Industrial Logistics Properties Trust 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following information should be read in conjunction with our condensed consolidated financial statements and accompanying notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q and with our 2025 Annual Report. OVERVIEW (dollars in thousands, except per square foot data) We are a real estate investment trust, or REIT, organized under Maryland law. As of March 31, 2026, our portfolio was comprised of 409 properties containing approximately 59,604,000 rentable square feet located in 39 states with 94.6% occupancy, leased to approximately 300 different tenants. As of March 31, 2026, we also owned a 22% equity interest in the unconsolidated joint venture. We believe consumer expectations, long-term growth of e-commerce and modernization of and demand for supply chain resiliency will keep demand for industrial properties strong for the foreseeable future. This continued demand has contributed to favorable market conditions, resulting in positive mark-to-market rents on our lease renewals and new leases. Currently, there are uncertainties in global and U.S. economic conditions driven by fluctuations in interest rates and inflation, wars and other geopolitical hostilities and tensions and changes in trade policies and tariffs, all of which have impacted financial markets and supply chains. While these factors have not had a significant adverse impact on our results of operations, if continued or if they worsen, they could adversely affect our financial condition primarily through our tenants’ financial stability, including their ability or willingness to renew leases, including at increased rental rates, or satisfy lease obligations. Most of our leases require our tenants to be responsible for certain operating expenses, including real estate taxes, insurance and common area maintenance, thereby reducing our exposure to increases in operating expenses resulting from inflation or other factors. Our portfolio as of March 31, 2026 is summarized below (square feet in thousands): % of Weighted Rentable Annualized Average Ownership Number of Square Rental Remaining Vehicle Ownership Properties Location Feet Occupancy Revenues Lease Term (1) Mainland Properties ILPT 100% 88 33 states 21,833 95.7% 34.1% 5.5 Hawaii Properties ILPT 100% 226 Hawaii 16,729 86.2% 28.0% 11.9 Mainland Properties Mountain JV 61% 94 27 states 20,978 100.0% 37.6% 5.7 Mainland Properties Tenancy in common 67% 1 New Jersey 64 100.0% 0.3% 3.9 Total / weighted average 409 59,604 94.6% 100.0% 7.4 (1) Based on annualized rental revenues as of March 31, 2026. Property Operations Occupancy data for our portfolio as of March 31, 2026 and 2025 were as follows (square feet in thousands): All Properties Comparable Properties (1) as of March 31, as of March 31, 2026 2025 2026 2025 Total properties 409 411 409 409 Total rentable square feet 59,604 59,890 59,604 59,604 Percent leased (2) 94.6 % 94.6 % 94.6 % 94.8 % (1) Consists of properties that we have owned continuously since January 1, 2025. (2) Leased square feet is pursuant to existing leases as of March 31, 2026, and includes space being fitted out for occupancy, if any, and space which is leased but is not occupied, if any. 18 Table of Contents The average effective rental rates per square foot represents total rental income divided by the average rentable square feet leased during the periods specified for our properties. For the three months ended March 31, 2026 and 2025, the average effective rental rates per square foot of our properties were as follows: Three Months Ended March 31, 2026 2025 All properties $ 8.26 $ 7.92 Comparable properties (1) $ 8.26 $ 7.93 (1) Consists of properties that we have owned continuously since January 1, 2025. Mainland Properties. We generally will seek to renew or extend the terms of leases for our Mainland Properties as their expirations approach. A majority of the leases for our Mainland Properties include periodic set dollar amount or percentage increases that increase the cash rent payable to us. Due to the capital that many of the tenants in our Mainland Properties have invested in these properties and because many of these properties appear to be of strategic importance to the tenants’ businesses, we believe that it is likely that these tenants will renew or extend their leases prior to their expirations. If we are unable to extend or renew our leases, it may be time consuming and expensive to relet some of these properties and the terms of any new leases we enter into may be less favorable to us than the terms of our existing leases for those properties. Hawaii Properties. Revenues from our Hawaii Properties have generally increased as rents under the leases for those properties have been reset or renewed. Lease renewals, lease extensions, new leases and rental rates for our Hawaii Properties in the future will depend on prevailing market conditions when these lease renewals, lease extensions, new leases and rental rates are set. As rent reset dates or lease expirations approach at our Hawaii Properties, we generally negotiate with existing or new tenants for new lease terms. If we are unable to reach an agreement with a tenant on a rent reset, our Hawaii Properties’ leases typically provide that rent is reset based on an appraisal process. Due to the limited availability of land suitable for industrial uses that might compete with our Hawaii Properties, we believe that our Hawaii Properties offer the potential for future rent growth as a result of periodic rent resets, lease extensions and new leasing. Certain of our Hawaii Properties are lands leased for rents that periodically reset based on fair market values, generally every 10 years. During the three months ended March 31, 2026, we entered into new and renewal leases as summarized in the following table, excluding the impact of rent resets (square feet in thousands): Three Months Ended March 31, 2026 New Leases Renewals Totals Square feet leased during the period 135 605 740 Weighted average rental rate change (by rentable square feet) 54.2 % 15.5 % 25.2 % Weighted average lease term by square feet (years) 15.2 3.5 5.6 Total leasing costs and concession commitments (1) $ 617 $ 961 $ 1,578 Total leasing costs and concession commitments per square foot (1) $ 4.57 $ 1.59 $ 2.13 Total leasing costs and concession commitments per square foot per year (1) $ 0.30 $ 0.46 $ 0.38 (1) Includes commitments made for leasing expenditures and concessions, such as leasing commissions, tenant improvements or other tenant inducements. During the three months ended March 31, 2026, we completed rent resets for approximately 122,000 square feet of land at our Hawaii Properties at rental rates that were 30.6% higher than prior rental rates. 19 Table of Contents The following table provides the annualized rental revenues scheduled to reset at our Hawaii Properties as of March 31, 2026: Annualized Rental Revenues Scheduled to Reset 2026 $ 1,656 2027 814 2028 — 2029 8,394 2030 5,900 Thereafter 5,764 Total $ 22,528 As of March 31, 2026, our remaining lease expirations by year were as follows (square feet in thousands): Cumulative % of Total Cumulative % of Total % of Total Annualized Annualized % of Total Leased Leased Leased Rental Rental Annualized No. of Square Feet Square Feet Square Feet Revenues Revenues Rental Revenues Year Leases Expiring (1) Expiring (1) Expiring (1) Expiring Expiring Expiring 2026 20 2,576 4.6% 4.6% $ 14,062 3.1% 3.1% 2027 43 5,613 10.0% 14.6% 37,742 8.4% 11.5% 2028 48 5,303 9.4% 24.0% 42,082 9.3% 20.8% 2029 38 6,937 12.3% 36.3% 45,622 10.1% 30.9% 2030 34 5,450 9.7% 46.0% 40,976 9.1% 40.0% Thereafter 206 30,487 54.0% 100.0% 270,583 60.0% 100.0% Total 389 56,366 100.0% $ 451,067 100.0% Weighted average remaining lease term (years) 6.7 7.4 (1) Leased square feet is pursuant to existing leases as of March 31, 2026, and includes space being fitted out for occupancy, if any, and space which is leased but is not occupied, if any. As of March 31, 2026, FedEx and Amazon leased 22.7% and 8.1% of our total leased square feet, respectively, and represented 27.7% and 7.6% of our total annualized rental revenues, respectively. As of March 31, 2026, $16,556, or 3.7%, of our annualized rental revenues were included in leases scheduled to expire by March 31, 2027 and 5.4% of our rentable square feet were vacant. Rental rates for which available space may be leased in the future will depend on prevailing market conditions when lease extensions, lease renewals or new leases are negotiated. Whenever we extend, renew or enter new leases for our properties, we intend to seek rents that are equal to or higher than our historical rents for the same properties. Despite our prior experience with rent resets, lease extensions and new leases in Hawaii, our ability to increase rents when rents reset, leases are extended or leases expire depends upon market conditions, which are beyond our control. Accordingly, we cannot be sure that the historical increases achieved at our Hawaii Properties will continue in the future. Tenant Review Process. Our manager, RMR, conducts a tenant review process for us. RMR assesses tenants on an individual basis based on various applicable credit criteria. Depending on facts and circumstances, RMR evaluates the creditworthiness of a tenant based on information that is provided by the tenant and, in some cases, information that is publicly available or obtained from third party sources. RMR also may use a third party service to monitor the credit ratings of debt securities of our existing tenants whose debt securities are rated by a nationally recognized credit rating agency. 20 Table of Contents RESULTS OF OPERATIONS Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025 (dollars and share amounts in thousands, except per share data) Comparable (1) Non-Comparable Properties Results Properties Results Consolidated Properties Results Three Months Ended Three Months Ended Three Months Ended March 31, March 31, March 31, $ % $ $ % 2026 2025 Change Change 2026 2025 Change 2026 2025 Change Change Rental income $ 116,419 $ 111,737 $ 4,682 4.2% $ — $ 168 $ (168) $ 116,419 $ 111,905 $ 4,514 4.0% Operating expenses: Real estate taxes 16,015 14,116 1,899 13.5% (1) 38 (39) 16,014 14,154 1,860 13.1% Other operating expenses 10,055 10,115 (60) (0.6)% 43 134 (91) 10,098 10,249 (151) (1.5)% Total operating expenses 26,070 24,231 1,839 7.6% 42 172 (130) 26,112 24,403 1,709 7.0% Net operating income (2) $ 90,349 $ 87,506 $ 2,843 3.2% $ (42) $ (4) $ (38) 90,307 87,502 2,805 3.2% Other expenses: Depreciation and amortization 40,801 41,518 (717) (1.7)% General and administrative 9,464 8,238 1,226 14.9% Total other expenses 50,265 49,756 509 1.0% Interest income 1,044 1,968 (924) (47.0)% Interest expense (61,702) (69,813) 8,111 (11.6)% Loss before income taxes and equity in earnings of unconsolidated joint venture (20,616) (30,099) 9,483 31.5% Income tax expense (114) (28) (86) (307.1)% Equity in earnings (losses) of unconsolidated joint venture 2,871 (1,042) 3,913 375.5% Net loss (17,859) (31,169) 13,310 42.7% Net loss attributable to noncontrolling interests 8,432 9,637 (1,205) (12.5)% Net loss attributable to common shareholders $ (9,427) $ (21,532) $ 12,105 56.2% Weighted average common shares outstanding (basic and diluted) 66,178 65,834 344 0.5% Net loss per share attributable to common shareholders (basic and diluted) $ (0.14) $ (0.33) $ 0.19 57.6% (1) Consists of properties that we have owned continuously since January 1, 2025. (2) See our definition of net operating income, or NOI, and our reconciliation of net loss to NOI below under the heading “Non-GAAP Financial Measures”. References to changes in the income and expense categories below relate to the comparison of results for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. Rental income. Rental income increased primarily due to increases from our net leasing activity and increases in real estate tax reimbursements at certain of our properties. Real estate taxes. Real estate taxes increased primarily due to a refund received during the three months ended March 31, 2025 as a result of a successful real estate tax appeal at one of our Mainland Properties and higher tax rates at certain of our properties during the three months ended March 31, 2026. 21 Table of Contents Other operating expenses . The decrease in other operating expenses is primarily due to decreases in repairs and maintenance expenses, other professional fees and insurance expenses, partially offset by increases in snow removal expenses at certain of our properties. Depreciation and amortization. The decrease in depreciation and amortization primarily reflects the impact of certain acquired real estate leases fully amortizing and the disposition of two properties since April 1, 2025, partially offset by increased depreciation related to improvements made to certain of our properties since April 1, 2025. General and administrative. The increase in general and administrative expenses is primarily due to increases in accrued incentive management fees, legal costs and trustee share award expense during the three months ended March 31, 2026 compared to the three months ended March 31, 2025. Interest income. The decrease in interest income is primarily due to lower cash balances and lower interest rates during the 2026 period as compared to the 2025 period. Interest expense. The decrease in interest expense is primarily due to the repayment of the ILPT Floating Rate Loan in June 2025 and the discontinuation of hedge accounting for the related interest rate cap. As a result, no further amortization of the related interest rate cap was recognized during the 2026 period. Additionally, amortization of interest rate cap costs of our consolidated joint venture decreased during the 2026 period. Income tax expense. Income tax expense reflects state income taxes payable in certain jurisdictions. Equity in earnings (losses) of unconsolidated joint venture. Equity in earnings (losses) of unconsolidated joint venture represents the change in the fair value of our investment in the unconsolidated joint venture. Non-GAAP Financial Measures (dollars in thousands, except per share data) We present certain “non-GAAP financial measures” within the meaning of the applicable rules of the Securities and Exchange Commission, or the SEC, including NOI, funds from operations, or FFO, attributable to common shareholders and normalized funds from operations, or Normalized FFO, attributable to common shareholders. These measures do not represent cash generated by operating activities in accordance with GAAP and should not be considered as alternatives to net loss or net loss attributable to common shareholders, as indicators of our operating performance or as measures of our liquidity. These measures should be considered in conjunction with net loss and net loss attributable to common shareholders as presented in our condensed consolidated statements of comprehensive income (loss). We consider these non-GAAP measures to be appropriate supplemental measures of operating performance for a REIT, along with net loss and net loss attributable to common shareholders. We believe these measures provide useful information to investors because by excluding the effects of certain historical amounts, such as depreciation and amortization expense, they may facilitate a comparison of our operating performance between periods and with other REITs and, in the case of NOI, reflecting only those income and expense items that are generated and incurred at the property level may help both investors and management to understand the operations of our properties. Net Operating Income We calculate NOI as shown below. We define NOI as income from our rental of real estate less our property operating expenses. The calculation of NOI excludes certain components of net loss in order to provide results that are more closely related to our property level results of operations. NOI excludes depreciation and amortization. We use NOI to evaluate individual and company-wide property level performance. Other real estate companies and REITs may calculate NOI differently than we do. 22 Table of Contents The following table presents the reconciliation of net loss to NOI for the three months ended March 31, 2026 and 2025: Three Months Ended March 31, 2026 2025 Net loss $ (17,859) $ (31,169) Equity in (earnings) losses of unconsolidated joint venture (2,871) 1,042 Income tax expense 114 28 Loss before income taxes and equity in earnings of unconsolidated joint venture (20,616) (30,099) Interest expense 61,702 69,813 Interest income (1,044) (1,968) General and administrative 9,464 8,238 Depreciation and amortization 40,801 41,518 NOI $ 90,307 $ 87,502 Funds From Operations Attributable to Common Shareholders and Normalized Funds From Operations Attributable to Common Shareholders We calculate FFO attributable to common shareholders and Normalized FFO attributable to common shareholders as shown below. FFO attributable to common shareholders is calculated on the basis defined by The National Association of Real Estate Investment Trusts, which is: (1) net loss attributable to common shareholders calculated in accordance with GAAP, excluding (i) any recovery or loss on impairment of real estate, (ii) any gain or loss on sale of real estate and (iii) equity in earnings or losses of unconsolidated joint venture; (2) plus (i) real estate depreciation and amortization and (ii) our proportionate share of FFO from unconsolidated joint venture properties; (3) minus FFO adjustments attributable to noncontrolling interests; and (4) certain other adjustments currently not applicable to us. In calculating Normalized FFO attributable to common shareholders, we adjust for certain nonrecurring items shown below, including adjustments for such items related to the unconsolidated joint venture, if any, loss on extinguishment of debt, if any, and incentive management fees, if any. FFO attributable to common shareholders and Normalized FFO attributable to common shareholders are among the factors considered by our Board of Trustees when determining the amount of distributions to our shareholders. Other factors include, but are not limited to, requirements to maintain our qualification for taxation as a REIT, the then current and expected needs for and availability of cash to pay our obligations and fund our investments, limitations in our debt agreements, the availability to us of debt and equity capital, our distribution rate as a percentage of the trading price of our common shares, or dividend yield, and our dividend yield compared to the dividend yields of other REITs and our expectation of future capital requirements and operating performance. Other real estate companies and REITs may calculate FFO attributable to common shareholders and Normalized FFO attributable to common shareholders differently than we do. 23 Table of Contents The following table presents our calculation of FFO attributable to common shareholders and Normalized FFO attributable to common shareholders and reconciliations of net loss attributable to common shareholders to FFO attributable to common shareholders and Normalized FFO attributable to common shareholders for the three months ended March 31, 2026 and 2025: Three Months Ended March 31, 2026 2025 Net loss attributable to common shareholders $ (9,427) $ (21,532) Equity in (earnings) losses of unconsolidated joint venture (2,871) 1,042 Depreciation and amortization 40,801 41,518 Share of FFO from unconsolidated joint venture 1,849 1,505 FFO adjustments attributable to noncontrolling interests (9,936) (10,010) FFO attributable to common shareholders 20,416 12,523 Incentive management fees (1) 1,567 967 Normalized FFO attributable to common shareholders $ 21,983 $ 13,490 Weighted average common shares outstanding (basic and diluted) 66,178 65,834 Per common share data (basic and diluted): Net loss attributable to common shareholders $ (0.14) $ (0.33) FFO attributable to common shareholders $ 0.31 $ 0.19 Normalized FFO attributable to common shareholders $ 0.33 $ 0.20 (1) Incentive management fees are estimated and accrued during the applicable measurement period. Actual incentive management fees are calculated based on common share total return, as defined in our business management agreement, for the three year period ending December 31 of the applicable calendar year, are included in general and administrative expenses in our condensed consolidated statements of comprehensive income (loss) and are payable to RMR in January of the following calendar year. LIQUIDITY AND CAPITAL RESOURCES (dollars in thousands, except per share and per square foot data) Our principal sources of funds to meet our operating and capital obligations, pay our debt service obligations and make distributions to our shareholders are rents from tenants at our properties. As of March 31, 2026, investment grade rated tenants, subsidiaries of investment grade rated entities or our Hawaii land leases represented 76.9% of our annualized rental revenues and only 3.7% of our annualized rental revenues were from leases expiring over the next 12 months. We believe that these sources of funds will be sufficient to meet our operating and capital obligations, pay our debt service obligations and make distributions to our shareholders for the next 12 months and for the foreseeable future thereafter. The following is a summary of our sources and uses of cash flows for the periods presented, as reflected in our condensed consolidated statements of cash flows: Three Months Ended March 31, 2026 2025 Cash and cash equivalents and restricted cash and cash equivalents at beginning of period $ 183,031 $ 242,480 Net cash provided by (used in): Operating activities 15,892 11,371 Investing activities (4,695) (11,689) Financing activities (8,438) (5,460) Total 2,759 (5,778) Cash and cash equivalents and restricted cash and cash equivalents at end of period $ 185,790 $ 236,702 24 Table of Contents The increase in net cash from operating activities for the three months ended March 31, 2026 compared to the 2025 period is primarily due to higher cash flows and reimbursements from our properties and lower interest expense, excluding the impact of settlement of our interest rate caps. The decrease in net cash used in investing activities for the three months ended March 31, 2026 compared to the 2025 period is primarily due to reduced interest rate cap purchase costs and real estate improvements in 2026. The increase in net cash used in financing activities for the three months ended March 31, 2026 compared to the 2025 period is due to increases in distributions to common shareholders in 2026. Our Operating Liquidity and Resources Our future cash flows from operating activities will depend primarily upon our ability to: • collect rents from our tenants when due; • maintain the occupancy of, and maintain or increase the rental rates at, our properties; and • control operating cost increases, including interest and other financing costs. Our Investing and Financing Liquidity and Resources As of March 31, 2026, we had cash and cash equivalents, excluding restricted cash and cash equivalents, of $99,500. To maintain our qualification for taxation as a REIT under the Internal Revenue Code of 1986, as amended, we generally are required to distribute at least 90% of our REIT taxable income annually, subject to specified adjustments and excluding any net capital gain. This distribution requirement limits our ability to retain earnings and thereby provide capital for our operations or acquisitions. We may use our cash and cash equivalents on hand, the cash flow from our operations, net proceeds from any sales of assets and net proceeds of any offerings of equity or debt securities to fund our distributions to our shareholders. As our debt approaches maturity or we desire to reduce our leverage or refinance debt, we may explore refinancing alternatives, property sales or sales of equity interests in joint ventures. Such alternatives may include incurring term debt, obtaining financing secured by mortgages on properties we own, issuing new equity or debt securities or obtaining a revolving credit facility. We may also assume mortgage loans or incur debt in connection with future acquisitions, developments and redevelopments. Although we cannot be sure that we will be successful in completing any particular type of financing, we believe that we will have access to financing, such as debt or equity offerings, to fund capital expenditures, future acquisitions, development, redevelopment and other activities and to pay our obligations. Capital Expenditures As of March 31, 2026, committed, but unspent, tenant related obligations based on existing leases were $4,868, of which $3,900 is expected to be spent during the next 12 months. For further information regarding our capital expenditures, see Note 3 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. Joint Ventures 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. We also own a 22% equity interest in the unconsolidated joint venture. We account for the unconsolidated joint venture using the equity method of accounting under the fair value option. The unconsolidated joint venture made aggregate cash distributions to us of $1,188 and $990 for the three months ended March 31, 2026 and 2025, respectively. For further information regarding our consolidated joint venture and the unconsolidated joint venture, see Note 3 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. Indebtedness As of March 31, 2026, we had an aggregate principal amount of $4,209,229 of indebtedness, primarily including: (1) our $1,160,000 mortgage loan; (2) the Mountain Floating Rate Loan; (3) our $700,000 mortgage loan; (4) our $650,000 mortgage loan; (5) our consolidated joint venture’s $91,000 mortgage loan; and (6) $208,229 of our consolidated joint venture’s amortizing mortgage loans, with maturity dates between 2027 and 2038. 25 Table of Contents In June 2025, we obtained a $1,160,000 fixed rate, interest only mortgage loan secured by 101 of our properties. This mortgage loan matures in July 2030 and requires that interest be paid at an annual rate of 6.40%. Subject to the satisfaction of certain conditions, we have the option to prepay our $1,160,000 mortgage loan in full or in part with a premium prior to January 9, 2030 and at par with no premium on or after January 9, 2030. We used the net proceeds from our $1,160,000 mortgage loan and cash on hand to repay in full the ILPT Floating Rate Loan. The Mountain Floating Rate Loan is secured by 82 properties, matures in March 2027 and requires that interest be paid at an annual rate of SOFR plus a weighted average premium of 2.77%. In March 2026, our consolidated joint venture exercised the third 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 $3,720 with a SOFR strike rate equal to 3.29%, which replaced the previous interest rate cap with a SOFR strike rate equal to 3.10%. The weighted average interest rates under the Mountain Floating Rate Loan were 5.90% and 5.82% for three months ended March 31, 2026 and 2025, respectively, including the impact of our interest rate caps. In April 2026, our consolidated joint venture priced a $1,620,000 five year, fixed rate, interest only mortgage loan to be secured by 90 of its properties. This mortgage loan is expected to close on or about May 8, 2026 and our consolidated joint venture expects to use the net proceeds from this mortgage loan to repay in full the Mountain Floating Rate Loan and $204,999 of its amortizing fixed rate debt secured by eight properties. The agreements and related documents governing our $1,160,000 mortgage loan, the Mountain Floating Rate Loan, our $700,000 mortgage loan and our $650,000 mortgage loan contain customary covenants, provide for acceleration of payment of all amounts due thereunder upon the occurrence and continuation of certain events of default and, in the case of the $650,000 mortgage loan, also require us to maintain a minimum consolidated net worth of at least $250,000 and liquidity of at least $15,000. As of March 31, 2026, we believe that we were in compliance with all of the covenants and other terms under the agreements governing these loans. For further information regarding our indebtedness and historical weighted average interest rates of our floating rate loans, see Notes 5 and 6 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. Distributions During the three months ended March 31, 2026, we declared and paid a regular quarterly distribution to common shareholders totaling $3,333 using cash on hand. On April 9, 2026, we declared a regular quarterly distribution to common shareholders of record on April 21, 2026 of $0.05 per share, or approximately $3,333. We expect to pay this distribution on or about May 14, 2026 using cash on hand. Related Person Transactions We have relationships and historical and continuing transactions with RMR, RMR Inc. and others related to them. For further information about these and other such relationships and related person transactions, see Notes 8 and 9 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, our 2025 Annual Report, our definitive Proxy Statement for our 2026 Annual Meeting of Shareholders and our other filings with the SEC. In addition, see the section captioned “Risk Factors” of our 2025 Annual Report for a description of risks that may arise as a result of these and other related person transactions and relationships. We may engage in additional transactions with related persons, including businesses to which RMR or its subsidiaries provide management services. Critical Accounting Estimates The preparation of our condensed consolidated 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 assumptions used in the evaluation of impairment of real estate and related intangibles. A discussion of our critical accounting estimates is included in our 2025 Annual Report. There have been no significant changes in our critical accounting estimates since the year ended December 31, 2025. 26 Table of Contents