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Item 9A. Controls and Procedures

2025-02-19 compared with 2024-02-20 · 323 added, 416 removed, 1227 unchanged (38% of the section changed)

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There have been no changes in our internal control over financial reporting during the quarter ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Management Report on Assessment of Internal Control Over Financial Reporting

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Not applicable.

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Directors, Executive Officers and Corporate Governance

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We intend to satisfy the requirements under Item 5.05 of Form 8-K regarding disclosure of amendments to, or waivers from, provisions of our Code of Conduct that apply to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, on our website.

We have adopted comprehensive insider trading policies and procedures that apply to trustees, directors, officers and employees, as applicable, of us and RMR.

These policies are designed to prevent trading on the basis of material nonpublic information and to ensure compliance with applicable securities laws.

The policies include provisions for pre-clearance of trades, blackout periods and the establishment of Rule 10b5-1 trading plans.

A copy of our insider trading policy is filed as an exhibit to this Annual Report on Form 10-K.

The remainder of the information required by Item 10 is incorporated by reference to our definitive Proxy Statement.

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Number of securities remaining available for future

to be issued upon Weighted-average issuance under equity

to be issued upon Weighted average

issuance under equity

exercise of exercise price of compensation plan (excluding

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The information required by Item 14 is incorporated by reference to our definitive Proxy Statement.

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Exhibits and Financial Statement Schedules

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(Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020.)

3.2 Second A mended and Restated Bylaws of the Company, adopted June 1, 2023 .

3.2 Third Amended and Restated Bylaws of the Company, adopted May 30, 2024.

(Incorporated by reference to the Company’s Current Report on Form 8-K filed on June 3, 2024.)

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4.2 Description of Securities.

(Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.)

(Filed here with .

8.1 Opinion of Sullivan & Worcester LLP as to certain tax matters.

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10.3 Second Amendment to Business Management Agreement, effective as of August 1, 2021, between the Company and The RMR Group LLC.(+) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021.)

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10.4 Property Management Agreement, dated as of January 17, 2018, between the Company and The RMR Group LLC.(+) (Incorporated by reference to the Company’s Current Report on Form 8-K filed on January 18, 2018.)

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(Incorporated by reference to the Company’s Current Report on Form 8-K filed on September 26, 2022.)

19.1 Insider Trading Policies and Procedures.

(Filed herewith.)

21.1 Subsidiaries of the Company.

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(Filed herewith.)

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31.4 Rule 13a-14(a) Certification.

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97.1 Clawback Policy.

(Filed herewith.)

( Incorporated by reference to the C ompan y ’ s Annual Report on Form 10-K for the year e nded December 31, 2023)

99.1 Letter Agreement, dated as of January 29, 2019, between the Company and The RMR Group LLC.

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Form 10-K Summary

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Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of Industrial Logistics Properties Trust

To the Shareholders and Board of Trustees of Industrial Logistics Properties Trust

Opinion on the Financial Statements

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The Company’s undiscounted future cash flows analysis requires management to make significant estimates and assumptions related to expected remaining hold periods, market rents, and terminal capitalization rates.

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We identified the impairment of real estate assets as a critical audit matter because of the significant estimates and assumptions management makes to evaluate the recoverability of real estate assets.

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How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the undiscounted cash flow analysis for each real estate asset or group of assets with impairment indicators included the following among others:

Our audit procedures related to the undiscounted cash flows analysis for each real estate asset or group of assets with impairment indicators included the following among others:

• We tested the effectiveness of controls over management’s evaluation of the recoverability of real estate property assets, including the key assumptions utilized in estimating the undiscounted future cash flows.

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We have served as the Company's auditor since 2020.

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Report of Independent Registered Public Accounting Firm

To the Board of Trustees and the Shareholders of Industrial Logistics Properties Trust

To the Shareholders and Board of Trustees of Industrial Logistics Properties Trust

Opinion on Internal Control over Financial Reporting

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February 18, 2025

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INDUSTRIAL LOGISTICS PROPERTIES TRUST

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Cash and cash equivalents 131,706 112,341

Restricted cash 133,382 92,519

Restricted cash and cash equivalents 110,774 133,382

Rents receivable, including straight line rents of $ 104,730 and $ 94,309 , respectively

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Additional paid in capital 1,017,382 1,015,777

Cumulative net income 9,196 117,185

Cumulative other comprehensive income 10,171 21,903

Cumulative net (deficit) income ( 86,473 ) 9,196

Cumulative other comprehensive (loss) income ( 1,065 ) 10,171

Cumulative common distributions ( 368,486 ) ( 365,848 )

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

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INDUSTRIAL LOGISTICS PROPERTIES TRUST

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Interest and other income 11,427 7,911 2,663

Interest expense (including net amortization of debt issuance costs, premiums and discounts of $ 26,922 , $ 96,974 , and $ 2,022 , respectively)

( 288,537 ) ( 280,051 ) ( 35,625 )

Interest expense ( 292,536 ) ( 288,537 ) ( 280,051 )

Gain (loss) on sale of real estate — 1,710 ( 10 )

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

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

( 150,517 ) ( 293,874 ) 79,037

Loss before income taxes and equity in earnings of unconsolidated joint venture ( 142,338 ) ( 150,517 ) ( 293,874 )

Income tax expense ( 162 ) ( 104 ) ( 45 )

Equity in earnings of unconsolidated joint venture 5,332 902 7,078

Net (loss) income ( 149,719 ) ( 286,841 ) 119,682

Net loss ( 137,168 ) ( 149,719 ) ( 286,841 )

Net loss attributable to noncontrolling interest 41,499 41,730 60,118

Net (loss) income attributable to common shareholders ( 107,989 ) ( 226,723 ) 119,682

Other comprehensive income:

Net loss attributable to common shareholders ( 95,669 ) ( 107,989 ) ( 226,723 )

Other comprehensive income (loss):

Unrealized (loss) gain on derivatives ( 13,925 ) ( 17,999 ) 30,194

unrealized loss (gain) on derivatives attributable to noncontrolling interest 2,689 6,267 ( 8,291 )

6,267 ( 8,291 ) —

Other comprehensive (loss) income attributable to common shareholders ( 11,236 ) ( 11,732 ) 21,903

Comprehensive (loss) income attributable to common shareholders $ ( 119,721 ) $ ( 204,820 ) $ 119,682

Weighted average common shares outstanding (basic) 65,430 65,248 65,169

Weighted average common shares outstanding (diluted) 65,430 65,248 65,211

Per common share data (basic and diluted):

Net (loss) income attributable to common shareholders $ ( 1.65 ) $ ( 3.47 ) $ 1.83

Comprehensive loss attributable to common shareholders $ ( 106,905 ) $ ( 119,721 ) $ ( 204,820 )

Weighted average common shares outstanding (basic and diluted)

65,697 65,430 65,248

Net loss per share attributable to common shareholders (basic and diluted)

$ ( 1.46 ) $ ( 1.65 ) $ ( 3.47 )

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

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INDUSTRIAL LOGISTICS PROPERTIES TRUST

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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 Income Distributions Shareholders Interest Equity

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

Net income — — — 119,682 — — 119,682 — 119,682

Share grants 139,800 1 2,331 — — — 2,332 — 2,332

Share repurchases ( 35,596 ) — ( 922 ) — — — ( 922 ) — ( 922 )

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

Distributions to common shareholders — — — — — ( 86,236 ) ( 86,236 ) — ( 86,236 )

Number of Additional Cumulative Other Cumulative Attributable to

Common Common Paid In Net Income

Comprehensive Common Common Noncontrolling Total

Shares Shares Capital (Deficit)

Income (Loss) Distributions Shareholders Interest Equity

Balance at December 31, 2021 65,404,592 $ 654 $ 1,012,224 $ 343,908 $ — $ ( 318,744 ) $ 1,038,042 $ — $ 1,038,042

Net loss — — — ( 226,723 ) — — ( 226,723 ) ( 60,118 ) ( 286,841 )

Share grants 197,800 2 2,228 — — — 2,230 — 2,230

Share repurchases ( 32,347 ) — ( 242 ) — — — ( 242 ) — ( 242 )

Share forfeitures ( 1,900 ) — ( 9 ) — — — ( 9 ) — ( 9 )

Share grants, repurchases and forfeitures 163,553 2 1,977 — — — 1,979 — 1,979

Distributions to common shareholders — — — — — ( 44,477 ) ( 44,477 ) — ( 44,477 )

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Net loss — — — ( 107,989 ) — — ( 107,989 ) ( 41,730 ) ( 149,719 )

Share grants 328,350 3 1,747 — — — 1,750 — 1,750

Share repurchases ( 49,158 ) ( 1 ) ( 162 ) — — — ( 163 ) — ( 163 )

Share forfeitures ( 3,950 ) — ( 9 ) — — — ( 9 ) — ( 9 )

Share grants, repurchases and forfeitures 275,242 2 1,576 — — — 1,578 — 1,578

Distributions to common shareholders — — — — — ( 2,627 ) ( 2,627 ) — ( 2,627 )

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Balance at December 31, 2023 65,843,387 $ 658 $ 1,015,777 $ 9,196 $ 10,171 $ ( 365,848 ) $ 669,954 $ 491,825 $ 1,161,779

Net loss — — — ( 95,669 ) — — ( 95,669 ) ( 41,499 ) ( 137,168 )

Share grants, repurchases and forfeitures 300,921 3 1,605 — — — 1,608 — 1,608

Distributions to common shareholders — — — — — ( 2,638 ) ( 2,638 ) — ( 2,638 )

Other comprehensive loss — — — — ( 11,236 ) — ( 11,236 ) ( 2,689 ) ( 13,925 )

Distributions to noncontrolling interest — — — — — — — ( 326 ) ( 326 )

Balance at December 31, 2024 66,144,308 $ 661 $ 1,017,382 $ ( 86,473 ) $ ( 1,065 ) $ ( 368,486 ) $ 562,019 $ 447,311 $ 1,009,330

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

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INDUSTRIAL LOGISTICS PROPERTIES TRUST

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CASH FLOWS FROM OPERATING ACTIVITIES:

Net (loss) income $ ( 149,719 ) $ ( 286,841 ) $ 119,682

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

Net loss $ ( 137,168 ) $ ( 149,719 ) $ ( 286,841 )

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

Depreciation 126,525 125,262 106,236

Loss on impairment of real estate 156 100,747 —

Amortization of interest rate caps 42,883 24,578 1,028

Net amortization of debt issuance costs, premiums and discounts 12,946 26,922 96,974

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Amortization of deferred leasing costs 3,184 2,440 1,675

Loss on equity securities — 5,758 —

Straight line rental income ( 10,421 ) ( 13,599 ) ( 11,538 )

Loss on early extinguishment of debt 359 22,198 —

(Gain) loss on sale of real estate — ( 1,710 ) 10

Loss on impairment of real estate — 156 100,747

Loss on early extinguishment of debt — 359 22,198

Loss on equity securities — — 5,758

Proceeds from settlement of derivatives ( 65,268 ) ( 56,915 ) —

Other non-cash expenses 26,319 3,249 2,328

General and administrative expenses paid in common shares 1,920 1,741 2,221

Distributions of earnings from unconsolidated joint venture 3,960 3,960 5,282

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Real estate improvements ( 5,698 ) ( 19,415 ) ( 17,732 )

Purchase of interest rate caps

( 43,150 ) — —

Proceeds from sale of equity securities

Distributions in excess of earnings from unconsolidated joint venture — 5,940 20,460

Proceeds from sale of properties to joint venture, net — — 160,506

Proceeds from sale of real estate — 24,300 —

Proceeds from settlement of derivatives 65,268 56,915 —

Proceeds from sale of joint venture — — 804

Net cash provided by (used in) investing activities 16,420 67,740 ( 3,445,869 )

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Distributions to noncontrolling interest ( 326 ) ( 225 ) ( 1,365 )

Net cash provided by (used in) financing activities 31,144 3,474,001 ( 126,962 )

Increase in cash, cash equivalents and restricted cash 104,943 111,383 6,563

Cash, cash equivalents and restricted cash at beginning of period 140,780 29,397 22,834

Cash, cash equivalents and restricted cash at end of period $ 245,723 $ 140,780 $ 29,397

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Net cash (used in) provided by financing activities

( 21,626 ) 31,144 3,474,001

(Decrease) increase in cash and cash equivalents and restricted cash and cash equivalents

( 3,243 ) 104,943 111,383

Cash and cash equivalents and restricted cash and cash equivalents at beginning of period 245,723 140,780 29,397

Cash and cash equivalents and restricted cash and cash equivalents at end of period $ 242,480 $ 245,723 $ 140,780

Year Ended December 31,

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$ 237,120 $ 237,585 $ 178,842

Income taxes paid $ 85 $ 228 $ 485

Income taxes (received) paid $ ( 80 ) $ 85 $ 228

NON-CASH INVESTING ACTIVITIES:

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

Real estate improvements accrued not paid $ 6,465 $ 1,235 $ 2,507

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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 consolidated balance sheets to the amounts shown in the consolidated statements of cash flows:

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 consolidated balance sheets to the amounts shown in the consolidated statements of cash flows:

As of December 31,

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Cash and cash equivalents $ 131,706 $ 112,341 $ 48,261

Restricted cash (1)

Restricted cash and cash equivalents

110,774 133,382 92,519

Total cash, cash equivalents and restricted cash shown in the statements of cash flows $ 245,723 $ 140,780 $ 29,397

(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

$ 242,480 $ 245,723 $ 140,780

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

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Industrial Logistics Properties Trust, or, collectively with its consolidated subsidiaries, we, us or our, is a real estate investment trust, or REIT, organized under Maryland law on September 15, 2017.

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 of 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, 2024, our portfolio was comprised of 411 properties containing approximately 59,890,000 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 43,161,000 rentable square feet that were industrial and logistics properties located in 38 other states, or our Mainland Properties, which included 94 properties in 27 states totaling approximately 20,978,000 rentable square feet, owned by Mountain Industrial REIT LLC, or Mountain JV, or our consolidated joint venture, in which we own a 61 % equity interest.

As of December 31, 2024, we also owned a 22 % equity interest in The Industrial Fund REIT LLC, or the unconsolidated joint venture.

Summary of Significant Accounting Policies

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This includes decisions regarding operating and capital budgets and the placement of new or additional financing secured by the assets of the venture, among others.

Use of Estimates.

Preparation of these financial statements in conformity with U.S.

generally accepted accounting principles, or GAAP, requires us to make estimates and assumptions that may affect the amounts reported in these consolidated financial statements and related notes.

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

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We have a controlling financial interest in our consolidated joint venture and as result, account for it on a consolidated basis.

Use of Estimates.

Preparation of these financial statements in conformity with U.S.

generally accepted accounting principles, or GAAP, requires us to make estimates and assumptions that may affect the amounts reported in these consolidated financial statements and related notes.

Real Estate Properties.

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Our real estate investments in lands are not depreciated.

We calculate depreciation on other real estate investments on a straight line basis over estimated useful lives generally ranging from seven to 40 years.

We calculate depreciation on other real estate investments on a straight line basis over estimated useful lives of up to 40 years.

We allocate the purchase prices of our properties to land, building and improvements based on determinations of the fair values of these assets assuming the properties are vacant.

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(dollars in thousands, except per share data)

We allocate a portion of the purchase price to above market and below market leases based on the present value (using a discount rate which reflects the risks associated with acquired in-place leases at the time each property was acquired by us) of the difference, if any, between (i) the contractual amounts to be paid pursuant to the acquired in-place leases and (ii) our estimates of fair market lease rates for the corresponding leases, measured over a period equal to the terms of the respective leases.

The terms of below market leases that include bargain renewal options, if any, are further adjusted if we determine renewal to be probable.

We allocate a portion of the purchase price to acquired in-place leases and tenant relationships based upon market estimates of the costs to lease up the property.

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If the value of tenant relationships becomes material in the future, we may separately allocate those amounts and amortize the allocated amount over the estimated life of the relationships.

We amortize lease origination value (included in acquired real estate leases in our consolidated balance sheets) over the terms of the associated leases.

The terms of below market leases that include bargain renewal options, if any, are further adjusted if we determine renewal to be probable.

We amortize lease origination value (included in acquired real estate leases, net in our consolidated balance sheets) over the terms of the associated leases.

Such amortization, which is included in depreciation and amortization expense, totaled $ 42,278 , $ 51,065 and $ 53,113 during the years ended December 31, 2024, 2023 and 2022, respectively.

We amortize capitalized above market lease values (included in acquired real estate leases in our consolidated balance sheets) and below market lease values (presented as assumed real estate lease obligations in our consolidated balance sheets) as a reduction or increase, respectively, to rental income over the terms of the associated leases.

We amortize capitalized above market lease values (included in acquired real estate leases, net in our consolidated balance sheets) and below market lease values (presented as assumed real estate lease obligations, net in our consolidated balance sheets) as a reduction or increase, respectively, to rental income over the terms of the associated leases.

Such amortization resulted in increases in rental income of $ 1,547 , $ 1,130 and $ 4,544 during the years ended December 31, 2024, 2023 and 2022, respectively.

If a lease is terminated prior to its stated expiration, we write off the unamortized amounts relating to that lease.

As of December 31, 2023 and 2022, our acquired real estate leases and assumed real estate lease obligations were as follows:

If a lease is terminated prior to its stated expiration, we fully amortize the unamortized amounts relating to that lease at that time.

As of December 31, 2024 and 2023, our acquired real estate leases, net and assumed real estate lease obligations, net were as follows:

As of December 31,

Acquired real estate leases:

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(dollars in thousands, except per share data)

Expected future amortization related to our acquired real estate leases, net and assumed real estate obligations, net, deferred leasing costs, net and debt issuance costs, net as of December 31, 2024 are shown below:

Acquired Real Estate Deferred Debt

Leases and Assumed Leasing Issuance

Obligations Costs

2025 $ 32,996 $ 3,617 $ 1,375

2026 30,479 3,436 1,262

2027 27,150 3,243 1,262

2028 21,455 2,828 1,262

2029 18,089 2,357 779

Thereafter 54,087 8,210 1,352

$ 184,256 $ 23,691 $ 7,292

Deferred Leasing Costs.

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Legal costs associated with the execution of our leases are expensed as incurred and included in general and administrative expenses in our consolidated statements of comprehensive income (loss).

Deferred leasing costs totaled $ 26,803 and $ 22,371 at December 31, 2023 and 2022, respectively, and accumulated amortization of deferred leasing costs totaled $ 6,156 and $ 4,366 at December 31, 2023 and 2022, respectively.

Deferred leasing costs are included in other assets, net in our consolidated balance sheets.

As of December 31, 2024 and 2023, we had deferred leasing costs, net of accumulated amortization of $ 23,691 and $ 20,647 , respectively.

Deferred leasing costs, net are included in other assets, net in our consolidated balance sheets.

Debt Issuance Costs.

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As of December 31, 2024 and 2023, we had debt issuance costs, net of accumulated amortization, of $ 7,292 and $ 20,003 , respectively, for certain of our mortgage notes payable.

As of December 31, 2021, we had debt issuance costs for our revolving credit facility, which we repaid and terminated in 2022, totaling $ 6,711 and accumulated amortization of debt issuance costs of $ 5,907 .

Debt issuance costs for our revolving credit facility were included in other assets, net in our consolidated balance sheets.

Expected future amortization related to our acquired real estate leases and assumed real estate obligations, deferred leasing costs and debt issuance costs as of December 31, 2023 are shown below:

Acquired Real Estate

Leases and Assumed

Deferred Leasing

Debt Issuance

Real State Obligations

2024 $ 43,158 $ 2,811 $ 12,823

2025 35,521 2,724 1,262

2026 30,272 2,548 1,262

2027 26,104 2,304 1,262

2028 20,194 1,965 1,262

Thereafter 69,738 8,295 2,132

$ 224,987 $ 20,647 $ 20,003

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.

Impairment indicators may include declining tenant occupancy, lack of progress leasing vacant space, tenant bankruptcies, low long-term prospects for improvement in property performance, 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.

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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.

During the year ended December 31, 2023, we recognized a $ 156 loss on impairment to adjust the carrying value of a property to its estimated fair value.

During the year ended December 31, 2022, we recognized a $ 100,747 loss on impairment for 25 properties we acquired as part of the Merger, to adjust the carrying value of these properties to their estimated fair value.

Fair Value of Financial Instruments.

We determine the estimated fair value of financial assets and liabilities using the three-tier fair value hierarchy established by GAAP, which prioritizes observable inputs in active markets when measuring fair value.

The three levels of inputs that may be used to measure fair value in order of priority are as follows:

Level 1 - Inputs include quoted prices in active markets for identical assets or liabilities that we have the ability to access.

Level 2 - Inputs include quoted prices in markets that are less active or inactive or for which all significant inputs are observable, either directly or indirectly.

Level 3 - Inputs include unobservable prices and are supported by little or no market activity and are significant to the overall fair value measurement.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

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(dollars in thousands, except per share data)

Environmental Obligations.

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

however, we do not have any present plans to change the use of those lands or to undertake this environmental cleanup.

As of December 31, 2023 and 2022, accrued environmental remediation costs of $ 6,775 and $ 6,940 , respectively, were included in accounts payable and other liabilities in our consolidated balance sheets.

At each of December 31, 2024 and 2023, accrued environmental remediation costs of $ 6,775 were included in accounts payable and other liabilities in our consolidated balance sheets.

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

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

Capitalization Policy.

Costs directly related to the development of properties are capitalized.

We capitalize development costs, including interest, real estate taxes, insurance and other project costs, incurred during the period of development.

Determinations of when a development project commences and capitalization begins, and when a development project is substantially complete and held available for occupancy and capitalization must cease, involve judgments.

We begin the capitalization of costs during the pre-construction period, which we consider to begin when activities that are necessary to the development of the property commence.

We consider a development project as substantially complete and held available for occupancy upon the completion of tenant improvements, but no later than one year from cessation of major construction activity.

Cash and Cash Equivalents.

We consider highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents.

Restricted Cash.

Restricted cash consists of amounts escrowed for future capital expenditures as required by certain of our mortgaged properties and cash held for the operations of our consolidated joint venture in which we own a 61 % equity interest .

Restricted Cash and Cash Equivalents.

Restricted cash and cash equivalents consist of amounts escrowed as required by the agreements governing certain of our mortgage debt and cash held for the operations of our consolidated joint venture.

Derivative Instruments and Hedging Activities.

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Income derived from our leases is recorded in rental income in our consolidated statements of comprehensive income (loss).

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

Certain tenants under their leases are required to directly pay their obligations for insurance, real estate taxes and certain other expenses to the vendor and/or the municipality.

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We are, however, subject to certain state and local taxes.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

Right of Use Assets and Lease Liabilities.

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

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

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.

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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.

Net Income (Loss) Per Common Share.

Net Loss Per Share Attributable to Common Shareholders.

We calculate basic earnings per common share by dividing net income (loss) by the weighted average number of common shares outstanding during the period.

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Unvested share awards and other potentially dilutive common shares and the related impact on earnings are considered when calculating diluted earnings per share.

Noncontrolling Interests.

Noncontrolling interests represent the share of our consolidated joint venture owned by a third party.

Noncontrolling Interest.

Noncontrolling interest represents the share of our consolidated joint venture owned by a third party.

We allocate net income (loss) to noncontrolling interests based on the respective ownership interest during the period.

Segment Reporting.

We operate in one business segment:

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

New Accounting Pronouncements.

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

In November 2024, the Financial Accounting Standards Board, or the FASB, issued Accounting Standards Update, or ASU, 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statements Expenses , which requires public entities to disclose specific expense categories such as employee compensation, depreciation and intangible asset amortization.

These details must be presented in a tabular format in the notes to financial statements for both interim and annual reporting periods.

ASU 2024-03 is required to be applied prospectively but can be applied retrospectively, and is effective for the first annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted.

We are currently evaluating the impact that ASU 2024-03 will have on our consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

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

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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 consolidated financial statements.

In August 2023, the FASB issued ASU 2023-05, Business Combinations – Joint Venture Formations (Subtopic 805-60) :

Recognition and Initial Measurement.

ASU 2023-05 applies to the formation of a joint venture and requires a joint venture to initially measure all contributions received upon its formation at fair value.

This guidance is effective for all joint ventures with a formation date on or after January 1, 2025, with early adoption permitted.

Joint ventures formed before the effective date have the option to apply it retrospectively, while those formed after the effective date are required to apply it prospectively.

We adopted ASU 2023-05 on October 1, 2023 and will apply the guidance prospectively.

We do not expect the adoption to have an impact on our consolidated financial statements.

We adopted ASU 2023-07 effective December 31, 2024, and, as a result, we have included additional information related to the required disclosures in Note 12.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

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Real Estate Investments

We incurred capital expenditures at certain of our properties of $ 23,263 and $ 30,331 during the years ended December 31, 2023 and 2022, respectively.

During the year ended December 31, 2023, we committed $ 10,923 for expenditures related to tenant improvements and leasing costs for leases executed during the period for approximately 4,982,000 rentable square feet.

Committed, but unspent, tenant related obligations based on existing leases as of December 31, 2023, were $ 5,947 , all of which is expected to be spent during the next 12 months.

On February 25, 2022, we completed the acquisition of MNR pursuant to the Agreement and Plan of Merger, dated as of November 5, 2021 and as amended on February 7, 2022, or the Merger Agreement, by and among us, Maple Delaware Merger Sub LLC, a Delaware limited liability company and our wholly owned subsidiary, or Merger Sub, and MNR.

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

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

The aggregate value of the consideration paid in the Merger was $ 3,739,048 , including the assumption of $ 323,432 aggregate principal amount of former MNR mortgage debt, the repayment of $ 885,269 of MNR debt and the payment of certain transaction fees and expenses, net of MNR’s cash on hand, and excluding two then pending property acquisitions for an aggregate purchase price of $ 78,843 , excluding acquisition related costs.

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

At the Effective Time, each MNR stock option and restricted stock award outstanding immediately prior to the Effective Time, whether vested or unvested, became fully vested and converted into the right to receive, in the case of stock options, the difference between the Common Stock Consideration and the exercise price and, in the case of restricted stock awards, the Common Stock Consideration.

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

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

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

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

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

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

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

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

We repaid the Bridge Loan in full in September 2022.

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

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

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

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

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

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

We accounted for the Merger as an acquisition of assets.

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

Land $ 430,818

Buildings 3,035,309

Acquired real estate leases (1)

Other assets, net 14,194

Securities available for sale (2)

Total assets 3,930,261

Mortgage notes payable, at fair value ( 323,432 )

Accounts payable and other liabilities ( 25,327 )

Assumed real estate lease obligations ( 17,829 )

Equity attributable to noncontrolling interest in the joint venture

Net assets acquired 3,559,846

Assumed working capital ( 144,230 )

Assumed mortgage notes payable, principal 323,432

Purchase price $ 3,739,048

(1) As of the date of acquisition, the weighted average amortization periods for the above market lease values, lease origination value and capitalized below market lease values were 11.1 years, 8.5 years and 7.8 years, respectively.

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

During the year ended December 31, 2022, we sold all of these securities for net proceeds of $ 140,792 , resulting in a $ 5,758 realized loss on sale of equity securities for the year ended December 31, 2022.

In July 2022, our consolidated joint venture acquired a property located in Augusta, GA containing approximately 226,000 rentable square feet for a purchase price of $ 38,053 , including acquisition related costs of $ 53 .

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

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

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

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

Buildings and Real Estate

Purchase Price Land Improvements Leases

1 225,997 $ 38,053 $ 3,818 $ 30,780 $ 3,455

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

During the year ended December 31, 2021, we acquired four industrial properties and one parcel of developable land containing 1,644,508 rentable square feet for an aggregate purchase price of $ 134,730 , including acquisition related costs of $ 1,030 , and accounted for as asset acquisitions.

We allocated the purchase prices for these acquisitions based on the estimated fair value of the acquired assets and assumed liabilities as follows:

Number Rentable Buildings Acquired Real Estate

of Square Purchase and Real Estate Lease

Date Market Area

Properties Feet Price Land Improvements Leases Obligations

May 2021 Dallas, TX

During the years ended December 31, 2024 and 2023, amounts capitalized at certain of our properties for tenant improvements, leasing costs, building improvements and development, redevelopment and other activities were as follows:

Year Ended December 31,

Tenant improvements (1)

$ 1,935 $ 3,316

June 2021 Columbus, OH 1 357,504 31,762 1,491 27,407 2,864 —

August 2021 Memphis, TN 3 1,287,004 100,649 5,922 87,600 7,192 ( 65 )

Leasing costs (1)

Building improvements (2)

Development, redevelopment and other activities (3)

$ 17,199 $ 23,263

During the year ended December 31, 2023, we sold two properties and a portion of a land parcel, containing 489,825 square feet for the aggregate sales price of $ 25,460 , excluding closing costs.

Number of Gross Gain (Loss) on Sale of

(1) Includes capital expenditures used to improve tenants’ space or amounts paid directly to tenants to improve their space and leasing related costs, such as brokerage commissions and tenant inducements.

(2) Includes expenditures to replace obsolete building components and expenditures that extend the useful life of existing assets.

(3) Includes capital expenditure projects that reposition a property or result in new sources of revenues.

During the year ended December 31, 2023, we sold two properties and a portion of a land parcel, containing 489,825 rentable square feet for the aggregate sales price of $ 25,460 , excluding closing costs.

Gain (Loss) on

Number of Rentable Gross Sale of

Location Properties Square Feet Sales Price (1)

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2 489,825 $ 25,460 $ 1,710

(1) Gross sale price is the gross contract price, excluding closing costs.

In September 2021, we sold a portion of a land parcel located in Rock Hill, SC for $ 1,400 , excluding closing costs, resulting in a net gain on sale of real estate of $ 940 .

(1) Gross sales price is the gross contract price, excluding closing costs.

During the years ended December 31, 2024 and 2023, recognized net income (loss) attributable to noncontrolling interest in our consolidated financial statements was as follows:

Year Ended December 31,

Consolidated joint venture $ ( 41,558 ) $ ( 41,798 )

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.

Tenancy in common 59 68

$ ( 41,499 ) $ ( 41,730 )

Consolidated Joint Venture

We own a 61 % equity interest in our consolidated joint venture.

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

We recognized net loss attributable to noncontrolling interest in our consolidated financial statements for the year ended December 31, 2023 and the period from February 25, 2022 (inception of our consolidated joint venture) to December 31, 2022 of $ 41,798 and $ 60,067 , respectively, As of December 31, 2023, our consolidated joint venture had total assets of $ 3,026,194 and total liabilities of $ 1,774,380 .

Consolidated Tenancy in Common

An unrelated third party owns an approximate 33 % tenancy in common interest in one property located in Somerset, NJ 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 of $ 68 and ($ 51 ) for the year ended December 31, 2023 and the period from February 25, 2022 (the date of acquisition) to December 31, 2022, respectively, is reported as net loss attributable to noncontrolling interest in our consolidated statements of comprehensive income (loss).

As of December 31, 2024, our consolidated joint venture had total assets of $ 2,896,160 and total liabilities of $ 1,757,801 .

INDUSTRIAL LOGISTICS PROPERTIES TRUST

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(dollars in thousands, except per share data)

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 approximate 67 % tenancy in common interest in this property.

The tenancy in common made cash distributions to the unrelated third party investor of $ 326 and $ 225 for the years ended December 31, 2024 and 2023, respectively.

As of December 31, 2024, the tenancy in common had total assets of $ 10,427 and total liabilities of $ 217 .

Unconsolidated Joint Venture

We own a 22 % equity interest in The Industrial Fund REIT LLC, which owns 18 industrial properties located in 12 states totaling approximately 11,726,000 rentable square feet.

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

We own a 22 % equity interest in the unconsolidated joint venture, which owns 18 industrial properties located in 12 states totaling approximately 11,726,000 rentable square feet.

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

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

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The following table summarizes the future contractual lease payments due from our tenants as of December 31, 2024:

Lease Payments

2025 $ 353,755

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Tenant Concentration

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.

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

represented 29.7 % and 6.7 % of our annualized rental revenues as of December 31, 2023, respectively, and 29.6 % and 6.7 % as of December 31, 2022, respectively.

Subsidiaries of FedEx Corporation, or FedEx, and subsidiaries of Amazon.com Services, Inc., or Amazon, represented 29.1 % and 6.8 % of our annualized rental revenues as of December 31, 2024, respectively, and 29.7 % and 6.7 % as of December 31, 2023, respectively.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

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(dollars in thousands, except per share data)

Our outstanding indebtedness as of December 31, 2023 and 2022 is summarized below:

Our outstanding indebtedness as of December 31, 2024 and December 31, 2023 is summarized below:

Properties Principal Interest Carrying Value

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As of December 31, 2024

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

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

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

Mountain JV 82

ILPT 104 $ 1,235,000 6.71 % Floating 10/09/2025 $ 1,017,228

ILPT 186 650,000 4.31 % Fixed 02/07/2029 490,454

ILPT 17 700,000 4.42 % Fixed 03/09/2032 491,143

82 1,400,000 5.81 % Floating 03/09/2025 1,802,396

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

Mountain JV 4 91,000 6.25 % Fixed 06/10/2030 178,465

Mountain JV 1 10,020 3.67 % Fixed 05/01/2031 28,363

Mountain JV 1 11,636 4.14 % Fixed 07/01/2032 42,242

Mountain JV 1 26,200 4.02 % Fixed 10/01/2033 82,443

Mountain JV 1 36,684 4.13 % Fixed 11/01/2033 127,960

Mountain JV 1 22,637 3.10 % Fixed 06/01/2035 45,070

Mountain JV 1 36,655 2.95 % Fixed 01/01/2036 96,321

Mountain JV 1 41,491 4.27 % Fixed 11/01/2037 107,606

Mountain JV 1 46,506 3.25 % Fixed 01/01/2038 110,346

Total / weighted average 4,307,829 5.51 % $ 4,620,037

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As of December 31, 2023

$ 1,235,000 6.18 % Floating 10/09/2024 $ 1,071,815

650,000 4.31 % Fixed 02/07/2029 490,416

700,000 4.42 % Fixed 03/09/2032 518,806

Mountain JV 82

1,400,000 6.17 % Floating 03/09/2024 1,909,185

Mountain JV 1

13,556 3.76 % Fixed 10/01/2028 63,314

Mountain JV 1

4,865 3.77 % Fixed 04/01/2030 39,724

Mountain JV 1

5,145 3.85 % Fixed 04/01/2030 39,724

Mountain JV 1

14,392 3.56 % Fixed 09/01/2030 50,825

Mountain JV 1

12,691 3.67 % Fixed 05/01/2031 30,800

Mountain JV 1

14,144 4.14 % Fixed 07/01/2032 44,777

Mountain JV 1

30,949 4.02 % Fixed 10/01/2033 87,143

Mountain JV 1

43,219 4.13 % Fixed 11/01/2033 131,539

Mountain JV 1

26,175 3.10 % Fixed 06/01/2035 47,718

Mountain JV 1

42,087 2.95 % Fixed 01/01/2036 101,896

Mountain JV 1

46,109 4.27 % Fixed 11/01/2037 113,063

Mountain JV 1

52,031 3.25 % Fixed 01/01/2038 116,607

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

4,290,363 5.43 % $ 4,857,352

Unamortized debt issuance costs ( 20,003 )

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(dollars in thousands, except per share data)

We had a $ 750,000 unsecured revolving credit facility that was available for our general business purposes, including acquisitions.

The weighted average annual interest rate for borrowings under this revolving credit facility was 1.41 %, for the period from January 1, 2022 to February 25, 2022, and 1.44 % for the year ended December 31, 2021.

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

During the year ended December 31, 2022, we recorded a $ 828 loss on early extinguishment of debt to write off unamortized costs related to this facility.

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

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

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 2.25 %.

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

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

The weighted average annual interest rate payable under the Floating Rate Loan was 6.17 % for the year ended December 31, 2023, and was 6.10 % for the period from our joint venture’s formation date, February 25, 2022, to December 31, 2022.

Also on February 25, 2022, certain of our subsidiaries entered into a loan agreement with a group of institutional lenders, or the Bridge Lenders, and a mezzanine loan agreement with an institutional lender, or the Bridge Mezz Lender, together pursuant to which we obtained the Bridge Loan.

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

The Bridge Loan was scheduled to mature in February 2023 and required that interest only be paid at an annual rate of SOFR plus a premium of 1.75 % under the loan agreement and a premium of 8.0 % under the mezzanine loan agreement.

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

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

During the year ended December 31, 2022, we recorded a $ 21,370 loss on early extinguishment of debt to write off unamortized costs related to the Bridge Loan and related interest rate cap.

The weighted average annual interest rate payable under the Bridge Loan was 4.24 % for the period from February 25, 2022 to September 22, 2022.

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

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

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

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

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

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

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

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

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

On September 22, 2022, certain of our subsidiaries entered into a loan agreement with a group of institutional lenders, or the ILPT Floating Rate Lenders, and a mezzanine loan agreement with a separate group of institutional lenders, or the ILPT Floating Rate Mezz Lenders, pursuant to which we obtained the $ 1,235,000 loan, or the ILPT Floating Rate Loan, secured by 104 of our properties.

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

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

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

Subject to the satisfaction of certain conditions, we have the option:

(1) to prepay up to $ 247,000 of the ILPT Floating Rate Loan at par with no premium;

and (2) to prepay the balance of the ILPT Floating Rate Loan in full or in part at any time, subject to a premium.

Our $ 1,235,000 loan, or the ILPT Floating Rate Loan, which is secured by 104 of our properties, matures in October 2025, subject to two remaining 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 %.

In October 2024, we exercised the first of our three , one year extension options for the maturity date of this loan.

In connection with the exercise of the extension, we purchased a one year interest rate cap for $ 16,975 with a SOFR strike rate equal to 2.78 %, which replaced the previous interest rate cap with a SOFR strike rate equal to 2.25 %.

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.

The weighted average interest rate payable under the ILPT Floating Rate Loan was 6.18 % for the year ended December 31, 2023 and the period from September 22, 2022 to December 31, 2022.

Our consolidated joint venture’s $ 1,400,000 loan, or the Mountain Floating Rate Loan, which is secured by 82 properties, matures in March 2025, subject to two remaining one year extension options, and requires 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 extension options for the maturity date of this loan.

In connection with the exercise 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 %.

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

In February 2025, our consolidated joint venture provided notice to exercise the second extension option for the maturity of the Mountain Floating Rate Loan and in connection therewith purchased a one year interest rate cap for $ 15,010 with a SOFR strike rate equal to 3.10 %.

The weighted average interest rates under our floating rate loans for the year ended December 31, 2024 and 2023 were as follows:

Year Ended December 31,

ILPT Floating Rate Loan (1)

6.26 % 6.18 %

Mountain Floating Rale Loan (2)

5.88 % 6.17 %

(1) Reflects the impact of interest rate caps with a current SOFR strike rate equal to 2.78 %, which replaced the previous strike rate equal to 2.25 % in October 2024.

(2) Reflects the impact of interest rate caps with a current SOFR strike rate equal to 3.04 %, which replaced the previous strike rate equal to 3.40 % in March 2024.

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 year ended December 31, 2023 in conjunction with the repayment of these mortgage loans.

A portion of the net proceeds from this mortgage loan was used to repay four then 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 in conjunction with the repayment of these mortgage loans.

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.

The required principal payments due during the next five years and thereafter under all our outstanding debt as of December 31, 2023 are as follows:

See Note 11 for further information regarding our interest rate caps.

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

2025 $ 2,653,793

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Fair Value of Assets and Liabilities

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

At December 31, 2023 and 2022, the fair value of our financial instruments approximated their carrying values in our consolidated financial statements, due to their short term nature or floating interest rates, except for our fixed rate mortgage notes payable.

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 December 31, 2024 and 2023, the fair value of our financial instruments approximated their carrying values in our 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 $ 1,665,649 and $ 1,682,501 as of December 31, 2024 and 2023, respectively, and a fair value of $ 1,535,640 and $ 1,553,863 as of December 31, 2024 and 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 rates as of the measurement date.

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

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 and nonrecurring basis at fair value as of December 31, 2024 and 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 December 31, 2023

As of December 31, 2024

Investment in unconsolidated joint venture $ 116,732 $ — $ — $ 116,732

Interest rate caps $ 16,916 $ — $ 16,916 $ —

$ 30,576 $ — $ 30,576 $ —

Non-recurring:

Real estate properties (2)

$ 1,414 $ — $ — $ 1,414

At December 31, 2022

As of December 31, 2023

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

Interest rate caps $ 30,576 $ — $ 30,576 $ —

$ 73,133 $ — $ 73,133 $ —

Non-recurring:

Nonrecurring:

Real estate properties (1)

$ 1,414 $ — $ — $ 1,414

(1) The fair values of our interest rate caps are based on market prices in secondary markets for similar derivative contracts.

(2) During the years ended December 31, 2023 and December 31, 2022, we reduced the carrying value of one property and 25 properties, respectively, to their fair values based on third party offers.

See Note 2 for more information.

At December 31, 2023 and 2022, the fair value of our investment in the unconsolidated joint venture was determined by applying our ownership percentage to the net asset value of the entity.

(1) During the year ended December 31, 2023, we reduced the carrying value of one property to its fair value based on a third party offer.

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 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 Rates Holding Periods

At December 31, 2023

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 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 December 31, 2024

Investment in unconsolidated joint venture Discounted cash flow 6.25 % - 8.25 %

5.25 % - 6.50 %

At December 31, 2022

10 - 12 years

As of December 31, 2023

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

5.25 % - 6.50 %

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

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

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We have common shares available for issuance under the terms of our 2018 Equity Compensation Plan, or the 2018 Plan.

During the years ended December 31, 2023, 2022 and 2021, we awarded to our officers and other employees of The RMR Group LLC, or RMR, annual share awards of 188,350 , 173,300 and 118,800 of our common shares, respectively, valued at $ 684 , $ 1,184 and $ 3,086 , in aggregate, respectively.

In accordance with our Trustee compensation arrangements, we awarded each of our then Trustees 20,000 of our common shares with an aggregate value of $ 249 , 3,500 of our common shares with an aggregate value of $ 369 and 3,500 of our common shares with an aggregate value of $ 538 during the years ended December 31, 2023, 2022 and 2021, respectively, as part of their annual compensation.

The values of the share awards were based upon the closing price of our common shares trading on The Nasdaq Stock Market LLC, or Nasdaq, on the dates of awards.

During the years ended December 31, 2024, 2023 and 2022, we awarded to our officers and certain other employees of The RMR Group LLC, or RMR, annual share awards of 204,915 , 188,350 and 173,300 of our common shares, respectively, valued at $ 992 , $ 684 and $ 1,184 , in aggregate, respectively.

During the years ended December 31, 2024, 2023 and 2022, we awarded each of our seven Trustees 23,316 , 20,000 and 3,500 of our common shares with an aggregate value of $ 630 , $ 249 and $ 369 , respectively, as part of their annual compensation in accordance with our trustee compensation arrangements.

The values or numbers, as applicable, of the share awards were based upon the closing price of our common shares on The Nasdaq Stock Market LLC, or Nasdaq, on the dates of awards.

The common shares awarded to our Trustees vested immediately.

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Unvested at end of year 310,177 $ 5.74 288,310 $ 8.50 260,800 $ 15.07

The 288,310 unvested shares as of December 31, 2023 are scheduled to vest as follows:

100,280 shares in 2024, 84,660 shares in 2025, 66,000 shares in 2026 and 37,370 shares in 2027.

As of December 31, 2023, the estimated future compensation expense for the unvested shares was approximately $ 2,111 .

The weighted average period over which the compensation expense will be recorded is approximately 23 months.

During the years ended December 31, 2023, 2022 and 2021, we recorded $ 1,741 , $ 2,221 and $ 2,328 , respectively, of compensation expense related to the 2018 Plan.

At December 31, 2023, 3,156,613 common shares remain available for issuance under the 2018 Plan.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

1 unchanged sentence

(dollars in thousands, except per share data)

As of December 31, 2024, the estimated future compensation expense for the unvested shares was approximately $ 1,539 .

The weighted average period over which the compensation expense will be recorded is approximately 23 months.

During the years ended December 31, 2024, 2023 and 2022, we recorded $ 1,920 , $ 1,741 and $ 2,221 , respectively, of compensation expense related to the 2018 Plan.

As of December 31, 2024, 2,855,692 common shares remain available for issuance under the 2018 Plan.

Common Share Purchases

During the years ended December 31, 2023, 2022 and 2021, we purchased an aggregate of 49,158 , 32,347 and 35,596 of our common shares, respectively, valued at weighted average prices of $ 3.29 , $ 7.50 and $ 25.91 per common share, respectively, from certain of our Trustees, 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.

During the years ended December 31, 2024, 2023 and 2022, we purchased an aggregate of 67,206 , 49,158 and 32,347 , respectively, of our common shares valued at weighted average prices of $ 4.65 , $ 3.29 and $ 7.50 per common share, respectively, from certain of our Trustees, 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 withheld and purchased these common shares at their fair market values based upon the closing prices of our common shares on Nasdaq on the applicable purchase dates.

Distributions

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2022 $ 0.68 $ 44,477 89.7 % 9.6 % 0.7 %

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

On January 16, 2025, we declared a regular quarterly distribution to common shareholders of record on January 27, 2025 of $ 0.01 per share, or approximately $ 661 .

We expect to pay this distribution to our shareholders on or about February 20, 2025 using cash on hand.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

Per Common Share Amounts

We calculate basic earnings per common share by dividing net (loss) income attributable to common shareholders by the weighted average number of our common shares outstanding during the period.

We calculate basic earnings per common share by dividing net loss attributable to common shareholders by the weighted average number of our common shares outstanding during the period.

We calculate diluted earnings per share using the more dilutive of the two class method or the treasury stock method.

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2024 2023 2022

Net (loss) income attributable to common shareholders $ ( 107,989 ) $ ( 226,723 ) $ 119,682

Net loss attributable to common shareholders $ ( 95,669 ) $ ( 107,989 ) $ ( 226,723 )

Income attributable to participating unvested share awards

( 11 ) ( 10 ) ( 131 )

Net (loss) income attributable to common shareholders used in calculating earnings per share $ ( 107,999 ) $ ( 226,854 ) $ 119,375

Net loss attributable to common shareholders used in calculating earnings per share $ ( 95,680 ) $ ( 107,999 ) $ ( 226,854 )

Denominators:

Weighted average common shares for basic earnings per share 65,697 65,430 65,248

Effect of unvested share awards

Weighted average common shares for diluted earnings per share 65,697 65,430 65,248

Net (loss) income attributable to common shareholders per common share (basic and diluted) $ ( 1.65 ) $ ( 3.47 ) $ 1.83

Net loss attributable to common shareholders per common share

(basic and diluted) $ ( 1.46 ) $ ( 1.65 ) $ ( 3.47 )

Business and Property Management Agreements with RMR

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

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

Management Agreements with RMR.

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The average aggregate historical cost of our real estate investments includes our consolidated assets invested, directly or indirectly, in equity interests in or loans secured by real estate and personal property owned in connection with such real estate (including acquisition related costs and costs which may be allocated to intangibles or are unallocated), all before reserves for depreciation, amortization, impairment charges or bad debts or other similar non-cash reserves.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

• Incentive Management Fee .

4 unchanged sentences

The MSCI U.S.

REIT/Industrial REIT Index is the benchmark index for periods on and after August 1, 2021, and the SNL U.S.

REIT Industrial Index is the benchmark index for periods prior to August 1, 2021.

REIT/Industrial REIT Index is the applicable benchmark index.

For purposes of the total return per share of our common shareholders, share price appreciation for a measurement period is determined by subtracting (i) the closing price of our common shares on Nasdaq on the last trading day of the year immediately before the first year of the applicable measurement period, or the initial share price, from (ii) the average closing price of our common shares on the 10 consecutive trading days having the highest average closing prices during the final 30 trading days in the last year of the measurement period.

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• No incentive management fee is payable by us unless our total return per share during the measurement period is positive.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

• The measurement periods are three year periods ending with the year for which the incentive management fee is being calculated.

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• Incentive management fees we paid to RMR for any period may be subject to “clawback” if our financial statements for that period are restated due to material non-compliance with any financial reporting requirements under the securities laws as a result of the bad faith, fraud, willful misconduct or gross negligence of RMR and the amount of the incentive management fee we paid was greater than the amount we would have paid based on the restated financial statements.

Pursuant to our business management agreement with RMR, we recognized business management fees of $ 23,154 , $ 23,701 and $ 10,562 for the years ended December 31, 2023, 2022 and 2021, respectively.

The business management fees we recognized are included in general and administrative expenses in our consolidated statements of comprehensive income (loss) for the years ended December 31, 2023, 2022 and 2021.

We did no t incur any incentive management fee pursuant to our business management agreement for the years ended December 31, 2023, 2022 and 2021.

We did not incur any incentive management fee pursuant to our business management agreement for the years ended December 31, 2024, 2023 and 2022.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

• Property Management and Construction Supervision Fees .

The property management fees payable to RMR by us for each applicable period are equal to 3.0 % of gross collected rents and the construction supervision fees payable to RMR by us for each applicable period are equal to 5.0 % of construction costs.

Pursuant to our property management agreement with RMR, we recognized aggregate property management and construction supervision fees of $ 13,449 , $ 11,916 and $ 6,606 for the years ended December 31, 2023, 2022 and 2021, respectively.

For the years ended December 31, 2023, 2022 and 2021, $ 12,800 , $ 11,058 and $ 6,395 , respectively, of the total property management and construction supervision fees were included in other operating expenses in our consolidated statements of comprehensive income (loss) and $ 649 , $ 858 and $ 211 , respectively, were capitalized as building improvements in our consolidated balance sheets.

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

• Expense Reimbursement .

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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 and as otherwise agreed.

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

We reimbursed RMR amounts totaling $ 8,378 , $ 6,785 and $ 4,786 for these expenses and costs for the years ended December 31, 2023, 2022 and 2021, respectively.

These amounts are included in other operating expenses and general and administrative expenses, as applicable, for these periods.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

Our property level operating expenses are generally incorporated into rents charged to our tenants, including certain payroll and related costs incurred by RMR which are included in other operating expenses and general and administrative expenses, as applicable, in our consolidated statements of comprehensive income (loss).

Our management agreements with RMR have terms that end on December 31, 2044, and automatically extend on December 31st of each year for an additional year, so that the terms of our management agreements thereafter end on the 20th anniversary of the date of the extension.

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Under our business management agreement with RMR, we acknowledge that RMR may engage in other activities or businesses and act as the manager to any other person or entity (including other REITs) even though such person or entity has investment policies and objectives similar to ours and we are not entitled to preferential treatment in receiving information, recommendations and other services from RMR.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

For the years ended December 31, 2024, 2023 and 2022, the business management fees, property management fees, construction supervision fees and expense reimbursements recognized in our consolidated financial statements were as follows:

Financial Statement

Year Ended December 31,

2024 2023 2022

Pursuant to business management agreement:

Business management fees

General and administrative expenses

$ 23,439 $ 23,154 $ 23,701

Pursuant to property management agreement:

Property management fees

Other operating expenses

$ 12,885 $ 12,800 $ 11,058

Construction supervision fees

Building and improvements (1)

$ 13,344 $ 13,449 $ 11,916

Expense reimbursement:

Property level expenses

General and administrative expenses $ 304 $ 288 $ 243

Property level expenses

Other operating expenses

6,450 8,090 6,542

$ 6,754 $ 8,378 $ 6,785

(1) Amounts capitalized as building improvements are depreciated over the estimated useful lives of the related assets.

In January 2025, in connection with a $ 100,000 credit agreement and related security agreement entered into by RMR and certain of its subsidiaries with Citibank, N.A., or Citibank, and the other lenders party thereto, we consented to the pledge and assignment of RMR’s interest in our management agreements under the security agreement.

Pursuant to the consent, we agreed, among other things, that upon notice that an event of default under the RMR credit agreement has occurred and is continuing, we will continue to make all payments under our management agreements in accordance with the instructions of Citibank, and that if there is an event of default by RMR under our management agreements that would allow us to terminate or suspend our obligations, we will not terminate or suspend without notice to Citibank and provide Citibank 30 days to cure the default on RMR’s behalf.

The consent was approved by our Independent Trustees.

Management Agreements Between Our Joint Ventures and RMR.

We have two separate joint venture arrangements.

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

This joint venture owns 18 properties, and we own a 22 % equity interest in this joint venture.

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

This joint venture owns 94 properties.

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

One of these joint ventures, our consolidated joint venture, which we entered into in connection with the Merger, is with one , third party institutional investor .

The other joint venture, the unconsolidated joint venture, is with two , third party institutional investors.

See Note 3 for further information about our joint ventures.

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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 these public 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.

Yael Duffy, our President and Chief Operating Officer, is also the president and chief operating officer of Office Properties Income Trust, one of the other 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 .

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We have two separate joint venture arrangements.

See Note 3 for further information regarding our joint ventures, including properties we have sold to, and equity interests we have sold in, these joint ventures.

RMR provides management services to each of these joint ventures.

See Note 3 for further information regarding our joint ventures.

As of December 31, 2024 and 2023, we owed $ 0 and $ 680 , respectively, to the unconsolidated joint venture for rents that we collected on behalf of that joint venture.

4 unchanged sentences

As described in Note 7, we award shares to our officers and other employees of RMR annually.

Generally, one fifth of these awards vest on the grant date and one fifth vests on each of the next four anniversaries of the grant dates.

Generally, one fifth of these awards vest on the award date and one fifth vests on each of the next four anniversaries of the award dates.

In certain instances, we may accelerate the vesting of an award, such as in connection with the award holder’s retirement as an officer of us or an officer or employee of RMR.

These awards to RMR employees are in addition to the share awards to our Managing Trustees, as Trustee compensation, and the fees we paid to RMR.

See Note 7 for information regarding our share awards and activity as well as certain share repurchases we made in connection with share award recipients satisfying tax withholding obligations on the vesting of share awards.

TravelCenters of America Inc.

In May 2021, we acquired a property located in the Mesquite, TX market from TravelCenters of America Inc., or TA, for a purchase price of $ 2,319 , including acquisition related costs of $ 119 .

Until TA was acquired in May 2023 by BP Products North America Inc., RMR provided management services to TA and Mr.

Portnoy served as the chair of the board of directors and as a managing director of TA.

See Note 3 for further information regarding our acquisition and disposition of the property in Mesquite, TX.

See Note 7 for information regarding our share awards and activity as well as certain share purchases we made in connection with share award recipients satisfying tax withholding obligations on the vesting of share awards.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

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.

As required under the applicable loan agreements, 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.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

Cash Flow Hedges of Interest Rate Risk

We record all derivatives in our 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 December 31, 2023 and 2022:

Balance Sheet Underlying Strike Notional Fair Value at December 31,

Derivative Line Item Instrument Rate Amount 2023 2022

Interest rate cap

Other assets Floating Rate Loan 3.40 % $ 1,400,000 $ 5,516 $ 23,337

Interest rate cap

Other assets ILPT Floating Rate Loan 2.25 % $ 1,235,000 25,060 49,796

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 December 31, 2024 and 2023:

Sheet Underlying Maturity Strike Notional Fair Value at

Line Item Instrument Date Rate Amount December 31, 2024 December 31, 2023

Other assets, net

ILPT Floating Rate Loan 10/15/2024

2.25 % $ 1,235,000 $ — $ 25,060

Other assets, net

ILPT Floating Rate Loan 10/15/2025 2.78 % $ 1,235,000 13,302 —

Other assets, net

Mountain Floating Rate Loan

3.40 % $ 1,400,000 — 5,516

Other assets, net

Mountain Floating Rate Loan

3.04 % $ 1,400,000 3,614 —

$ 16,916 $ 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.

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

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

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

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

Year Ended December 31,

Amount of gain recognized in cumulative other comprehensive income $ 15,640 $ 34,825

Amount reclassified from cumulative other comprehensive income into interest expense ( 33,639 ) 2,330

Amount reclassified from cumulative other comprehensive income to loss on early extinguishment of debt

Unrealized (loss) gain on derivative instrument recognized in cumulative other comprehensive loss $ ( 17,999 ) $ 30,194

Amount of gain recognized on derivative in other comprehensive income (loss) $ 7,623 $ 15,640

Amount of gain reclassified from cumulative other comprehensive income (loss) into interest expense $ 21,548 $ 33,639

Total amount of interest expense presented in the consolidated statements of comprehensive income (loss) $ ( 292,536 ) $ ( 288,537 )

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

Segment Reporting

We manage our business on a consolidated basis and therefore have one reportable segment:

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

The chief operating decision maker, or CODM, is our President and Chief Operating Officer.

The CODM assesses performance, allocates resources and makes strategic decisions based on net income (loss) as shown in our consolidated statements of comprehensive income (loss).

The CODM is also regularly provided with information on expenses related to our management agreements with RMR, which are detailed in Note 9.

The accounting policies of our reportable segment are the same as those described in Note 2.The measure of segment assets is reported as total assets in our consolidated balance sheets.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

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5000 North Ridge Trail Davenport FL (C) 4,001 52,290 — — 4,001 52,290 56,291 ( 4,258 ) 2/25/2022 2016

14001 Jetport Loop Ft.

Myers FL (C) 5,902 25,616 — — 5,902 25,616 31,518 ( 1,354 ) 2/25/2022 2016

14001 Jetport Loop Fort Myers FL (C) 5,902 25,616 — — 5,902 25,616 31,518 ( 2,086 ) 2/25/2022 2016

8411 Florida Mining Boulevard Tampa FL (C) 7,602 29,985 19 — 7,602 30,004 37,606 ( 2,853 ) 2/25/2022 2003

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3150 Highway 42 Locust Grove GA (B) 9,803 109,420 41 — 9,803 109,461 119,264 ( 8,918 ) 2/25/2022 2020

650 Braselton Parkway Braselton GA (B) 6,902 82,238 — — 6,902 82,238 89,140 ( 6,696 ) 2/25/2022 2018

Initial Cost to Gross Amount Carried at

7 unchanged sentences

Acquired Date (5)

650 Braselton Parkway Braselton GA (B) 6,902 82,238 — — 6,902 82,238 89,140 ( 4,347 ) 2/25/2022 2018

700 Hudson Road Griffin GA (C) 900 20,442 339 — 900 20,781 21,681 ( 2,374 ) 2/25/2022 2002

39 unchanged sentences

2804 Kilihau Street Honolulu HI (E) 1,775 2 ( 2 ) — 1,775 — 1,775 — 12/5/2003 —

2833 Kilihau Street Honolulu HI (E) 601 — — — 601 — 601 — 12/5/2003 —

Initial Cost to Gross Amount Carried at

7 unchanged sentences

Acquired Date (5)

2833 Kilihau Street Honolulu HI (E) 601 — — — 601 — 601 — 12/5/2003 —

692 Mapunapuna Street Honolulu HI (E) 1,796 2 ( 2 ) — 1,796 — 1,796 — 12/5/2003 —

38 unchanged sentences

2829 Awaawaloa Street Honolulu HI (E) 1,720 2 138 — 1,720 140 1,860 — 12/5/2003 —

766 Mapunapuna Street Honolulu HI (E) 1,801 — — — 1,801 — 1,801 — 12/5/2003 —

Initial Cost to Gross Amount Carried at

7 unchanged sentences

Acquired Date (5)

766 Mapunapuna Street Honolulu HI (E) 1,801 — — — 1,801 — 1,801 — 12/5/2003 —

2908 Kaihikapu Street Honolulu HI (E) 1,798 23 ( 11 ) — 1,798 12 1,810 ( 4 ) 12/5/2003 —

38 unchanged sentences

2344 Pahounui Drive Honolulu HI (E) 6,709 — — — 6,709 — 6,709 — 12/5/2003 —

238 Sand Island Access Road Honolulu HI (E) 2,273 — — — 2,273 — 2,273 — 12/5/2003 —

Initial Cost to Gross Amount Carried at

7 unchanged sentences

Acquired Date (5)

238 Sand Island Access Road Honolulu HI (E) 2,273 — — — 2,273 — 2,273 — 12/5/2003 —

2308 Pahounui Drive Honolulu HI (E) 3,314 — — — 3,314 — 3,314 — 12/5/2003 —

38 unchanged sentences

1062 Kikowaena Place Honolulu HI (E) 1,049 598 217 — 1,049 815 1,864 ( 334 ) 12/5/2003 —

2829 Pukoloa Street Honolulu HI (E) 2,088 — — — 2,088 — 2,088 — 12/5/2003 —

Initial Cost to Gross Amount Carried at

9 unchanged sentences

2819 Pukoloa Street Honolulu HI (E) 2,090 — 34 — 2,090 34 2,124 ( 14 ) 12/5/2003 —

2819 Pukoloa Street Honolulu HI (E) 2,090 — 34 — 2,090 34 2,124 ( 13 ) 12/5/2003 —

950 Mapunapuna Street Honolulu HI (E) 1,724 — — — 1,724 — 1,724 — 12/5/2003 —

36 unchanged sentences

91-174 Olai Kapolei HI (A) 962 — 47 — 962 47 1,009 ( 34 ) 6/15/2005 —

91-218 Olai Kapolei HI (A) 1,622 — 62 — 1,622 62 1,684 ( 42 ) 6/15/2005 —

Initial Cost to Gross Amount Carried at

9 unchanged sentences

91-210 Olai Kapolei HI (A) 706 — — — 706 — 706 — 6/15/2005 —

91-087 Hanua Kapolei HI (A) 381 — — — 381 — 381 — 6/15/2005 —

36 unchanged sentences

5156 American Road Rockford IL (A) 400 1,529 390 — 400 1,919 2,319 ( 546 ) 1/29/2015 1996

9215-9347 E Pendleton Pike Lawrence IN (A) 3,763 34,877 ( 1 ) — 3,763 34,876 38,639 ( 5,859 ) 2/14/2019 2009

Initial Cost to Gross Amount Carried at

7 unchanged sentences

Acquired Date (5)

9215-9347 E Pendleton Pike Lawrence IN (A) 3,763 34,877 — — 3,763 34,877 38,640 ( 4,864 ) 2/14/2019 2009

6825 West County Road 400 North Greenfield IN (F) 918 14,300 1,009 — 918 15,309 16,227 ( 2,727 ) 2/14/2019 2008

87 unchanged sentences

200 Orange Point Drive Lewis Center OH (A) 1,300 8,613 319 — 1,300 8,932 10,232 ( 2,238 ) 1/29/2015 2013

301 Commerce Drive South Point OH (A) 600 4,530 — — 600 4,530 5,130 ( 1,010 ) 1/29/2015 2013

Initial Cost to Gross Amount Carried at

7 unchanged sentences

Acquired Date (5)

301 Commerce Drive South Point OH (A) 600 4,530 22 — 600 4,552 5,152 ( 1,124 ) 1/29/2015 2013

5300 Centerpoint Parkway Groveport OH (F) 2,700 29,863 344 — 2,700 30,207 32,907 ( 7,472 ) 1/29/2015 2014

39 unchanged sentences

246 Glasson Drive Corpus Christi TX (C) — 9,596 — — — 9,596 9,596 ( 781 ) 2/25/2022 2011

985 Kershaw Street Ogden UT (A) 2,301 13,994 — ( 1,903 ) 2,032 12,360 14,392 ( 535 ) 2/25/2022 2019

Initial Cost to Gross Amount Carried at

7 unchanged sentences

Acquired Date (5)

985 Kershaw Street Ogden UT (A) 2,301 13,994 — ( 1,903 ) 2,032 12,360 14,392 ( 892 ) 2/25/2022 2019

1095 South 4800 West Salt Lake City UT (A) 1,500 6,913 20 — 1,500 6,933 8,433 ( 1,725 ) 1/29/2015 2012

10 unchanged sentences

$ 1,130,169 $ 4,063,151 $ 81,859 $ ( 94,794 ) $ 1,113,711 $ 4,066,674 $ 5,180,385 $ ( 523,886 )

(1) Represents mortgage notes.

(1) Represents mortgages and notes payable, net.

Certain of our properties are encumbered as follows:

4 unchanged sentences

231,831 687,169

1,399,975 1,963,455

3 unchanged sentences

647,759 508,703

(F) 17 properties encumbered by the Fixed Rate Loan

(F) 17 properties encumbered by one mortgage loan

695,851 615,789

1 unchanged sentence

(2) Excludes value of real estate intangibles and includes partial dispositions.

(3) Depreciation on buildings and improvements is provided for periods ranging up to 40 years.

(3) We depreciate buildings and improvements over periods ranging up to 40 years.

(4) The total aggregate cost for U.S.

federal income tax purposes is $ 5,732,975 .

(5) Properties without an original construction date are land parcels only.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

8 unchanged sentences

Disposals ( 259 ) 259

Impairments ( 93,029 ) —

Balance at December 31, 2022 $ 5,176,108 $ ( 273,467 )

4 unchanged sentences

Additions 10,833 ( 126,432 )

Disposals ( 24,190 ) 884

Impairments ( 547 ) 391

Balance at December 31, 2024 $ 5,180,385 $ ( 523,886 )

21 unchanged sentences

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 9A. Controls and Procedures