Table of Contents


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2018

2024
OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 001-38342

INDUSTRIAL LOGISTICS PROPERTIES TRUST
(Exact Name of Registrant as Specified in Its Charter)

Maryland82-2809631
Maryland82-2809631
(State or Other Jurisdiction of Incorporation or
Organization)
(IRSI.R.S. Employer Identification No.)
Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts02458-1634
(Address of Principal Executive Offices)(Zip Code)

617-219-1460
(Registrant’s Telephone Number, Including Area Code)

Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name Of Each Exchange On Which Registered
Common Shares of Beneficial InterestILPTThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
(Do not check if a smaller reporting company)
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided inpursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

Number of registrant’s common shares of beneficial interest, $.01 par value per share, outstanding as of April 26, 2018: 65,005,000
2024: 65,831,530.




Table of Contents

INDUSTRIAL LOGISTICS PROPERTIES TRUST
 
FORM 10-Q
March 31, 2018
2024
INDEX
 
Page
 
References in this Quarterly Report on Form 10-Q to the Company, we, us or our include Industrial Logistics Properties Trust and its consolidated subsidiaries unless otherwise expressly stated or the context indicates otherwise.

2


Table of Contents
PART I I. Financial Information
 
Item 1. Financial Statements
 
INDUSTRIAL LOGISTICS PROPERTIES TRUST
 
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data)
(unaudited)
 March 31,December 31,
 20242023
ASSETS  
Real estate properties:
Land$1,113,723 $1,113,723 
Buildings and improvements4,057,048 4,055,829 
Total real estate properties, gross5,170,771 5,169,552 
Accumulated depreciation(428,967)(397,454)
Total real estate properties, net4,741,804 4,772,098 
Investment in unconsolidated joint venture116,093 115,360 
Acquired real estate leases, net231,621 243,521 
Cash and cash equivalents128,394 112,341 
Restricted cash and cash equivalents108,083 133,382 
Rents receivable, including straight line rents of $97,798 and $94,309, respectively116,170 119,170 
Other assets, net85,404 67,803 
Total assets$5,527,569 $5,563,675 
LIABILITIES AND EQUITY
Mortgages and notes payable, net$4,307,999 $4,305,941 
Accounts payable and other liabilities73,923 72,455 
Assumed real estate lease obligations, net17,608 18,534 
Due to related persons5,539 4,966 
Total liabilities4,405,069 4,401,896 
Commitments and contingencies
Equity:
Equity attributable to common shareholders:
Common shares of beneficial interest, $.01 par value: 100,000,000 shares authorized; 65,831,530 and 65,843,387 shares issued and outstanding, respectively658 658 
Additional paid in capital1,016,067 1,015,777 
Cumulative net (deficit) income(14,207)9,196 
Cumulative other comprehensive income7,213 10,171 
Cumulative common distributions(366,506)(365,848)
Total equity attributable to common shareholders643,225 669,954 
Noncontrolling interest479,275 491,825 
Total equity1,122,500 1,161,779 
Total liabilities and equity$5,527,569 $5,563,675 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
  March 31, December 31,
  2018 2017
ASSETS    
Real estate properties:    
Land $642,706
 $642,706
Buildings and improvements 701,433
 700,896
  1,344,139
 1,343,602
Accumulated depreciation (79,092) (74,614)
  1,265,047
 1,268,988
Acquired real estate leases, net 76,475
 79,103
Cash and cash equivalents 19,847
 
Rents receivable, including straight line rents of $51,371 and $50,177, respectively, net of allowance for doubtful accounts of $659 and $1,241, respectively 52,787
 51,672
Debt issuance costs, net 5,538
 1,724
Deferred leasing costs, net 5,065
 5,254
Due from related persons 4,133
 
Other assets, net 4,343
 4,942
Total assets $1,433,235
 $1,411,683
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
Revolving credit facility $302,000
 $750,000
Mortgage note payable, net 49,369
 49,427
Assumed real estate lease obligations, net 19,861
 20,384
Accounts payable and other liabilities 11,056
 11,082
Rents collected in advance 8,426
 5,794
Security deposits 5,730
 5,674
Due to related persons 3,965
 7,114
Total liabilities 400,407
 849,475
     
Commitments and contingencies 

 

     
Shareholders' equity:    
Common shares of beneficial interest, $.01 par value: 100,000,000 shares authorized; 65,005,000 and 45,000,000 shares issued and outstanding, respectively 650
 450
Additional paid in capital 997,677
 546,489
Cumulative net income 34,501
 15,269
Total shareholders' equity 1,032,828
 562,208
Total liabilities and shareholders' equity $1,433,235
 $1,411,683


Table of Contents
See accompanying notes

INDUSTRIAL LOGISTICS PROPERTIES TRUST
 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(amounts in thousands, except per share data)
(unaudited)
Three Months Ended March 31,
20242023
Rental income$112,235 $110,258 
Expenses:
Real estate taxes15,861 16,467 
Other operating expenses10,322 9,318 
Depreciation and amortization43,577 45,457 
General and administrative7,689 7,907 
Total expenses77,449 79,149 
Interest and other income2,852 1,146 
Interest expense(73,230)(70,771)
Loss on sale of real estate— (974)
Loss before income taxes and equity in earnings of unconsolidated joint venture(35,592)(39,490)
Income tax expense(33)(17)
Equity in earnings of unconsolidated joint venture1,723 3,961 
Net loss(33,902)(35,546)
Net loss attributable to noncontrolling interest10,499 10,737 
Net loss attributable to common shareholders(23,403)(24,809)
Other comprehensive income:
Unrealized loss on derivatives(4,846)(8,778)
Less: unrealized loss on derivatives attributable to noncontrolling interest1,888 1,760 
Other comprehensive loss attributable to common shareholders(2,958)(7,018)
Comprehensive loss attributable to common shareholders$(26,361)$(31,827)
Weighted average common shares outstanding (basic and diluted)65,556 65,309 
Per common share data (basic and diluted):
Net loss attributable to common shareholders$(0.36)$(0.38)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.



4
  Three Months Ended March 31,
  2018 2017
     
REVENUES:    
Rental income $34,809
 $33,870
Tenant reimbursements and other income 5,796
 5,570
Total revenues 40,605
 39,440
     
EXPENSES:  
  
Real estate taxes 4,585
 4,339
Other operating expenses 3,545
 2,732
Depreciation and amortization 6,873
 6,811
General and administrative 2,574
 4,636
Total expenses 17,577
 18,518
     
Operating income 23,028
 20,922
     
Interest income 13
 
Interest expense (including net amortization of debt issuance costs and premiums of $311 and ($73), respectively) (3,802) (555)
Income before income tax expense 19,239
 20,367
Income tax expense (7) (11)
Net income $19,232
 $20,356
     
Weighted average common shares outstanding - basic and diluted 61,445
 45,000
     
Net income per common share—basic and diluted $0.31
 $0.45


Table of Contents
See accompanying notes


INDUSTRIAL LOGISTICS PROPERTIES TRUST
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(dollars in thousands)
(unaudited)

CumulativeTotal Equity
Number ofAdditionalCumulativeOtherCumulativeAttributable to
CommonCommonPaid InNet (Deficit)ComprehensiveCommonCommonNoncontrollingTotal
SharesSharesCapitalIncomeIncomeDistributionsShareholdersInterestEquity
Balance at December 31, 202365,843,387 $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, 202465,831,530 $658 $1,016,067 $(14,207)$7,213 $(366,506)$643,225 $479,275 $1,122,500 
Balance at December 31, 202265,568,145 $656 $1,014,201 $117,185 $21,903 $(363,221)$790,724 $540,047 $1,330,771 
Net loss— — — (24,809)— — (24,809)(10,737)(35,546)
Share grants, repurchases and forfeitures(2,176)— 384 — — — 384 — 384 
Distributions to common shareholders— — — — — (656)(656)— (656)
Other comprehensive loss— — — — (7,018)— (7,018)(1,760)(8,778)
Balance at March 31, 202365,565,969 $656 $1,014,585 $92,376 $14,885 $(363,877)$758,625 $527,550 $1,286,175 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5

INDUSTRIAL LOGISTICS PROPERTIES TRUST 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
 Three Months Ended March 31,
20242023
CASH FLOWS FROM OPERATING ACTIVITIES:  
Net loss$(33,902)$(35,546)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation31,540 31,224 
Net amortization of debt issuance costs, premiums and discounts6,654 6,713 
Amortization of acquired real estate leases and assumed real estate lease obligations10,974 13,414 
Amortization of deferred leasing costs705 559 
Straight line rental income(3,489)(3,762)
Loss on sale of real estate— 974 
Proceeds from settlement of derivatives(16,537)(12,976)
General and administrative expenses paid in common shares339 387 
Other non-cash expenses7,210 6,145 
Distributions of earnings from unconsolidated joint venture990 990 
Equity in earnings of unconsolidated joint venture(1,723)(3,961)
Change in assets and liabilities:
Rents receivable6,489 (242)
Other assets(3,972)(7,449)
Accounts payable and other liabilities2,138 3,747 
Due to related persons573 950 
Net cash provided by operating activities7,989 1,167 
CASH FLOWS FROM INVESTING ACTIVITIES:
Real estate improvements(2,132)(3,784)
Purchase of interest rate cap(26,175)— 
Proceeds from settlement of derivatives16,537 12,976 
Proceeds from sale of real estate— 243 
Net cash (used in) provided by investing activities(11,770)9,435 
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of mortgage notes payable(4,466)(5,530)
Payment of debt issuance costs(129)(34)
Distributions to common shareholders(658)(656)
Repurchase of common shares(49)(3)
Distributions to noncontrolling interest(163)— 
Net cash used in financing activities(5,465)(6,223)
(Decrease) increase in cash and cash equivalents and restricted cash and cash equivalents(9,246)4,379 
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period245,723 140,780 
Cash and cash equivalents and restricted cash and cash equivalents at end of period$236,477 $145,159 
SUPPLEMENTAL DISCLOSURES:
Interest paid$59,621 $68,600 
Cash received for income tax refund$80 $— 
NON-CASH INVESTING ACTIVITIES:
Real estate improvements accrued not paid$348 $2,092 
6

  Three Months Ended March 31,
  2018 2017
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net income $19,232
 $20,356
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation 4,478
 4,407
Net amortization of debt issuance costs and premiums 311
 (73)
Amortization of acquired real estate leases and assumed real estate lease obligations 2,105
 2,110
Amortization of deferred leasing costs 194
 203
Provision for losses on rents receivable 400
 23
Straight line rental income (1,194) (1,470)
Other non-cash expenses 104
 
Change in assets and liabilities:    
Rents receivable (321) 698
Deferred leasing costs (9) (322)
Due from related persons (4,133) 
Other assets 599
 (3,419)
Accounts payable and other liabilities 788
 207
Rents collected in advance 2,632
 1,252
Security deposits 56
 24
Due to related persons (3,149) 
Net cash provided by operating activities 22,093
 23,996
     
CASH FLOWS FROM INVESTING ACTIVITIES:    
Real estate acquisitions 
 (277)
Real estate improvements (1,347) (1,244)
Net cash used in investing activities (1,347) (1,521)
     
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds from issuance of common shares, net 444,309
 
Borrowings under revolving credit facility 7,000
 
Repayment of mortgage notes payable 
 (8)
Repayments of revolving credit facility (455,000) 
Payment of debt issuance costs (4,183) 
Contributions 16,162
 17,910
Distributions (9,187) (40,377)
Net cash used in financing activities (899) (22,475)
     
Increase in cash and cash equivalents 19,847
 
Cash and cash equivalents at beginning of period 
 
Cash and cash equivalents at end of period $19,847
 $
     
SUPPLEMENTAL DISCLOSURES:    
Interest paid $3,196
 $628
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,
20242023
Cash and cash equivalents$128,394 $61,250 
Restricted cash and cash equivalents (1)
108,083 83,909 
Total cash and cash equivalents and restricted cash shown in the statements of cash flows$236,477 $145,159 


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

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

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Table of Contents
INDUSTRIAL LOGISTICS PROPERTIES TRUST
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)


Note 1. Organization and Basis of Presentation

Industrial Logistics Properties Trust, or, collectively with its consolidated subsidiaries, we, us or our, is a real estate investment trust, or REIT, formed under Maryland law in 2017 as a wholly owned subsidiary of Select Income REIT, or SIR. On January 17, 2018, we completed an initial public offering and listing on The Nasdaq Stock Market LLC, or Nasdaq, of 20,000,000 of our common shares, or our IPO.

The accompanying condensed consolidated financial statements of Industrial Logistics Properties Trust and its consolidated subsidiaries, or the Company, ILPT, we, us or our, 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, 2017,2023, or our 2023 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. Because of the significant changes resulting from our IPO on January 17, 2018, the financial results reported may not be indicative of our expected future results. For periods prior to January 17, 2018, our historical operating information and financial position have been derived from the financial statements of SIR.

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 the allowance for doubtful accounts, purchase price allocations, useful lives of fixed assets and the assessmentsassessment of the carrying valuesimpairment of real estate and impairments of long lived assets.related intangibles.

Note 2. Recent Accounting Pronouncements

On January 1, 2018, we adoptedNew Accounting Pronouncements. In November 2023, the Financial Accounting Standards Board or FASB,issued Accounting Standards Update, or ASU, No. 2014-09 (and related clarifying guidance issued2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities, including those with a single reportable segment, to: (i) provide disclosures of significant segment expenses and other segment items if they are regularly provided to the chief operating decision maker, or the CODM, and included in each reported measure of segment profit or loss; (ii) provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by Accounting Standards Codification, or ASC, 280, Segment Reporting, in interim periods; and (iii) disclose the FASB), Revenue From Contracts With Customers, which outlinesCODM’s title and position, as well as an explanation of how the CODM uses the reported measures and other disclosures. ASU 2023-07 does not change how a comprehensive model for entitiespublic entity identifies its operating segments, aggregates those operating segments or applies the quantitative thresholds to use in accounting for revenue arising from contracts with customers.determine its reportable segments. ASU No. 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects2023-07 is required to be entitled in exchange for those goods or services.” A substantial portion of our revenue consists of rental income from leasing arrangements, which is specifically excluded from ASU No. 2014-09. We have adopted ASU No. 2014-09 using the modified retrospective approach. The adoption of ASU No. 2014-09 did not have a material impact on the amount or timing of our revenue recognition in our condensed consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases, which sets out the principles for the recognition, measurement, presentationapplied retrospectively and disclosure of leases for both parties to a contract (i.e., lessees and lessors). ASU No. 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease. A lessee is also required to record a right of use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales type leases, direct financing leases and operating leases. ASU No. 2016-02 is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. We are currently assessing the potential impact the adoption of ASU No. 2016-02 will have in our condensed consolidated financial statements.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires that entities use a new forward looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU No. 2016-13 is effective for fiscal years beginning after December 15, 2019, including2023, and interim periods

within those fiscal years.years beginning after December 15, 2024, with early adoption permitted. We are currently assessingevaluating the potential impact the adoption of ASU No. 2016-132023-07 will have inon our condensed consolidated financial statements. We currently expect to adopt the standard using the modified retrospective approach.

Note 3. Real Estate Properties

Investments
As of March 31, 2018, we owned 2662024, our portfolio was comprised of 411 properties with a total ofcontaining approximately 28,540,00059,893,000 rentable square feet located in 39 states, including 226 buildings, leasable land parcels and easements with a total ofcontaining approximately 16,834,00016,729,000 rentable square feet that arewere primarily industrial lands located on the island of Oahu, HI,Hawaii, or our Hawaii Properties, and 40 buildings with a total of185 properties containing approximately 11,706,00043,164,000 rentable square feet that arewere industrial and logistics properties located in 2438 other states, or our Mainland Properties.

As of March 31, 2024, we also owned a 22% equity interest in an unconsolidated joint venture.
We operate in one business segment: ownership and leasing of properties that include industrial and logistics buildings and leased industrial lands. For
We incurred capital expenditures at certain of our properties of $3,373, and $4,931, during the three months ended March 31, 20182024 and 2017, approximately 60.7%2023, respectively. Capital expenditures include leasing costs of $2,127 and 59.8%, respectively, of our total revenues were from our Hawaii Properties. In addition, two subsidiaries of Amazon.com, Inc., which are tenants of our Mainland Properties, accounted for $4,267, or 10.5%, and $4,145, or 10.2%, of our total revenues$1,562 for the three months ended March 31, 20182024 and 2017,2023, respectively.

During the three months ended March 31, 2018,2024, we committed $68$3,471 for expenditures related to tenant improvements and leasing costs for approximately 296,000 square feet of leases executed during the period.

period for approximately 1,981,000 rentable square feet. Committed, but unspent, tenant related obligations based on existing leases as of March 31, 20182024 were $243.$5,981, all of which is expected to be spent during the next 12 months.

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Certain ofINDUSTRIAL LOGISTICS PROPERTIES TRUST 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)

Consolidated Joint Venture
We own a 61% equity interest in Mountain Industrial REIT LLC, or Mountain JV, or our industrial landsconsolidated joint venture, which owns 94 properties in Hawaii may require environmental remediation, especially if27 states totaling approximately 20,981,000 rentable square feet. We control this consolidated joint venture and therefore account for the use of those lands is changed; however, we do not have any present plans to change the use of those lands or to undertakeproperties owned by this environmental remediation. As of both March 31, 2018 and December 31, 2017, accrued environmental remediation costs of $7,002 were included in accounts payable and other liabilitiesjoint venture on a consolidated basis in our condensed consolidated balance sheets. These accrued environmental remediation costs relatefinancial statements. We recognized net loss attributable to maintenancenoncontrolling interest in our condensed consolidated financial statements for the three months ended March 31, 2024 and 2023 of $10,514 and $10,728, respectively. As of March 31, 2024, our consolidated joint venture had total assets of $2,991,343 and total liabilities of $1,771,327.
Consolidated Tenancy in Common
An unrelated third party owns an approximate 33% tenancy in common interest in one property located in Somerset, New Jersey with approximately 64,000 rentable square feet, and we own the remaining 67% tenancy in common interest in this property. We recognized net income (loss) attributable to noncontrolling interest in our condensed consolidated financial statements for the three months ended March 31, 2024 and 2023 of $15 and ($9), respectively. During the three months ended March 31, 2024, the tenancy in common made cash distributions of $163 to the unrelated third party investor. As of March 31, 2024, the tenancy in common had total assets of $10,877 and total liabilities of $60.
Unconsolidated Joint Venture
We own a 22% equity interest in The Industrial Fund REIT LLC, or 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 under the equity method of accounting under the fair value option. We recognize changes in the fair value of our properties for current uses, and, becauseinvestment in the unconsolidated joint venture as equity in earnings of the indeterminable timing of the remediation, these amounts have not been discounted to present value. In general, we do not have any insurance designated to limit any losses that we may incur as a result of known or unknown environmental conditions which are not caused by an insured event, such as fire or flood, although some of our tenants may maintain such insurance that may benefit us. Although we do not believe that there are environmental conditions at any of our properties that will have a material adverse effect on us, we cannot be sure that such conditions are not present at our properties or that costs we incur to remediate any contamination will not have a material adverse effect on our business or financial condition. Charges for environmental remediation costs, if any, are included in other operating expensesunconsolidated joint venture in our condensed consolidated statements of comprehensive income.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 all the physical space specified in their respective leases and are generally classified as operating leases.
We do not include in our measurement of our lease receivables certain variable payments, including payments determined by changes in the index or market-based indices after the inception of the lease, certain tenant reimbursements and other income until the specific events that trigger the variable payments have occurred. Such payments totaled $21,175 and $21,099 for the three months ended March 31, 2024 and 2023, respectively.
Generally, payments of ground lease obligations are made by our tenants. However, if a tenant does not perform obligations under a ground lease or does not renew any ground lease, we may have to perform obligations under, or renew, the ground lease in order to protect our investment in the affected property.
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 $4,534 and $4,621, respectively, as of March 31, 2024, and $4,646 and $4,730, respectively, as of December 31, 2023. Our right of use assets and related lease liabilities are included in other assets, net and accounts payable and other liabilities, respectively, in our condensed consolidated balance sheets.
Geographic Concentration
For the three months ended March 31, 2024 and 2023, our Hawaii Properties represented 28.0% and 27.4%, respectively, of our rental income.
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INDUSTRIAL LOGISTICS PROPERTIES TRUST 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)

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 amortization of deferred leasing costs.
Subsidiaries of FedEx Corporation, or FedEx, and subsidiaries of Amazon.com Services, Inc., or Amazon, represented 28.9% and 6.7% of our annualized rental revenues as of March 31, 2024, respectively, and 30.1% and 6.9% as of March 31, 2023, respectively.
Note 5. Indebtedness

Our outstanding indebtedness as of March 31, 2024 is summarized below:
Number of
PropertiesPrincipalInterestCarrying Value
EntitySecured ByBalance
Rate (1)
TypeMaturityof Collateral
ILPT104$1,235,000 6.18%Floating10/09/2024$1,036,749 
ILPT186650,000 4.31%Fixed02/07/2029490,619 
ILPT17700,000 4.42%Fixed03/09/2032501,338 
Mountain JV821,400,000 5.81%Floating03/09/20251,843,036 
Mountain JV491,000 6.25%Fixed06/10/2030181,935 
Mountain JV111,045 3.67%Fixed05/01/203128,769 
Mountain JV112,601 4.14%Fixed07/01/203243,193 
Mountain JV128,026 4.02%Fixed10/01/203384,206 
Mountain JV139,198 4.13%Fixed11/01/2033129,302 
Mountain JV123,989 3.10%Fixed06/01/203546,063 
Mountain JV138,730 2.95%Fixed01/01/203698,411 
Mountain JV143,269 4.27%Fixed11/01/2037109,573 
Mountain JV148,620 3.25%Fixed01/01/2038112,694 
Total/weighted average4,321,478 5.35%$4,705,888 
Unamortized debt issuance costs(13,479)
Total indebtedness, net$4,307,999 
(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.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)

Our outstanding indebtedness as of December 31, 2023 is summarized below:
Number of
PropertiesPrincipalInterestCarrying Value
EntitySecured ByBalance
Rate (1)
TypeMaturityof Collateral
ILPT104$1,235,000 6.18%Floating10/09/2024$1,044,028 
ILPT186650,000 4.31%Fixed02/07/2029490,149 
ILPT17700,000 4.42%Fixed03/09/2032505,153 
Mountain JV821,400,000 6.17%Floating03/09/20241,857,062 
Mountain JV491,000 6.25%Fixed06/10/2030183,264 
Mountain JV111,380 3.67%Fixed05/01/203128,932 
Mountain JV112,916 4.14%Fixed07/01/203243,510 
Mountain JV128,622 4.02%Fixed10/01/203384,793 
Mountain JV140,019 4.13%Fixed11/01/2033129,749 
Mountain JV124,433 3.10%Fixed06/01/203546,394 
Mountain JV139,411 2.95%Fixed01/01/203699,108 
Mountain JV143,850 4.27%Fixed11/01/2037110,097 
Mountain JV149,313 3.25%Fixed01/01/2038113,477 
Total/weighted average4,325,944 5.47%$4,735,716 
Unamortized debt issuance costs(20,003)
Total indebtedness, net$4,305,941 
(1)Interest rates reflect the impact of interest rate caps, if any, and exclude the impact of the amortization of debt issuance costs, premiums and discounts.
Our principal debt obligations$1,235,000 loan, or the ILPT Floating Rate Loan, which is secured by 104 of our properties, matures in October 2024, subject to three, one year extension options, and requires that interest be paid at an annual rate of secured overnight financing rate, or SOFR, plus a weighted average premium of 3.93%. The weighted average interest rate under the ILPT Floating Rate Loan was 6.18%, including the impact of our interest rate cap on SOFR of 2.25%, as of March 31, 2018 were: (1) $302,0002024 and December 31, 2023, and for the three months ended March 31, 2024 and 2023. Subject to the satisfaction of outstanding borrowings under our $750,000 unsecured revolving credit facility;certain conditions, we have the option to prepay the ILPT Floating Rate Loan in full or in part at any time at par with no premium.
Our consolidated joint venture’s $1,400,000 loan, or the Mountain Floating Rate Loan, was scheduled to mature in March 2024, subject to three, one year extension options, and (2) a mortgage note withrequired that interest be paid at an outstanding principal amountannual rate of $48,750.

On December 29, 2017, we obtained a $750,000 secured revolving credit facility which initially had a maturity date of March 29, 2018. Upon the completion of our IPO, our secured revolving credit facility became a $750,000 unsecured revolving credit facility and the maturity date was extended to December 29, 2021. Following our IPO, borrowings under our revolving credit facility are available for our general business purposes, including acquisitions. Interest on borrowings under our revolving credit facility is calculated at floating rates based on LIBORSOFR plus a premium that varies based onof 2.77%. In March 2024, our leverage ratio. We haveconsolidated joint venture exercised the optionfirst of its three, one year options to extend the maturity date of this loan. As part of the extension, our revolving credit facilityconsolidated joint venture purchased a one year interest rate cap for two six month periods, subject to payment of extension fees and satisfaction of other conditions. If we later achieve an investment grade credit rating, we will then be able to elect to continue to have the interest premium based on our leverage ratio or we may instead elect to have the interest premium based on our credit rating, or a ratings election. We are also required to pay a commitment fee on the unused portion of our revolving credit facility until and if such time as we make a ratings election, and thereafter we will be required to pay a facility fee in lieu of such commitment fee based on the maximum amount of our revolving credit facility. We may borrow, repay and reborrow funds under our revolving credit facility until maturity, and no principal repayment is due until maturity. The agreement governing our revolving credit facility, or our credit agreement, also includes a feature under which the maximum borrowing availability under our revolving credit facility may be increased to up to $1,500,000 in certain circumstances. In addition, during the first quarter of 2018, we completed the syndication of our revolving credit facility$26,175 with a group of institutional lenders.SOFR strike rate equal to 3.04%, which replaced the previous interest rate cap with a SOFR strike rate equal to 3.40%. As of March 31, 20182024 and December 31, 2017,2023, the interest rate payable on borrowings under our revolving credit facilitythe Mountain Floating Rate Loan was 3.23%5.81% and 2.89%6.17%, respectively. The weighted average interest rate for borrowings under our revolving credit facilitythe Mountain Floating Rate Loan was 2.97%6.09% and 6.17% for the three months ended March 31, 2018. As2024 and 2023, respectively, including the impact of March 31, 2018our interest rate caps. Subject to the satisfaction of certain conditions, we have the option to prepay up to $280,000 of the Mountain Floating Rate Loan at par with no premium, and April 26, 2018, weto prepay the balance of the Mountain Floating Rate Loan at any time, subject to a premium.

had $302,000The agreements governing certain of our indebtedness contain customary covenants and $292,000, respectively, outstanding under our revolving credit facility, and $448,000 and $458,000, respectively, available to borrow under our revolving credit facility.

Our credit agreement providesprovide for acceleration of payment of all amounts due thereunder upon the occurrence and continuation of certain events of default, suchdefault. See Note 10 for further information regarding our interest rate caps.
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INDUSTRIAL LOGISTICS PROPERTIES TRUST 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)

The required principal payments due during the next five years and thereafter under all our outstanding debt as a change of control of us, which includes The RMR Group LLC, or RMR LLC, ceasing to act as our business manager and property manager. Our credit agreement also contains a number of covenants, including covenants that restrict our ability to incur debts or to make distributions in certain circumstances, and generally requires us to maintain certain financial ratios. We believe we were in compliance with the terms and conditions of the covenants under our credit agreement at March 31, 2018.

As of March 31, 2018, the principal amount outstanding under our mortgage note was $48,750. This mortgage note was secured by one of our properties with a net book value of $66,166. This mortgage note is non-recourse, subject to certain limited exceptions, and does not contain any material financial covenants.2024 are as follows:
Principal
Payment
2024$1,248,648 
20251,418,794 
202619,495 
202720,229 
202820,989 
Thereafter1,593,323 
$4,321,478 

Note 5.6. Fair Value of Assets and Liabilities

Our financial instruments include cash and cash equivalents, rents receivable, our revolving credit facility, a mortgage noterestricted cash and cash equivalents, mortgages and notes payable, accounts payable rents collected in advance, security deposits and amounts due from or to related persons. Atinterest rate caps. As of March 31, 20182024 and December 31, 2017,2023, the fair value of our financial instruments approximated their carrying values in our condensed consolidated financial statements due to their short term nature or variablefloating interest rates, except for our fixed rate mortgage notes payable. Our fixed rate mortgage notes payable had an aggregate carrying value of $1,678,351 and $1,682,501 as follows:
  At March 31, 2018 At December 31, 2017
  Carrying Estimated Carrying Estimated
  
Value (1)
 Fair Value 
Value (1)
 Fair Value
Mortgage note payable $49,369
 $48,527
 $49,427
 $48,919
(1)Includes unamortized premiums of $619 and $677 as of March 31, 2018 and December 31, 2017, respectively.

of March 31, 2024 and December 31, 2023, respectively, and a fair value of $1,531,780 and $1,553,863 as of March 31, 2024 and December 31, 2023, respectively. We estimate the fair value of our fixed rate mortgage notenotes payable using significant unobservable inputs (Level 3), including discounted cash flow analysisanalyses and currently prevailing market ratesinterest rates.
The table below presents certain of our assets measured on a recurring basis at fair value as of March 31, 2024 and December 31, 2023, categorized by the level of inputs as defined in the fair value hierarchy under ASC 820, Fair Value Measurement, used in the valuation of each asset:
Quoted Prices inSignificant OtherSignificant
Active Markets forObservableUnobservable
Identical AssetsInputsInputs
 Total(Level 1)(Level 2)(Level 3)
As of March 31, 2024
Investment in unconsolidated joint venture$116,093 $— $— $116,093 
Interest rate caps$44,700 $— $44,700 $— 
As of December 31, 2023
Investment in unconsolidated joint venture$115,360 $— $— $115,360 
Interest rate caps$30,576 $— $30,576 $— 
The fair value of our investment in the unconsolidated joint venture is determined by applying our ownership percentage to the net asset value of the entity. The net asset value of the unconsolidated joint venture is determined by using similar estimation techniques as those used for consolidated real estate properties, including discounting expected future cash flows of the underlying real estate investments based on prevailing market rents over a holding period and including an exit capitalization rate to determine the final year of cash flows.
The fair values of our interest rate cap derivatives are based on prevailing market prices in secondary markets for similar derivative contracts as of the measurement date (Level 3 inputs). Becausedate.
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INDUSTRIAL LOGISTICS PROPERTIES TRUST 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)

The discount rates, exit capitalization rates and holding periods used to determine the fair value of our investment in the unconsolidated joint venture are Level 3 significant unobservable inputs and are unobservable, our estimatedshown in the table below:
Exit
ValuationDiscountCapitalizationHolding
TechniqueRatesRatesPeriods
As of March 31, 2024
Investment in unconsolidated joint ventureDiscounted cash flow5.75% - 8.00%5.25% - 6.50%10 - 12 years
As of December 31, 2023
Investment in unconsolidated joint ventureDiscounted cash flow5.75% - 8.00%5.25% - 6.50%9 - 12 years

The table below presents a summary of the changes in fair value may differ materially fromfor our investment in the actual fair value.unconsolidated joint venture:

Three Months Ended March 31,
 20242023
Beginning balance$115,360 $124,358 
Equity in earnings of unconsolidated joint venture1,723 3,961
Distributions from unconsolidated joint venture(990)(990)
Ending balance$116,093 $127,329 
Note 6. Shareholders’ Equity

Share Issuances:

On January 17, 2018, we issued 20,000,000 of our common shares in our IPO at a price to the public of $24.00 per common share, raising net proceeds of $444,309, after deducting the underwriting discounts and commissions and expenses.

On March 27, 2018, in accordance with our Trustee compensation arrangements, we granted 1,000 of our common shares, valued at $20.87 per share, the closing price of our common shares on Nasdaq on that day, to each of our five Trustees as part of their annual compensation.

Distributions:

On April 19, 2018, we declared a prorated distribution of $0.27 per common share, or approximately $17,600, for the period from January 17, 2018 (the date we completed our IPO) through March 31, 2018 to shareholders of record on April 30, 2018. This prorated distribution is based upon a quarterly distribution of $0.33 per common share ($1.32 per common share per year). We expect to pay this distribution on or about May 14, 2018.

Additional Paid in Capital Adjustments:

Until January 17, 2018, we were a wholly owned subsidiary of SIR and SIR managed and controlled our cash management function through a series of commingled centralized accounts. As a result, the cash receipts collected by SIR on our behalf have been accounted for as distributions within shareholders' equity and the cash disbursements paid by SIR on our behalf have been accounted for as contributions within shareholders' equity. During the period from January 1, 2018 to January 16, 2018, we recorded net contributions from SIR of $6,975 as an increase to additional paid in capital.


Note 7. Earnings per Shareholders’ Equity
Common Share Purchases

We calculate earnings per common share by dividing net income by the weighted average number of common shares outstanding during the period. Basic earnings per share equal diluted earnings per share as there are no common share equivalent securities outstanding.

Note 8. Income Taxes

Until January 17, 2018, we were a wholly owned subsidiary of SIR, which is taxed as a REIT under the Internal Revenue Code of 1986, as amended, or the IRC. Accordingly, until January 17, 2018, we were a qualified REIT subsidiary and a disregarded entity for federal income tax purposes. We intend to qualify for taxation as a REIT under the IRC for U.S. federal income tax purposes commencing with our taxable year ending December 31, 2018 and to maintain such qualification thereafter. Accordingly, we generally are not, and will not be, subject to U.S. federal income taxes provided that we distribute our taxable income and meet certain other requirements to qualify for taxation as a REIT. We are subject to certain state and local taxes, certain of which amounts are reported as income taxes in our condensed consolidated statements of comprehensive income. We do not currently expect recent amendments to the IRC to have a significant impact on us; however, we will monitor future interpretations of such amendments as they develop, and accordingly, our estimates and disclosures may change.

Note 9. Certain Historical Arrangements and Operations Prior to our IPO

In connection with our IPO, on September 29, 2017, SIR contributed to us 266 properties with a total of approximately 28,540,000 rentable square feet, or our Initial Properties, consisting of our Hawaii Properties and our Mainland Properties. In connection with our formation and this contribution from SIR, we issued to SIR 45,000,000 of our common shares and a $750,000 non-interest bearing demand note, or the SIR Note, and we assumed three mortgage notes totaling $63,069, as of September 30, 2017, that were secured by three of our Initial Properties. In December 2017, we obtained a $750,000 secured revolving credit facility, and we used the proceeds of an initial borrowing of $750,000 under this credit facility to pay the SIR Note in full. Also in December 2017, SIR prepaid on our behalf two of the mortgage notes totaling approximately $14,319 that had encumbered two of our Initial Properties. In connection with our IPO, we reimbursed SIR for approximately $7,271 of costs that SIR incurred in connection with our formation and preparation for our IPO, $1,047 of which was due to SIR and included in due to related persons in our condensed consolidated balance sheet as of March 31, 2018. In addition, SIR collected rents from our tenants for the period subsequent to our IPO of $4,133, which are presented as due from related persons in our condensed consolidated balance sheet as of March 31, 2018. These amounts due to and from SIR were paid in April 2018.

Neither we nor SIR have any employees. As a wholly owned subsidiary of SIR, until the completion of our IPO, we had received services from RMR LLC under SIR’s business and property management agreements with RMR LLC. For periods prior to the completion of our IPO on January 17, 2018, base management fees payable by SIR under SIR’s business management agreement with RMR LLC were calculated based on the historical costs of our Initial Properties and incentive management fees and internal audit costs payable by SIR and allocated to us were based on the percentage of our base management fees compared to the total base management fees paid by SIR. During the period from January 1, 2018 to January 16, 2018, the base management fees payable by SIR and allocated to us were $308. During the three months ended March 31, 2017,2024, we purchased an aggregate of 11,857 of our common shares, valued at a weighted average price of $4.12 per common share, from certain former employees of The RMR Group LLC, or RMR, in satisfaction of tax withholding and payment obligations in connection with the base management fees, internal audit costsvesting of awards of our common shares. We withheld and estimated incentive management fees payable by SIR allocated to us were $1,701, $21 and $2,409, respectively.purchased these common shares at their fair market values based upon the trading prices of our common shares at the close of trading on The property management and construction supervision fees payable by SIR under SIR’s property management agreement with RMRNasdaq Stock Market LLC, that were allocated to us for services to our Initial Properties foror Nasdaq, on the period from January 1, 2018 to January 16, 2018 and forapplicable purchase dates.
Distributions
During the three months ended March 31, 2017 were $2302024, we declared and $1,030, respectively. These amounts are included in other operating expensespaid a regular quarterly distribution to common shareholders as follows:
DistributionTotal
Declaration DateRecord DatePayment DatePer ShareDistribution
January 11, 2024January 22, 2024February 15, 2024$0.01 $658 
On April 11, 2024, we declared a regular quarterly distribution to common shareholders of record on April 22, 2024 of $0.01 per share, or have been capitalized, as appropriate, in our condensed consolidated financial statements. For the period from January 1, 2018approximately $658. We expect to January 16, 2018 and for the three months ended March 31, 2017, the total property management related reimbursements paid under SIR’s business management agreement with RMR LLC for costs incurred by RMR LLC with respectpay this distribution to our Initial Properties were $120 and $632, respectively. These amounts are included in other operating expenses in our condensed consolidated statements of comprehensive income. All these management fees and reimbursements allocated to us for periods prior to January 17, 2018 were paid by SIR and not us.shareholders on or about May 16, 2024 using cash on hand.

In connection with our IPO, we entered into two agreements with RMR LLC to provide management services to us. See Notes 10 and 11 for further information regarding our relationships, agreements and transactions with RMR LLC and SIR.


Note 10.8. Business and Property Management Agreements with RMR LLC


We have no employees. The personnel and various services we require to operate our business are provided to us by RMR LLC.RMR. We have two agreements with RMR LLC to provide management services to us, which we entered on January 17, 2018 in connection with the completion of our IPO: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.

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INDUSTRIAL LOGISTICS PROPERTIES TRUST 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)

Pursuant to our business management agreement with RMR, LLC, we recognized business management fees of $1,482$5,830 and $5,726 for the period from January 17, 2018 throughthree months ended March 31, 2018. This2024 and 2023, respectively. Based on our common share total return, as defined in our business management agreement, as of March 31, 2024 and 2023, no incentive fees are included in the business management fees we recognized for the three months ended March 31, 2024 or 2023. The actual amount is includedof annual incentive fees for 2024, if any, will be based on our common share total return, as defined in our business management agreement, for the three year period ending December 31, 2024, and will be payable in January 2025. We did not incur any incentive fee payable to RMR for the year ended December 31, 2023. We include business management fees in general and administrative expenses in our condensed consolidated statements of comprehensive income. 

income (loss).
Pursuant to our property management agreement with RMR, LLC, we recognized aggregate property management and construction supervision fees of $967$3,403 and $3,452 for the period from January 17, 2018 throughthree months ended March 31, 2018. This amount is2024 and 2023, respectively. Of these amounts, for the three months ended March 31, 2024 and 2023, $3,330 and $3,319, respectively, were included in other operating expenses or has been capitalized, as appropriate, in our condensed consolidated financial statements.

statements of comprehensive income (loss) and $73 and $133, respectively, were capitalized as building improvements in our condensed consolidated balance sheets. The amounts capitalized are being depreciated over the estimated useful lives of the related capital assets.
We are generally responsible for all of our operating expenses, including certain expenses incurred or arranged by RMR LLC on our behalf. We are generally not responsible for payment of RMR’s employment, office or administrative expenses incurred to provide management services to us, except for the employment and related expenses of RMR’s employees assigned to work exclusively or partly at our properties, our share of the wages, benefits and other related costs of RMR’s centralized accounting personnel, our share of RMR’s costs for providing our internal audit function, or as otherwise agreed. Our property level operating expenses are generally incorporated into the rents charged to our tenants, including certain payroll and related costs incurred by RMR LLC, are generally incorporated into rents charged to our tenants.RMR. We reimbursed RMR LLC $542$1,687 and $1,841 for property management relatedthese expenses and costs for the period from January 17, 2018 throughthree months ended March 31, 2018, which amount is2024 and 2023, respectively. These amounts are included in other operating expenses and general and administrative expenses, as applicable, in our condensed consolidated statements of comprehensive income. In addition, weincome (loss).
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 responsible fornot obligated to pay management fees to RMR under our share ofmanagement agreements with RMR LLC’s costs for providing our internal audit function. The amount recognized as expense for internal audit costs was $52 for the period from January 17, 2018 through March 31, 2018, which amount is included in generalservices 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 administrative expenses inany such fees paid by our condensed consolidated statements of comprehensive income.

joint venture are credited against the fees payable by us to RMR.
See NotesNote 9 and 11 for further information regarding our relationships, agreements and transactions with RMR LLC.RMR.

Note 11.9. Related Person Transactions


We have relationships and historical and continuing transactions with RMR, LLC, SIRThe RMR Group Inc., or RMR Inc., and others related to them, including other companies to which RMR LLC or its subsidiaries provide management services and some of which have trustees, directors andor 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 D. 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 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 LLC. We have two agreements with RMR LLC to provide management services to us. See Note 108 for further information regarding our management agreements with RMR LLC.RMR.

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SIR. SIR is our largest shareholder. As of March 31, 2018, SIR owned 45,000,000 of our common shares, or approximately 69.2% of our outstanding common shares. INDUSTRIAL LOGISTICS PROPERTIES TRUST 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)

Joint Ventures. We were SIR’s wholly owned subsidiary until we completed our IPO on January 17, 2018. Adam D. Portnoy, one of our Managing Trustees, is also a managing trustee of SIR. John C. Popeo, our other Managing Trustee and our President and Chief Operating Officer, also serves as the chief financial officer and treasurer of SIR.have two separate joint venture arrangements. RMR LLC provides management services to SIR and us. In connection with our IPO, we entered a transaction agreement with SIR that governs our separation from and relationship with SIR. The transaction agreement provides that, among other things, (1) our current assets and current liabilities, aseach of the time of closing of our IPO, were settled so that SIR retained all pre-closing current assets and pre-closing current liabilities and we assumed all post-closing current assets and post-closing current liabilities, (2) we will indemnify SIR with respect to any of our liabilities, and SIR will indemnify us with respect to any of SIR’s liabilities, after giving effect to the settlement between us and SIR of our current assets and current liabilities, and (3) we and SIR will cooperate to enforce the ownership limitations in our and SIR’s respective declaration of trust as may be appropriate to qualify for and maintain qualification for taxation as a REIT under the IRC, and otherwise to ensure each receives the economics of its assets and liabilities and to file future tax returns, including appropriate allocations of taxable income, expenses and other tax attributes.these joint ventures. See Note 93 for further information regarding our IPOjoint ventures.
As of March 31, 2024 and December 31, 2023, we owed $652 and $680, respectively, to the unconsolidated joint venture for rents that we collected on behalf of that joint venture. These amounts are presented as due to related persons in our condensed consolidated balance sheets.
For further information about these and other such relationships and certain other related person transactions, see our 2023 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. We have interest rate cap agreements to manage our interest rate risk exposure on each of the ILPT Floating Rate Loan and transactionsthe Mountain Floating Rate Loan, both with SIR.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, 2024 and December 31, 2023:

Balance SheetUnderlyingCurrentStrikeNotionalFair Value at
Line Item InstrumentMaturityRateAmountMarch 31, 2024December 31, 2023
Other assetsMountain Floating Rate Loan03/15/20243.40%$1,400,000 $— $5,516 
Other assetsMountain Floating Rate Loan03/15/20253.04%$1,400,000 25,345 — 
Other assetsILPT Floating Rate Loan10/15/20242.25%$1,235,000 19,355 25,060 
$44,700 $30,576 
Interest rate caps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium. 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 income 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 income 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 income for the periods shown:
Three Months Ended March 31,
20242023
Unrealized gain (loss) on derivatives recognized in cumulative other comprehensive income$4,674 $(3,776)
Realized gain on derivatives reclassified from cumulative other comprehensive income into interest expense(9,520)(5,002)
Unrealized loss on derivatives recognized in cumulative other comprehensive income$(4,846)$(8,778)
15

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 this Quarterly Report on Form 10-Q and with our 2023 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, 2018, we owned 2662024, our portfolio was comprised of 411 properties withcontaining approximately 28.5 million rentable square feet, including 226 buildings, leasable land parcels and easements with approximately 16.8 million rentable square feet located on the island of Oahu, HI, and 40 buildings with approximately 11.7 million59,893,000 rentable square feet located in 24 other states.39 states with 99.0% occupancy leased to 301 different tenants. As of March 31, 2018, our properties were approximately 99.9% leased (based2024, we also owned a 22% equity interest in the unconsolidated joint venture.
Our portfolio as of March 31, 2024 is summarized below (square feet in thousands):
Weighted
Average
Number ofRentableRemaining
OwnershipPropertiesStatesSquare FeetOccupancy
Lease Term (1)
Hawaii Properties100%226Hawaii16,729 99.0%13.1
Consolidated joint venture properties61%9427 States20,981 99.2%6.9
Wholly owned Mainland Properties100%9034 States22,119 98.9%5.0
Other67%1New Jersey64 100.0%4.2
Total/weighted average41159,893 99.0%8.0
(1)Based on rentable square feet) to 243 different tenants with a weighted average remaining lease term (based on annualized rental revenues) of approximately 11.2 years. We define the term annualized rental revenues as used in this section as the annualized contractual rents, as of March 31, 2018, including straight line2024.
During the three months ended March 31, 2024, our rental income and net operating income, or NOI, increased compared to the 2023 period primarily due to leasing activity and rent adjustmentsresets at our properties. Long-term e-commerce trends and excluding lease value amortization, adjustedsupply chain resiliency have resulted in high occupancy and increases in rents. We believe customer service expectations, growth in the number of households and demand for tenant concessions including freesupply chain resiliency will keep demand for industrial properties strong for the foreseeable future. However, inflationary pressures and high interest rates in the United States and globally, and global geopolitical hostilities and tensions, have given rise to economic uncertainty and have caused disruptions in the financial markets. These conditions have increased our cost of capital and negatively impacted our ability to reduce our leverage. An economic recession, or continued or intensified disruptions in the financial markets, could adversely affect our financial condition and that of our tenants, could adversely impact the ability or willingness of our tenants to renew our leases or pay rent to us, may restrict our access to and amounts reimbursedwould likely increase our cost of capital, may impact our ability to tenants, plus estimated recurring expense reimbursements from tenants.

sell properties and may cause the values of our properties and of our common shares or other securities to decline.
Property Operations
As of March 31, 2018, 99.9% of our rentable square feet was leased, compared to 99.6% of our rentable square feet as of March 31, 2017. Occupancy data for our properties as of March 31, 20182024 and 20172023 were as follows:
All PropertiesComparable Properties 
as of March 31,
as of March 31, (1)
2024202320242023
Total properties411 413 411 411 
Total rentable square feet (in thousands) (2)
59,893 59,983 59,893 59,951 
Percent leased (3)
99.0 %98.7 %99.0 %98.7 %
(1)Consists of properties that we owned continuously since January 1, 2023.
(2)Subject to modest adjustments when space is remeasured or reconfigured for new tenants and when land leases are converted to building leases.
(3)Leased square feet is pursuant to existing leases as follows (square feet in thousands):
of March 31, 2024, and includes space being fitted out for occupancy, if any, and space which is leased but is not occupied, if any.
16

  
All Properties (1)
  As of March 31,
     2018 2017
Total properties 266
 266
Total rentable square feet (2)
 28,540
(4) 
28,505
Percent leased (3)
 99.9% 99.6%
Table of Contents
(1)Consists of properties that we owned (including for the period SIR owned our properties prior to our IPO) continuously since January 1, 2017. All of our properties have been continuously owned by us and SIR since January 1, 2017.
(2)Subject to modest adjustments when space is re-measured or re-configured for new tenants and when land leases are converted to building leases.
(3)Percent leased includes (i) space being fitted out for occupancy pursuant to existing leases as of March 31, 2018, if any, and (ii) space which is leased but is not occupied or is being offered for sublease by tenants, if any.
(4)Includes a 35 rentable square foot expansion for a lease that commenced on September 1, 2017.
The average effective rental rates per square foot as defined below,represents total rental income divided by the average rentable square feet leased during the periods specified for our properties forproperties. For the three months ended March 31, 20182024 and 2017 are2023, the average effective rental rates per square foot of our properties were as follows:
Three Months Ended March 31,
20242023
All properties$7.58 $7.46 
Comparable properties (1)
$7.58 $7.46 
  Three Months Ended March 31,
  2018 2017
Average effective rental rates per square foot leased (1)
 $5.69
 $5.58
(1)Consists of properties that we owned continuously since January 1, 2023.
(1)Average effective rental rates per square foot leased represents annualized total revenues during the period specified divided by the average rentable square feet leased during the period specified.
During the three months ended March 31, 2024, we entered into new and renewal leases as summarized in the following table:
Three Months Ended March 31, 2024
New LeasesRenewalsTotals
Square feet leased during the period (in thousands)90 1,785 1,875 
Weighted average rental rate change (by rentable square feet)48.1 %38.5 %39.4 %
Weighted average lease term by square feet (years)19.4 5.6 6.2 
Total leasing costs and concession commitments (1)
$717 $2,754 $3,471 
Total leasing costs and concession commitments per square foot (1)
$7.96 $1.54 $1.85 
Total leasing costs and concession commitments per square foot per year (1)
$0.41 $0.28 $0.30 
(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, 2018,2024, we entered lease renewals and new leasescompleted rent resets for approximately 296,000106,000 square feet of land at weighted average (per square foot)our Hawaii Properties at rental rates that were approximately 45.9%27.5% higher than prior rates for the same land area or building area (with leasing rate increases for vacant space based upon the most recent rental rate for the same space). Consolidated portfolio occupancy increased from 99.6% as of March 31, 2017 to 99.9% as of March 31, 2018. Commitments for tenant improvements, leasing costs and concessions for leases entered during the three months ended March 31, 2018 totaled $68,000, or $0.01 per square foot per year of the new weighted average lease term.rates.


As shown in the table below, approximately 1.1% of our total rented square feet and approximately 0.8% of our total annualized rental revenues as of March 31, 2018 are included in leases scheduled to expire by December 31, 2018. As of March 31, 2018,2024, our remaining lease expirations by year are as follows (dollars and square feet in thousands):
               
            % of Total Cumulative
      % of Total Cumulative % Annualized Annualized % of Total
    Rented Rented of Total Rented Rental Rental Annualized
  Number of Square Feet Square Feet Square Feet Revenues  Revenues Rental Revenues
Period/Year Tenants 
Expiring (1)
 
Expiring (1)
 
Expiring (1)
 Expiring Expiring Expiring
4/1/2018 - 12/31/2018 16
 314
 1.1% 1.1% $1,177
 0.8% 0.8%
2019 16
 1,534
 5.4% 6.5% 4,410
 2.8% 3.6%
2020 19
 848
 3.0% 9.5% 4,292
 2.7% 6.3%
2021 20
 1,224
 4.3% 13.8% 7,139
 4.6% 10.9%
2022 63
 2,762
 9.7% 23.5% 20,823
 13.3% 24.2%
2023 18
 1,538
 5.4% 28.9% 11,665
 7.5% 31.7%
2024 12
 4,750
 16.6% 45.5% 15,698
 10.0% 41.7%
2025 8
 619
 2.2% 47.7% 3,115
 2.0% 43.7%
2026 3
 637
 2.2% 49.9% 3,472
 2.2% 45.9%
2027 12
 4,887
 17.1% 67.0% 23,840
 15.2% 61.1%
Thereafter 81
 9,421
 33.0% 100.0% 60,877
 38.9% 100.0%
    Total 268
 28,534
 100.0%   $156,508
 100.0%  
               
Weighted average remaining lease term (in years): 10.3
     11.2
    
(1)Rented square feet is pursuant to existing leases as of March 31, 2018, and includes (i) space being fitted out for occupancy, if any, and (ii) space which is leased but is not occupied or is being offered for sublease by tenants, if any.

We generally receive rents from our tenants monthly in advance. As of March 31, 2018, tenants representing 1% or more of our total annualized rental revenues were as follows (square feet in thousands):
% of TotalCumulative
% of TotalCumulative %AnnualizedAnnualized% of Total
LeasedLeasedof TotalRentalRentalAnnualized
No. ofSquare FeetSquare FeetSquare FeetRevenuesRevenuesRental Revenues
Period/YearLeases
Expiring (1)
Expiring (1)
Expiring (1)
Expiring (2)
Expiring (2)
Expiring (2)
202432 4,017 6.8 %6.8 %$20,420 4.6 %4.6 %
202534 4,355 7.3 %14.1 %26,598 6.0 %10.6 %
202632 4,174 7.0 %21.1 %29,664 6.7 %17.3 %
202738 8,738 14.7 %35.8 %53,275 12.1 %29.4 %
202841 6,066 10.2 %46.0 %45,274 10.3 %39.7 %
Thereafter213 31,963 54.0 %100.0 %265,595 60.3 %100.0 %
Total390 59,313 100.0 %$440,826 100.0 %
Weighted average remaining lease term (in years)7.0 8.0 
(1)Leased square feet is pursuant to existing leases as of March 31, 2024, and includes space being fitted out for occupancy, if any, and space which is leased but is not occupied, if any.
(2)Annualized rental revenues are as of March 31, 2024.
As of March 31, 2024, subsidiaries of FedEx and Amazon leased 21.7% and 7.7% of our total leased square feet, respectively, and represented 28.9% and 6.7% of our total annualized rental revenues, respectively.
17

        % of Total
    Rented % of Total Annualized Rental
Tenant Property Type 
Sq. Ft. (1)
 
Rented Sq. Ft. (1)
 Revenues
1.Amazon.com.dedc, LLC / Amazon.com.kydc LLC Mainland Industrial 3,048
 10.7% 10.2%
2.Restoration Hardware, Inc. Mainland Industrial 1,195
 4.2% 3.8%
3.Federal Express Corporation / FedEx Ground Package System, Inc. Mainland Industrial 674
 2.4% 3.6%
4.American Tire Distributors, Inc. Mainland Industrial 722
 2.5% 3.2%
5.Par Hawaii Refining, LLC Hawaii Land and Easement 3,148
 11.0% 2.8%
6.Servco Pacific Inc. Hawaii Land and Easement 537
 1.9% 2.3%
7.Shurtech Brands, LLC Mainland Industrial 645
 2.3% 2.2%
8.BJ's Wholesale Club, Inc. Mainland Industrial 634
 2.2% 2.2%
9.Safeway Inc. Hawaii Land and Easement 146
 0.5% 2.1%
10.Exel Inc. Mainland Industrial 945
 3.3% 2.0%
11.Trex Company, Inc. Mainland Industrial 646
 2.3% 1.9%
12.Avnet, Inc. Mainland Industrial 581
 2.0% 1.8%
13.Manheim Remarketing, Inc. Hawaii Land and Easement 338
 1.2% 1.7%
14.Warehouse Rentals Inc. Hawaii Land and Easement 278
 1.0% 1.6%
15.Coca-Cola Bottling of Hawaii, LLC Hawaii Land and Easement 351
 1.2% 1.6%
16.A.L. Kilgo Company, Inc. Hawaii Land and Easement 310
 1.1% 1.5%
17.The Net-A-Porter Group LLC Mainland Industrial 167
 0.6% 1.4%
18.General Mills Operations, LLC Mainland Industrial 158
 0.6% 1.4%
19.Honolulu Warehouse Co., Ltd. Hawaii Land and Easement 298
 1.0% 1.4%
20.AES Hawaii, Inc. Hawaii Land and Easement 1,242
 4.4% 1.2%
21.Bradley Shopping Center Company Hawaii Land and Easement 334
 1.2% 1.1%
22.Kaiser Foundation Health Plan, Inc. Hawaii Land and Easement 217
 0.8% 1.1%
23.The Toro Company Mainland Industrial 450
 1.6% 1.1%
 Total   17,064
 60.0% 53.2%
(1)Rented square feet is pursuant to existing leases as of March 31, 2018, and includes (i) space being fitted out for occupancy, if any, and (ii) space which is leased but is not occupied or is being offered for sublease by tenants, if any.

Mainland Properties.As of March 31, 2024, occupancy at our Mainland Properties was 99.0% and represented 72.0% of our annualized rental revenues. We generally will seek to renew or extend the terms of leases at our Mainland Properties when they expire. Becauseas their expirations approach. A majority of the leases at 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 when they expire.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 leases we may enter may be less favorable to us than the terms of our existing leases for those properties.

Hawaii Properties. Approximately 60.3%As of March 31, 2024, occupancy at our Hawaii Properties was 99.0% and represented 28.0% of our annualized rental revenues as of March 31, 2018 were derived from our Hawaii Properties.revenues. As of March 31, 2018, a significant portion2024, certain of our Hawaii Properties are lands leased for rents that are periodically reset based on fair market values, generally every five or ten10 years. Revenues from our Hawaii Properties have generally increased under our or our predecessors’ ownership as rents under the leases for those properties have been reset or renewed. Lease renewals, lease extensions, new leases and rental rates for which available space may be relet at 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.
The following table provides the annualized rental revenues scheduled to reset at our Hawaii Properties as of March 31, 2024:
Annualized
Rental Revenues
Scheduled to Reset
2024$— 
20251,002 
20261,315 
2027795 
2028— 
Thereafter19,338 
Total$22,450 
As of March 31, 2024, $24,430, or 5.5%, of our annualized rental revenues are included in leases scheduled to expire by March 31, 2025 and 1.0% of our rentable square feet are currently 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 and our predecessors' prior experience with rent resets, lease extensions and new leases and rent resets 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.


The following chart showsTenant Review Process. Our manager, RMR, employs a tenant review process for us. RMR assesses tenants on an individual basis based on various applicable credit criteria. In general, depending on facts and circumstances, RMR evaluates the annualized rental revenues ascreditworthiness of March 31, 2018 scheduled to reset at our Hawaii Properties:

Scheduled Rent Resets at Hawaii Properties
(dollars in thousands)
  Annualized
  Rental Revenues as of
  March 31, 2018
  Scheduled to Reset
2018 $237
2019 10,903
2020 2,500
2021 and thereafter 19,723
Total $33,363

Sincea tenant based on information that is provided by the leases at certain of our Hawaii Properties were originally entered,tenant and, in some cases, as long as 40information that is publicly available or 50 years ago,obtained from third party sources. RMR also may use a third party service to monitor the characteristicscredit ratings of the neighborhoods in the vicinity of some of those properties have changed. In such circumstances, we and our predecessors have sometimes engaged in redevelopment activities to change the character of certain properties in order to increase rents. Because our Hawaii Properties are currently experiencing strong demand for their current uses, we do not currently expect redevelopment efforts in Hawaii to become a major activity of ours in the foreseeable future; however, we may undertake such activities on a selective basis.

Investment Activities
Our strategy related to property acquisitions and dispositions is materially unchanged from that disclosed in our Annual Report. Our target investments include all industrial and logistics buildings in top tier markets. In addition to top tier markets, our focus is on newer buildings, high credit quality tenants and longer lease terms. We expect to use the extensive nationwide resources of RMR LLC to locate and acquire properties.

For further information regarding our investment activities, see Note 3 to the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Financing Activities (dollars in thousands)
On January 17, 2018, we completed our IPO, in which we issued 20,000,000debt securities of our common shares for net proceedsexisting tenants whose debt securities are rated by a nationally recognized credit rating agency.

18

Table of $444,309, after deducting the underwriting discounts and commissions and expenses. Upon the completion of our IPO, our secured revolving credit facility converted into a four year unsecured revolving credit facility, and we used substantially all of the net proceeds from our IPO to reduce amounts outstanding under our revolving credit facility. We also reimbursed SIR for costs that it incurred in connection with our formation and the preparation for our IPO.Contents

For further information regarding our financing activities, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Our Investment and Financing Liquidity and Resources” of this Quarterly Report on Form 10-Q.


RESULTS OF OPERATIONS
 
Three Months Ended March 31, 2018,2024 Compared to Three Months Ended March 31, 20172023 (dollars and share amounts in thousands, except per share data)
ComparableNon-Comparable
Properties ResultsProperties ResultsConsolidated Results
Three Months Ended March 31, (1)
Three Months Ended March 31, (2)
Three Months Ended March 31,
$%$$%
20242023ChangeChange20242023Change20242023ChangeChange
Rental income$112,235 $110,195 $2,040 1.9%$— $63 $(63)$112,235 $110,258 $1,977 1.8%
Operating expenses:
Real estate taxes15,860 16,461 (601)(3.7%)(5)15,861 16,467 (606)(3.7%)
Other operating expenses10,290 9,307 983 10.6%32 11 21 10,322 9,318 1,004 10.8%
Total operating expenses26,150 25,768 382 1.5%33 17 16 26,183 25,785 398 1.5%
Net operating income (3)
$86,085 $84,427 $1,658 2.0%$(33)$46 $(79)86,052 84,473 1,579 1.9%
Other expenses:
Depreciation and amortization43,577 45,457 (1,880)(4.1)%
General and administrative7,689 7,907 (218)(2.8)%
Total other expenses51,266 53,364 (2,098)(3.9)%
Interest and other income2,852 1,146 1,706 148.9%
Interest expense(73,230)(70,771)(2,459)3.5%
Loss on sale of real estate— (974)974 (100.0)%
Loss before income taxes and equity in earnings of unconsolidated joint venture(35,592)(39,490)3,898 (9.9)%
Income tax expense(33)(17)(16)94.1%
Equity in earnings of unconsolidated joint venture1,723 3,961 (2,238)(56.5)%
Net loss(33,902)(35,546)1,644 (4.6)%
Net loss attributable to noncontrolling interest10,499 10,737 (238)(2.2)%
Net loss attributable to common shareholders$(23,403)$(24,809)$1,406 (5.7)%
Weighted average common shares outstanding (basic and diluted)65,556 65,309 247 0.4%
Per common share data (basic and diluted):
Net loss attributable to common shareholders$(0.36)$(0.38)$0.02 (5.3)%
  Three Months Ended March 31,
      $ %
  2018 2017 Change Change
Revenues:        
Rental income $34,809
 $33,870
 $939
 2.8 %
Tenant reimbursements and other income 5,796
 5,570
 226
 4.1 %
Total revenues 40,605
 39,440
 1,165
 3.0 %
         
Operating expenses:        
Real estate taxes 4,585
 4,339
 246
 5.7 %
Other operating expenses 3,545
 2,732
 813
 29.8 %
Total operating expenses 8,130
 7,071
 1,059
 15.0 %
         
Net operating income (1)
 32,475
 32,369
 106
 0.3 %
         
Other expenses:        
Depreciation and amortization 6,873
 6,811
 62
 0.9 %
General and administrative 2,574
 4,636
 (2,062) (44.5)%
Total other expenses 9,447
 11,447
 (2,000) (17.5)%
Operating income 23,028
 20,922
 2,106
 10.1 %
Interest income 13
 
 13
 100.0 %
Interest expense (3,802) (555) (3,247) 585.0 %
Income before income tax expense 19,239
 20,367
 (1,128) (5.5)%
Income tax expense (7) (11) 4
 (36.4)%
Net income $19,232
 $20,356
 $(1,124) (5.5)%
         
Weighted average common shares outstanding - basic and diluted 61,445
 45,000
 16,445
 36.5 %
         
Net income per common share - basic and diluted $0.31
 $0.45
 $(0.14) (31.1)%
     
Reconciliation of Net Income to Net Operating Income (1):
  
Net income$19,232
 $20,356
    
Income tax expense7
 11
    
Income before income tax expense19,239
 20,367
    
Interest expense3,802
 555
    
Interest income(13) 
    
Operating income 23,028
 20,922
    
        
General and administrative2,574
 4,636
    
Depreciation and amortization6,873
 6,811
    
NOI $32,475
 $32,369
    
         
NOI:        
Hawaii Properties $18,922
 $18,568
    
Mainland Properties 13,553
 13,801
    
NOI $32,475
 $32,369
    
         
Reconciliation of Net Income to Funds From Operations and Normalized Funds From Operations (2):
Net income$19,232
 $20,356
    
Plus: depreciation and amortization6,873
 6,811
    
FFO26,105
 27,167
    
Plus: estimated business management incentive fees (3)

 2,409
    
Normalized FFO$26,105
 $29,576
    
        
FFO per common share - basic and diluted$0.42
 $0.60
    
Normalized FFO per common share - basic and diluted$0.42
 $0.66
    
(1)Consists of properties that we owned continuously since January 1, 2023.

(2)Consists of two properties we disposed of during the period from January 1, 2023 to March 31, 2024.


(1)The calculation of net operating income, or NOI, excludes certain components of net income in order to provide results that are more closely related to our property level results of operations. We calculate NOI as shown above. We define NOI as income from our rental of real estate less our property operating expenses. NOI excludes amortization of capitalized tenant improvement costs and leasing commissions that we record as depreciation and amortization. We consider NOI to be an appropriate supplemental measure to net income because it may help both investors and management to understand the operations of our properties. We use NOI to evaluate individual and company wide property level performance, and we believe that NOI provides useful information to investors regarding our results of operations because it reflects only those income and expense items that are generated and incurred at the property level and may facilitate comparisons of our operating performance between periods and with other REITs. NOI does not represent cash generated by operating activities in accordance with GAAP and should not be considered an alternative to net income or operating income as an indicator of our operating performance or as a measure of our liquidity. This measure should be considered in conjunction with net income and operating income as presented in our condensed consolidated statements of comprehensive income. Other real estate companies and REITs may calculate NOI differently than we do.

(2)We calculate funds from operations, or FFO, and normalized funds from operations, or Normalized FFO, as shown above. FFO is calculated on the basis defined by The National Association of Real Estate Investment Trusts, or Nareit, which is net income, calculated in accordance with GAAP, plus real estate depreciation and amortization, as well as certain other adjustments currently not applicable to us. Our calculation of Normalized FFO differs from Nareit’s definition of FFO because we include business management incentive fees, if any, only in the fourth quarter versus the quarter when they are recognized as expense in accordance with GAAP due to their quarterly volatility not necessarily being indicative of our core operating performance and the uncertainty as to whether any such business management incentive fees will be payable when all contingencies for determining such fees are known at the end of the calendar year. We consider FFO and Normalized FFO to be appropriate supplemental measures of operating performance for a REIT, along with net income and operating income. We believe that FFO and Normalized FFO provide useful information to investors because by excluding the effects of certain historical amounts, such as depreciation expense, FFO and Normalized FFO may facilitate a comparison of our operating performance between periods and with other REITs. FFO and Normalized FFO 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 qualify for taxation as a REIT, limitations in our credit agreement, the availability to us of debt and equity capital, our expectation of our future capital requirements and operating performance and our expected needs for and availability of cash to pay our obligations. FFO and Normalized FFO do not represent cash generated by operating activities in accordance with GAAP and should not be considered alternatives to net income or operating income as indicators of our operating performance or as measures of our liquidity. These measures should be considered in conjunction with net income and operating income as presented in our condensed consolidated statements of comprehensive income. Other real estate companies and REITs may calculate FFO and Normalized FFO differently than we do.

(3)Incentive fees under our and SIR's business management agreements with RMR LLC are payable after the end of each calendar year, are calculated based on common share total return, as defined in the respective agreements, and are included in general and administrative expense in our condensed consolidated statements of income. In calculating net income in accordance with GAAP, we recognize estimated business management incentive fee expense, if any, in the first, second and third quarters. Although we recognize this expense, if any, in the first, second and third quarters for purposes of calculating net income, we do not include such expense in the calculation of Normalized FFO until the fourth quarter, when the amount of the business management incentive fee expense for the calendar year, if any, is determined. Normalized FFO for the three months ended March 31, 2017 excludes $2,409, which represents the portion of SIR's estimated business management incentive fee allocated to us for the period during which we were SIR's wholly owned subsidiary.

(3)See our definition of 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, 2018,2024 compared to the three months ended March 31, 2017.2023.

Rental income. The increase in rental Rental income wasincreased primarily a result of an increase in occupancy during 2017 anddue to increases from our leasing activity and rent resetsresets.
Real estate taxes. Real estate taxes decreased primarily due to lower assessed values as a result of successful real estate tax appeals.
Other operating expenses. Other operating expenses increased primarily due to increases in insurance and repairs and maintenance costs and snow removal expenses at certain of our Hawaii Properties. Rental income includes non-cash straight line rent adjustments totaling approximately $1,194 for the 2018 period and approximately $1,470 for the 2017 period, and net amortizationproperties.
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Tenant reimbursements and other income. The increase in tenant reimbursements and other income primarily reflects increases in real estate tax and other operating expense reimbursements from tenants at certain of our properties, partially offset by insurance proceeds and tenant escalation true-ups recognized in the 2017 period.

Real estate taxes. The increase in real estate taxes primarily reflects tax valuation and tax rate increases at certain of our properties.

Other operating expenses. Other operating expenses primarily include property maintenance, environmental remediation, utilities, insurance, bad debt, legal and property management fees. The increase in other operating expenses primarily reflects increases in rent reserves and snow removal costs at certain of our properties in the 2018 period, compared to lower than usual amounts for these expenses in the 2017 period.

Depreciation and amortization.The increasedecrease in depreciation and amortization primarily reflects increasedcertain leasing related assets becoming fully amortized and our disposition related activities after April 1, 2023, partially offset by an increase in depreciation of capital improvements atmade to certain of our properties.properties after April 1, 2023.

General and administrative. Subsequent to our IPO, general and administrative expenses primarily include fees paid under our business management agreement, legal fees, audit fees, Trustee cash fees and equity compensation expense. Prior to our IPO, general and administrative expenses were primarily allocated to us by SIR based on the historical cost of our

properties as a percentage of SIR's historical cost of all of its properties. The decrease in general and administrative expenses is primarily reflects our allocated portion of estimated business management incentivedue to decreases in accounting fees recognized by SIR in the 2017 period,and leasing costs, partially offset by increased costs relatedan increase in other professional fees in the 2024 period.
Interest and other income. The increase in interest and other income is primarily due to our becoming a separate public company.higher interest rates and average cash balances during the 2024 period as compared to the 2023 period.

Interest income. Interest income represents interest earned on our cash balances.

Interest expense.The increase in interest expense is primarily reflectsdue to refinancing activities from our consolidated joint venture in May 2023, resulting in higher debt balances and interest rate and costs related to the change in our capital structure, including our IPO, which resulted in changes in borrowings under our revolving credit facilitypurchase of an interest rate cap during the 20182024 period.
Loss on sale of real estate. During the 2023 period, partially offset bywe recognized a loss on sale of real estate of $974 as a result of the prepaymentsale of certain mortgage notesa portion of a land parcel in December 2017.Everett, Washington.

Income tax expense. Income tax expense primarily reflects state income taxes payable in certain jurisdictions despitejurisdictions.
Equity in earnings of unconsolidated joint venture. Equity in earnings of unconsolidated joint venture is the change in the fair value of our expected statusinvestment 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 Securities and Exchange Commission, or SEC, rules, 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 expense. 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.
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The following table presents the reconciliation of net loss to NOI for the three months ended March 31, 2024 and 2023:
Three Months Ended March 31,
20242023
Net loss$(33,902)$(35,546)
Equity in earnings of unconsolidated joint venture(1,723)(3,961)
Income tax expense33 17 
Loss before income taxes and equity in earnings of unconsolidated joint venture(35,592)(39,490)
Loss on sale of real estate— 974 
Interest expense73,230 70,771 
Interest and other income(2,852)(1,146)
General and administrative7,689 7,907 
Depreciation and amortization43,577 45,457 
NOI$86,052 $84,473 
NOI:
Hawaii Properties$23,433 $22,122 
Mainland Properties62,619 62,351 
NOI$86,052 $84,473 
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 any gain or loss on sale of real estate and equity in earnings of unconsolidated joint venture; (2) plus real estate depreciation and amortization of our properties and our proportionate share of FFO from unconsolidated joint venture properties; (3) minus FFO adjustments attributable to noncontrolling interest; and (4) certain other adjustments currently not applicable to us. In calculating Normalized FFO attributable to common shareholders, we adjust for certain non-recurring items shown below, including adjustments for such items related to the unconsolidated joint venture, 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, for federal income tax purposes.

Net income. The decreaselimitations in net income for the 2018 period comparedagreements governing our debt, the availability to us of debt and equity capital, our distribution rate as a percentage of the 2017 period reflects the changes noted above.

Weighted average common shares outstanding - basic and diluted. The increase in weighted average common shares outstanding primarily reflects the issuance of 20,000,000trading price of our common shares, in connection withor dividend yield, and our IPO.dividend yield compared to the dividend yields of other industrial REITs, our expectation of our future capital requirements and operating performance and our expected needs for and availability of cash to pay our obligations. Other real estate companies and REITs may calculate FFO attributable to common shareholders and Normalized FFO attributable to common shareholders differently than we do.

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Net income perThe following table presents our calculation of FFO attributable to common share - basicshareholders and diluted. Net income perNormalized FFO attributable to common share reflectsshareholders and reconciliations of net loss attributable to common shareholders to FFO attributable to common shareholders and Normalized FFO attributable to common shareholders for the changes to net income noted above.three months ended March 31, 2024 and 2023:

Three Months Ended March 31,
20242023
Net loss attributable to common shareholders$(23,403)$(24,809)
Equity in earnings of unconsolidated joint venture(1,723)(3,961)
Loss on sale of real estate— 974 
Depreciation and amortization43,577 45,457 
Share of FFO from unconsolidated joint venture1,459 1,468 
FFO adjustments attributable to noncontrolling interest(10,460)(11,213)
FFO and Normalized FFO attributable to common shareholders$9,450 $7,916 
Weighted average common shares outstanding (basic and diluted)65,556 65,309 
Per common share data (basic and diluted):
FFO and Normalized FFO attributable to common shareholders$0.14 $0.12 
LIQUIDITY AND CAPITAL RESOURCES
 
Our Operating Liquidity and Resources (dollars in thousands)
Our principal sources of funds to meet our operating and capital expenses, pay debt service obligations and make distributions to our shareholders are rents from tenants at our propertiesproperties. As of March 31, 2024, investment grade rated tenants, subsidiaries of investment grade rated parent entities or our Hawaii land leases represented 76.6% of our annualized rental revenues and borrowings underonly 5.5% of our revolving credit facility.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 expenses, pay debt service obligations and make distributions to our shareholders for the next 12 months and for the foreseeable future thereafter.
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;
control our operating cost increases;increases, including interest and other financing costs;
develop properties to produce cash flows in excess of our costs of capital; and
purchase additional properties that produce cash flows in excess of our costs of acquisition and the cost to our capital and property operating expenses.
CashThe following is a summary of our sources and uses of cash flows provided by (used in) operating, investing and financing activities were $22,093, ($1,347) and ($899), respectively, for the three months ended March 31, 2018 and $23,996, ($1,521) and ($22,475), respectively, for the three months ended March 31, 2017. periods presented, as reflected in our condensed consolidated statements of cash flows:
 Three Months Ended March 31,
 20242023
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period$245,723 $140,780 
Net cash provided by (used in):
Operating activities7,989 1,167 
Investing activities(11,770)9,435 
Financing activities(5,465)(6,223)
Cash and cash equivalents and restricted cash and cash equivalents at end of period$236,477 $145,159 
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The decreaseincrease in net cash provided by operating activities for the three months ended March 31, 20182024 compared to the same2023 period in the prior year is primarily due to reimbursements to SIR forhigher cash flows from our properties and favorable changes in working capital in the costs it incurred2024 period. The change in connection with our formation and the preparation for our IPO. Netnet cash used in investing activities for the three months ended March 31, 20182024 period compared to net cash provided by investing activities for the same2023 period is primarily due to costs associated with the purchase of an interest rate cap for $26,175 in the prior year was essentially unchanged.2024 period. The decrease in net cash used in financing activities for the three months ended March 31, 2018 compared to the same period in the prior year iswas primarily due to net proceeds froma decrease in principal repayments on our IPO and net contributions from SIR related to our property operations prior to the completion of our IPO, partially offset by net activities under our revolving credit facility.
amortizing loans.
Our InvestmentInvesting and Financing Liquidity and Resources (dollars in thousands, except per share and per square foot data)
Our future acquisitions or development of properties cannot be accurately projected because they depend upon available opportunities that come to our attention and upon our ability to successfully acquire, develop and operate such properties. We generally do not intend to purchase "turn around" properties, or properties that do not generate positive cash flows, and, to the extent we conduct construction or redevelopment activities on our properties, we currently intend to conduct those activities primarily to satisfy tenant requirements or on a build to suit basis for existing or new tenants.

As of March 31, 2018,2024, we had $19,847 of cash and cash equivalents.equivalents, excluding restricted cash and cash equivalents, of $128,394. To qualifymaintain our qualification for taxation as a REIT under the IRC,Internal Revenue Code of 1986, as amended, we generally will beare required to distribute annually 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. In orderWe 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 offerings of equity or debt securities to fund cash needs that may result from timing differences between our receipt of rents and our desire or need to make distributions to pay operating or capital expenses orour shareholders.
We expect to fund any future property acquisitions, development or redevelopment efforts, we maintain a $750,000 unsecured revolving credit facilitydevelopments and redevelopments with a group of lenders. The maturity date of our revolving credit facility is December 29, 2021. We have the option to extend the maturity date of our revolving credit facility for two six month periods, subject to payment of extension fees and satisfaction of other conditions. We pay interest on borrowings under our revolving credit facility at the rate of LIBOR plus a premium that will vary based on our leverage ratio. If we later achieve an investment grade credit rating, we will then be able to elect to continue to have the interest premium based on our leverage ratio orproceeds we may instead electreceive in connection with any additional properties we may sell to have the interest premium based on our credit rating,joint ventures, equity contributions from any third party investors in our joint ventures or a ratings election. We are required to pay a commitment fee on the unused portion of our revolving credit facility until and if such time as we make a ratings election, and thereafter we will be required to pay a facility fee in lieu of such commitment fee based on the maximum amount of our revolving credit facility. At March 31, 2018, the interest rate premium on our revolving credit facility was 140 basis points and our commitment fee was 25 basis points. After reporting our leverage as of March 31, 2018, the interest rate premium on our revolving credit facility will decrease to 130 basis points. We can borrow, repay and reborrow funds available under our revolving credit facility until maturity, and no principal repayment is due until maturity. As of March 31, 2018, the interest rate payable on borrowings under our revolving credit facility was 3.23%. As of March 31, 2018 and April 26, 2018, we had $302,000 and $292,000, respectively, outstanding under our revolving credit facility and $448,000 and $458,000, respectively, available to borrow under our revolving credit facility.
Our credit agreement includes a feature under which the maximum borrowing availability under the facility may be increased to up to $1,500,000 in certain circumstances.

On January 17, 2018, we completed our IPO, in which we issued 20,000,000 of our common shares for net proceeds of $444,309, after deducting the underwriting discounts and commissions and expenses. For further information regarding our IPO and our application of the net proceeds, see Note 9 to the Notes to Condensed Consolidated Financial Statements included in Part 1, Item 1 of this Quarterly Report on Form 10-Q.

Our debt maturity (other than our revolving credit facility) as of March 31, 2018 was $48,750 in 2020.
We expect to use borrowings under our revolving credit facilityany future joint ventures, and net proceeds from offerings of equity or debt securities to fund any future property acquisitions, development or redevelopment efforts.securities. We may also assume mortgage loans or incur debt in connection with future acquisitions.acquisitions, developments and redevelopments. When significant amounts are outstanding under our revolving credit facility or the maturities of our revolving credit facilitydebt approach or we desire to reduce our otherleverage or refinance maturing debt, approach, we intend to explore refinancing alternatives.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, extending the maturity date of ourobtaining a revolving credit facility, participating or participatingselling equity interests in joint venture arrangements.ventures or selling properties. Further, any issuances of our equity securities may be dilutive to our existing shareholders. 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 andor equity offerings, to fund capital expenditures, future acquisitions, development, redevelopment and other activities and to pay our obligations.

Real Estate Activities
Although we have no present intention to do so, we also may sell properties that we own or place mortgages on properties that we own to raise capital.
The completion and the costs of any future financings will depend primarily upon our success in operating our business and upon market conditions. In particular, the feasibility and cost of any future debt financings will depend primarily on our then current credit qualities and on market conditions. We have no control over market conditions. Potential lenders in future debt transactions will evaluate our ability to fund required debt service and repay principal balances when they become due by reviewing our financial condition, results of operations, business practices and plans and our ability to maintain our earnings, to stagger our debt maturities and to balance our use of debt and equity capital so that our financial performance and leverage ratios afford us flexibility to withstand any reasonably anticipated adverse changes. We intend to conduct our business activities in a manner that will afford us reasonable access to capital for investment and financing activities.
On April 19, 2018, we declared a prorated distribution of $0.27 per common share, or approximately $17,600, for the period from January 17, 2018 (the date we completed our IPO) through March 31, 2018 to shareholders of record on April 30, 2018. This prorated distribution is based upon a quarterly distribution of $0.33 per common share ($1.32 per common share per year). We expect to pay this distribution on or about May 14, 2018 using existing cash balances and borrowings under our revolving credit facility.


During the three months ended March 31, 20182024 and 2017,2023, amounts capitalized for tenant improvements and leasing costs, building improvements and development and redevelopment activities were as follows:
Three Months Ended March 31,
20242023
Tenant improvements and leasing costs (1)
$2,571 $2,040 
Building improvements (2)
802 370 
Development, redevelopment and other activities (3)
— 2,521 
$3,373 $4,931 
(1)Tenant improvements and leasing costs include 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.
  Three Months Ended
  March 31,
  2018    2017
Tenant improvements (1)
 $69
 $17
Leasing costs (2)
 5
 429
Building improvements (3)
 90
 309
Development, redevelopment and other activities (4)
 378
 684
  $542
 $1,439
(2)Building improvements generally include expenditures to replace obsolete building components and expenditures that extend the useful life of existing assets.

(1)Tenant improvements include capital expenditures used to improve tenants’ space or amounts paid directly to tenants to improve their space.

(2)Leasing costs include leasing related costs, such as brokerage commissions, legal costs and tenant inducements.

(3)Building improvements generally include (i) expenditures to replace obsolete building components and (ii) expenditures that extend the useful life of existing assets.

(4)Development, redevelopment and other activities generally include (i) capital expenditures that are identified at the time of a property acquisition and incurred within a short time period after acquiring the property and (ii) capital expenditure projects that reposition a property or result in new sources of revenues.
(3)Development, redevelopment and other activities generally include capital expenditure projects that reposition a property or result in new sources of revenues.
As of March 31, 2018,2024, we had estimated unspent leasing related obligations of $243.$5,981, all of which is expected to be spent during the next 12 months.
Consolidated Joint Venture
DuringWe own a 61% equity interest in our consolidated joint venture, which owns 94 properties in 27 states totaling approximately 20,981,000 rentable square feet. We control our consolidated joint venture and therefore account for the properties owned by this joint venture on a consolidated basis. We recognized net loss attributable to noncontrolling interest of our consolidated joint venture in our condensed consolidated financial statements for the three months ended March 31, 2018, commitments2024 and 2023 of $10,514 and $10,728, respectively. As of March 31, 2024, our consolidated joint venture had total assets of $2,991,343 and total liabilities of $1,771,327.
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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 under 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 the unconsolidated joint venture in our condensed consolidated statements of comprehensive income (loss). The unconsolidated joint venture made aggregate cash distributions to us of $990 during the three months ended March 31, 2024 and 2023, respectively.
For further information regarding these joint ventures, see Note 3 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Indebtedness
The ILPT Floating Rate Loan, which is secured by 104 of our properties, matures in October 2024, subject to three, one year extension options, and requires that interest be paid at an annual rate of SOFR plus a weighted average premium of 3.93%. The weighted average interest rate under the ILPT Floating Rate Loan was 6.18%, including the impact of our interest rate cap on SOFR of 2.25%, as of March 31, 2024 and December 31, 2023, and for expenditures, suchthe three months ended March 31, 2024 and 2023. Subject to the satisfaction of certain conditions, we have the option to prepay the ILPT Floating Rate Loan in full or in part at any time at par with no premium.
The Mountain Floating Rate Loan was scheduled to mature in March 2024, subject to three, one year extension options, and required that interest be paid at an annual rate of SOFR plus a premium of 2.77%. In March 2024, our consolidated joint venture exercised the first of its three, one year options to extend the maturity date of this loan. As part of the extension, our consolidated joint venture purchased a one year interest rate cap for $26,175 with a SOFR strike rate equal to 3.04%, which replaced the previous interest rate cap with a SOFR strike rate equal to 3.40%. As of March 31, 2024 and December 31, 2023, the interest rate under the Mountain Floating Rate Loan was 5.81% and 6.17%, respectively. The weighted average interest rate under the Mountain Floating Rate Loan was 6.09% and 6.17% for the three months ended March 31, 2024 and 2023, respectively, including the impact of our interest rate caps. Subject to the satisfaction of certain conditions, we have the option to prepay up to $280,000 of the Mountain Floating Rate Loan at par with no premium, and to prepay the balance of the Mountain Floating Rate Loan at any time, subject to a premium.
The one year options to extend the ILPT Floating Rate Loan and the Mountain Floating Rate Loan require, among other things, that we obtain a replacement interest rate cap, as tenant improvements and leasing costsdefined in connection with leasing space, were as follows:
 New Leases Renewals Totals
Square feet leased during the period (in thousands)1
 295
 296
Total leasing costs and concession commitments (1)
$33
 $35
 $68
Total leasing costs and concession commitments per square foot (1)
$33.00
 $0.12
 $0.23
Weighted average lease term by square feet (years)7.0
 30.4
 30.3
Total leasing costs and concession commitments per square foot per year (1)
$4.71
 $0.00
 $0.01

(1)Includes commitments made for leasing expenditures and concessions, such as leasing commissions, tenant improvements or other tenant inducements.
Off Balance Sheet Arrangements
the applicable agreement.
As of March 31, 2018,2024, we had no off balance sheet arrangements that have had or that we expect would be reasonably likelyan aggregate principal amount of $4,321,478 of indebtedness, including the ILPT Floating Rate Loan, the Mountain Floating Rate Loan, the $700,000 mortgage loan and the $650,000 mortgage loan, scheduled to have a material effect onmature between 2024 and 2038.
The agreements and related documents governing the ILPT Floating Rate Loan, the Mountain Floating Rate Loan, our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. We had no swaps or hedges as of March 31, 2018.

Debt Covenants (dollars in thousands)
Our principal debt obligations at March 31, 2018 were borrowings outstanding under$700,000 mortgage loan and our revolving credit facility and a secured$650,000 mortgage note assumed in connection with one of our acquisitions. Our mortgage note is non-recourse, subject to certain limitations, and does notloan contain any material financial covenants. Our credit agreement providescustomary covenants, provide for acceleration of payment of all amounts outstandingdue thereunder upon the occurrence and continuation of certain events of default such as a changeand, in the case of control of us, which includes RMR LLC ceasing to act as our business and property manager. Our credit agreement contains a number of covenants which restrict our ability to incur debts, including debts secured by mortgages on our properties, in excess of calculated amounts, restrict our ability to make distributions to our shareholders in certain circumstances and generallythe $650,000 mortgage loan, also require us to maintain certain financial ratios.a minimum consolidated net worth of at least $250,000 and liquidity of at least $15,000. As of March 31, 2018,2024, 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, see Notes 5 and covenants under6 to our credit agreement.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, 2024, we paid quarterly cash distributions to our shareholders totaling $658 using cash on hand.
Our credit agreement does not contain provisions for acceleration which could be triggered byOn April 11, 2024, we declared a regular quarterly distribution to common shareholders of record on April 22, 2024 of $0.01 per share, or approximately $658. We expect to pay this distribution to our leverage ratio. However, under our credit agreement, our leverage ratio is used to determine the fees and interest rates we pay. Accordingly, if our leverage ratio increases above the applicable thresholds, our interest expense and related costs under our credit agreement would increase.shareholders on or about May 16, 2024 using cash on hand.
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Our revolving credit facility has cross default provisions to other indebtedness that is recourse

Related Person Transactions

We have relationships and historical and continuing transactions with RMR, LLCRMR Inc. and others related to them. For example: we have no employees and the personnel and various services we require to operate our business are provided to us by RMR LLC pursuant to our business and property management agreements with RMR LLC; The RMR Group Inc., or RMR Inc., is the managing member of RMR LLC; and Adam D. Portnoy, one of our Managing Trustees, is the sole trustee of ABP Trust, which is the controlling shareholder of RMR Inc. We also have relationships and historical and continuing transactions with other companies to which RMR LLC or its subsidiaries provide management services and which may have trustees, directors and officers who are also trustees, directors or officers of us, RMR LLC or RMR Inc., including: SIR, of which we were a wholly owned subsidiary until January 17, 2018 and which remains our largest shareholder, owning, at March 31, 2018, approximately 69.2% of our outstanding common shares. For further information about these and other such relationships and related person transactions, see Notes 8 and 9 10 and 11 to the Notes to Condensed Consolidated Financial Statementsour condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, our 2023 Annual Report, our definitive Proxy Statement for our 2024 Annual Meeting of Shareholders and our other filings with the Securities and Exchange Commission, or SEC. In addition, see the section captioned “Risk Factors” of our 2023 Annual Report for a description of risks that may arise as a result of these and other related person transactions and relationships. Our filings with the SEC and copies of certain of our agreements with these related persons, including our business and property management agreements with RMR LLC and our various agreements with SIR, are available as exhibits to our filings with the SEC and accessible at the SEC’s website, www.sec.gov. We may engage in additional transactions with related persons, including businesses to which RMR LLC 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 assessment of impairment of real estate and related intangibles.
A discussion of our critical accounting estimates is included in our 2023 Annual Report. There have been no significant changes in our critical accounting estimates since the year ended December 31, 2023.
Item 3. Quantitative and Qualitative Disclosures About Market Risk(dollars in thousands, except per share data)
 
We are exposed to risks associated with market changes in interest rates. We manage our exposure to this market risk by monitoring available financing alternatives. Our strategyalternatives, including fixed rate debt, and employing derivative instruments, including interest rate caps, to managelimit our exposure to changes inincreasing interest rates is materially unchanged since December 31, 2017.rates. Other than as described below, we do not currently expect any significant changes in our exposure to fluctuations in interest rates or in how we manage this exposure in the near future.

FixedFloating Rate Debt
AtAs of March 31, 2018,2024, our outstanding fixedfloating rate debt consisted of the following secured mortgage note:following:
AnnualAnnualInterest
PrincipalInterestInterestCurrentPayments
DebtBalance
Rate (1)
ExpenseMaturityDue
ILPT Floating Rate Loan$1,235,000 6.18%$77,383 10/09/2024Monthly
Mountain Floating Rate Loan1,400,000 5.81%82,470 03/09/2025Monthly
Total/weighted average$2,635,000 5.98%$159,853 
          Annual Annual         Interest
  Principal Interest Interest   Payments
Debt 
Balance (1)
 
Rate (1)
 
Expense (1)
 Maturity Due
Mortgage note (one property in Chester, VA) $48,750
 3.99% $1,945
 2020 Monthly
(1)The annual interest rate is the rate stated in the applicable contract, as adjusted by our interest rate caps.

(1)The principal balance, annual interest rate and annual interest expense are the amounts stated in the applicable contract. In accordance with GAAP, our carrying value and recorded interest expense may differ from these amounts because of market conditions at the time we assumed this debt.

Our mortgage noteThe ILPT Floating Rate Loan is subject to three, one year extension options, and requires that interest only payments until maturity. Because our mortgage note requires interest to be paid at an annual rate of SOFR plus a fixed rate, changes in market interest rates during the termweighted average premium of the mortgage note will not affect our interest obligations. If this mortgage note is refinanced at an interest rate which is 100 basis points higher or lower than shown above, our annual interest cost would increase or decrease by approximately $488.

Changes in market interest rates would affect the fair value of our fixed rate debt obligations. Increases in market interest rates decrease the fair value of our fixed rate debt, while decreases in market interest rates increase the fair value of our fixed rate debt. Based on the balance outstanding at March 31, 2018 and discounted cash flow analysis through the maturity date, and assuming no other changes in factors that may affect the fair value of our fixed rate debt obligation, a hypothetical immediate 100 basis point change in the interest rate would change the fair value of this obligation by approximately $1,208.


3.93%. The Mountain Floating Rate Debt

At March 31, 2018, our floating rate debt consisted of $302,000 outstanding under our revolving credit facility. Our revolving credit facility matures on December 29, 2021 and,Loan is subject to the payment oftwo, one year extension feesoptions, and satisfaction of other conditions, we have the option to extend the maturity date for two six month periods. No principal repayments are required under our revolving credit facility prior to maturity, and prepayments may be made at any time without penalty.

Borrowings under our revolving credit facility are in U.S. dollars and requirerequires that interest to be paid at LIBORan annual rate of SOFR plus a premium that is subject to adjustment based upon changes to our leverage ratio. Accordingly, weof 2.77%. We are vulnerable to changes in the U.S. dollar based on short term interest rates, specifically LIBOR. SOFR. In conjunction with these borrowings, to hedge our exposure to risks related to changes in SOFR, we purchased interest rate caps with a SOFR strike rate equal to 2.25% for the ILPT Floating Rate Loan and 3.04% for the Mountain Floating Rate Loan.
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In addition, upon renewal or refinancing of this obligation,these obligations, we are vulnerable to increases in interest rate premiums, including increases in the cost of replacement interest rate caps, due to market conditions orand our perceived credit risk. Generally, a change in interest rates would not affect the value of our floating rate debt but would affect our operating results. The following table presents the approximate impact a one percentage point increase in interest rates would have on our annual floating rate interest expense at March 31, 2018:2024, including the impact of our interest rate caps:

Impact of an Increase in Interest Rates
Total Interest Annual
Weighted AverageOutstandingExpenseEarnings Per
Interest RateDebtPer Year
Share Impact (1)
At March 31, 20245.98 %$2,635,000 $159,853 $(2.44)
One percentage point increase (2)
5.98 %$2,635,000 $159,853 $(2.44)
(1)Based on the diluted weighted average common shares outstanding for the three months ended March 31, 2024.
  Impact of an Increase in Interest Rates
            Total Interest     Annual
  Interest Rate  Outstanding Expense Earnings Per
  
Per Year 
 
Debt 
 Per Year 
Share Impact (1)
At March 31, 2018 3.23% $302,000
 $9,755
 $0.16
One percentage point increase 4.23% $302,000
 $12,775
 $0.21
(1)Based on the diluted weighted average common shares outstanding for the three months ended March 31, 2018.

The following table presents(2)A one percentage point increase in interest rates would not have an impact on annual total interest expense for our floating rate debt because current interest rates exceed the approximatestrike rates of our interest rate caps. Excluding the impact of our interest rate caps, a one percentage point increase in interest rates would have onresult in a weighted average interest rate of 6.98%, a total interest expense per year of $186,568 and an annual earnings per share impact of $(2.85) for our annual floating rate interest expense at March 31, 2018 if we were fully drawn on our revolving credit facility:
  Impact of an Increase in Interest Rates
      Total Interest  Annual
  Interest Rate  Outstanding Expense Earnings Per
  Per Year Debt Per Year 
Share Impact (1)
At March 31, 2018 3.23% $750,000
 $24,225
 $0.39
One percentage point increase 4.23% $750,000
 $31,725
 $0.52
(1)Based on the diluted weighted average common shares outstanding for the three months ended March 31, 2018.

debt.
The foregoing tables showtable shows the impact of an immediate increaseone percentage point change in floating interest rates. If interest rates, were to change gradually over time,including the impact would be spread over time.of our interest rate caps. Our exposure to fluctuations in floating interest rates will increase or decrease in the future with increases or decreases in the outstanding amounts of our revolving credit facility and any other floating rate debt.debt we may incur and the impact, if any, of interest rate caps we may purchase. Generally, if interest rates were to change gradually over time, the impact would be spread over time.

Fixed Rate Debt
There have been no material changes to market interest rate risks associated with our fixed rate debt during the three months ended March 31, 2024. For a discussion of market interest rate risks associated with our fixed rate debt, see “Quantitative and Qualitative Disclosures About Market Risk” included in Part II, Item 7A of our 2023 Annual Report.
Item 4. Controls andProcedures


As of the end of the period covered by this report,Quarterly Report on Form 10-Q, our management carried out an evaluation, under the supervision and with the participation of our Managing Trustees, our President and Chief Operating Officer and our Chief Financial Officer and Treasurer, of the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, our Managing Trustees, our President and Chief Operating Officer and our Chief Financial Officer and Treasurer concluded that our disclosure controls and procedures are effective.

There have been no changes in our internal control over financial reporting during the quarter ended March 31, 20182024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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WARNING CONCERNING FORWARD LOOKING STATEMENTSWarning Concerning Forward-Looking Statements


THIS QUARTERLY REPORT ON FORMThis Quarterly Report on Form 10-Q CONTAINS STATEMENTS THAT CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OFcontains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 AND OTHER SECURITIES LAWS. ALSO, WHENEVER WE USE WORDS SUCH AS “BELIEVE”and other securities laws that are subject to risks and uncertainties. These statements may include words such as “believe”, “EXPECT”“expect”, “ANTICIPATE”“anticipate”, “INTEND”“intend”, “PLAN”“plan”, “ESTIMATE”“estimate”, “WILL”“will”, “MAY” AND NEGATIVES OR DERIVATIVES OF THESE OR SIMILAR EXPRESSIONS, WE ARE MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON OUR PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR. FORWARD LOOKING STATEMENTS IN THIS REPORT RELATE TO VARIOUS ASPECTS OF OUR BUSINESS, INCLUDING:“may” and negatives or derivatives of these or similar expressions. These forward-looking statements include, among others, statements about: economic and market conditions; our expectations regarding the demand for industrial properties; our future leasing activity; our leverage levels and possible future financings; our liquidity needs and sources; our capital expenditure plans and commitments; acquisitions and dispositions; our existing and possible future joint venture arrangements; our redevelopment and construction activities and plans; and the amount and timing of future distributions.
THE LIKELIHOOD THAT OUR TENANTS WILL PAY RENT OR BE NEGATIVELY AFFECTED BY CYCLICAL ECONOMIC CONDITIONS,Forward-looking statements reflect our current expectations, are based on judgments and assumptions, are inherently uncertain and are subject to risks, uncertainties and other factors, which could cause our actual results, performance or achievements to differ materially from expected future results, performance or achievements expressed or implied in those forward-looking statements. Some of the risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements include, but are not limited to, the following:
THE LIKELIHOOD THAT OUR TENANTS WILL RENEW OR EXTEND THEIR LEASES OR THAT WE WILL BE ABLE TO OBTAIN REPLACEMENT TENANTS,Our ability to reduce our leverage, generate cash flow and take advantage of mark-to-market leasing opportunities,
OUR ACQUISITIONS OF PROPERTIES,Whether our tenants will renew or extend their leases or whether we will obtain replacement tenants on terms as favorable to us as the terms of our existing leases,
OUR ABILITY TO COMPETE FOR ACQUISITIONS AND TENANCIES EFFECTIVELY,Our ability to successfully compete for tenancies, the likelihood that the rents we realize will increase when we renew or extend our leases, enter new leases, or our rents reset at our Hawaii Properties,
THE LIKELIHOOD THAT OUR RENTS WILL INCREASE WHEN WE RENEW OR EXTEND OUR LEASES, WHEN WE ENTER NEW LEASES, OR WHEN OUR RENTS RESET AT OUR HAWAII PROPERTIES,Our ability to cost-effectively raise and balance our use of debt or equity capital,
OUR ABILITY TO PAY DISTRIBUTIONS TO OUR SHAREHOLDERS AND TO SUSTAIN THE AMOUNT OF SUCH DISTRIBUTIONS,Our ability to purchase cost effective interest rate caps,
THE FUTURE AVAILABILITY OF BORROWINGS UNDER OUR REVOLVING CREDIT FACILITY,Non-performance by the counterparties to our interest rate caps,
OUR POLICIES AND PLANS REGARDING INVESTMENTS, FINANCINGS AND DISPOSITIONS,Our ability to pay interest on and principal of our debt,
OUR ABILITY TO RAISE DEBT OR EQUITY CAPITAL,Our ability to maintain sufficient liquidity,
OUR ABILITY TO PAY INTEREST ON AND PRINCIPAL OF OUR DEBT,Demand for industrial and logistics properties,
OUR ABILITY TO APPROPRIATELY BALANCE OUR USE OF DEBT AND EQUITY CAPITAL,Our ability and the ability of our tenants to operate under unfavorable market and commercial real estate industry conditions, due to high interest rates, prolonged high inflation, labor market challenges, supply chain disruptions, emerging technologies, volatility in the public equity and debt markets, pandemics, geopolitical instability and tensions, economic downturns or a possible recession or changes in real estate utilization,
CHANGES IN THE SECURITY OF CASH FLOWS FROM OUR PROPERTIES,Our ability to maintain high occupancy at our properties,
OUR CREDIT RATINGS,Our tenant and geographic concentrations,
OUR EXPECTATION THAT WE BENEFIT FROM OUR RELATIONSHIPS WITHOur tenants’ ability and willingness to pay their rent obligations to us,
The credit qualities of our tenants,
Changes in the security of cash flows from our properties,
Potential defaults of our leases by our tenants,
Whether the industrial and logistics sector and the extent to which our tenants’ businesses are critical to sustaining a resilient supply chain and that our business will benefit as a result,
Our ability to pay distributions to our shareholders and to increase or sustain the amount of such distributions,
Our ability to sell properties at prices we target,
Our ability to complete sales without delay, or at all, at existing agreement terms,
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Our ability to prudently pursue, and successfully and profitably complete, expansion and renovation projects at our properties and to realize our expected returns on those projects,
Our expected capital expenditures and leasing costs, as well as risks and uncertainties regarding the development, redevelopment or repositioning of our properties, including as a result of prolonged high inflation, cost overruns, supply chain challenges, labor shortages, construction delays or inability to obtain necessary permits, our ability to lease space at these properties at targeted returns and volatility in the commercial real estate markets,
Our ability to sell additional equity interests in, or contribute additional properties to, our existing joint ventures, to enter into additional real estate joint ventures or to attract co-venturers and benefit from our existing joint ventures or any real estate joint ventures we may enter into,
Our ability to acquire properties that realize our targeted returns,
The ability of our manager, RMR, INC.,to successfully manage us,
OUR QUALIFICATION FOR TAXATION AS AChanges in environmental laws or in their interpretations or enforcement as a result of climate change or otherwise, or our incurring environmental remediation costs or other liabilities,
Competition within the commercial real estate industry, particularly for industrial and logistics properties in those markets in which our properties are located,
Compliance with, and changes to, federal, state and local laws and regulations, accounting rules, tax laws and similar matters,
Limitations imposed by and our ability to satisfy complex rules to maintain our qualification for taxation as a REIT for U.S. federal income tax purposes,
CHANGES IN FEDERAL OR STATE TAX LAWS,Actual and potential conflicts of interest with our related parties, including our managing trustees, RMR and others affiliated with them,
CHANGES IN REAL ESTATE AND ZONING LAWS AND REGULATIONS, AND INTERPRETATIONS OF THOSE LAWS AND REGULATIONS, APPLICABLE TO OUR PROPERTIES,Acts of terrorism, outbreaks of pandemics or other public health safety events or conditions, war or other hostilities, global climate change or other manmade or natural disasters beyond our control, and
THE CREDIT QUALITIES OF OUR TENANTS,Other matters.
CHANGES IN ENVIRONMENTAL LAWS OR IN THEIR INTERPRETATIONS OR ENFORCEMENT AS A RESULT OF CLIMATE CHANGE OR OTHERWISE,These risks, uncertainties and other factors are not exhaustive and should be read in conjunction with other cautionary statements that are included in our periodic filings. The information contained elsewhere in our filings with the SEC, including under the caption “Risk Factors” in our periodic reports, or incorporated therein, identifies important factors that could cause differences from our forward-looking statements in this Quarterly Report on Form 10-Q. Our filings with the SEC are available on the SEC’s website at www.sec.gov.
OUR SALES OF PROPERTIES, ANDYou should not place undue reliance upon our forward-looking statements.
OTHER MATTERS.Except as required by law, we do not intend to update or change any forward-looking statements as a result of new information, future events or otherwise.
OUR ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY OUR FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. FACTORS THAT COULD HAVE A

Statement Concerning Limited Liability
MATERIAL ADVERSE EFFECT ON OUR FORWARD LOOKING STATEMENTS AND UPON OUR BUSINESS, RESULTS OF OPERATIONS, FINANCIAL CONDITION, FFO, NORMALIZED FFO, NOI, CASH FLOWS, LIQUIDITY AND PROSPECTS INCLUDE, BUT ARE NOT LIMITED TO:
THE IMPACT OF CONDITIONS AND CHANGES IN THE ECONOMY AND THE CAPITAL MARKETS ON US AND OUR TENANTS,
COMPETITION WITHIN THE REAL ESTATE INDUSTRY, PARTICULARLY IN THOSE MARKETS IN WHICH OUR PROPERTIES ARE LOCATED,
COMPLIANCE WITH, AND CHANGES TO, FEDERAL, STATE AND LOCAL LAWS AND REGULATIONS, ACCOUNTING RULES, TAX LAWS AND SIMILAR MATTERS,
LIMITATIONS IMPOSED ON OUR BUSINESS AND OUR ABILITY TO SATISFY COMPLEX RULES IN ORDER FOR US TO QUALIFY FOR TAXATION AS A REIT FOR U.S. FEDERAL INCOME TAX PURPOSES,
ACTUAL AND POTENTIAL CONFLICTS OF INTEREST WITH OUR RELATED PARTIES, INCLUDING OUR MANAGING TRUSTEES, RMR LLC, RMR INC., SIR, AFFILIATES INSURANCE COMPANY, OR AIC, AND OTHERS AFFILIATED WITH THEM, AND
ACTS OF TERRORISM, OUTBREAKS OF SO CALLED PANDEMICS OR OTHER MANMADE OR NATURAL DISASTERS BEYOND OUR CONTROL.
FOR EXAMPLE:
OUR ABILITY TO MAKE FUTURE DISTRIBUTIONS TO OUR SHAREHOLDERS AND TO MAKE PAYMENTS OF PRINCIPAL AND INTEREST ON OUR INDEBTEDNESS DEPENDS UPON A NUMBER OF FACTORS, INCLUDING OUR FUTURE EARNINGS, THE CAPITAL COSTS WE INCUR TO LEASE OUR PROPERTIES AND OUR WORKING CAPITAL REQUIREMENTS. WE MAY BE UNABLE TO PAY OUR DEBT OBLIGATIONS OR TO MAKE OR SUSTAIN DISTRIBUTIONS ON OUR COMMON SHARES AND FUTURE DISTRIBUTIONS MAY BE REDUCED OR ELIMINATED,
OUR ABILITY TO GROW OUR BUSINESS AND INCREASE OUR DISTRIBUTIONS DEPENDS IN LARGE PART UPON OUR ABILITY TO BUY PROPERTIES AND LEASE THEM FOR RENTS, LESS THEIR PROPERTY OPERATING COSTS, THAT EXCEED OUR CAPITAL COSTS. WE MAY BE UNABLE TO IDENTIFY PROPERTIES THAT WE WANT TO ACQUIRE OR TO NEGOTIATE ACCEPTABLE PURCHASE PRICES, ACQUISITION FINANCING OR LEASE TERMS FOR NEW PROPERTIES,
CONTINGENCIES IN OUR ACQUISITION AND SALE AGREEMENTS MAY NOT BE SATISFIED AND ANY EXPECTED ACQUISITIONS AND SALES MAY NOT OCCUR, MAY BE DELAYED OR THE TERMS OF SUCH TRANSACTIONS MAY CHANGE, 
RENTS THAT WE CAN CHARGE AT OUR PROPERTIES MAY DECLINE BECAUSE OF CHANGING MARKET CONDITIONS OR OTHERWISE,
MOST OF OUR HAWAII PROPERTIES ARE LANDS LEASED FOR RENTS THAT ARE PERIODICALLY RESET BASED ON THEN CURRENT FAIR MARKET VALUES. REVENUES FROM OUR PROPERTIES IN HAWAII HAVE GENERALLY INCREASED DURING OUR AND OUR PREDECESSORS’ OWNERSHIP AS THE LEASES FOR THOSE PROPERTIES HAVE BEEN RESET OR RENEWED. ALTHOUGH WE EXPECT THAT RENTS FOR OUR HAWAII PROPERTIES WILL INCREASE IN THE FUTURE, WE CANNOT BE SURE THEY WILL. FUTURE RENTS FROM THESE PROPERTIES COULD DECREASE OR NOT INCREASE TO THE EXTENT THEY HAVE IN THE PAST,
OUR POSSIBLE REDEVELOPMENT OF CERTAIN OF OUR PROPERTIES MAY NOT BE REALIZED OR BE SUCCESSFUL,
OUR LEASING RELATED OBLIGATIONS MAY COST MORE OR LESS AND MAY TAKE LONGER TO COMPLETE THAN WE EXPECT, AND OUR LEASING RELATED OBLIGATIONS MAY INCREASE IN THE FUTURE,

THE UNEMPLOYMENT RATE OR ECONOMIC CONDITIONS IN AREAS WHERE OUR PROPERTIES ARE LOCATED MAY BECOME WORSE IN THE FUTURE. SUCH CIRCUMSTANCES OR OTHER CONDITIONS MAY REDUCE DEMAND FOR LEASING INDUSTRIAL SPACE. IF THE DEMAND FOR LEASING INDUSTRIAL SPACE IS REDUCED, WE MAY BE UNABLE TO RENEW LEASES WITH OUR TENANTS AS LEASES EXPIRE OR ENTER INTO NEW LEASES AT RENTAL RATES AS HIGH AS EXPIRING RENTS AND OUR FINANCIAL RESULTS MAY DECLINE,
E-COMMERCE RETAIL SALES MAY NOT CONTINUE TO GROW AND INCREASE THE DEMAND FOR INDUSTRIAL AND LOGISTICS REAL ESTATE AS WE EXPECT,
INCREASING DEVELOPMENT OF INDUSTRIAL AND LOGISTICS PROPERTIES MAY REDUCE THE DEMAND FOR, AND OUR RENTS FROM, OUR PROPERTIES,
OUR BELIEF THAT THERE IS A LIKELIHOOD THAT TENANTS MAY RENEW OR EXTEND OUR LEASES WHEN THEY EXPIRE WHENEVER THEY HAVE MADE SIGNIFICANT INVESTMENTS IN THE LEASED PROPERTIES, OR BECAUSE THOSE PROPERTIES MAY BE OF STRATEGIC IMPORTANCE TO THEM, MAY NOT BE REALIZED,
SOME OF OUR TENANTS MAY NOT RENEW EXPIRING LEASES, AND WE MAY BE UNABLE TO OBTAIN NEW TENANTS TO MAINTAIN OR INCREASE THE HISTORICAL OCCUPANCY RATES OF, OR RENTS FROM, OUR PROPERTIES,
THE COMPETITIVE ADVANTAGES WE BELIEVE WE HAVE MAY NOT IN FACT PROVIDE US WITH THE ADVANTAGES WE EXPECT. WE MAY FAIL TO MAINTAIN THESE ADVANTAGES OR OUR COMPETITION MAY OBTAIN OR INCREASE THEIR COMPETITIVE ADVANTAGES RELATIVE TO US,
OUR INCREASED OPERATING EXPENSES AS A PUBLIC COMPANY MAY BE GREATER THAN WE EXPECT,
WE INTEND TO CONDUCT OUR BUSINESS ACTIVITIES IN A MANNER THAT WILL AFFORD US REASONABLE ACCESS TO CAPITAL FOR INVESTMENT AND FINANCING ACTIVITIES. HOWEVER, WE MAY NOT SUCCEED IN THIS REGARD AND WE MAY NOT HAVE REASONABLE ACCESS TO CAPITAL,
CONTINUED AVAILABILITY OF BORROWINGS UNDER OUR REVOLVING CREDIT FACILITY IS SUBJECT TO OUR SATISFYING CERTAIN FINANCIAL COVENANTS AND OTHER CREDIT FACILITY CONDITIONS THAT WE MAY BE UNABLE TO SATISFY,
ACTUAL COSTS UNDER OUR REVOLVING CREDIT FACILITY WILL BE HIGHER THAN LIBOR PLUS A PREMIUM BECAUSE OF FEES AND EXPENSES ASSOCIATED WITH SUCH DEBT,
WE MAY BE UNABLE TO REPAY OUR DEBT OBLIGATIONS WHEN THEY BECOME DUE,
THE MAXIMUM BORROWING AVAILABILITY UNDER OUR REVOLVING CREDIT FACILITY MAY BE INCREASED TO UP TO $1.5 BILLION IN CERTAIN CIRCUMSTANCES; HOWEVER, INCREASING THE MAXIMUM BORROWING AVAILABILITY UNDER OUR REVOLVING CREDIT FACILITY IS SUBJECT TO OUR OBTAINING ADDITIONAL COMMITMENTS FROM LENDERS, WHICH MAY NOT OCCUR,
WE HAVE THE OPTION TO EXTEND THE MATURITY DATE OF OUR REVOLVING CREDIT FACILITY UPON PAYMENT OF A FEE AND MEETING OTHER CONDITIONS. HOWEVER, THE APPLICABLE CONDITIONS MAY NOT BE MET,
OUR RIGHT TO ELECT TO HAVE INTEREST PAYABLE UNDER OUR REVOLVING CREDIT FACILITY CALCULATED AS LIBOR PLUS A PREMIUM BASED ON OUR CREDIT RATING IS SUBJECT TO OUR OBTAINING AN INVESTMENT GRADE CREDIT RATING, WHICH WE MAY NOT OBTAIN,
THE BUSINESS AND PROPERTY MANAGEMENT AGREEMENTS BETWEEN US AND RMR LLC HAVE CONTINUING 20 YEAR TERMS. HOWEVER, THOSE AGREEMENTS PERMIT EARLY TERMINATION IN CERTAIN CIRCUMSTANCES. ACCORDINGLY, WE CANNOT BE SURE THAT THESE AGREEMENTS WILL REMAIN IN EFFECT FOR CONTINUING 20 YEAR TERMS,

WE BELIEVE THAT OUR RELATIONSHIPS WITH OUR RELATED PARTIES, INCLUDING RMR LLC, RMR INC., SIR, AIC AND OTHERS AFFILIATED WITH THEM MAY BENEFIT US AND PROVIDE US WITH COMPETITIVE ADVANTAGES IN OPERATING AND GROWING OUR BUSINESS. HOWEVER, THE ADVANTAGES WE BELIEVE WE MAY REALIZE FROM THESE RELATIONSHIPS MAY NOT MATERIALIZE, AND
THE PREMIUMS USED TO DETERMINE THE INTEREST RATE PAYABLE ON OUR REVOLVING CREDIT FACILITY AND THE UNUSED FEE PAYABLE ON OUR REVOLVING CREDIT FACILITY ARE BASED ON OUR LEVERAGE. FUTURE CHANGES IN OUR LEVERAGE MAY CAUSE THE INTEREST AND FEES WE PAY TO INCREASE.
CURRENTLY UNEXPECTED RESULTS COULD OCCUR DUE TO MANY DIFFERENT CIRCUMSTANCES, SOME OF WHICH ARE BEYOND OUR CONTROL, SUCH AS ACTS OF TERRORISM, NATURAL DISASTERS, CHANGES IN OUR TENANTS’ FINANCIAL CONDITIONS, THE MARKET DEMAND FOR LEASED SPACE OR CHANGES IN CAPITAL MARKETS OR THE ECONOMY GENERALLY.
THE INFORMATION CONTAINED ELSEWHERE IN THIS QUARTERLY REPORT ON FORM 10-Q AND IN OUR ANNUAL REPORT OR IN OUR OTHER FILINGS WITH THE SEC, INCLUDING UNDER THE CAPTION “RISK FACTORS”, OR INCORPORATED HEREIN OR THEREIN, IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD CAUSE DIFFERENCES FROM OUR FORWARD LOOKING STATEMENTS. OUR FILINGS WITH THE SEC ARE AVAILABLE ON THE SEC’S WEBSITE AT WWW.SEC.GOV.
YOU SHOULD NOT PLACE UNDUE RELIANCE UPON OUR FORWARD LOOKING STATEMENTS.
EXCEPT AS REQUIRED BY LAW, WE DO NOT INTEND TO UPDATE OR CHANGE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.

STATEMENT CONCERNING LIMITED LIABILITY
THE AMENDED AND RESTATED DECLARATION OF TRUST ESTABLISHING INDUSTRIAL LOGISTICS PROPERTIES TRUST, DATED JANUARYThe Amended and Restated Declaration of Trust establishing Industrial Logistics Properties Trust, dated January 11, 2018, AS FILED WITH THE STATE DEPARTMENT OF ASSESSMENTS AND TAXATION OF MARYLAND, PROVIDES THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF INDUSTRIAL LOGISTICS PROPERTIES TRUST SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, INDUSTRIAL LOGISTICS PROPERTIES TRUST. ALL PERSONS DEALING WITH INDUSTRIAL LOGISTICS PROPERTIES TRUST IN ANY WAY SHALL LOOK ONLY TO THE ASSETS OF INDUSTRIAL LOGISTICS PROPERTIES TRUST FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.as amended, as filed with the State Department of Assessments and Taxation of Maryland, provides that no trustee, officer, shareholder, employee or agent of Industrial Logistics Properties Trust shall be held to any personal liability, jointly or severally, for any obligation of, or claim against, Industrial Logistics Properties Trust. All persons dealing with Industrial Logistics Properties Trust in any way shall look only to the assets of Industrial Logistics Properties Trust for the payment of any sum or the performance of any obligation.




PART II.Other Information

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Item 1A. Risk Factors

There have been no material changes to the risk factors from those we previously disclosedprovided in our 2023 Annual Report.


Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer purchases of equity securities. The following table provides information about our purchases of our equity securities during the quarter ended March 31, 2024:
Maximum
Total Number ofApproximate Dollar
Shares PurchasedValue of Shares that
Number ofAverageas Part of PubliclyMay Yet Be Purchased
SharesPrice PaidAnnounced PlansUnder the Plans or
Calendar Month
Purchased (1)
per Shareor ProgramsPrograms
January 1, 2024 - January 31, 20241,048 $4.74 — $— 
March 1, 2024 - March 31, 202410,809 4.06 — — 
Total11,857 $4.12 — $— 
(1)These common share withholdings and purchases were made to satisfy tax withholding and payment obligations of certain former employees of RMR in connection with the vesting of prior awards of our common shares. We withheld and purchased these common shares at their fair market values based upon the trading prices of our common shares at the close of trading on Nasdaq on the applicable purchase dates.
29

Item 6. Exhibits
 
Exhibit Number
Description
3.1
3.2
4.1
4.2
31.1
31.1
31.2
31.3
32.1
31.4
32.1
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.1
101.SCHThe following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018 formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Statements of Cash Flows and (iv) related notes to these financial statements, tagged as blocks of text and in detail.Taxonomy Extension Schema Document. (Filed herewith.)
101.CALXBRL Taxonomy Extension Calculation Linkbase Document. (Filed herewith.)
101.DEFXBRL Taxonomy Extension Definition Linkbase Document. (Filed herewith.)
101.LABXBRL Taxonomy Extension Label Linkbase Document. (Filed herewith.)
101.PREXBRL Taxonomy Extension Presentation Linkbase Document. (Filed herewith.)
104Cover Page Interactive Data File. (Formatted as Inline XBRL and contained in Exhibit 101.)

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SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



INDUSTRIAL LOGISTICS PROPERTIES TRUST
By:/s/ John C. PopeoYael Duffy
John C. PopeoYael Duffy
President and Chief Operating Officer
Dated: April 27, 201830, 2024
By:/s/ Richard W. Siedel, Jr.Tiffany R. Sy
Richard W. Siedel, Jr.Tiffany R. Sy
Chief Financial Officer and Treasurer
(principal financial officerPrincipal Financial Officer and principal accounting officer)Principal Accounting Officer)
Dated: April 27, 201830, 2024



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