) ( 70,771 )

Loss on sale of real estate — ( 974 )

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

Loss on early extinguishment of debt — ( 21,370 ) ( 359 ) ( 22,198 )

Loss before income tax expense and equity in earnings of unconsolidated joint venture ( 36,859 ) ( 87,243 ) ( 115,627 ) ( 251,603 )

Loss before income taxes and equity in earnings of unconsolidated joint venture

( 35,592 ) ( 39,490 )

Income tax expense ( 33 ) ( 17 )

4 unchanged sentences

Other comprehensive income:

Unrealized (loss) gain on derivatives

( 6,635 ) 8,847 ( 3,392 ) 18,917

unrealized loss (gain) on derivatives attributable to noncontrolling interest

2,290 ( 4,119 ) 3,631 ( 6,617 )

Other comprehensive (loss) income attributable to common shareholders

( 4,345 ) 4,728 239 12,300

Unrealized loss on derivatives ( 4,846 ) ( 8,778 )

unrealized loss on derivatives attributable to noncontrolling interest

Other comprehensive loss attributable to common shareholders ( 2,958 ) ( 7,018 )

Comprehensive loss attributable to common shareholders $ ( 26,361 ) $ ( 31,827 )

Weighted average common shares outstanding (basic and diluted) 65,556 65,309

65,488 65,250 65,389 65,228

Per common share data (basic and diluted):

5 unchanged sentences

Cumulative Total Equity

Number of Additional Other Cumulative Attributable to

Common Common Paid In Cumulative

Comprehensive Common Common

Number of Additional Cumulative Other Cumulative Attributable to

Common Common Paid In Net (Deficit) Comprehensive Common Common

Noncontrolling Total

Shares Shares Capital Net Income

Shares Shares Capital Income Income

Distributions Shareholders

3 unchanged sentences

Share grants, repurchases and forfeitures ( 11,857 ) — 290 — — — 290 — 290

( 2,176 ) — 384 — — — 384 — 384

Distributions to common shareholders — — — — — ( 658 ) ( 658 ) — ( 658 )

1 unchanged sentence

— — — — ( 2,958 ) — ( 2,958 ) ( 1,888 ) ( 4,846 )

Balance at March 31, 2023 65,565,969 656 1,014,585 92,376 14,885 ( 363,877 ) 758,625 527,550 1,286,175

Net loss — — — ( 25,828 ) — — ( 25,828 ) ( 10,752 ) ( 36,580 )

Share grants, repurchases and forfeitures 131,990 1 553 — — — 554 — 554

Distributions to common shareholders — — — — — ( 656 ) ( 656 ) — ( 656 )

Other comprehensive income

— — — — 11,602 — 11,602 419 12,021

Distributions to noncontrolling interest — — — — — — — ( 163 ) ( 163 )

Balance at June 30, 2023 65,697,959 657 1,015,138 66,548 26,487 ( 364,533 ) 744,297 516,992 1,261,289

Net loss — — — ( 26,112 ) — — ( 26,112 ) ( 10,079 ) ( 36,191 )

Share grants, repurchases and forfeitures 147,114 1 330 — — — 331 — 331

Distributions to common shareholders — — — — — ( 656 ) ( 656 ) — ( 656 )

Other comprehensive loss — — — — ( 4,345 ) — ( 4,345 ) ( 2,290 ) ( 6,635 )

Balance at September 30, 2023 65,845,073 $ 658 $ 1,015,468 $ 40,436 $ 22,142 $ ( 365,189 ) $ 713,515 $ 504,623 $ 1,218,138

Cumulative Total Equity

Number of Additional Other Cumulative Attributable to

Common Common Paid In Cumulative

Comprehensive Common Common

Noncontrolling Total

Shares Shares Capital Net Income

Distributions Shareholders

Interest Equity

Balance at March 31, 2024 65,831,530 $ 658 $ 1,016,067 $ ( 14,207 ) $ 7,213 $ ( 366,506 ) $ 643,225 $ 479,275 $ 1,122,500

Balance at December 31, 2022 65,568,145 $ 656 $ 1,014,201 $ 117,185 $ 21,903 $ ( 363,221 ) $ 790,724 $ 540,047 $ 1,330,771

1 unchanged sentence

Share grants, repurchases and forfeitures ( 2,176 ) — 384 — — — 384 — 384

Other comprehensive income

— — — — 3,908 — 3,908 1,724 5,632

Contributions from noncontrolling interest — — — — — — — 591,268 591,268

Distributions to common shareholders — — — — — ( 656 ) ( 656 ) — ( 656 )

Other comprehensive loss — — — — ( 7,018 ) — ( 7,018 ) ( 1,760 ) ( 8,778 )

Balance at March 31, 2023 65,565,969 $ 656 $ 1,014,585 $ 92,376 $ 14,885 $ ( 363,877 ) $ 758,625 $ 527,550 $ 1,286,175

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

Share grants, repurchases and forfeitures 23,600 — 796 — — — 796 — 796

Other comprehensive income

— — — — 3,664 — 3,664 774 4,438

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

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

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

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

Share grants, repurchases and forfeitures 141,245 2 384 — — — 386 — 386

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.

2 unchanged sentences

(dollars in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss $ ( 33,902 ) $ ( 35,546 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

Depreciation 31,540 31,224

Loss on impairment of real estate 254 100,747

Net amortization of debt issuance costs, premiums and discounts 6,654 6,713

1 unchanged sentence

Amortization of deferred leasing costs 705 559

Loss on equity securities — 5,758

Straight line rental income ( 3,489 ) ( 3,762 )

Loss on early extinguishment of debt 359 22,198

Loss on sale of real estate — 974

Proceeds from settlement of derivatives ( 16,537 ) ( 12,976 )

General and administrative expenses paid in common shares

Other non-cash expenses 7,210 6,145

8 unchanged sentences

CASH FLOWS FROM INVESTING ACTIVITIES:

Real estate acquisitions — ( 3,589,085 )

Real estate improvements ( 2,132 ) ( 3,784 )

Proceeds from sale of marketable securities — 140,792

Proceeds from sale of real estate 243 —

Purchase of interest rate cap

Proceeds from settlement of derivatives 16,537 12,976

Distributions in excess of earnings from unconsolidated joint venture 4,400 —

Net cash provided by (used in) investing activities 31,420 ( 3,457,034 )

Proceeds from sale of real estate — 243

Net cash (used in) provided by investing activities

( 11,770 ) 9,435

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of mortgage notes payable 91,000 3,335,000

Repayment of mortgage notes payable ( 4,466 ) ( 5,530 )

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

Repayments of revolving credit facility — ( 185,000 )

Payment of debt issuance costs ( 129 ) ( 34 )

Distributions to common shareholders ( 658 ) ( 656 )

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

Repurchase of common shares ( 49 ) ( 3 )

Distributions to noncontrolling interest ( 163 ) —

Net cash provided by financing activities 36,240 3,472,399

Increase in cash, cash equivalents and restricted cash 81,723 97,272

Cash, cash equivalents and restricted cash at beginning of period 140,780 29,397

Cash, cash equivalents and restricted cash at end of period $ 222,503 $ 126,669

Net cash used in financing activities ( 5,465 ) ( 6,223 )

(Decrease) increase in cash and cash equivalents and restricted cash and cash equivalents ( 9,246 ) 4,379

Cash and cash equivalents and restricted cash and cash equivalents at beginning of period 245,723 140,780

Cash and cash equivalents and restricted cash and cash equivalents at end of period $ 236,477 $ 145,159

SUPPLEMENTAL DISCLOSURES:

Interest paid $ 59,621 $ 68,600

Income taxes paid $ 85 $ 223

Interest capitalized $ 545 $ 68

Cash received for income tax refund $ 80 $ —

NON-CASH INVESTING ACTIVITIES:

Real estate acquired by assumption of mortgage notes payable $ — $ 323,432

Real estate improvements accrued not paid $ 348 $ 2,092

NON-CASH FINANCING ACTIVITIES:

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

SUPPLEMENTAL DISCLOSURE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH:

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

As of September 30,

SUPPLEMENTAL DISCLOSURE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS:

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

As of March 31,

Cash and cash equivalents $ 128,394 $ 61,250

Restricted cash (1)

Restricted cash and cash equivalents (1)

108,083 83,909

Total cash, cash equivalents and restricted cash shown in the statements of cash flows $ 222,503 $ 126,669

(1) Restricted cash consists of amounts escrowed for capital expenditures at certain of our mortgaged properties and cash held for the operations of our consolidated joint venture.

Total cash and cash equivalents and restricted cash shown in the statements of cash flows $ 236,477 $ 145,159

(1) Restricted cash and cash equivalents consists of amounts escrowed for capital expenditures at certain of our mortgaged properties and cash held for the operations of our consolidated joint venture.

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

14 unchanged sentences

Significant estimates in the condensed consolidated financial statements include purchase price allocations, useful lives of fixed assets and assessment of impairment of real estate and related intangibles.

Recent Accounting Pronouncements

New Accounting Pronouncements.

In November 2023, the Financial Accounting Standards Board issued Accounting Standards Update, or ASU, 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which requires public entities, including those with a single reportable segment, to:

(i) provide disclosures of significant segment expenses and other segment items if they are regularly provided to the chief operating decision maker, or the CODM, and included in each reported measure of segment profit or loss;

(ii) provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by Accounting Standards Codification, or ASC, 280, Segment Reporting , in interim periods;

and (iii) disclose the CODM’s title and position, as well as an explanation of how the CODM uses the reported measures and other disclosures.

ASU 2023-07 does not change how a public entity identifies its operating segments, aggregates those operating segments or applies the quantitative thresholds to determine its reportable segments.

ASU 2023-07 is required to be applied retrospectively and is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

We are currently evaluating the impact ASU 2023-07 will have on our condensed consolidated financial statements.

Real Estate Investments

As of September 30, 2023, our portfolio was comprised of 413 consolidated properties containing approximately 59,983,000 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 industrial properties containing approximately 43,254,000 rentable square feet located in 38 other states, or our Mainland Properties, which included 94 properties in 27 states totaling approximately 20,981,000 rentable square feet, owned by a consolidated joint venture in which we own a 61 % equity interest.

As of September 30, 2023, we also owned a 22 % equity interest in an unconsolidated joint venture which owns 18 industrial properties located in 12 states totaling approximately 11,726,000 rentable square feet.

As of March 31, 2024, our portfolio was comprised of 411 properties containing approximately 59,893,000 rentable square feet located in 39 states, including 226 buildings, leasable land parcels and easements containing approximately 16,729,000 rentable square feet that were primarily industrial lands located on the island of Oahu, Hawaii, or our Hawaii Properties, and 185 properties containing approximately 43,164,000 rentable square feet that were industrial and logistics properties located in 38 other states, or our Mainland Properties.

As of March 31, 2024, we also owned a 22 % equity interest in an unconsolidated joint venture.

We operate in one business segment:

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

We incurred capital expenditures and leasing costs at certain of our properties of $ 5,275 and $ 8,574 during the three months ended September 30, 2023 and 2022, respectively, and $ 17,857 and $ 22,419 for the nine months ended September 30, 2023 and 2022, respectively.

During the nine months ended September 30, 2023, we committed $ 7,273 for expenditures related to tenant improvements and leasing costs for leases executed during the period for approximately 3,868,000 rentable square feet.

Committed, but unspent, tenant related obligations based on existing leases as of September 30, 2023 were $ 5,923 , of which $ 3,529 is expected to be spent during the next 12 months.

We regularly evaluate whether events or changes in circumstances have occurred that could indicate an impairment in the value of long lived assets.

Impairment indicators may include declining tenant occupancy, lack of progress leasing vacant space, tenant bankruptcies, low long term prospects for improvement in property performance, weak or declining tenant profitability, cash flow or liquidity, our decision to dispose of an asset before the end of its estimated useful life and legislative, market or industry changes that could permanently reduce the value of a property.

If there is an indication that the carrying value of an asset is not recoverable, we estimate the projected undiscounted cash flows to determine if an impairment loss should be recognized.

The future net undiscounted cash flows are subjective and are based in part on assumptions regarding hold periods, market rents and terminal capitalization rates.

If the carrying value exceeds the projected undiscounted cash flows, we determine the amount of any impairment loss by comparing the historical carrying value to estimated fair value.

We estimate fair value through an evaluation of recent financial performance and projected discounted cash flows using standard industry valuation techniques.

In addition to consideration of impairment upon the events or changes in circumstances described above, we regularly evaluate the remaining useful lives of our long lived assets.

If we change our estimate of the remaining useful lives, we allocate the carrying value of the affected assets over their revised remaining useful lives.

We incurred capital expenditures at certain of our properties of $ 3,373 , and $ 4,931 , during the three months ended March 31, 2024 and 2023, respectively.

Capital expenditures include leasing costs of $ 2,127 and $ 1,562 for the three months ended March 31, 2024 and 2023, respectively.

During the three months ended March 31, 2024, we committed $ 3,471 for expenditures related to tenant improvements and leasing costs for leases executed during the period for approximately 1,981,000 rentable square feet.

Committed, but unspent, tenant related obligations based on existing leases as of March 31, 2024 were $ 5,981 , all of which is expected to be spent during the next 12 months.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

1 unchanged sentence

(dollars in thousands, except per share data)

During the nine months ended September 30, 2023, we recognized a loss on impairment of real estate of $ 254 to reduce the carrying value of a property that was classified as held for sale at September 30, 2023 to its estimated sales price less costs to sell.

During the nine months ended September 30, 2022, we recognized a $ 100,747 loss on impairment for 25 properties we acquired as part of our acquisition of Monmouth Real Estate Investment Corporation, or MNR, on February 25, 2022, to adjust the carrying value of these properties to their estimated fair value.

Disposition Activities

In March 2023, we received gross proceeds of $ 270 and recognized a $ 974 net loss on sale of real estate as a result of a property in Everett, Washington partially taken by eminent domain.

As of September 30, 2023, we had three Mainland Properties with an aggregate carrying value of $ 56,944 , classified as held for sale in our condensed consolidated balance sheet.

As of October 25, 2023, one of these properties is under agreement to sell for a sales price of $ 21,500 , excluding closing costs.

This pending sale is subject to conditions;

accordingly, we cannot be sure that we will complete this sale, that this sale will not be delayed or that the terms will not change.

We terminated agreements to sell two of these properties for an aggregate sales price of $ 43,765 and we continue to market one of these two properties for sale.

Consolidated Joint Venture

We own a 61 % equity interest in Mountain Industrial REIT LLC, or Mountain JV, or our consolidated joint venture, which owns 94 properties in 27 states totaling approximately 20,981,000 rentable square feet.

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

We recognized a 39 % noncontrolling interest in our condensed consolidated financial statements for the three months ended September 30, 2023 and 2022, for the nine months ended September 30, 2023 and the period from this joint venture’s formation date, February 25, 2022 to September 30, 2022.

The portion of this joint venture's net loss not attributable to us, or $ 10,238 and $ 38,318 , for the three months ended September 30, 2023 and 2022, respectively, and $ 31,642 and $ 49,360 for the nine months ended September 30, 2023 and for the period from February 25, 2022 to September 30, 2022, respectively, is reported as net loss attributable to noncontrolling interest in our condensed consolidated statements of comprehensive income (loss).

As of September 30, 2023, our consolidated joint venture had total assets of $ 3,065,834 and total liabilities of $ 1,781,222 .

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

We recognized net loss attributable to noncontrolling interest in our condensed consolidated financial statements for the three months ended March 31, 2024 and 2023 of $ 10,514 and $ 10,728 , respectively.

As of March 31, 2024, our consolidated joint venture had total assets of $ 2,991,343 and total liabilities of $ 1,771,327 .

Consolidated Tenancy in Common

An unrelated third party owns an approximate 33 % tenancy in common interest in one property located in Somerset, New Jersey with approximately 64,000 rentable square feet, and we own the remaining 67 % tenancy in common interest in this property.

The portion of this property’s net income (loss) not attributable to us, or $ 159 and ($ 29 ), for the three months ended September 30, 2023 and 2022, respectively, and $ 74 and ($ 42 ) for the nine months ended September 30, 2023 and the period from the date we acquired our interest in this property, February 25, 2022 to September 30, 2022, respectively, is reported as net loss attributable to noncontrolling interest in our condensed consolidated statements of comprehensive income (loss).

During the nine months ended September 30, 2023, this tenancy in common made cash distributions of $ 225 to the unrelated third party investor, which is reflected as a decrease in noncontrolling interest in our condensed consolidated balance sheet.

We recognized net income (loss) attributable to noncontrolling interest in our condensed consolidated financial statements for the three months ended March 31, 2024 and 2023 of $ 15 and ($ 9 ), respectively.

During the three months ended March 31, 2024, the tenancy in common made cash distributions of $ 163 to the unrelated third party investor.

As of March 31, 2024, the tenancy in common had total assets of $ 10,877 and total liabilities of $ 60 .

Unconsolidated Joint Venture

2 unchanged sentences

We recognize changes in the fair value of our investment in the unconsolidated joint venture as equity in earnings of the unconsolidated joint venture in our condensed consolidated statements of comprehensive income (loss).

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

We are a lessor of industrial and logistics properties.

Our leases provide our tenants with the contractual right to use and economically benefit from all the physical space specified in their respective leases;

therefore, we have determined to evaluate our leases as lease arrangements.

We recognize rental income from operating leases on a straight line basis over the lease term when we have determined that the collectability of substantially all of the lease payments is probable.

We increased rental income by $ 3,414 and $ 3,794 to record revenue on a straight line basis during the three months ended September 30, 2023 and 2022, respectively, and $ 10,531 and $ 8,170 for the nine months ended September 30, 2023 and 2022, respectively.

Our leases provide our tenants with the contractual right to use and economically benefit from all the physical space specified in their respective leases and are generally classified as operating leases.

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 $ 19,310 and $ 16,664 for the three months ended September 30, 2023 and 2022, respectively, and $ 58,700 and $ 46,071 for the nine months ended September 30, 2023 and 2022, respectively.

Such payments totaled $ 21,175 and $ 21,099 for the three months ended March 31, 2024 and 2023, respectively.

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

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

We define annualized rental revenues as the annualized contractual base rents from our tenants pursuant to our lease agreements 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.

Right of Use Assets and Lease Liabilities

We are the lessee for three of our properties subject to ground leases and one office property that we assumed as part of our acquisition of MNR.

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

The values of our right of use assets and related lease liabilities were $ 4,757 and $ 4,837 , respectively, as of September 30, 2023, and $ 5,084 and $ 5,149 , respectively, as of December 31, 2022.

We are the lessee for three of our properties subject to ground leases and one office lease that we assumed in an acquisition.

For leases with a term greater than 12 months under which we are the lessee, we recognize right of use assets and lease liabilities.

The values of our right of use assets and related lease liabilities were $ 4,534 and $ 4,621 , respectively, as of March 31, 2024, and $ 4,646 and $ 4,730 , respectively, as of December 31, 2023.

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

We sublease a portion of our office property assumed in the acquisition of MNR.

Rent expense incurred under this lease, net of sublease revenue, was $ 12 and $ 176 for three months ended September 30, 2023 and 2022, respectively, and $ 141 and $ 355 for the nine months ended September 30, 2023 and the period from February 25, 2022 to September 30, 2022, respectively.

Rent expense is included in general and administrative expense in our condensed consolidated statements of comprehensive income (loss).

Tenant Concentration

Subsidiaries of FedEx Corporation and Amazon.com Services, Inc.

were responsible for approximately 29.8 % and 6.7 % of our annualized rental revenues as of September 30, 2023, respectively, and 29.6 % and 6.8 % as of September 30, 2022, respectively.

Geographic Concentration

For the three months ended September 30, 2023 and 2022, approximately 28.1 % and 26.8 %, respectively, of our rental income was from our Hawaii Properties.

For the nine months ended September 30, 2023 and 2022, approximately 27.9 % and 30.6 %, respectively, of our rental income was from our Hawaii Properties.

For the three months ended March 31, 2024 and 2023, our Hawaii Properties represented 28.0 % and 27.4 %, respectively, of our rental income.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

1 unchanged sentence

(dollars in thousands, except per share data)

As of September 30, 2023 and December 31, 2022, our outstanding indebtedness consisted of the following:

Principal Balance at

Carrying Value of Collateral at

September 30, December 31, Interest September 30, December 31,

Entity Secured By

2023 2022 Rate (1)

Type Maturity

Tenant Concentration

Subsidiaries of FedEx Corporation, or FedEx, and subsidiaries of Amazon.com Services, Inc., or Amazon, represented 28.9 % and 6.7 % of our annualized rental revenues as of March 31, 2024, respectively, and 30.1 % and 6.9 % as of March 31, 2023, respectively.

Our outstanding indebtedness as of March 31, 2024 is summarized below:

Properties Principal Interest Carrying Value

Entity Secured By Balance Rate (1)

Type Maturity of Collateral

$ 1,235,000 6.18 % Floating 10/09/2024 $ 1,036,749

2 unchanged sentences

1,400,000 5.81 % Floating 03/09/2025 1,843,036

Mountain JV 4

91,000 6.25 % Fixed 06/10/2030 181,935

Mountain JV 1

11,045 3.67 % Fixed 05/01/2031 28,769

Mountain JV 1

12,601 4.14 % Fixed 07/01/2032 43,193

Mountain JV 1

28,026 4.02 % Fixed 10/01/2033 84,206

Mountain JV 1

39,198 4.13 % Fixed 11/01/2033 129,302

Mountain JV 1

23,989 3.10 % Fixed 06/01/2035 46,063

Mountain JV 1

38,730 2.95 % Fixed 01/01/2036 98,411

Mountain JV 1

43,269 4.27 % Fixed 11/01/2037 109,573

Mountain JV 1

48,620 3.25 % Fixed 01/01/2038 112,694

— 13,556 N/A Fixed 10/1/2028 — 63,314

— 4,865 N/A Fixed 4/1/2030 — 39,724

— 5,145 N/A Fixed 4/1/2030 — 39,724

— 14,392 N/A Fixed 9/1/2030 — 50,825

Total/weighted average 4,321,478 5.35 % $ 4,705,888

4,330,370 4,290,363 5.47 % $ 4,763,350 $ 4,857,352

Unamortized debt issuance costs ( 13,479 )

Total indebtedness, net $ 4,307,999

(1) Interest rates are as of September 30, 2023 and reflect the impact of interest rate caps, if any, and exclude the impact of the amortization of debt issuance costs, premiums and discounts.

Our $ 1,235,000 loan, or the ILPT Floating Rate Loan, matures in October 2024, subject to three , one year extension options, and requires that interest be paid at an annual rate of secured overnight financing rate, or SOFR, plus a weighted average premium of 3.93 %.

The weighted average interest rate payable under the ILPT Floating Rate Loan was 6.18 %, including the impact of our interest rate cap on SOFR of 2.25 %, for both the three and nine months ended September 30, 2023.

Beginning in October 2023, subject to the satisfaction of certain conditions, we have the option to prepay the ILPT Floating Rate Loan in full or in part at any time at par with no premium.

Our $ 1,400,000 loan, or 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 of SOFR plus a premium of 2.77 %.

The weighted average annual interest rate payable under the Floating Rate Loan was 6.17 %, including the impact of our interest rate cap on SOFR of 3.40 %, for both the three and nine months ended September 30, 2023.

The weighted average annual interest rate payable 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.

Subject to the satisfaction of certain conditions, we have the option to prepay up to $ 280,000 of the Floating Rate Loan at par with no premium, and to prepay the balance of the Floating Rate Loan at any time, subject to a premium.

See Note 9 for more information regarding our interest rate caps.

In May 2023, our consolidated joint venture obtained a $ 91,000 fixed rate, interest only mortgage loan secured by four properties owned by our consolidated joint venture.

This mortgage loan matures in June 2030 and requires that interest be paid at an annual rate of 6.25 %.

A portion of the net proceeds from this mortgage loan was used to repay four outstanding mortgage loans of our consolidated joint venture with an aggregate outstanding principal balance of $ 35,910 and a weighted average interest rate of 3.70 %.

We recognized a loss on early extinguishment of debt of $ 359 for the nine months ended September 30, 2023 in conjunction with the repayment of these mortgage loans.

(1) Interest rates reflect the impact of interest rate caps, if any, and exclude the impact of the amortization of debt issuance costs, premiums and discounts.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

1 unchanged sentence

(dollars in thousands, except per share data)

Our outstanding indebtedness as of December 31, 2023 is summarized below:

Properties Principal Interest Carrying Value

Entity Secured By Balance Rate (1)

Type Maturity of Collateral

ILPT 104 $ 1,235,000 6.18 % Floating 10/09/2024 $ 1,044,028

ILPT 186 650,000 4.31 % Fixed 02/07/2029 490,149

ILPT 17 700,000 4.42 % Fixed 03/09/2032 505,153

Mountain JV 82 1,400,000 6.17 % Floating 03/09/2024 1,857,062

Mountain JV 4 91,000 6.25 % Fixed 06/10/2030 183,264

Mountain JV 1 11,380 3.67 % Fixed 05/01/2031 28,932

Mountain JV 1 12,916 4.14 % Fixed 07/01/2032 43,510

Mountain JV 1 28,622 4.02 % Fixed 10/01/2033 84,793

Mountain JV 1 40,019 4.13 % Fixed 11/01/2033 129,749

Mountain JV 1 24,433 3.10 % Fixed 06/01/2035 46,394

Mountain JV 1 39,411 2.95 % Fixed 01/01/2036 99,108

Mountain JV 1 43,850 4.27 % Fixed 11/01/2037 110,097

Mountain JV 1 49,313 3.25 % Fixed 01/01/2038 113,477

Total/weighted average 4,325,944 5.47 % $ 4,735,716

Unamortized debt issuance costs ( 20,003 )

Total indebtedness, net $ 4,305,941

(1) Interest rates reflect the impact of interest rate caps, if any, and exclude the impact of the amortization of debt issuance costs, premiums and discounts.

Our $ 1,235,000 loan, or the ILPT Floating Rate Loan, which is secured by 104 of our properties, matures in October 2024, subject to three , one year extension options, and requires that interest be paid at an annual rate of secured overnight financing rate, or SOFR, plus a weighted average premium of 3.93 %.

The weighted average interest rate under the ILPT Floating Rate Loan was 6.18 %, including the impact of our interest rate cap on SOFR of 2.25 %, as of March 31, 2024 and December 31, 2023, and for the three months ended March 31, 2024 and 2023.

Subject to the satisfaction of certain conditions, we have the option to prepay the ILPT Floating Rate Loan in full or in part at any time at par with no premium.

Our consolidated joint venture’s $ 1,400,000 loan, or the Mountain Floating Rate Loan, was scheduled to mature in March 2024, subject to three , one year extension options, and required that interest be paid at an annual rate of SOFR plus a premium of 2.77 %.

In March 2024, our consolidated joint venture exercised the first of its three , one year options to extend the maturity date of this loan.

As part of the extension, our consolidated joint venture purchased a one year interest rate cap for $ 26,175 with a SOFR strike rate equal to 3.04 %, which replaced the previous interest rate cap with a SOFR strike rate equal to 3.40 %.

As of March 31, 2024 and December 31, 2023, the interest rate under the Mountain Floating Rate Loan was 5.81 % and 6.17 %, respectively.

The weighted average interest rate under the Mountain Floating Rate Loan was 6.09 % and 6.17 % for the three months ended March 31, 2024 and 2023, respectively, including the impact of our interest rate caps.

Subject to the satisfaction of certain conditions, we have the option to prepay up to $ 280,000 of the Mountain Floating Rate Loan at par with no premium, and to prepay the balance of the Mountain Floating Rate Loan at any time, subject to a premium.

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

Fair Value of Assets and Liabilities

Our financial instruments include cash and cash equivalents, restricted cash, mortgages and notes payables, accounts payable and interest rate caps.

At September 30, 2023 and December 31, 2022, 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, 2023

At December 31, 2022

Carrying Carrying

Fair Value Value (1)

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

$ 647,077 $ 613,520 $ 646,669 $ 592,295

Fixed rate loan, 6.25 % interest rate, due in 2030

90,038 94,438 — —

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

11,712 11,009 12,691 11,713

Fixed rate loan, 4.42 % interest rate, due in 2032

695,134 609,714 694,704 623,133

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

13,228 12,611 14,144 13,182

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

29,213 27,185 30,949 28,195

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

40,832 38,181 43,219 39,573

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

24,873 21,837 26,175 22,373

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

40,087 34,723 42,087 35,444

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

44,423 41,466 46,109 41,880

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

50,001 43,463 52,031 43,878

Fixed rate loan, 3.76 % interest rate, due in 2028 (2)

— — 13,556 12,784

Fixed rate loan, 3.77 % interest rate, due in 2030 (2)

— — 4,865 4,553

Fixed rate loan, 3.85 % interest rate, due in 2030 (2)

— — 5,145 4,829

Fixed rate loan, 3.56 % interest rate, due in 2030 (2)

— — 14,392 13,315

$ 1,686,618 $ 1,548,147 $ 1,646,736 $ 1,487,147

(1) Includes unamortized debt issuance costs, premiums and discounts of $ 8,751 and $ 8,628 at September 30, 2023 and December 31, 2022, respectively.

(2) This loan was repaid in May 2023.

We estimate the fair value of our mortgage notes payable using significant unobservable inputs (Level 3), such as discounted cash flow analyses and prevailing market rates as of the measurement date.

See Note 10 for further information regarding our interest rate caps.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

1 unchanged sentence

(dollars in thousands, except per share data)

The table below presents certain of our assets measured on a recurring and non-recurring basis at fair value at September 30, 2023 and December 31, 2022, categorized by the level of inputs as defined in the fair value hierarchy under GAAP, used in the valuation of each asset:

The required principal payments due during the next five years and thereafter under all our outstanding debt as of March 31, 2024 are as follows:

2024 $ 1,248,648

2025 1,418,794

Thereafter 1,593,323

Fair Value of Assets and Liabilities

Our financial instruments include cash and cash equivalents, restricted cash and cash equivalents, mortgages and notes payable, accounts payable and interest rate caps.

As of March 31, 2024 and December 31, 2023, 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 for our fixed rate mortgage notes payable.

Our fixed rate mortgage notes payable had an aggregate carrying value of $ 1,678,351 and $ 1,682,501 as of March 31, 2024 and December 31, 2023, respectively, and a fair value of $ 1,531,780 and $ 1,553,863 as of March 31, 2024 and December 31, 2023, respectively.

We estimate the fair value of our fixed rate mortgage notes payable using significant unobservable inputs (Level 3), including discounted cash flow analyses and prevailing market interest rates.

The table below presents certain of our assets measured on a recurring basis at fair value as of March 31, 2024 and December 31, 2023, categorized by the level of inputs as defined in the fair value hierarchy under ASC 820, Fair Value Measurement , used in the valuation of each asset:

Quoted Prices in Significant Other Significant

2 unchanged sentences

Total (Level 1) (Level 2) (Level 3)

At September 30, 2023

Recurring fair value measurements

Investment in unconsolidated joint venture

$ 124,411 $ — $ — $ 124,411

Interest rate cap derivatives (1)

$ 51,322 $ — $ 51,322 $ —

Non-recurring fair value measurements

Real estate properties (2)

$ 1,414 $ — $ — $ 1,414

At December 31, 2022

Recurring fair value measurements

As of March 31, 2024

Investment in unconsolidated joint venture $ 116,093 $ — $ — $ 116,093

$ 124,358 $ — $ — $ 124,358

Interest rate cap derivatives (1)

$ 73,133 $ — $ 73,133 $ —

Non-recurring fair value measurements

Real estate properties (2)

Interest rate caps

$ 44,700 $ — $ 44,700 $ —

(1) The estimated fair values of our interest rate cap derivatives are based on then current market prices in secondary markets for similar derivative contracts.

(2) At September 30, 2023 and December 31, 2022, we reduced the carrying value of one property and 25 properties, respectively, to their estimated fair value based on third party offers.

See Note 2 for more information.

At September 30, 2023 and December 31, 2022, the fair value of our investment in the unconsolidated joint venture was determined by discounting expected future cash flows based on prevailing market rents over a holding period and including an exit capitalization rate to determine the final year of cash flows.

The discount rates, exit capitalization rates and holding periods used are Level 3 significant unobservable inputs and are shown in the table below:

Capitalization

Valuation Technique

Discount Rates

Holding Periods

At September 30, 2023

As of December 31, 2023

Investment in unconsolidated joint venture $ 115,360 $ — $ — $ 115,360

Discounted cash flow

Interest rate caps

$ 30,576 $ — $ 30,576 $ —

The fair value of our investment in the unconsolidated joint venture is determined by applying our ownership percentage to the net asset value of the entity.

The net asset value of the unconsolidated joint venture is determined by using similar estimation techniques as those used for consolidated real estate properties, including discounting expected future cash flows of the underlying real estate investments based on prevailing market rents over a holding period and including an exit capitalization rate to determine the final year of cash flows.

The fair values of our interest rate cap derivatives are based on prevailing market prices in secondary markets for similar derivative contracts as of the measurement date.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

The discount rates, exit capitalization rates and holding periods used to determine the fair value of our investment in the unconsolidated joint venture are Level 3 significant unobservable inputs and are shown in the table below:

Valuation Discount Capitalization Holding

Technique Rates Rates Periods

As of March 31, 2024

Investment in unconsolidated joint venture Discounted cash flow 5.75 % - 8.00 %

5.25 % - 6.50 %

10 - 12 years

At December 31, 2022

As of December 31, 2023

Investment in unconsolidated joint venture Discounted cash flow 5.75 % - 8.00 %

5.25 % - 6.50 %

4.75 % - 6.00 %

The table below presents a summary of the changes in fair value for our investment in the unconsolidated joint venture:

Ended September 30,

Three Months Ended March 31,

Beginning balance $ 115,360 $ 124,358

$ 129,082 $ 143,716 $ 124,358 $ 143,021

Equity in earnings of unconsolidated joint venture 1,723 3,961

719 3,297 7,423 6,634

Distributions from unconsolidated joint venture ( 990 ) ( 990 )

( 5,390 ) ( 1,320 ) ( 7,370 ) ( 3,962 )

Ending balance $ 116,093 $ 127,329

$ 124,411 $ 145,693 $ 124,411 $ 145,693

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

Shareholders’ Equity

Common Share Awards

On June 1, 2023, in accordance with our Trustee compensation arrangements, we awarded to each of our seven Trustees 20,000 of our common shares, valued at $ 1.78 per share, the closing price of our common shares on The Nasdaq Stock Market LLC, or Nasdaq, on that day.

On September 13, 2023, we awarded under our equity compensation plan an aggregate of 188,350 of our common shares, valued at $ 3.63 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, 2023, we purchased an aggregate of 40,636 and 48,722 of our common shares, respectively, valued at a weighted average price of $ 3.54 and $ 3.29 per common share, respectively, from our officers and certain other current and former employees of RMR in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares.

During the three months ended March 31, 2024, we purchased an aggregate of 11,857 of our common shares, valued at a weighted average price of $ 4.12 per common share, from certain former employees 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.

We withheld and purchased these common shares at their fair market values based upon the trading prices of our common shares at the close of trading on The Nasdaq Stock Market LLC, or Nasdaq, on the applicable purchase dates.

Distributions

During the nine months ended September 30, 2023, we declared and paid regular quarterly distributions to common shareholders as follows:

Declaration Date Record Date Payment Date Distribution Per Share Total Distribution

During the three months ended March 31, 2024, we declared and paid a regular quarterly distribution to common shareholders as follows:

Distribution Total

Declaration Date Record Date Payment Date Per Share Distribution

January 11, 2024 January 22, 2024 February 15, 2024 $ 0.01 $ 658

April 13, 2023 April 24, 2023 May 18, 2023 0.01 656

July 13, 2023 July 24, 2023 August 17, 2023 0.01 656

$ 0.03 $ 1,968

On October 12, 2023, we declared a regular quarterly distribution to common shareholders of record on October 23, 2023 of $ 0.01 per share, or approximately $ 658 .

We expect to pay this distribution to our shareholders on or about November 16, 2023 using cash balances.

On April 11, 2024, we declared a regular quarterly distribution to common shareholders of record on April 22, 2024 of $ 0.01 per share, or approximately $ 658 .

We expect to pay this distribution to our shareholders on or about May 16, 2024 using cash on hand.

Business and Property Management Agreements with RMR

4 unchanged sentences

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 $ 5,919 and $ 17,301 for the three and nine months ended September 30, 2023, respectively, and $ 6,465 and $ 17,821 for the three and nine months ended September 30, 2022, respectively.

Based on our common share total return, as defined in our business management agreement, as of September 30, 2023 and 2022, no incentive fees are included in the net business management fees we recognized for the three and nine months ended September 30, 2023 or 2022.

The actual amount of annual incentive fees for 2023, 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, 2023, and will be payable in January 2024.

We did no t incur any incentive fee payable to RMR for the year ended December 31, 2022.

We include business management fees in general and administrative expenses in our condensed consolidated statements of comprehensive income (loss).

INDUSTRIAL LOGISTICS PROPERTIES TRUST

1 unchanged sentence

(dollars in thousands, except per share data)

Pursuant to our property management agreement with RMR, we recognized aggregate property management and construction supervision fees of $ 3,464 and $ 10,286 for the three and nine months ended September 30, 2023, respectively, and $ 3,270 and $ 8,797 for the three and nine months ended September 30, 2022, respectively.

Of these amounts, for the three and nine months ended September 30, 2023, $ 3,293 and $ 9,745 , respectively, were included in other operating expenses in our condensed consolidated statements of comprehensive income (loss) and $ 171 and $ 541 , respectively, were capitalized as building improvements in our condensed consolidated balance sheets.

For the three and nine months ended September 30, 2022, $ 2,976 and $ 8,104 , respectively, were included in other operating expenses in our condensed consolidated statements of comprehensive income (loss) and $ 294 and $ 693 , respectively, were capitalized as buildings and improvements in our condensed consolidated balance sheets.

Pursuant to our business management agreement with RMR, we recognized business management fees of $ 5,830 and $ 5,726 for the three months ended March 31, 2024 and 2023, respectively.

Based on our common share total return, as defined in our business management agreement, as of March 31, 2024 and 2023, no incentive fees are included in the business management fees we recognized for the three months ended March 31, 2024 or 2023.

The actual amount of annual incentive fees for 2024, 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, 2024, and will be payable in January 2025.

We did no t incur any incentive fee payable to RMR for the year ended December 31, 2023.

We include business management fees in general and administrative expenses in our condensed consolidated statements of comprehensive income (loss).

Pursuant to our property management agreement with RMR, we recognized aggregate property management and construction supervision fees of $ 3,403 and $ 3,452 for the three months ended March 31, 2024 and 2023, respectively.

Of these amounts, for the three months ended March 31, 2024 and 2023, $ 3,330 and $ 3,319 , respectively, were included in other operating expenses in our condensed consolidated statements of comprehensive income (loss) and $ 73 and $ 133 , 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.

We are generally responsible for all our operating expenses, including certain expenses incurred or arranged by RMR on our behalf.

We are generally responsible for all of our operating expenses, including certain expenses incurred or arranged by RMR on our behalf.

We are generally not responsible for payment of RMR’s employment, office or administrative expenses incurred to provide management services to us, except for the employment and related expenses of RMR’s employees assigned to work exclusively or partly at our properties, our share of the wages, benefits and other related costs of RMR’s centralized accounting personnel, our share of RMR’s costs for providing our internal audit function, or as otherwise agreed.

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 $ 2,375 and $ 6,216 for these expenses and costs for the three and nine months ended September 30, 2023, respectively, and $ 1,847 and $ 5,155 for the three and nine months ended September 30, 2022, respectively.

We reimbursed RMR $ 1,687 and $ 1,841 for these expenses and costs for the three months ended March 31, 2024 and 2023, 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).

4 unchanged sentences

We are obligated to pay management fees to RMR under our management agreements with RMR for the services it provides to our consolidated joint venture;

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

See Note 2 for further information about our joint ventures.

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

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

6 unchanged sentences

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

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

Each of our officers is also an officer and employee of RMR.

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

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

Other officers of RMR, including Messrs.

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

See Note 6 for information relating to the awards of our common shares we made in September 2023 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

(dollars in thousands, except per share data)

Portnoy serves as chair of the boards and as a managing trustee of these public companies.

Yael Duffy, our President and Chief Operating Officer, is also the president and chief operating officer of Office Properties Income Trust, one of the public companies managed by RMR.

Other officers of RMR, including Mr.

Jordan, serve as managing trustees or officers of certain of these public companies.

Our Manager, RMR .

1 unchanged sentence

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

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

Joint Ventures.

1 unchanged sentence

RMR provides management services to each of these joint ventures.

As of September 30, 2023 and December 31, 2022, we owed $ 613 and $ 616 , respectively, to the unconsolidated joint venture for rents that we collected on behalf of that joint venture.

See Note 3 for further information regarding our joint ventures.

As of March 31, 2024 and December 31, 2023, we owed $ 652 and $ 680 , respectively, to the unconsolidated 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 sheets.

We paid these amounts in October 2023 and January 2023, respectively.

See Notes 2 and 7 for further information regarding our joint ventures and RMR’s management agreements with our joint ventures.

For further information about these and other such relationships and certain other related person transactions, see our 2023 Annual Report.

Derivatives and Hedging Activities

Risk Management Objective of Using Derivatives

We are exposed to certain risks relating to our ongoing business operations, including the impact of changes in interest rates.

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

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.

We have interest rate cap agreements to manage our interest rate risk exposure on each of the ILPT Floating Rate Loan and the Mountain 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.

1 unchanged sentence

We do not anticipate that any of the counterparties will fail to meet their obligations.

Cash Flow Hedges of Interest Rate Risk

We record all derivatives in our condensed consolidated balance sheets 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 at September 30, 2023 and December 31, 2022:

Interest Rate

Balance Sheet

Fair Value at

Underlying Instrument Rate

September 30, 2023 December 31, 2022

Interest rate cap

Other assets Floating Rate Loan

Our interest rate cap agreements are designated as cash flow hedges of interest rate risk and are measured on a recurring basis at fair value.

See Notes 5 and 6 for further information regarding the debt our interest rate caps are related to and the fair value of our interest rate caps.

The following table summarizes the terms of our outstanding interest rate cap agreements as of March 31, 2024 and December 31, 2023:

Balance Sheet Underlying Current Strike Notional Fair Value at

Line Item Instrument Maturity

Rate Amount March 31, 2024 December 31, 2023

Other assets Mountain Floating Rate Loan

3.40 % $ 1,400,000 $ — $ 5,516

Interest rate cap

Other assets Mountain Floating Rate Loan

3.04 % $ 1,400,000 25,345 —

Other assets ILPT Floating Rate Loan 10/15/2024

2.25 % $ 1,235,000 19,355 25,060

$ 44,700 $ 30,576

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

In September 2022, in conjunction with the repayment of the then existing $ 1,385,158 bridge loan facility secured by 109 of our properties, 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.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

The following table summarizes the activity related to our cash flow hedges within cumulative other comprehensive income for the periods shown:

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

2023 2022 2023 2022

Amount of gain recognized in cumulative other comprehensive income

Three Months Ended March 31,

Unrealized gain (loss) on derivatives recognized in cumulative other comprehensive income

$ 4,674 $ ( 3,776 )

Amount reclassified from cumulative other comprehensive income into interest expense

Realized gain on derivatives reclassified from cumulative other comprehensive income into interest expense

( 9,520 ) ( 5,002 )

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

Unrealized (loss) gain on derivative instrument recognized in cumulative other comprehensive loss

Unrealized loss on derivatives recognized in cumulative other comprehensive income

$ ( 4,846 ) $ ( 8,778 )

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