Industrial Logistics Properties Trust 10-Q

Item 1. Financial Statements INDUSTRIAL LOGISTICS PROPERTIES TRUST CONDENSED CONSOLIDATED BALANCE SHEETS (dollars in thousands, except per share data) (unaudited) March 31, December 31, 2025 2024 ASSETS Real estate properties: Land $ 1,113,711 $ 1,113,711 Buildings and improvements 4,067,380 4,066,674 Total real estate properties, gross 5,181,091 5,180,385 Accumulated depreciation ( 555,714 ) ( 523,886 ) Total real estate properties, net 4,625,377 4,656,499 Investment in unconsolidated joint venture 114,700 116,732 Acquired real estate leases, net 190,123 199,193 Cash and cash equivalents 107,951 131,706 Restricted cash and cash equivalents 128,751 110,774 Rents receivable, including straight line rents of $ 108,017 and $ 104,730 , respectively 131,464 129,162 Other assets, net 65,259 62,265 Total assets $ 5,363,625 $ 5,406,331 LIABILITIES AND EQUITY Mortgages and notes payable, net $ 4,296,146 $ 4,300,537 Accounts payable and other liabilities 71,295 76,753 Assumed real estate lease obligations, net 14,089 14,937 Due to related persons 5,182 4,774 Total liabilities 4,386,712 4,397,001 Commitments and contingencies Equity: Equity attributable to common shareholders: Common shares of beneficial interest, $ .01 par value: 100,000,000 shares authorized; 66,143,704 and 66,144,308 shares issued and outstanding, respectively 661 661 Additional paid in capital 1,017,627 1,017,382 Cumulative net deficit ( 108,005 ) ( 86,473 ) Cumulative other comprehensive loss ( 1,611 ) ( 1,065 ) Cumulative common distributions ( 369,147 ) ( 368,486 ) Total equity attributable to common shareholders 539,525 562,019 Noncontrolling interest 437,388 447,311 Total equity 976,913 1,009,330 Total liabilities and equity $ 5,363,625 $ 5,406,331 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 3 Table of Contents INDUSTRIAL LOGISTICS PROPERTIES TRUST CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (amounts in thousands, except per share data) (unaudited) Three Months Ended March 31, 2025 2024 Rental income $ 111,905 $ 112,235 Expenses: Real estate taxes 14,154 15,861 Other operating expenses 10,249 10,322 Depreciation and amortization 41,518 43,577 General and administrative 8,238 7,689 Total expenses 74,159 77,449 Interest income 1,968 2,852 Interest expense ( 69,813 ) ( 73,230 ) Loss before income taxes and equity in (losses) earnings of unconsolidated joint venture ( 30,099 ) ( 35,592 ) Income tax expense ( 28 ) ( 33 ) Equity in (losses) earnings of unconsolidated joint venture ( 1,042 ) 1,723 Net loss ( 31,169 ) ( 33,902 ) Net loss attributable to noncontrolling interest 9,637 10,499 Net loss attributable to common shareholders ( 21,532 ) ( 23,403 ) Other comprehensive loss: Unrealized loss on derivatives ( 802 ) ( 4,846 ) Less: unrealized loss on derivatives attributable to noncontrolling interest 256 1,888 Other comprehensive loss attributable to common shareholders ( 546 ) ( 2,958 ) Comprehensive loss attributable to common shareholders $ ( 22,078 ) $ ( 26,361 ) Weighted average common shares outstanding (basic and diluted) 65,834 65,556 Net loss per share attributable to common shareholders (basic and diluted) $ ( 0.33 ) $ ( 0.36 ) The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 4 Table of Contents INDUSTRIAL LOGISTICS PROPERTIES TRUST CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (dollars in thousands) (unaudited) Cumulative Total Equity Number of Additional Cumulative Other Cumulative Attributable to Common Common Paid In Net (Deficit) Comprehensive Common Common Noncontrolling Total Shares Shares Capital Income (Loss) Income Distributions Shareholders Interest Equity 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 Net loss — — — ( 21,532 ) — — ( 21,532 ) ( 9,637 ) ( 31,169 ) Share grants, repurchases and forfeitures ( 604 ) — 245 — — — 245 — 245 Distributions to common shareholders — — — — — ( 661 ) ( 661 ) — ( 661 ) Other comprehensive loss — — — — ( 546 ) — ( 546 ) ( 256 ) ( 802 ) Distributions to noncontrolling interest — — — — — — — ( 30 ) ( 30 ) Balance at March 31, 2025 66,143,704 $ 661 $ 1,017,627 $ ( 108,005 ) $ ( 1,611 ) $ ( 369,147 ) $ 539,525 $ 437,388 $ 976,913 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 — — — ( 23,403 ) — — ( 23,403 ) ( 10,499 ) ( 33,902 ) Share grants, repurchases and forfeitures ( 11,857 ) — 290 — — — 290 — 290 Distributions to common shareholders — — — — — ( 658 ) ( 658 ) — ( 658 ) Other comprehensive loss — — — — ( 2,958 ) — ( 2,958 ) ( 1,888 ) ( 4,846 ) Distributions to noncontrolling interest — — — — — — — ( 163 ) ( 163 ) Balance at March 31, 2024 65,831,530 $ 658 $ 1,016,067 $ ( 14,207 ) $ 7,213 $ ( 366,506 ) $ 643,225 $ 479,275 $ 1,122,500 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 5 Table of Contents INDUSTRIAL LOGISTICS PROPERTIES TRUST CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) (unaudited) Three Months Ended March 31, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 31,169 ) $ ( 33,902 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 31,858 31,540 Amortization of interest rate caps 10,211 7,210 Net amortization of debt issuance costs, premiums and discounts 376 6,654 Amortization of acquired real estate leases and assumed real estate lease obligations 8,222 10,974 Amortization of deferred leasing costs 1,003 705 Straight line rental income ( 3,287 ) ( 3,489 ) Proceeds from settlement of interest rate caps ( 9,674 ) ( 16,537 ) General and administrative expenses paid in common shares 247 339 Distributions of earnings from unconsolidated joint venture 990 990 Equity in losses (earnings) of unconsolidated joint venture 1,042 ( 1,723 ) Change in assets and liabilities: Rents receivable 985 6,489 Other assets — ( 3,972 ) Accounts payable and other liabilities 159 2,138 Due to related persons 408 573 Net cash provided by operating activities 11,371 7,989 CASH FLOWS FROM INVESTING ACTIVITIES: Real estate improvements ( 6,353 ) ( 2,132 ) Purchase of interest rate cap ( 15,010 ) ( 26,175 ) Proceeds from settlement of interest rate caps 9,674 16,537 Net cash used in investing activities ( 11,689 ) ( 11,770 ) CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of mortgage notes payable ( 4,633 ) ( 4,466 ) Payment of debt issuance costs ( 134 ) ( 129 ) Distributions to common shareholders ( 661 ) ( 658 ) Repurchase of common shares ( 2 ) ( 49 ) Distributions to noncontrolling interest ( 30 ) ( 163 ) Net cash used in financing activities ( 5,460 ) ( 5,465 ) Decrease in cash and cash equivalents and restricted cash and cash equivalents ( 5,778 ) ( 9,246 ) Cash and cash equivalents and restricted cash and cash equivalents at beginning of period 242,480 245,723 Cash and cash equivalents and restricted cash and cash equivalents at end of period $ 236,702 $ 236,477 SUPPLEMENTAL DISCLOSURES: Interest paid $ 59,523 $ 59,621 Income taxes received $ — $ 80 NON-CASH INVESTING ACTIVITIES: Real estate improvements accrued not paid $ 849 $ 348 6 Table of Contents SUPPLEMENTAL DISCLOSURE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS: The following table provides a reconciliation of cash and cash equivalents and restricted cash and cash equivalents reported within the condensed consolidated balance sheets to the amounts shown in the condensed consolidated statements of cash flows: As of March 31, 2025 2024 Cash and cash equivalents $ 107,951 $ 128,394 Restricted cash and cash equivalents (1) 128,751 108,083 Total cash and cash equivalents and restricted cash $ 236,702 $ 236,477 (1) 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. The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 7 Table of Contents INDUSTRIAL LOGISTICS PROPERTIES TRUST NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share data) Note 1. Basis of Presentation The accompanying condensed consolidated financial statements of Industrial Logistics Properties Trust and its consolidated subsidiaries, or the Company or ILPT, are unaudited. Certain information and disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted. We believe the disclosures made are adequate to make the information presented not misleading. However, the accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2024, or our 2024 Annual Report. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of results for the interim period have been included. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Our operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in the condensed consolidated financial statements include purchase price allocations, useful lives of fixed assets and impairment of real estate and related intangibles. Note 2. Recent Accounting Pronouncements In November 2024, the Financial Accounting Standards Board 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 condensed consolidated 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 condensed consolidated financial statements. Note 3. Real Estate Investments As of March 31, 2025, 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 March 31, 2025, we also owned a 22 % equity interest in The Industrial Fund REIT LLC, or the unconsolidated joint venture. 8 Table of Contents INDUSTRIAL LOGISTICS PROPERTIES TRUST NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share data) During the three months ended March 31, 2025 and 2024, amounts capitalized at certain of our properties for tenant improvements, leasing costs and building improvements were as follows: Three Months Ended March 31, 2025 2024 Tenant improvements (1) $ 3 $ 444 Leasing costs (1) 3,222 2,127 Building improvements (2) 734 802 Total capital expenditures $ 3,959 $ 3,373 (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. During the three months ended March 31, 2025 and 2024, recognized net loss attributable to noncontrolling interest in our condensed consolidated financial statements was as follows: Three Months Ended March 31, 2025 2024 Consolidated joint venture $ 9,672 $ 10,514 Tenancy in common ( 35 ) ( 15 ) Total net loss attributable to noncontrolling interest $ 9,637 $ 10,499 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 condensed consolidated financial statements. 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 $ 30 and $ 163 during the three months ended March 31, 2025 and 2024, respectively. Unconsolidated Joint Venture 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 (losses) earnings of the unconsolidated joint venture in our condensed consolidated statements of comprehensive income (loss). Note 4. Leases We are a lessor of industrial and logistics properties. Our leases provide our tenants with the contractual right to use and economically benefit from the physical space specified in their respective leases and are generally classified as operating leases. Our leases provide for base rent payments and may also include variable payments. Rental income from operating leases, including any payments derived by index or market-based indices, is recognized on a straight line basis over the lease term when we have determined that the collectability of substantially all of the lease payments is probable. Some of our leases have options to extend or terminate the lease exercisable at the option of our tenants, which are considered when determining the lease term. 9 Table of Contents INDUSTRIAL LOGISTICS PROPERTIES TRUST NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share data) We do not include in our measurement of our lease receivables certain variable payments, including payments determined by changes in the index or market-based indices after the inception of the lease, certain tenant reimbursements and other income until the specific events that trigger the variable payments have occurred. Such payments totaled $ 19,857 and $ 21,175 for the three months ended March 31, 2025 and 2024, respectively. Generally, payments of ground lease obligations are made by our tenants. However, if a tenant does not pay obligations under a ground lease or does not renew any ground lease, we may have to pay obligations under the ground lease in order to protect our investment in the affected property. 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 in an acquisition. For leases with a term greater than 12 months under which we are the lessee, we recognize right of use assets and lease liabilities. The values of our right of use assets and related lease liabilities were $ 4,078 and $ 4,173 , respectively, as of March 31, 2025, and $ 4,193 and $ 4,288 , respectively, as of December 31, 2024. Our right of use assets and related lease liabilities are included in other assets, net and accounts payable and other liabilities, respectively, in our condensed consolidated balance sheets. Geographic 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 amortization of deferred leasing costs. For the three months ended March 31, 2025 and 2024, our Hawaii Properties represented 27.7 % and 28.0 %, respectively, of our annualized rental revenues. Tenant Concentration Subsidiaries of FedEx Corporation, or FedEx, and subsidiaries of Amazon.com Services, Inc., or Amazon, represented 28.7 % and 6.7 % of our annualized rental revenues as of March 31, 2025, respectively, and 28.9 % and 6.7 % as of March 31, 2024, respectively. 10 Table of Contents INDUSTRIAL LOGISTICS PROPERTIES TRUST NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share data) Note 5. Indebtedness Our outstanding indebtedness as of March 31, 2025 and December 31, 2024 is summarized below: Number of Properties Principal Interest Carrying Value Entity Secured By Balance Rate (1) Type Maturity of Collateral As of March 31, 2025 ILPT 104 $ 1,235,000 6.71 % Floating 10/09/2025 $ 1,009,721 ILPT 186 650,000 4.31 % Fixed 02/07/2029 490,369 ILPT 17 700,000 4.42 % Fixed 03/09/2032 489,606 Mountain JV 82 1,400,000 5.87 % Floating 03/09/2026 1,788,145 Mountain JV 4 91,000 6.25 % Fixed 06/10/2030 177,115 Mountain JV 1 9,672 3.67 % Fixed 05/01/2031 28,330 Mountain JV 1 11,308 4.14 % Fixed 07/01/2032 41,926 Mountain JV 1 25,579 4.02 % Fixed 10/01/2033 81,856 Mountain JV 1 35,829 4.13 % Fixed 11/01/2033 127,512 Mountain JV 1 22,179 3.10 % Fixed 06/01/2035 44,739 Mountain JV 1 35,953 2.95 % Fixed 01/01/2036 95,624 Mountain JV 1 40,886 4.27 % Fixed 11/01/2037 106,806 Mountain JV 1 45,790 3.25 % Fixed 01/01/2038 109,564 Total / weighted average 4,303,196 5.53 % $ 4,591,313 Unamortized debt issuance costs ( 7,050 ) Total indebtedness, net $ 4,296,146 As of December 31, 2024 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 Mountain JV 82 1,400,000 5.81 % Floating 03/09/2025 1,802,396 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 Unamortized debt issuance costs ( 7,292 ) Total indebtedness, net $ 4,300,537 (1) Interest rates reflect the impact of interest rate caps, if any, and exclude the impact of the amortization of debt issuance costs, premiums and discounts. 11 Table of Contents INDUSTRIAL LOGISTICS PROPERTIES TRUST NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share data) 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. Our consolidated joint venture’s $ 1,400,000 loan, or the Mountain Floating Rate Loan, which is secured by 82 properties, matures in March 2026, subject to one remaining one-year extension option, and requires that interest be paid at an annual rate of SOFR plus a premium of 2.77 %. In March 2025, our consolidated joint venture exercised the second 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 $ 15,010 with a SOFR strike rate equal to 3.10 %, which replaced the previous interest rate cap with a SOFR strike rate equal to 3.04 %. Subject to the satisfaction of certain conditions, our consolidated joint venture has the option to prepay the Mountain Floating Rate Loan in full or in part at any time at par with no premium. The weighted average interest rates under our floating rate loans for the three months ended March 31, 2025 and 2024 were as follows: Three Months Ended March 31, 2025 2024 ILPT Floating Rate Loan (1) 6.71 % 6.18 % Mountain Floating Rate Loan (2) 5.82 % 6.09 % (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 3.10 % which replaced the previous strike rate equal to 3.04 % in March 2025. 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. See Note 10 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 March 31, 2025 are as follows: Principal Payment 2025 $ 1,249,159 2026 1,419,499 2027 20,224 2028 20,989 2029 671,778 Thereafter 921,547 Total $ 4,303,196 Note 6. Fair Value of Assets and Liabilities Our financial instruments include cash and cash equivalents, restricted cash and cash equivalents, mortgages and notes payable, accounts payable and interest rate caps. We remeasure our interest rate caps at fair value on a quarterly basis. As of March 31, 2025 and December 31, 2024, the fair value of our other financial instruments approximated their carrying values in our condensed consolidated financial statements due to their short term nature or floating interest rates, except for our fixed rate mortgage notes payable. 12 Table of Contents INDUSTRIAL LOGISTICS PROPERTIES TRUST NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share data) Our fixed rate mortgage notes payable had an aggregate carrying value of $ 1,661,331 and $ 1,665,649 as of March 31, 2025 and December 31, 2024, respectively, and a fair value of $ 1,565,801 and $ 1,535,640 as of March 31, 2025 and December 31, 2024, respectively. We estimate the fair value of our fixed rate mortgage notes payable using significant unobservable inputs, including discounted cash flow analyses and prevailing market interest rates. The table below presents certain of our assets measured on a recurring basis at fair value as of March 31, 2025 and December 31, 2024, categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset: Quoted Prices in Significant Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs Total (Level 1) (Level 2) (Level 3) As of March 31, 2025 Investment in unconsolidated joint venture $ 114,700 $ — $ — $ 114,700 Interest rate caps $ 20,913 $ — $ 20,913 $ — As of December 31, 2024 Investment in unconsolidated joint venture $ 116,732 $ — $ — $ 116,732 Interest rate caps $ 16,916 $ — $ 16,916 $ — 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 uses similar estimation techniques as those used for consolidated real estate properties, including discounting expected future cash flows of the underlying real estate investments based on prevailing market rents over a holding period and including an exit capitalization rate to determine the final year of cash flows. The fair values of our interest rate cap derivatives are based on prevailing market prices in secondary markets for similar derivative contracts as of the measurement date. The discount rates, exit capitalization rates and holding periods used to determine the fair value of our investment in the unconsolidated joint venture are significant unobservable inputs and are shown in the table below: Exit Valuation Discount Capitalization Holding Technique Rates Rates Periods As of March 31, 2025 Investment in unconsolidated joint venture Discounted cash flow 6.25 % - 8.00 % 5.25 % - 6.50 % 10 - 11 years As of December 31, 2024 Investment in unconsolidated joint venture Discounted cash flow 6.25 % - 8.25 % 5.25 % - 6.50 % 10 - 12 years The table below presents a summary of the changes in fair value for our investment in the unconsolidated joint venture: Three Months Ended March 31, 2025 2024 Beginning balance $ 116,732 $ 115,360 Equity in (losses) earnings of unconsolidated joint venture ( 1,042 ) 1,723 Distributions from unconsolidated joint venture ( 990 ) ( 990 ) Ending balance $ 114,700 $ 116,093 13 Table of Contents INDUSTRIAL LOGISTICS PROPERTIES TRUST NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share data) Note 7. Shareholders’ Equity Common Share Purchases During the three months ended March 31, 2025, we purchased an aggregate of 604 of our common shares, valued at a weighted average price of $ 3.59 per common share, from a former employee of The RMR Group LLC, or RMR, in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares. We withheld and purchased these common shares at their fair market value based upon the trading price of our common shares at the close of trading on The Nasdaq Stock Market LLC, or Nasdaq, on the purchase date. Distributions During the three months ended March 31, 2025, we declared and paid a regular quarterly distribution to common shareholders as follows: Distribution Total Declaration Date Record Date Payment Date Per Share Distribution January 16, 2025 January 27, 2025 February 20, 2025 $ 0.01 $ 661 On April 10, 2025, we declared a regular quarterly distribution to common shareholders of record on April 22, 2025 of $ 0.01 per share, or approximately $ 661 . We expect to pay this distribution on or about May 15, 2025 using cash on hand. Note 8. Business and Property Management Agreements with RMR We have no employees. The personnel and various services we require to operate our business are provided to us by RMR. We have two agreements with RMR to provide management services to us: (1) a business management agreement, which relates to our business generally; and (2) a property management agreement, which relates to our property level operations. Business Management Agreement. Pursuant to our business management agreement and in accordance with GAAP, we accrued estimated incentive management fees during the three months ended March 31, 2025. The actual amount of incentive management fees incurred for 2025, if any, will be based on our common share total return, as defined in our business management agreement, for the three year period ending December 31, 2025, and will be payable to RMR in January 2026. We did no t incur any incentive management fees for the year ended December 31, 2024. Property Management Agreement. We are generally responsible for all of our operating expenses, including certain expenses incurred or arranged by RMR on our behalf. We are generally not responsible for payment of RMR’s employment, office or administrative expenses incurred to provide management services to us, except for the employment and related expenses of RMR’s employees assigned to work exclusively or partly at our properties, our share of the wages, benefits and other related costs of RMR’s centralized accounting personnel, our share of RMR’s costs for providing our internal audit function 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 which are included in other operating expenses and general and administrative expenses, as applicable, in our condensed consolidated statements of comprehensive income (loss). 14 Table of Contents INDUSTRIAL LOGISTICS PROPERTIES TRUST NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share data) For the three months ended March 31, 2025 and 2024, the business management fees, incentive management fees, property management fees, construction supervision fees and expense reimbursements recognized in our condensed consolidated financial statements were as follows: Financial Statement Three Months Ended March 31, Line Item 2025 2024 Pursuant to business management agreement: Business management fees General and administrative expenses $ 5,735 $ 5,830 Incentive management fees General and administrative expenses 967 — Total $ 6,702 $ 5,830 Pursuant to property management agreement: Property management fees Other operating expenses $ 3,267 $ 3,330 Construction supervision fees Buildings and improvements (1) 30 73 Total $ 3,297 $ 3,403 Expense reimbursement: Property level expenses General and administrative expenses $ 50 $ 82 Property level expenses Other operating expenses 1,570 1,605 Total $ 1,620 $ 1,687 (1) Amounts capitalized as buildings and 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, our consolidated joint venture and the unconsolidated joint venture. RMR provides management services to both of these joint ventures. We are not obligated to pay management fees to RMR under our management agreements with RMR for the services it provides to the unconsolidated joint venture. We are obligated to pay management fees to RMR under our management agreements with RMR for the services it provides to our consolidated joint venture; however, our consolidated joint venture pays management fees directly to RMR, and any such fees paid by our consolidated joint venture are credited against the fees payable by us to RMR. See Note 9 for further information regarding our relationships, agreements and transactions with RMR. 15 Table of Contents INDUSTRIAL LOGISTICS PROPERTIES TRUST NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share data) Note 9. Related Person Transactions We have relationships and historical and continuing transactions with RMR, The RMR Group Inc., or RMR Inc., and others related to them, including other companies to which RMR or its subsidiaries provide management services and some of which have trustees, directors or officers who are also our Trustees or officers. RMR is a majority owned subsidiary of RMR Inc. The Chair of our Board of Trustees and one of our Managing Trustees, Adam Portnoy, is the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of RMR Inc., the chair of the board of directors, a managing director and the president and chief executive officer of RMR Inc. and an officer and employee of RMR. Matthew P. 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. 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. Mr. Portnoy serves as chair of the boards and as a managing trustee of these public companies. Yael Duffy, our President and Chief Operating Officer, is also the president and chief operating officer of Office Properties Income Trust, one of the 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 . We have two agreements with RMR to provide management services to us. See Note 8 for further information regarding our management agreements with RMR. Joint Ventures. We have two separate joint venture arrangements. RMR provides management services to each of these joint ventures. See Note 3 for further information regarding our joint ventures. For further information about these and other such relationships and certain other related person transactions, see our 2024 Annual Report. Note 10. Derivatives and Hedging Activities 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. 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. To mitigate this risk, we only enter into derivative financial instruments with counterparties with high credit ratings and with major financial institutions with which we or our related parties may also have other financial relationships. We do not anticipate that any of the counterparties will fail to meet their obligations. Our interest rate cap agreements are designated as cash flow hedges of interest rate risk and are measured on a recurring basis at fair value. See Notes 5 and 6 for further information regarding the debt our interest rate caps are related to and the fair value of our interest rate caps. The following table summarizes the terms of our outstanding interest rate cap agreements as of March 31, 2025 and December 31, 2024: Balance Sheet Underlying Maturity Strike Notional Fair Value at Line Item Instrument Date Rate Amount March 31, 2025 December 31, 2024 Other assets, net ILPT Floating Rate Loan 10/15/2025 2.78 % $ 1,235,000 $ 8,976 $ 13,302 Other assets, net Mountain Floating Rate Loan 03/15/2025 3.04 % $ 1,400,000 — 3,614 Other assets, net Mountain Floating Rate Loan 03/15/2026 3.10 % $ 1,400,000 11,937 — Total $ 20,913 $ 16,916 16 Table of Contents INDUSTRIAL LOGISTICS PROPERTIES TRUST NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share data) 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. For derivatives designated and qualifying as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in cumulative other comprehensive loss and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings. Gains and losses on the derivative representing hedge components excluded from the assessment of effectiveness are recognized over the life of the hedge on a systematic and rational basis, as documented at hedge inception in accordance with our accounting policy election. The earnings recognition of excluded components is presented in interest expense. Amounts reported in cumulative other comprehensive loss related to derivatives will be reclassified to interest expense as interest payments are made on our applicable debt. The following table summarizes the activity related to our cash flow hedges within cumulative other comprehensive loss for the periods shown: Three Months Ended March 31, 2025 2024 Amount of (loss) gain recognized on derivative in other comprehensive loss $ ( 1,759 ) $ 4,674 Amount of (loss) gain reclassified from cumulative other comprehensive loss into interest expense $ ( 957 ) $ 9,520 Total amount of interest expense presented in the condensed consolidated statements of comprehensive income (loss) $ ( 69,813 ) $ ( 73,230 ) Note 11. 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 condensed 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 8. The measure of segment assets is reported as total assets in our condensed consolidated balance sheets. 17 Table of Contents