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, ~~2021~~2022

☐ 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)


Maryland						82-2809631
(State or Other Jurisdiction of Incorporation or Organization)						(IRS Employer Identification No.)

Two Newton Place,

255 Washington Street,

Suite 300,

Newton,

Massachusetts

02458-1634

(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 Class

Trading Symbol(s)

Name Of Each Exchange On Which Registered

Common Shares of Beneficial Interest

ILPT

The 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 every Interactive Data File required to be submitted 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 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” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

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 22, ~~2021: 65,301,088~~

2022: 65,403,859

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INDUSTRIAL LOGISTICS PROPERTIES TRUST

FORM 10-Q

March 31, ~~2021~~2022

INDEX


		Page
PART I	Financial Information	3

Item 1.	Financial Statements (unaudited)	3

	Condensed Consolidated Balance Sheets — March 31, ~~2021~~2022 and December 31, ~~2020~~2021	3

	Condensed Consolidated Statements of Comprehensive Income (Loss) — Three Months Ended March 31, ~~2021~~2022 and ~~2020~~2021	4

	Condensed Consolidated Statements of Shareholders’ Equity — Three Months Ended March 31, ~~2021~~2022 and ~~2020~~2021	5

	Condensed Consolidated Statements of Cash Flows — Three Months Ended March 31, ~~2021~~2022 and ~~2020~~2021	6

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1421

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2634

Item 4.	Controls and Procedures	2836

	Warning Concerning Forward-Looking Statements	2937

	Statement Concerning Limited Liability	3240

PART II	Other Information	3341

Item 1A.	Risk Factors	3341

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41



Item 6.	Exhibits	3442

	Signatures	3543

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.

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PART 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,
2021 2020
ASSETS
Real estate properties:
Land $ 709,099 $ 709,099
Buildings and improvements 1,100,183 1,099,971
Total real estate properties, gross 1,809,282 1,809,070
Accumulated depreciation (149,003) (141,406)
Total real estate properties, net 1,660,279 1,667,664
Investment in unconsolidated joint venture 62,511 60,590
Acquired real estate leases, net 78,394 83,644
Cash and cash equivalents 26,147 22,834
Rents receivable, including straight line rents of $64,797 and $62,753, respectively 70,411 69,511
Deferred leasing costs, net 5,208 4,595
Debt issuance costs, net 1,108 1,477
Due from related persons 1,409 2,665
Other assets, net 3,552 2,765
Total assets $ 1,909,019 $ 1,915,745
LIABILITIES AND SHAREHOLDERS' EQUITY
Revolving credit facility $ 217,000 $ 221,000
Mortgage notes payable, net 645,715 645,579
Assumed real estate lease obligations, net 14,053 14,630
Accounts payable and other liabilities 14,720 14,716
Rents collected in advance 7,522 7,811
Security deposits 6,569 6,540
Due to related persons 2,224 2,279
Total liabilities 907,803 912,555
Commitments and contingencies 0 0
Shareholders' Equity:
Common shares of beneficial interest, $.01 par value: 100,000,000 shares authorized; 65,301,088 shares issued and outstanding for both periods presented 653 653
Additional paid in capital 1,011,058 1,010,819
Cumulative net income 243,563 224,226
Cumulative common distributions (254,058) (232,508)
Total shareholders' equity 1,001,216 1,003,190
Total liabilities and shareholders' equity $ 1,909,019 $ 1,915,745


	March 31,		December 31,
	2022		2021
ASSETS
Real estate properties:
Land	$	1,026,237	$	699,037
Buildings and improvements	3,524,573		1,049,796
Total real estate properties, gross	4,550,810		1,748,833
Accumulated depreciation	(182,482)		(167,490)
Total real estate properties, net	4,368,328		1,581,343
Assets of properties held for sale	731,964		—
Investment in unconsolidated joint venture	143,428		143,021
Acquired real estate leases, net	282,314		63,441
Cash and cash equivalents	275,075		29,397
Restricted cash	146,354		—
Rents receivable, including straight line rents of $70,253 and $69,173, respectively	77,443		75,877


Other assets, net	78,887		15,479

Total assets	$	6,103,793	$	1,908,558

LIABILITIES AND EQUITY
Revolving credit facility	$	—	$	182,000
Bridge loan facility	1,356,606		—
Mortgage notes payable, net	3,031,819		646,124
Liabilities of properties held for sale	10,516		—
Assumed real estate lease obligations, net	25,943		12,435
Accounts payable and other liabilities	68,863		27,772


Due to related persons	6,077		2,185
Total liabilities	4,499,824		870,516

Commitments and contingencies	0		0

Equity:
Equity attributable to common shareholders:
Common shares of beneficial interest, $0.01 par value: 100,000,000 shares authorized; 65,403,859 and 65,404,592 shares issued and outstanding, respectively	654		654
Additional paid in capital	1,012,622		1,012,224
Cumulative net income	337,394		343,908
Cumulative other comprehensive income	3,908		—
Cumulative common distributions	(340,328)		(318,744)
Total equity attributable to common shareholders	1,014,250		1,038,042
Noncontrolling interest:
Total equity attributable to noncontrolling interest	589,719		—
Total equity	1,603,969		1,038,042
Total liabilities and equity	$	6,103,793	$	1,908,558

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

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INDUSTRIAL LOGISTICS PROPERTIES TRUST

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(amounts in thousands, except per share data)

(unaudited)


		Three Months Ended March 31,				Three Months Ended March 31,
		2021		2020				2022		2021

Rental income	Rental income	$	54,217	$	64,278		Rental income	$	71,375	$	54,217

Expenses:	Expenses:						Expenses:
Real estate taxes	Real estate taxes	7,247		8,811			Real estate taxes	9,436		7,247
Other operating expenses	Other operating expenses	4,976		5,181			Other operating expenses	6,772		4,976
Depreciation and amortization	Depreciation and amortization	12,678		18,290			Depreciation and amortization	22,878		12,678

General and administrative	General and administrative	3,756		4,831			General and administrative	6,077		3,756
Total expenses	Total expenses	28,657		37,113			Total expenses	45,163		28,657


Interest income		0		111
Interest expense (including net amortization of debt issuance costs, premiums and discounts of $505 and $586, respectively)		(8,741)		(14,519)

Income before income tax expense and equity in earnings of investees		16,819		12,757
Realized gain on sale of equity securities							Realized gain on sale of equity securities	1,232		—
Unrealized gain on equity securities							Unrealized gain on equity securities	2,460		—
Dividend income							Dividend income	478		—
Interest expense (including net amortization of debt issuance costs, premiums and discounts of $20,321 and $505, respectively)							Interest expense (including net amortization of debt issuance costs, premiums and discounts of $20,321 and $505, respectively)	(40,999)		(8,741)
Loss on early extinguishment of debt							Loss on early extinguishment of debt	(828)		—
Income (loss) before income tax expense and equity in earnings of investees							Income (loss) before income tax expense and equity in earnings of investees	(11,445)		16,819
Income tax expense	Income tax expense	(63)		(63)			Income tax expense	(69)		(63)
Equity in earnings of investees	Equity in earnings of investees	2,581		0			Equity in earnings of investees	1,727		2,581
Net income		19,337		12,694
Net (loss) income							Net (loss) income	(9,787)		19,337
Net loss attributable to noncontrolling interest	Net loss attributable to noncontrolling interest	0		152			Net loss attributable to noncontrolling interest	3,273		—
Net income attributable to common shareholders		$	19,337	$	12,846
Net (loss) income attributable to common shareholders							Net (loss) income attributable to common shareholders	(6,514)		19,337

Other comprehensive income:							Other comprehensive income:
Unrealized gain on derivatives							Unrealized gain on derivatives	5,632		—
Less: unrealized gain on derivatives attributable to noncontrolling interest							Less: unrealized gain on derivatives attributable to noncontrolling interest	(1,724)		—
Other comprehensive income attributable to common shareholders							Other comprehensive income attributable to common shareholders	3,908		—
Comprehensive (loss) income attributable to common shareholders							Comprehensive (loss) income attributable to common shareholders	$	(2,606)	$	19,337

Weighted average common shares outstanding - basic	Weighted average common shares outstanding - basic	65,139		65,075			Weighted average common shares outstanding - basic	65,212		65,139
Weighted average common shares outstanding - diluted	Weighted average common shares outstanding - diluted	65,177		65,082			Weighted average common shares outstanding - diluted	65,212		65,177

Per common share data (basic and diluted):	Per common share data (basic and diluted):						Per common share data (basic and diluted):
Net income attributable to common shareholders		$	0.30	$	0.20
Net (loss) income attributable to common shareholders							Net (loss) income attributable to common shareholders	$	(0.10)	$	0.30

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

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INDUSTRIAL LOGISTICS PROPERTIES TRUST

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(dollars in thousands)

(unaudited)


											Total Equity		Total Equity												Cumulative				Total Equity		Total Equity
		Number of			Additional				Cumulative		Attributable to		Attributable to					Number of			Additional				Other		Cumulative		Attributable to		Attributable to
		Common	Common		Paid In		Cumulative		Common		Common		Noncontrolling		Total			Common	Common		Paid In		Cumulative		Comprehensive		Common		Common		Noncontrolling		Total
		Shares	Shares		Capital		Net Income		Distributions		Shareholders		Interest		Equity			Shares	Shares		Capital		Net Income		Income		Distributions		Shareholders		Interest		Equity
Balance at December 31, 2021																	Balance at December 31, 2021	65,404,592	$	654	$	1,012,224	$	343,908	$	—	$	(318,744)	$	1,038,042	$	—	$	1,038,042
Net (loss) income																	Net (loss) income	—	—		—		(6,514)		—		—		(6,514)		(3,273)		(9,787)
Share grants																	Share grants	—	—		407		—		—		—		407		—		407
Share repurchases																	Share repurchases	(333)	—		(7)		—		—		—		(7)		—		(7)
Share forfeitures																	Share forfeitures	(400)	—		(1)		—		—		—		(1)		—		(1)
Net current period other comprehensive income																	Net current period other comprehensive income	—	—		—		—		3,908		—		3,908		1,724		5,632
Contributions from noncontrolling interest																	Contributions from noncontrolling interest	—	—		—		—		—		—		—		591,268		591,268
Distributions to common shareholders																	Distributions to common shareholders	—	—		—		—		—		(21,584)		(21,584)		—		(21,584)
Balance at March 31, 2022																	Balance at March 31, 2022	65,403,859	$	654	$	1,012,622	$	337,394	$	3,908	$	(340,328)	$	1,014,250	$	589,719	$	1,603,969

Balance at December 31, 2020	Balance at December 31, 2020	65,301,088	$	653	$	1,010,819	$	224,226	$	(232,508)	$	1,003,190	$	0	$	1,003,190	Balance at December 31, 2020	65,301,088	$	653	$	1,010,819	$	224,226	—		$	(232,508)	$	1,003,190	—		$	1,003,190
Net income (loss)		—	—		—		19,337		—		19,337		—		19,337
Net income																	Net income	—	—		—		19,337		—		—		19,337		—		19,337
Share grants	Share grants	0	—		239		—		—		239		—		239		Share grants	—	—		239		—		—		—		239		—		239

Distributions to common shareholders	Distributions to common shareholders	—	—		—		—		(21,550)		(21,550)		—		(21,550)		Distributions to common shareholders	—	—		��		—		—		(21,550)		(21,550)		—		(21,550)
Balance at March 31, 2021	Balance at March 31, 2021	65,301,088	$	653	$	1,011,058	$	243,563	$	(254,058)	$	1,001,216	$	0	$	1,001,216	Balance at March 31, 2021	65,301,088	$	653	$	1,011,058	$	243,563	$	—	$	(254,058)	$	1,001,216	$	—	$	1,001,216

Balance at December 31, 2019		65,180,628	$	652	$	999,302	$	142,155	$	(146,419)	$	995,690	$	0	$	995,690
Net income (loss)		—	—		—		12,846		—		12,846		(152)		12,694
Share grants		6,000	—		326		—		—		326		—		326
Share repurchases		(951)	—		(18)		—		—		(18)		—		(18)

Distributions to common shareholders		—	—		—		—		(21,510)		(21,510)		—		(21,510)
Contributions from noncontrolling interest		—	—		6,972		—		—		6,972		100,668		107,640

Balance at March 31, 2020		65,185,677	$	652	$	1,006,582	$	155,001	$	(167,929)	$	994,306	$	100,516	$	1,094,822

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

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INDUSTRIAL LOGISTICS PROPERTIES TRUST

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(unaudited)


		Three Months Ended March 31,			Three Months Ended March 31,
			2021			2020			2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES:	CASH FLOWS FROM OPERATING ACTIVITIES:							CASH FLOWS FROM OPERATING ACTIVITIES:
Net income			$	19,337		$	12,694
Net (loss) income								Net (loss) income	$	(9,787)	$	19,337
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:							Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	Depreciation		7,617			11,294		Depreciation	14,992		7,617
Net amortization of debt issuance costs, premiums and discounts	Net amortization of debt issuance costs, premiums and discounts		505			586		Net amortization of debt issuance costs, premiums and discounts	20,320		505
Amortization of acquired real estate leases and assumed real estate lease obligations	Amortization of acquired real estate leases and assumed real estate lease obligations		4,673			6,530		Amortization of acquired real estate leases and assumed real estate lease obligations	7,223		4,673
Amortization of deferred leasing costs	Amortization of deferred leasing costs		211			273		Amortization of deferred leasing costs	361		211

Unrealized gain on equity securities								Unrealized gain on equity securities	(2,460)		—
Realized gain on sale of equity securities								Realized gain on sale of equity securities	(1,232)		—

Straight line rental income	Straight line rental income		(2,044)			(1,967)		Straight line rental income	(1,156)		(2,044)

Loss on early extinguishment of debt								Loss on early extinguishment of debt	828		—
Other non-cash expenses	Other non-cash expenses		239			326		Other non-cash expenses	696		239
Unconsolidated joint venture distributions	Unconsolidated joint venture distributions		660			0		Unconsolidated joint venture distributions	1,320		660
Equity in earnings of investees	Equity in earnings of investees		(2,581)			0		Equity in earnings of investees	(1,727)		(2,581)
Change in assets and liabilities:	Change in assets and liabilities:							Change in assets and liabilities:
Rents receivable	Rents receivable		1,144			(775)		Rents receivable	(1,309)		1,144
Deferred leasing costs	Deferred leasing costs		(771)			(273)		Deferred leasing costs	(3,226)		(771)
Due from related persons	Due from related persons		1,256			481		Due from related persons	—		1,256
Other assets	Other assets		(787)			(4,420)		Other assets	(15,018)		(787)
Accounts payable and other liabilities	Accounts payable and other liabilities		508			3,196		Accounts payable and other liabilities	22,502		508
Rents collected in advance	Rents collected in advance		(289)			1,289		Rents collected in advance	19,646		(289)
Security deposits	Security deposits		29			12		Security deposits	729		29
Due to related persons	Due to related persons		(55)			199		Due to related persons	3,937		(55)
Net cash provided by operating activities	Net cash provided by operating activities		29,652			29,445		Net cash provided by operating activities	56,639		29,652

CASH FLOWS FROM INVESTING ACTIVITIES:	CASH FLOWS FROM INVESTING ACTIVITIES:							CASH FLOWS FROM INVESTING ACTIVITIES:
Real estate acquisitions and deposits	Real estate acquisitions and deposits		0			(71,628)		Real estate acquisitions and deposits	(3,557,602)		—
Real estate improvements	Real estate improvements		(789)			(2,307)		Real estate improvements	(618)		(789)

Proceeds from sale of marketable securities								Proceeds from sale of marketable securities	115,735		—
Net cash used in investing activities	Net cash used in investing activities		(789)			(73,935)		Net cash used in investing activities	(3,442,485)		(789)

CASH FLOWS FROM FINANCING ACTIVITIES:	CASH FLOWS FROM FINANCING ACTIVITIES:							CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of mortgage notes payable								Proceeds from issuance of mortgage notes payable	2,100,000		—
Proceeds from secured bridge loan facility								Proceeds from secured bridge loan facility	1,385,158		—
Borrowings under revolving credit facility	Borrowings under revolving credit facility		9,000			125,000		Borrowings under revolving credit facility	3,000		9,000
Repayments of revolving credit facility	Repayments of revolving credit facility		(13,000)			(170,000)		Repayments of revolving credit facility	(185,000)		(13,000)
Repayment of mortgage notes payable								Repayment of mortgage notes payable	(1,782)		—

Payment of debt issuance costs								Payment of debt issuance costs	(89,354)		—
Distributions to common shareholders	Distributions to common shareholders		(21,550)			(21,510)		Distributions to common shareholders	(21,584)		(21,550)
Proceeds from noncontrolling interest, net	Proceeds from noncontrolling interest, net		0			107,640		Proceeds from noncontrolling interest, net	587,440		—

Repurchase of common shares			0			(18)

Net cash (used in) provided by financing activities	Net cash (used in) provided by financing activities		(25,550)			41,112		Net cash (used in) provided by financing activities	3,777,878		(25,550)

Increase (decrease) in cash, cash equivalents and restricted cash			3,313			(3,378)
Increase in cash, cash equivalents and restricted cash								Increase in cash, cash equivalents and restricted cash	392,032		3,313
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period		22,834			34,550		Cash, cash equivalents and restricted cash at beginning of period	29,397		22,834
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period		$	26,147		$	31,172	Cash, cash equivalents and restricted cash at end of period	$	421,429	$	26,147

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

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INDUSTRIAL LOGISTICS PROPERTIES TRUST

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(dollars in thousands)

(unaudited)


		Three Months Ended March 31,			Three Months Ended March 31,
			2021			2020			2022		2021
SUPPLEMENTAL DISCLOSURES:	SUPPLEMENTAL DISCLOSURES:							SUPPLEMENTAL DISCLOSURES:
Interest paid	Interest paid		$	8,240		$	14,143	Interest paid	$	13,021	$	8,240
Income taxes paid								Income taxes paid	$	57	$	—

NON-CASH INVESTING ACTIVITIES:								NON-CASH INVESTING ACTIVITIES:
Real estate acquired by assumption of mortgage notes payable								Real estate acquired by assumption of mortgage notes payable	$	323,432	$	—
Real estate improvements accrued, not paid								Real estate improvements accrued, not paid	$	821	$	72

NON-CASH FINANCING ACTIVITIES:								NON-CASH FINANCING ACTIVITIES:
Assumption of mortgage notes payable								Assumption of mortgage notes payable	$	(323,432)	$	—
Increase in deferred financing fees								Increase in deferred financing fees	$	14,537	$	—


SUPPLEMENTAL DISCLOSURE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH:	SUPPLEMENTAL DISCLOSURE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH:	SUPPLEMENTAL DISCLOSURE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH:
												The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets to the amounts shown in the condensed consolidated statements of cash flows:
			As of March 31,					As of March 31,
			2021		2020			2022		2021
Cash and cash equivalents	Cash and cash equivalents		$	26,147	$	19,870	Cash and cash equivalents	$	275,075	$	26,147
Restricted cash(1)	Restricted cash(1)		0		11,302		Restricted cash(1)	146,354		—
Total cash, cash equivalents and restricted cash shown in the statements of cash flows	Total cash, cash equivalents and restricted cash shown in the statements of cash flows		$	26,147	$	31,172	Total cash, cash equivalents and restricted cash shown in the statements of cash flows	$	421,429	$	26,147

(1) Restricted cash consists of amounts escrowed for capital expenditures at certain of our mortgaged properties and cash held for the operations of our consolidated joint venture arrangement in which we own a 61% equity interest.

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

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INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

Note 1. Basis of Presentation

The accompanying condensed consolidated financial statements of Industrial Logistics Properties Trust and its consolidated subsidiaries, or the Company, 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, ~~2020,~~2021, or our ~~2020~~2021 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.

On February 25, 2022, we acquired Monmouth Real Estate Investment Corporation, or MNR, pursuant to the merger of MNR with and into one of our wholly owned subsidiaries, or the Merger, as further described below. In connection with the Merger, we entered into a new joint venture arrangement for 95 of the acquired MNR properties, including 2 committed, but not yet completed, property acquisitions, located in the mainland United States, in which we retained a 61% equity interest. We have determined that this joint venture is not a variable interest entity, or VIE, as defined under the Consolidation Topic of the Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, and we evaluated such entity under the voting model and concluded we should consolidate the entity. Under the voting model, we consolidate the entity if we determine that we, directly or indirectly, have greater than 50% of the voting rights and that other equity holders do not have substantive participating rights. The other joint venture investor’s interest in this consolidated entity is reflected as noncontrolling interest in our condensed consolidated financial statements. See Notes 2, 9 and 11 for further information regarding this joint venture.

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in the condensed consolidated financial statements include purchase price allocations, useful lives of fixed assets, impairments of real estate and related intangibles.

Note 2. Real Estate Investments

As of March 31, ~~2021,~~2022, our portfolio was comprised of ~~289 wholly owned~~412 consolidated properties containing approximately ~~34,870,000~~59,736,000 rentable square feet, including 226 buildings, leasable land parcels and easements containing approximately ~~16,756,000~~16,729,000 rentable square feet of primarily industrial lands located on the island of Oahu, Hawaii, or our Hawaii Properties, and 63186 properties containing approximately ~~18,114,000~~43,007,000 rentable square feet of industrial properties located in 3038 other states, or our Mainland ~~Properties.~~Properties, which includes 93 properties owned by a consolidated joint venture arrangement in which we own a 61% equity interest. As of March 31, ~~2021,~~2022, we also owned a 22% equity interest in an unconsolidated joint venture which owns 1218 properties located in 912 states totaling approximately ~~9,227,000~~11,726,000 rentable square feet.

We operate in 1 business segment: ownership and leasing of properties that include industrial and logistics buildings and leased industrial lands. For the three months ended March 31, 2022 and 2021, approximately 37.4% and ~~2020, approximately~~ 50.2% ~~and 41.1%~~, respectively, of our rental income was from our Hawaii Properties. In addition, we have a ~~subsidiary~~concentration of ~~Amazon.com, Inc., which is a tenant at~~Mainland Properties leased to FedEx Corporation and certain of its subsidiaries, or FDX, which, as of March 31, 2022, consisted of approximately 21.6% of our ~~Mainland Properties,~~rentable square feet located in 34 states with a weighted average remaining lease term of 7.5 years and accounted for ~~$5,538,~~$13,468, or ~~10.2%~~18.9%, and ~~$9,662,~~$2,751, or ~~15.0%~~5.1%, of our rental income for the three months ended March 31, 2022 and 2021, respectively. As of March 31, 2022, the only other tenants that leased over 5% of our total rentable square footage were subsidiaries of Amazon.com, Inc., which accounted for $5,615, or 7.9%, and $5,538, or 10.2%, of our rental income for the three months ended March 31, 2022 and 2021, respectively.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

Acquisition activities

On February 25, 2022, we completed the acquisition of MNR pursuant to the Agreement and Plan of Merger, dated as of November 5, 2021 and ~~2020,~~as amended on February 7, 2022, or the Merger Agreement, by and among us, Maple Delaware Merger Sub LLC, a Delaware limited liability company and our wholly owned subsidiary, or Merger Sub, and MNR. At the effective time on February 25, 2022, or the Effective Time, MNR merged with and into Merger Sub, with Merger Sub continuing as the surviving entity, and the separate existence of MNR ceased. MNR’s portfolio included 124 Class A, single tenant, net leased, e-commerce focused industrial properties containing approximately 25,745,000 rentable square feet and 2 committed, but not yet completed, property acquisitions. The aggregate value of the consideration paid in the Merger was $3,734,485, including the assumption of $323,432 aggregate principal amount of existing MNR mortgage debt, the repayment of $885,269 of MNR debt and the payment of certain transaction fees and expenses, net of MNR’s cash on hand, and excluding 2 pending property acquisitions for an aggregate purchase price of $78,843, excluding acquisition related costs.

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

At the Effective Time, each MNR stock option and restricted stock award outstanding immediately prior to the Effective Time, whether vested or unvested, became fully vested and converted into the right to receive, in the case of stock options, the difference between the Common Stock Consideration and the exercise price and, in the case of restricted stock awards, the Common Stock Consideration. Any out-of-money stock options were canceled for no consideration.

Immediately following the closing of the Merger, we entered into a joint venture arrangement with an institutional investor for 95 MNR properties, including 2 committed, but not yet completed, property acquisitions. The investor acquired a 39% equity interest in the joint venture from us for $587,440, and we retained the remaining 61% equity interest in the joint venture. In connection with the transaction, the joint venture assumed $323,432 aggregate principal amount of existing MNR mortgage debt secured by 11 properties and entered into a $1,400,000 floating rate CMBS loan secured by 82 properties, or the Floating Rate Loan. The Floating Rate Loan matures in March 2024, subject to 3 one year extension options, and requires that interest be paid at an annual rate based on the secured overnight financing rate, or SOFR, plus a premium of 2.765%. See Notes 4, 9 and 11 for more information regarding this joint venture.

In connection with the closing of the Merger, we entered into a $1,385,158 bridge loan facility, secured by 109 properties not owned by the joint venture in which we retained a 61% equity interest, or the Bridge Loan. We also entered into a $700,000 fixed rate CMBS loan secured by 17 of our properties, or the Fixed Rate Loan.

The Bridge Loan matures in February 2023 and requires that interest be paid at an annual rate of SOFR plus a weighted average premium of 2.919%. The Fixed Rate Loan matures in March 2032 and requires that interest be paid at a weighted average annual interest rate of 4.417%. The Floating Rate Loan, the Bridge Loan and the Fixed Rate Loan are collectively referred to as the Loans.

We used the proceeds from our sale of the equity interest in our joint venture in which we retained a 61% equity interest to partially fund our acquisition of MNR. We funded our equity interest in that joint venture and the balance of the acquisition of MNR with proceeds from our Bridge Loan and our Fixed Rate Loan.

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

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


Land	$	327,200
Buildings	2,478,047
Acquired real estate leases (1)	226,820
Assets of properties held for sale	724,073
Cash	8,814
Other assets, net	14,194
Securities available for sale (2)	146,550
Total assets	3,925,698
Mortgage notes payable, at fair value	(323,432)
Accounts payable and other liabilities	(20,750)
Assumed real estate lease obligations	(14,233)
Liabilities of properties held for sale	(3,596)
Equity attributable to noncontrolling interest on the joint venture	(3,827)
Net assets acquired	3,559,860
Assumed working capital	(148,807)
Assumed mortgage notes payable, principal	323,432
Purchase price	$	3,734,485

(1)As of the date of acquisition, the weighted average amortization periods for the above market lease values, lease origination value and capitalized below market lease values were 11.05 years, 8.50 years and 7.83 years, respectively.

(2)As part of the Merger, we acquired a portfolio of marketable securities and classified them as held for sale. During the three months ended March 31, 2022, we sold securities with a cost of $114,503 for net proceeds of $115,735, resulting in a $1,232 realized gain on sale of equity securities for the three months ended March 31, 2022. As of March 31, 2022, we owned securities with a cost of $32,047 and a fair value of $34,508 resulting in a $2,460 unrealized gain on equity securities for the three months ended March 31, 2022. The securities are included in other assets, net on our condensed consolidated balance sheet as of March 31, 2022. We expect to complete the sales of these marketable securities during the second quarter of 2022. See Note 5 for more information regarding these marketable securities.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

During the three months ended March 31, ~~2021,~~2022, we committed ~~$3,256~~$4,772 for expenditures related to leasing related costs for leases executed during the period for approximately ~~620,000~~885,000 square feet. Committed, but unspent, tenant related obligations based on existing leases as of March 31, ~~2021~~2022 were ~~$1,704.~~$28,700.

Certain of our industrial lands in Hawaii may require environmental remediation, especially if the use of those lands is changed; however, we do not have plans to change the use of those lands. As of both March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, accrued environmental remediation costs of $6,940 were included in accounts payable and other liabilities in our condensed consolidated balance sheets. These accrued environmental remediation costs relate to maintenance of our properties for current uses, and, because of the indeterminable timing of the remediation, these amounts have not been discounted to present value. 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~~While 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 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 expenses in our condensed consolidated statements of comprehensive ~~income.~~income (loss).

InDisposition activities

As of March ~~2021,~~31, 2022, we ~~entered into an agreement to acquire a newly built property located near~~classified 30 properties we acquired as part of the ~~Rickenbacker intermodal terminal and airport~~MNR acquisition as held for sale in ~~Columbus, Ohio containing~~our condensed consolidated balance sheet. We are currently marketing these properties for sale, which contain approximately ~~358,000~~4,921,000 rentable square feet and net leased to a single tenant for a purchase price of $31,500, excluding acquisition related costs. This acquisition is expected to close during the second quarter of 2021. However, this acquisition is subject to conditions; accordingly, wefeet. We cannot be sure we will sell any properties we are marketing for prices in excess of our carrying values or that we will ~~complete this acquisition,~~not recognize impairment losses or losses on sale with respect to these properties.

Joint Venture Activities

As of March 31, 2022, we have equity investments in our joint ventures that ~~this acquisition will~~consist of the following:

ILPT Carrying Value

ILPT

of Investment

Number of

Square

Joint Venture

Presentation

Ownership

at March 31, 2022

Properties

Location

Feet

Mountain Industrial REIT LLC

Consolidated

61%

N/A

Various

20,754,664

The Industrial Fund REIT LLC

Unconsolidated

22%

143,428

Various

11,726,000

The following table provides a summary of the mortgages of our joint ventures:


			Principal Balance
			at March 31,
Joint Venture (Consolidated)	Coupon Rate	Maturity Date	2022 (1)
Mortgage notes payable (secured by 11 properties in 10 states)	3.690%	Various	$	321,650
Mortgage notes payable (secured by 82 properties in 25 states)	3.060%	3/9/2024	1,400,000

Weighted average/total	3.178%		$	1,721,650


			Principal Balance
			at March 31,
Joint Venture (Unconsolidated)	Coupon Rate (2)	Maturity Date	2022 (1)
Mortgage notes payable (secured by 1 property in Florida)	3.60%	10/1/2023	$	56,980
Mortgage notes payable (secured by 11 other properties in 8 states)	3.33%	11/7/2029	350,000
Weighted average/total	3.37%		$	406,980

(1)Amounts are not ~~be delayed or that~~adjusted for our minority interest; none of the ~~terms will not change.~~debt is recourse to us.

(2)Includes the effect of mark to market purchase accounting.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

Consolidated Joint Venture ~~Activities~~- Mountain Industrial REIT LLC

AsImmediately following the closing of ~~March 31, 2021,~~the Merger, we ~~have an equity investment in~~entered into a joint venture ~~that consists~~arrangement with an institutional investor for 95 of the ~~following:~~

ILPT Carrying Value of
ILPT Investment at March 31, Number of Square
Joint Venture Ownership 2021 Properties Location Feet
12 properties 22% $ 62,511 12 NaN states 9,226,729

~~The following table provides a summary of the mortgage debts of our joint venture:~~

Principal Balance
at March 31,
Joint Venture
Coupon Rate (1)
Maturity Date
2021 (2)
Mortgage note payable (secured by 1 property in Florida) 3.60% 10/1/2023 $ 56,980
Mortgage note payable (secured by 11 other properties in 8 states) 3.33% 11/7/2029 350,000
Weighted average/total 3.37% $ 406,980

~~(1) Includes the effect of mark to market purchase accounting.~~

~~(2) Amounts are not adjusted for our minority interest; none of the debt is recourse to us.~~

~~During the three months ended March 31, 2020, we entered into agreements related to a joint venture for 12 of our~~acquired MNR properties in ~~the mainland United States, or our joint venture, with an Asian institutional~~27 states, including 2 committed, but not yet completed, property acquisitions. The investor ~~and contributed those 12 properties to our joint venture. We received an aggregate of $108,266 from that investor for~~acquired a 39% noncontrolling equity interest in ~~our~~the joint venture from us for $587,440, and we retained the remaining 61% equity interest in ~~our~~the joint venture. ~~During~~The joint venture assumed $323,432 aggregate principal amount of existing MNR mortgage debt on certain of the ~~three months ended March 31, 2020, we incurred transaction costs of $626 in connection with the formation of~~properties. We control this joint ~~venture.~~venture and therefore account for the properties on a consolidated basis in our condensed consolidated financial statements.

We recognized a 39% noncontrolling interest in our condensed consolidated financial statements for the three months ended March 31, ~~2020.~~2022. The portion of ~~our~~this joint venture's net loss not attributable to us, or ~~$152~~$3,261 for the three months ended March 31, ~~2020,~~2022, is reported as noncontrolling interest in our condensed consolidated statements of comprehensive ~~income. No~~income (loss). There were no distributions ~~were~~ made by ~~our~~this joint venture during the three months ended March 31, ~~2020.~~2022. See Notes 1, 9 and 11 for more information regarding this joint venture.

~~In November 2020,~~Unconsolidated Joint Venture - The Industrial Fund REIT LLC

As of March 31, 2022 and December 31, 2021, we ~~sold~~also owned an ~~additional 39% equity interest from our remaining 61% equity interest to a second unrelated third party institutional investor and retained a 22% equity~~ interest in ~~our joint venture. Effective as of the date of the sale, we deconsolidated our~~an unconsolidated joint venture ~~and, since that time, we~~with 18 properties in 12 states. We account for ~~our~~the unconsolidated joint venture ~~using~~under the equity method of accounting under the fair value option.

During the three months ended March 31, 2022 and 2021, we recorded ~~the~~a change in the fair value of our investment in ~~our~~the unconsolidated joint venture of $1,727 and $2,581, respectively, as equity in earnings of investees in our condensed consolidated statements of comprehensive ~~income.~~income (loss). In addition, during the three months ended March 31, 2022 and 2021, ~~our~~the unconsolidated joint venture made aggregate cash distributions of $1,320 and $660, respectively, to us.

See ~~Note~~Notes 5, 9 and 11 for more information regarding our joint ~~venture.~~ventures.

Note 3. 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 ~~the~~their respective leases; therefore, we have determined to evaluate our leases as lease arrangements.

Our leases provide for base rent payments and ~~in addition~~ may also include variable payments. Rental income from operating leases, including any payments derived by index or market-based indices, is recognized on a straight line basis over the lease term when we have determined that the collectability of substantially all of the lease payments is probable. Some of our leases have options to extend or terminate the lease exercisable at the option of our tenants, which are considered when determining the lease term. 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 $12,380 and $9,872 for the three months ended March 31, 2022 and 2021, respectively, of which tenant reimbursements totaled $12,135 and $9,627, respectively.

We increased rental income to record revenue on a straight line basis by $1,156 and $2,044 for the three months ended March 31, 2022 and 2021, respectively.

Right of use asset and lease liability. In connection with our acquisition of MNR, we assumed the lease for MNR’s former corporate headquarters, which expires on December 31, 2029, and three of the properties we acquired as part of the MNR acquisition were subject to ground leases under which we are the lessee. For leases under which we are the lessee, we are required to record a right of use asset and lease liability for all leases with a term greater than 12 months. As of March 31, 2022, the value of the right of use asset and related liability representing our future obligations under the lease arrangements under which we are the lessee were $5,147 and $5,192, respectively. The right of use asset and related lease liability are included in other assets, net and accounts payable and other liabilities, respectively, in our condensed consolidated balance sheets.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

~~$11,520 for~~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 ~~three months ended March 31, 2021 and 2020, respectively, of which tenant reimbursements totaled $9,627 and $11,275, respectively.~~

~~We increased rental income~~ground lease in order to ~~record revenue on a straight line basis by $2,044 and $1,967 for~~protect our investment in the ~~three months ended March 31, 2021 and 2020, respectively.~~

During the year ended December 31, 2020, certain of our tenants requested relief from their obligations to pay rent due to us in response to the economic conditions resulting from the COVID-19 pandemic. In most cases, the tenants granted deferrals were obligated to pay the deferred rents in 12 equal monthly installments beginning in September 2020. As of March 31, 2021 and December 31, 2020, deferred payments totaling $1,725 and $2,630, respectively, are included in rents receivable in our condensed consolidated balance sheets. These deferred amounts did not impact our operating results for the three months ended March 31, 2021.affected property.

Note 4. Indebtedness

As of March 31, ~~2021,~~2022, our outstanding indebtedness consisted of the following:

Net Book
Value
Principal Balance as of of Collateral
March 31, December 31, Interest At March 31,
2021 (1)
2020 (1)
Rate Maturity 2021
Unsecured revolving credit facility (2)
$ 217,000 $ 221,000 1.41 % Dec 2021 $ 0
Mortgage notes payable (secured by 186 properties in Hawaii) 650,000 650,000 4.31 % Feb 2029 491,336
867,000 871,000 $ 491,336
Unamortized debt issuance costs (4,285) (4,421)
$ 862,715 $ 866,579


											Net Book
											Value
			Principal Balance as of								of Collateral
			March 31,		December 31,		Interest				At March 31,
Entity	Type	Secured By:	2022 (1)		2021 (1)		Rate		Maturity		2022

ILPT	Revolving credit facility (2)	Unsecured	$	—	$	182,000	1.410	%	N/A		$	—
ILPT	Bridge Loan Facility	109 Properties	1,385,158		—		3.214	%	Feb 2023		1,206,972
ILPT	Fixed Rate - Interest only	186 Properties	650,000		650,000		4.310	%	Feb 2029		490,882
ILPT	Fixed Rate - Interest only	17 Properties	700,000		—		4.417	%	Mar 2032		528,498
Mountain (3)	Floating Rate - Interest only	82 Properties	1,400,000		—		3.060	%	Mar 2024	(4)	1,946,182
Mountain (3)	Fixed Rate - Amortizing	One Property	13,644		—		3.670	%	May 2031		31,352
Mountain (3)	Fixed Rate - Amortizing	One Property	27,446		—		3.100	%	Jun 2035		48,843
Mountain (3)	Fixed Rate - Amortizing	One Property	15,585		—		3.560	%	Sep 2030		51,807
Mountain (3)	Fixed Rate - Amortizing	One Property	45,534		—		4.130	%	Nov 2033		132,174
Mountain (3)	Fixed Rate - Amortizing	One Property	15,032		—		4.140	%	Jul 2032		45,854
Mountain (3)	Fixed Rate - Amortizing	One Property	32,634		—		4.020	%	Oct 2033		88,253
Mountain (3)	Fixed Rate - Amortizing	One Property	5,290		—		3.770	%	Apr 2030		40,668
Mountain (3)	Fixed Rate - Amortizing	One Property	5,594		—		3.850	%	Apr 2030		40,668
Mountain (3)	Fixed Rate - Amortizing	One Property	44,042		—		2.950	%	Jan 2036		103,379
Mountain (3)	Fixed Rate - Amortizing	One Property	47,742		—		4.270	%	Nov 2037		114,816
Mountain (3)	Fixed Rate - Amortizing	One Property	54,012		—		3.250	%	Jan 2038		118,337
Mountain (3)	Fixed Rate - Amortizing	One Property	15,095		—		3.760	%	Oct 2028		65,064
			4,456,808		832,000						$	5,053,749
	Unamortized debt issuance costs		(68,383)		(3,876)
			$	4,388,425	$	828,124

(1)The principal balances are the amounts stated in contracts. In accordance with GAAP, our carrying values and recorded interest expense may be different because of market conditions at the time we assumed certain of these debts.

(2) ~~The maturity date of~~In February 2022, we repaid the outstanding principal balance under our ~~revolving credit facility is December 29, 2021 and we have the option to extend the maturity date for 2,~~ ~~six~~ ~~month periods through December 29, 2022.~~

~~We have a~~ $750,000 unsecured revolving credit facility ~~that~~and then terminated the agreement governing the facility in accordance with its terms and without penalty.

(3)Mountain is ~~available for our general business purposes, including acquisitions.~~ Mountain Industrial REIT LLC.

(4)The maturity date of our revolving credit facility is December 29, 2021. We may borrow, repay and reborrow funds under our revolving credit facility until maturity, and no principal repayment is due until maturity. Interest on borrowings under our revolving credit facility is calculated at floating rates based on LIBOR plus a premium that varies based on our leverage ratio. We have the option to extend the maturity date of our revolving credit facility for 2, ~~six~~ ~~month periods,~~Floating Rate Loan matures in March 2024, subject to ~~payment of~~three, one year extension fees and satisfaction of other conditions. We are also required to pay a commitment fee on the unused portion of our revolving credit facility. 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. As of March 31, 2021, interest payable on the amount outstanding under our revolving credit facility was LIBOR plus 130 basis points and our commitment fee was 25 basis points. As of March 31, 2021 and December 31, 2020, the interest rate payable on borrowings under our revolving credit facility was 1.41% and 1.70%, respectively. The weighted average interest rate for borrowings under our revolving credit facility was 1.57% and 3.23% for the three months ended March 31, 2021 and 2020, respectively. As of March 31, 2021 and April 22, 2021, we had $217,000 outstanding under our revolving credit facility, and $533,000 available to borrow under our revolving credit facility.options.

Our credit agreement provides for acceleration of payment of all amounts due thereunder upon the occurrence and continuation of certain events of default, such 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 agreementprincipal debt obligations at March 31, ~~2021.~~2022 were: (1) $1,385,158 outstanding principal amount of the Bridge Loan; (2) $1,400,000 outstanding principal amount of the Floating Rate Loan; (3) $700,000 outstanding principal amount of the Fixed Rate Loan; (4) $650,000 outstanding principal amount of a mortgage loan secured by 186 of our properties; and (5) $321,650 aggregate principal amount of mortgages secured by 11 properties owned by our consolidated joint venture in which we own a 61% equity interest.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

As of December 31, 2021, we had a $750,000 unsecured revolving credit facility that was available for our general business purposes, including acquisitions. The maturity date of this revolving credit facility was June 29, 2022 and had an option to extend the maturity date for 1, six month period, subject to payment of extension fees and satisfaction of other conditions. As of December 31, 2021, the annual interest rate payable on borrowings under this revolving credit facility was 1.41%. The weighted average annual interest rate for borrowings under this revolving credit facility was 1.41% and 1.57% for the period from January 1, 2022 to February 25, 2022 and the three months ended 2021, respectively. In connection with the closing of the Merger, we entered into the Loans, and repaid the outstanding principal balance under this revolving credit facility and then terminated the agreement governing the facility in accordance with its terms and without penalty. During the three months ended March 31, 2022, we recorded a $828 loss on extinguishment of debt to write off any unamortized costs related to this facility.

On February 25, 2022, subsidiaries of our consolidated joint venture entered into a loan agreement with Citi Real Estate Funding Inc., UBS AG, Bank of America, N.A., Bank of Montreal and Morgan Stanley Bank, N.A., or collectively, the Floating Rate Lenders, pursuant to which this joint venture obtained the Floating Rate Loan. Also on February 25, 2022, our consolidated joint venture entered into a guaranty in favor of the Floating Rate Lenders, pursuant to which this joint venture guaranteed certain limited recourse obligations of its subsidiaries with respect to the Floating Rate Loan. The Floating Rate Loan matures in March 2024, subject to 3, one year extension options, and requires that interest be paid at an annual rate of SOFR plus a premium of 2.25%. Effective in March 2022, the Floating Rate Lenders exercised their option to increase the premium in connection with the securitization of the Floating Rate Loan, resulting in an increase of 51.5 basis points in the premium. As of March 31, 2022, the weighted average annual interest rate payable under our Floating Rate Loan was 3.060% and the weighted average interest rate for borrowings under the Floating Rate Loan was 3.011% for the period from February 25, 2022 to March 31, 2022.

Also on February 25, 2022, certain of our subsidiaries entered into a loan agreement with Citibank, N.A., UBS AG, Bank of America, N.A., Bank of Montreal and Morgan Stanley Bank, N.A., or collectively, the Bridge Lenders, and a mezzanine loan agreement with an institutional lender, or the Bridge Mezz Lender, together pursuant to which we obtained the Bridge Loan. Also on February 25, 2022, we entered into a guaranty in favor of the Bridge Lenders and the Bridge Mezz Lender, pursuant to which we guaranteed certain limited recourse obligations of its subsidiaries with respect to the Bridge Loan. The Bridge Loan matures in February 2023 and requires that interest be paid at an annual rate of SOFR plus a premium of 1.75% under the loan agreement and a premium of 8.0% under the mezzanine loan agreement. As of March 31, 2022, the weighted average annual interest rate payable under our Bridge Loan was 3.214% and the weighted average annual interest rate for borrowings under the Bridge Loan was 3.143% for the period from February 25, 2022 to March 31, 2022.

Also on February 25, 2022, certain of our subsidiaries entered into a loan agreement with Citi Real Estate Funding Inc., UBS AG, Bank of America, N.A., Bank of Montreal and Morgan Stanley Bank, N.A., or collectively, the Fixed Rate Lenders, and mezzanine loan agreements with Citigroup Global Markets Realty Corp., UBS AG, Bank of America, N.A., Bank of Montreal and Morgan Stanley Mortgage Capital Holdings LLC, or collectively the Fixed Mezz Lenders, pursuant to which we obtained the Fixed Rate Loan. Also on February 25, 2022, we entered into a guaranty in favor of the Fixed Rate Lenders and the Fixed Mezz Lenders, pursuant to which we guaranteed certain limited recourse obligations of our subsidiaries with respect to the Fixed Rate Loan. The Fixed Rate Loan matures in March 2032 and requires that interest be paid at a weighted average annual fixed rate of 4.417%.

We used the aggregate net proceeds from the Loans to fund the acquisition of MNR. Principal payments on the Loans are not required prior to the end of the respective initial term, subject to certain conditions set forth in the applicable loan agreement. Subject to the satisfaction of certain stated conditions, we have the option under the applicable loan agreement: (1) to prepay up to $280,000 of the Floating Rate Loan after March 2023, at par with no premium, and to prepay the balance of the Floating Rate Loan at any time, subject to a premium; (2) to prepay the Bridge Loan, in full or in part at any time, subject to breakage costs; and (3) to prepay the Fixed Rate Loan in full or part at any time, subject to a premium, and beginning in September 2031, without a premium.

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

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INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

In connection with the Merger, our consolidated joint venture in which we own a 61% equity interest assumed an aggregate $323,432 of existing MNR mortgages secured by 11 properties which are owned by this joint venture. These amortizing mortgages require monthly payments of principal and interest until maturity. The value of these mortgages approximated their estimated fair value on the date of acquisition.

See Notes 2 and 5 for further information regarding our acquisition of MNR.

Note 5. Fair Value of Assets and Liabilities

Our financial instruments include cash and cash equivalents, restricted cash, rents receivable, ~~our revolving credit facility,~~the Floating Rate Loan, the Bridge Loan, the Fixed Rate Loan, mortgage notes payable, accounts payable, rents collected in advance, marketable securities available for sale, interest rate caps, security deposits and amounts due from or to related persons. At March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, the fair value of our financial instruments approximated their carrying values in our condensed consolidated financial statements, due to their short term nature or floating interest rates, except as follows:

At March 31, 2021 At December 31, 2020
Carrying Estimated Carrying Estimated

Value (1)
Fair Value
Value (1)
Fair Value
Mortgage notes payable $ 645,715 $ 706,152 $ 645,579 $ 730,119


	At March 31, 2022				At December 31, 2021
	Carrying		Estimated		Carrying		Estimated
	Value (1)		Fair Value		Value (1)		Fair Value
Mortgage notes payable, 4.310% interest rate, due in 2029	$	646,260	$	653,231	$	646,124	$	709,198
Bridge Loan, 3.214% weighted average interest rate, due in 2023	1,356,606		1,356,606		—		—
Mortgage notes payable, 3.060% interest rate, due in 2024 (2)	1,369,635		1,369,635		—		—
Mortgage notes payable, 4.417% interest rate, due in 2032	694,274		694,274		—		—
Mortgage note payable, 3.670% interest rate, due in 2031	13,644		13,644		—		—
Mortgage note payable, 3.100% interest rate, due in 2035	27,446		27,446		—		—
Mortgage note payable, 3.560% interest rate, due in 2030	15,585		15,585		—		—
Mortgage note payable, 4.130% interest rate, due in 2033	45,534		45,534		—		—
Mortgage note payable, 4.140% interest rate, due in 2032	15,032		15,032		—		—
Mortgage note payable, 4.020% interest rate, due in 2033	32,634		32,634		—		—
Mortgage note payable, 3.770% interest rate, due in 2030	5,290		5,290		—		—
Mortgage note payable, 3.850% interest rate, due in 2030	5,594		5,594		—		—
Mortgage note payable, 2.950% interest rate, due in 2036	44,042		44,042		—		—
Mortgage note payable, 4.270% interest rate, due in 2037	47,742		47,742		—		—
Mortgage note payable, 3.250% interest rate, due in 2038	54,012		54,012		—		—
Mortgage note payable, 3.760% interest rate, due in 2028	15,095		15,095		—		—
	$	4,388,425	$	4,395,396	$	646,124	$	709,198

(1)Includes unamortized debt issuance costs of ~~$4,285~~$68,383 and ~~$4,421~~$3,876 as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

(2)The Floating Rate Loan matures in March 2024, subject to three, one year extension options.

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INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

We estimate the fair value of our mortgage notes payable using discounted cash flow analyses and ~~currently~~current prevailing market rates as of the measurement date (Level 3 inputs). ~~Because~~As Level 3 inputs are unobservable, our estimated fair value may differ materially from the actual fair value.

The table below presents certain of our assets measured on a recurring basis at fair value at March 31, ~~2021~~,2022, categorized by the level of inputs as defined in the fair value hierarchy under GAAP, used in the valuation of each asset:


				Quoted Prices in		Significant Other		Significant					Quoted Prices in		Significant Other		Significant
				Active Markets for		Observable		Unobservable					Active Markets for		Observable		Unobservable
				Identical Assets		Inputs		Inputs					Identical Assets		Inputs		Inputs
		Total		(Level 1)		(Level 2)		(Level 3)			Total		(Level 1)		(Level 2)		(Level 3)
Recurring fair value measurements	Recurring fair value measurements									Recurring fair value measurements
Investment in unconsolidated joint venture (1)	Investment in unconsolidated joint venture (1)	$	62,511	$	0	$	0	$	62,511	Investment in unconsolidated joint venture (1)	$	143,428	$	—	$	—	$	143,428

Interest rate cap derivatives (2)										Interest rate cap derivatives (2)	$	9,859	$	—	$	9,859	$	—
Investment in marketable securities held for sale (3)										Investment in marketable securities held for sale (3)	$	34,508	$	34,508	$	—	$	—

(1)We own a 22% equity interest in a joint venture that owns 1218 properties and is included in investment in unconsolidated joint venture in our condensed consolidated balance sheet, and is reported at fair value, which is based on significant unobservable inputs (Level 3 inputs). The significant unobservable inputs used in the fair value are discount rates of between ~~4.8%~~5.25% and ~~7.3%~~6.50%, exit capitalization rates of between ~~4.4%~~4.50% and ~~6.8%~~5.50%, direct capitalization rates of between 4.00% and 4.50%, holding periods of approximately 10 years and market rents. The assumptions are based on the location, type and nature of each property, and current and anticipated market conditions, which are derived from appraisers, industry publications and our experience. See Note 2 for further information regarding our investment in this joint venture.

(2)Our derivative assets are carried at fair value as required by GAAP. The estimated fair values of the derivative assets are based on current market prices for similar instruments. Given the meaningful level of secondary market activity for derivative contracts, active pricing is available for similar assets and accordingly, we classify our derivative assets as Level 2. See Note 10 for more information regarding our derivatives and hedging activities.

(3)See Note 2 for more information regarding our investments in marketable securities held for sale.

Note 6. Shareholders’ Equity

Common Share Purchase:

During the three months ended March 31, 2022, we purchased 333 of our common shares at a price of $22.67 per common share, from a former employee of The RMR Group LLC, or RMR, in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares.

Distributions:

During the three months ended March 31, ~~2021~~2022, we declared and paid a regular quarterly distribution to common shareholders as follows:

Record Date

Payment Date

Distribution Per Share

Total Distribution

Record Date

Payment Date

Distribution Per Share

Total Distribution

January 25, 2021

February 18, 2021

0.33

21,550

January 24, 2022

February 17, 2022

0.33

21,584

On April ~~15, 2021,~~14, 2022, we declared a regular quarterly distribution ~~of $0.33 per~~to common ~~share, or approximately $21,550, to~~ shareholders of record on April ~~26, 2021.~~25, 2022 of $0.33 per share, or approximately $21,600. We expect to pay this distribution to our shareholders on or about May ~~20, 2021.~~19, 2022.

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INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

Note 7. Per Common Share Amounts

The following table provides a reconciliation of the weighted average number of common shares used in the calculation of basic and diluted earnings per share (in thousands):


		Three Months Ended March 31,		Three Months Ended March 31,
		2021	2020			2022	2021
Weighted average common shares for basic earnings per share	Weighted average common shares for basic earnings per share	65,139	65,075		Weighted average common shares for basic earnings per share	65,212	65,139
Effect of dilutive securities: unvested share awards	Effect of dilutive securities: unvested share awards	38	7		Effect of dilutive securities: unvested share awards	—	38
Weighted average common shares for diluted earnings per share(1)	Weighted average common shares for diluted earnings per share(1)	65,177	65,082		Weighted average common shares for diluted earnings per share(1)	65,212	65,177

(1)For the three months ended March 31, 2022, 18 unvested common shares were not included in the calculation of diluted earnings per share because doing so would have been antidilutive.

Note 8. Business and Property Management Agreements with RMR ~~LLC~~

We have 0no employees. The personnel and various services we require to operate our business are provided to us by ~~RMR LLC.~~RMR. We have 2 agreements with RMR ~~LLC~~ to provide management services to us: (1) a business management agreement, which relates to our business generally; and (2) a property management agreement, which relates to our property level operations.

Pursuant to our business management agreement with RMR, ~~LLC,~~ we recognized net business management fees of ~~$2,544~~$4,399 and ~~$3,307~~$2,544 for the three months ended March 31, 2022 and 2021, ~~and 2020,~~ respectively.The net business management fees we recognized for the three months ended March 31, 2020 include $129 of management fees paid to RMR LLC for that period by our joint venture we then owned a majority interest in and whose operating results we reported on a consolidated basis. Beginning in November 2020, our ownership in our joint venture was reduced to a minority interest; as a result, we ceased at that time to consolidate our joint venture’s operating results and, since then, we do not include the management fees it pays to RMR LLC in the management fees we pay to RMR LLC. Our joint venture is further described in Notes 2 and 9. Based on our common share total return, as defined in our business management agreement, as of March 31, 2022 and 2021, ~~and 2020, 0~~no incentive fees are included in the net business management fees we recognized for the three months ended March 31, ~~2021~~2022 or ~~2020.~~2021. The actual amount of annual incentive fees for ~~2021,~~2022, if any, will be based on our common share total return, as defined in our business management agreement, for the ~~three year~~three-year period ending December 31, ~~2021,~~2022, and will be payable in ~~2022.~~January 2023. We did 0tnot incur any incentive fee payable to RMR ~~LLC~~ for the year ended December 31, ~~2020.~~2021. We include business management fees in general and administrative expenses in our condensed consolidated statements of comprehensive ~~income.~~income (loss). RMR provides management services to our 2 joint ventures. See Note 9 for further information regarding our joint ventures’ management arrangements with RMR and the related impact on our management fees payable to RMR.

We and RMR amended our business management agreement effective August 1, 2021 to provide that (i) for periods beginning on and after August 1, 2021, the MSCI U.S. REIT/Industrial REIT Index will be used to calculate benchmark returns per share for purposes of determining any incentive management fee payable by us to RMR and (ii) for periods prior to August 1, 2021, the SNL U.S. REIT Industrial Index will continue to be used. This change of index was due to S&P Global ceasing to publish the SNL U.S. REIT Industrial Index.

Pursuant to our property management agreement with RMR, ~~LLC,~~ we recognized aggregate property management and construction supervision fees of ~~$1,594~~$2,763 and ~~$1,923~~$1,594 for the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectively. Of these amounts, for the three months ended March 31, 2022 and 2021, $2,098 and ~~2020,~~ $1,582, ~~and $1,860,~~ respectively, were expensed to other operating expenses in our condensed consolidated financial statements ~~of comprehensive income~~and $31 and $12, ~~and $63,~~ 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 LLC’s~~RMR’s employment, office or administrative expenses incurred to provide management services to us, except for the employment and related expenses of ~~RMR LLC’s~~RMR’s employees assigned to work exclusively or partly at our properties, our share of the wages, benefits and other related costs of ~~RMR LLC’s~~RMR’s centralized accounting personnel, our share of ~~RMR LLC’s~~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.~~RMR. We reimbursed RMR ~~LLC~~$1,604 and $1,141 ~~and $1,199~~ for these expenses and costs for the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectively. These amounts are included in other operating expenses and general and administrative expenses, as applicable, in our condensed consolidated statements of comprehensive ~~income.~~income (loss).

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INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

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

Note 9. Related Person Transactions

We have relationships and historical and continuing transactions with RMR, ~~LLC,~~ The 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 or officers who are also our Trustees or officers. RMR ~~LLC~~ is a majority owned

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~~INDUSTRIAL LOGISTICS PROPERTIES TRUST~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(dollars in thousands, except per share data)~~

subsidiary of RMR Inc. The Chair of our Board of Trustees and one of our Managing Trustees, Adam Portnoy, is the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of RMR Inc., 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 LLC.~~RMR. John Murray, our other Managing Trustee and our former President and Chief Executive Officer until March 31, 2022, also serves as an officer and employee of RMR, ~~LLC,~~ and each of our other officers is also an officer and employee of ~~RMR LLC.~~RMR. Some of our Independent Trustees also serve as independent trustees or independent directors of other public companies to which RMR ~~LLC~~ or its subsidiaries provide management services. Adam Portnoy serves as chair of the boards ~~of trustees or boards of directors of several of these public companies~~ and as a managing ~~director~~trustee or managing ~~trustee~~director of ~~these public~~those companies. Other officers of RMR, ~~LLC,~~ including Mr. Murray and certain of our other officers, serve as managing trustees, managing directors or officers of certain of these companies.

Our Manager, RMR ~~LLC~~. We have 2 agreements with RMR ~~LLC~~ to provide management services to us. See Note 8 for further information regarding our management agreements with RMR.

MNR Acquisition and Related Joint Venture. On February 25, 2022, we acquired MNR. In connection with the Merger, we entered into a new joint venture arrangement with an institutional investor for 95 of the acquired MNR properties, including 2 committed, but not yet completed, property acquisitions. The investor acquired a 39% equity interest in the joint venture from us for $587,440.

Joint Ventures. Following the Merger, we have 2 separate joint venture arrangements, one with 2, third party institutional investors for 18 properties in which we own a 22% equity interest, and the other with 1, third party institutional investor for 95 properties, including 2 committed, but not yet completed, property acquisitions, in which we own a 61% equity interest. We entered into our joint venture that currently owns 18 properties prior to January 1, 2021, and we entered into the other joint venture that currently owns 95 MNR properties, including two committed, but not yet completed,property acquisitions, in February 2022 in connection with the Merger. RMR ~~LLC.~~provides management services to both of these joint ventures. We do not include our 18 property joint venture as a consolidated subsidiary and, as a result, we are not obligated to pay management fees to RMR under our management agreements with RMR for the services it provides regarding that joint venture. Our 95 property joint venture is our consolidated subsidiary and, as a result, we are obligated to pay management fees to RMR under our management agreements with RMR for the services it provides regarding that joint venture; however, that joint venture pays management fees directly to RMR, and any such fees paid by that joint venture are credited against the fees payable by us to RMR.

In December 2021, we sold 6 properties to our then existing joint venture. We received proceeds of approximately $160,516 from the other equity investors in connection with this sale. We and the other equity investors maintained our respective percentage equity interests in that joint venture following this transaction. As of December 31, 2021 and March 31, 2022, we owed $225 and $629, respectively, to that joint venture for rents that we collected on behalf of that joint venture. This amount is presented as due to related persons in our condensed consolidated balance sheet. We paid the amount we owed as of December 31, 2021 in January 2022.

See Notes 2, 4, 5 and 11 for further information regarding our joint ventures.

TA. In May 2021, we acquired a property located in the Dallas, Texas market from TravelCenters of America Inc., or TA, for a purchase price of $2,319, including acquisition related costs of $119. RMR provides management services to TA and Mr. Portnoy serves as the chair of the board of directors and as a managing director of TA.

For further information about these and other such relationships and certain other related person transactions, see our ~~2020~~2021 Annual Report.

~~Our Joint Venture~~Table of Contents

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

Note 10. Derivatives and Hedging Activities

Risk Management Objective of Using Derivatives

We are exposed to certain risks relating to our ongoing business operations, including the impact of changes in interest rates. The only risk currently managed by us using derivative instruments is a part of our interest rate risk. We have an interest rate cap agreement to manage our interest rate risk exposure on each of the Bridge Loan and the Floating Rate Loan, both with interest payable at a rate equal to SOFR plus a premium. The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements are not able to perform under the agreements. To mitigate this risk, we only enter into derivative financial instruments with counterparties with high credit ratings and with major financial institutions with which we or our related parties may also have other financial relationships. We do not anticipate that any of the counterparties will fail to meet their obligations.

Cash Flow Hedges of Interest Rate Risk

As required by ASC 815, ~~. As~~Derivatives and Hedging, we record all derivatives on the balance sheet at fair value. The following table summarizes the terms of our outstanding interest rate cap agreements designated as cash flow hedges of interest rate risk as of March 31, ~~2021~~2022:


Interest Rate Derivative	Balance Sheet Line Item	Debt	Number of Instruments	Strike Rate	Notional Amount		Fair Value at March 31, 2022
Interest Rate Cap	Other assets	Floating Rate Loan	1	3.40%	$	1,400,000	$	7,815
Interest Rate Cap	Other assets	Bridge Loan Facility	2	2.70%	$	1,385,158	$	2,044

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 ~~December 31, 2020,~~qualifying as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in accumulated 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 ~~joint venture owed~~accounting policy election. The earnings recognition of excluded components is presented in interest expense. Amounts reported in accumulated other comprehensive income related to ~~us $1,409 and $2,665, respectively, for post-closing adjustments relating~~derivatives will be reclassified to interest expense as interest payments are made on our sale of some of our equity interests to a second third party institutional investor in November 2020. These amounts are presented as due from related persons in our condensed consolidated balance sheets.applicable debt.


	Three Months Ended March 31, 2022
Balance at December 31, 2021	$	—
Amount of income recognized in cumulative other comprehensive income	5,375
Amount reclassified from cumulative other comprehensive income into interest expense	257
Unrealized gain on derivative instrument	$	5,632

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Note 11. Noncontrolling Interest

On February 25, 2022, we completed the acquisition of MNR. In connection with the Merger, we entered into a joint venture arrangement with an institutional investor for 95 of the acquired MNR properties, including 2 committed, but not yet completed, property acquisitions. The investor acquired a 39% noncontrolling equity interest in the joint venture for $587,440, and we retained the remaining 61% equity interest in the joint venture. The joint venture assumed $323,432 aggregate principal amount of existing MNR mortgage debt on certain of the properties. We control this joint venture and therefore account for the properties on a consolidated basis in our condensed consolidated financial statements.

We recognized a 39% noncontrolling interest in our condensed consolidated financial statements for the three months ended March 31, 2022. The portion of this joint venture's net loss not attributable to us, or $3,261 for the three months ended March 31, 2022, is reported as noncontrolling interest in our condensed consolidated statements of comprehensive income (loss). There were no distributions made by the joint venture during the three months ended March 31, 2022. See Notes 1, 2, 4 and 5 for further information regarding this joint venture.

An unrelated third party owns an approximate 33% tenancy in common interest in 1 of the properties we acquired as part of the MNR acquisition located in Somerset, New Jersey, and we own the remaining 67% tenancy in common interest in this property. The portion of this property’s net loss not attributable to us, or $12 for the three months ended March 31, 2022, is reported as noncontrolling interest in our condensed consolidated statements of comprehensive income (loss).

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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 ~~2020~~2021 Annual Report.

OVERVIEW (dollars in thousands, except per share and per square foot data)

We are a real estate investment trust, or REIT, organized under Maryland law. As of March 31, ~~2021,~~2022, our portfolio was comprised of ~~289 wholly owned~~412 consolidated properties containing approximately ~~34.9~~59.7 million rentable square feet located in 39 states, including 226 buildings, leasable land parcels and easements containing approximately ~~16.8~~16.7 million rentable square feet located on the island of Oahu, Hawaii, and 63186 properties containing approximately ~~18.1~~43.0 million rentable square feet located in 3038 other states. Our 412 consolidated properties include 93 properties that we own in a consolidated joint venture arrangement in which we own a 61% equity interest. As of March 31, ~~2021,~~2022, we also owned a 22% equity interest in an unconsolidated joint venture, which owns 1218 properties located in ~~nine~~12 states containing approximately ~~9.2~~11.7 million rentable square feet that were 100% leased with an average (by annualized rental revenues) remaining lease term of ~~8.0~~6.4 years. As of March 31, ~~2021,~~2022, our consolidated properties were approximately ~~98.6%~~98.9% leased (based on rentable square feet) to ~~253~~304 different tenants with a weighted average remaining lease term (based on annualized rental revenues) of approximately ~~9.4~~8.6 years. We define the term annualized rental revenues as used in this section as the annualized contractual rents, as of March 31, ~~2021,~~2022, including straight line rent adjustments and excluding lease value amortization, adjusted for tenant concessions including free rent and amounts reimbursed to tenants, plus estimated recurring expense reimbursements from tenants.

~~Our business is focused on industrial and logistics properties. The industrial and logistics sector has fared better than some other industries thus far during~~On February 25, 2022, we completed the ~~COVID-19 pandemic, including other real estate sectors, due to the demand for e-commerce. Although, to date, the COVID-19 pandemic has not had a significant adverse impact on our business, certain~~acquisition of our tenants requested relief from their obligations to pay rent due to us in response to the economic conditions resulting from the COVID-19 pandemic. As of April 23, 2021, we granted requests to certain of our tenants to defer aggregate rent payments of $3,103 with respect to leases that represent, as of March 31, 2021, approximately 1.5% of our annualized rental revenues. As of March 31, 2021, we recognized $1,725 in our accounts receivable related to the remaining deferred amounts. In most cases, these tenants were obligated to pay the deferred rents in 12 equal monthly installments beginning in September 2020. These deferred amounts did not negatively impact our operating results for the three months ended March 31, 2021, and will continue to be reflected in our financial results in the applicable future reporting periods, assuming these tenants continue to pay the deferred rents due to us. Our manager, RMR LLC, has taken various actions in response to the COVID-19 pandemic to address its operating and financial impact on us and to protect the health and safety of our tenants and other persons who visit our properties. In addition, we are continuing to closely monitor the impact of the COVID-19 pandemic on all aspects of our business. See our 2020 Annual Report for further information regarding these actions and monitoring activities.

~~There are uncertainties surrounding the COVID-19 pandemic and,~~MNR as a result of ~~these uncertainties,~~which we ~~are unable~~acquired 124 Class A, single tenant, net leased, e-commerce focused industrial properties located in 32 states containing approximately 25,745,000 rentable square feet and two committed, but not yet completed, property acquisitions. The aggregate value of the consideration paid in the Merger was $3,734,485, including the assumption of $323,432 aggregate principal amount of existing MNR mortgage debt, the repayment of $885,269 of MNR debt and the payment of certain transaction fees and expenses, net of MNR’s cash on hand, and excluding two pending property acquisitions for an aggregate purchase price of $78,843, excluding acquisition related costs. The 124 MNR properties were 97.9% leased to ~~determine what~~various tenants and had a remaining weighted average (by rental revenues) lease term of eight years as of the ~~ultimate impact will be~~date of the acquisition.

Immediately following the closing of the Merger, we entered into a joint venture arrangement with an institutional investor for 95 MNR properties, including two committed, but not yet completed, property acquisitions. The investor acquired a 39% equity interest in the joint venture from us for $587,440, and we retained the remaining 61% equity interest in the joint venture. The joint venture assumed $323,432 aggregate principal amount of existing MNR mortgage debt on ~~our, our tenants’ and other stakeholders’ businesses, operations, financial results and financial position. For further information and risks relating to~~certain of the ~~COVID-19 pandemic on us and our business, see Part I, Item 1, “Business—Impact of COVID-19” and Part I, Item 1A, “Risk Factors”, of our 2020 Annual Report.~~properties.

Property Operations

Occupancy data for our properties as of March 31, ~~2021~~2022 and ~~2020~~2021 is as follows (square feet in thousands):


		All Properties				Comparable Properties (1)					All Properties				Comparable Properties (1)
		As of March 31,				As of March 31,					As of March 31,				As of March 31,
		2021		2020		2021		2020			2022		2021		2022		2021
Total properties	Total properties	289		301		287		287		Total properties	412		289		286		286
Total rentable square feet (2)	Total rentable square feet (2)	34,870		43,759		33,404		33,404		Total rentable square feet (2)	59,736		34,870		33,634		33,658
Percent leased (3)	Percent leased (3)	98.6	%	98.9	%	98.5	%	98.5	%	Percent leased (3)	98.9	%	98.6	%	99.3	%	98.5	%

(1)Consists of properties that we owned continuously since January 1, ~~2020~~2021 and excludes 1218 properties owned by an unconsolidated joint venture in which we own a 22% equity interest.

(2)Subject to modest adjustments when space is remeasured or reconfigured 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, ~~2021,~~2022, if any, and (ii) space which is leased but is not occupied or is being offered for sublease by tenants, if any.

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The average effective rental rates per square foot, as defined below, for our properties for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 are as follows:


		Three Months Ended March 31,					Three Months Ended March 31,
		2021		2020				2022		2021
Average effective rental rates per square foot leased: (1)	Average effective rental rates per square foot leased: (1)					Average effective rental rates per square foot leased: (1)
All properties	All properties	$	6.31	$	6.02	All properties		$	6.56	$	6.31
Comparable properties (2)	Comparable properties (2)	$	6.35	$	6.11	Comparable properties (2)		$	6.25	$	6.33

(1)Average effective rental rates per square foot leased represents annualized rental income during the period specified divided by the average rentable square feet leased during the period specified.

(2)Consists of properties that we owned continuously since January 1, ~~2020~~2021 and excludes 12 properties owned by an unconsolidated joint ~~venture in which we own a 22% equity interest.~~venture.

During the three months ended March 31, ~~2021,~~2022, we entered into new and renewal leases as summarized in the following tables:


	Three Months Ended March 31, 2022
	New Leases			Renewals			Totals
Square feet leased during the period (in thousands)	281			548			829
Weighted average rental rate change (by rentable square feet)	60.9		%	15.7		%	31.0		%
Weighted average lease term by square feet (years) (2)	12.6			6.9			8.9
Total leasing costs and concession commitments (1)	$	2,355		$	2,417		$	4,772
Total leasing costs and concession commitments per square foot (1)	$	8.38		$	4.41		$	5.76
Total leasing costs and concession commitments per square foot per year (1)	$	0.66		$	0.64		$	0.65

(1)Includes commitments made for leasing expenditures and concessions, such as leasing commissions, tenant improvements or other tenant inducements.

(2)The weighted average (by square feet) lease term for leases that were in effect for the same land area or building area during the prior lease term was 8.9 years for the three months ended March 31, 2022 and 11.7 years for the three months ended March 31, 2021.

During the three months ended March 31, 2022, we entered into new and renewal leases for approximately ~~620,000~~829,000 square feet at weighted average (by square feet) rental rates that were approximately ~~16.0%~~31.0% higher than prior rental rates for the same ~~land area or building area~~space (with leasing rate increases for vacant space based upon the most recent rental rate for the same space). The weighted average (by square feet) lease term for leases that were in effect for the same ~~land area or building area~~space during the prior lease term was ~~11.7~~8.9 years. Commitments for tenant improvements, leasing costs and concessions for leases entered into during the three months ended March 31, ~~2021~~2022 totaled ~~$3,256,~~$4,772, or approximately ~~$0.45~~$0.65 per square foot per year of the new weighted average lease term.

During the three months ended March 31, 2022, we completed rent resets for approximately 56,000 square feet of land at our Hawaii Properties at rental rates that were approximately 35.8% higher than the prior rental rates.

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As shown in the table below, approximately ~~0.9%~~3.3% of ~~both~~ our total leased square feet and 3.6% of our total annualized rental revenues as of March 31, ~~2021~~2022 are included in leases scheduled to expire by December 31, ~~2021.~~2022.

As of March 31, ~~2021,~~2022, our lease expirations by year are as follows (dollars and square feet in thousands):


										% of Total		Cumulative											% of Total		Cumulative
				% of Total		Cumulative %		Annualized		Annualized		% of Total					% of Total		Cumulative %		Annualized		Annualized		% of Total
			Leased	Leased		of Total Leased		Rental		Rental		Annualized				Leased	Leased		of Total Leased		Rental		Rental		Annualized
		Number of	Square Feet	Square Feet		Square Feet		Revenues		Revenues		Rental Revenues			Number of	Square Feet	Square Feet		Square Feet		Revenues		Revenues		Rental Revenues
Period / Year	Period / Year	Tenants	Expiring (1)	Expiring (1)		Expiring (1)		Expiring		Expiring		Expiring		Period / Year	Tenants	Expiring (1)	Expiring (1)		Expiring (1)		Expiring		Expiring		Expiring
4/1/2021-12/31/2021		14	322	0.9	%	0.9	%	$	2,165	1.0	%	1.0	%
2022		60	2,683	7.8	%	8.7	%	19,499		9.2	%	10.2	%
4/1/2022-12/31/2022														4/1/2022-12/31/2022	38	1,977	3.3	%	3.3	%	$	14,672	3.6	%	3.6	%
2023	2023	31	2,575	7.5	%	16.2	%	16,871		8.0	%	18.2	%	2023	40	4,147	7.0	%	10.3	%	25,963		6.4	%	10.0	%
2024	2024	31	6,709	19.5	%	35.7	%	28,638		13.6	%	31.8	%	2024	48	7,052	11.9	%	22.2	%	35,217		8.7	%	18.7	%
2025	2025	15	2,364	6.9	%	42.6	%	13,156		6.2	%	38.0	%	2025	29	4,457	7.5	%	29.7	%	25,469		6.3	%	25.0	%
2026	2026	7	1,028	3.0	%	45.6	%	7,121		3.4	%	41.4	%	2026	22	2,763	4.7	%	34.4	%	20,277		5.0	%	30.0	%
2027	2027	11	4,578	13.3	%	58.9	%	24,696		11.7	%	53.1	%	2027	31	8,216	13.9	%	48.3	%	47,833		11.8	%	41.8	%
2028	2028	20	2,459	7.2	%	66.1	%	17,881		8.5	%	61.6	%	2028	27	4,749	8.0	%	56.3	%	33,377		8.2	%	50.0	%
2029	2029	8	1,697	4.9	%	71.0	%	5,393		2.6	%	64.2	%	2029	17	3,428	5.8	%	62.1	%	16,531		4.1	%	54.1	%
2030	2030	9	1,232	3.6	%	74.6	%	9,516		4.5	%	68.7	%	2030	14	2,155	3.6	%	65.7	%	18,026		4.4	%	58.5	%
2031														2031	16	3,265	5.5	%	71.2	%	24,570		6.1	%	64.6	%
Thereafter	Thereafter	82	8,719	25.4	%	100.0	%	66,147		31.3	%	100.0	%	Thereafter	117	16,850	28.8	%	100.0	%	144,239		35.4	%	100.0	%
Total	Total	288	34,366	100.0	%			$	211,083	100.0	%			Total	399	59,059	100.0	%			$	406,174	100.0	%

Weighted average remaining lease term (in years):	Weighted average remaining lease term (in years):		8.3					9.4						Weighted average remaining lease term (in years):		7.7					8.6

(1)Leased square feet is pursuant to existing leases as of March 31, ~~2021~~2022 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.

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We generally receive rents from our tenants monthly and in advance. As of March 31, ~~2021,~~2022, tenants representing 1% or more of our total annualized rental revenues were as follows (square feet in thousands):


								% of Total									% of Total
				No. of	Leased	% of Total		Annualized Rental					No. of	Leased	% of Total		Annualized Rental
Tenant	Tenant		States	Properties	Sq. Ft. (1)	Leased Sq. Ft. (1)		Revenues		Tenant		States	Properties	Sq. Ft. (1)	Leased Sq. Ft. (1)		Revenues
1	1	Amazon.com Services, Inc.	AZ, SC, TN, VA	4	3,869	11.3	%	10.0	%	1	Federal Express Corporation/ FedEx Ground Package System, Inc.	AL, AR, CO, FL, GA, HI, IA, ID, IL, IN, KS, LA, MD, MI, MN, MO, MS, NC, ND, NE, NJ, NV, NY, OH, OK, PA, SC, TN, TX, UT, VA, VT, WA, WI	83	12,883	21.8	%	29.6	%
2	2	Federal Express Corporation / FedEx Ground Package System, Inc.	AR, CO, HI, IA, ID, IL, MN, MO, NC, ND, NV, OH, OK, UT	17	952	2.8	%	4.5	%	2	Amazon.com Services, Inc./ Amazon.com Services LLC	AL,IN, OK, SC, TN, VA	8	4,539	7.7	%	7.0	%
3	3	Restoration Hardware, Inc.	MD	1	1,195	3.5	%	2.9	%	3	Home Depot U.S.A., Inc.	GA, IL	2	829	1.4	%	1.8	%
4	4	American Tire Distributors, Inc.	CO, LA, NE, NY, OH	5	722	2.1	%	2.5	%	4	UPS Supply Chain Solutions, Inc.	NH, NY	3	794	1.3	%	1.6	%
5	5	Servco Pacific Inc.	HI	6	590	1.7	%	2.4	%	5	Restoration Hardware, Inc.	MD	1	1,195	2.0	%	1.6	%
6	6	UPS Supply Chain Solutions Inc.	NH	1	614	1.8	%	2.3	%	6	Servco Pacific, Inc.	HI	7	629	1.1	%	1.5	%
7	7	Par Hawaii Refining, LLC	HI	3	3,148	9.2	%	2.3	%	7	American Tire Distributors, Inc.	CO, LA, NE, NY, OH	5	722	1.2	%	1.3	%
8	8	EF Transit, Inc.	IN	1	535	1.6	%	1.9	%	8	Par Hawaii Refining, LLC	HI	3	3,148	5.3	%	1.2	%
9	9	BJ's Wholesale Club, Inc.	NJ	1	634	1.8	%	1.7	%	9	TD SYNNEX Corporation	OH	2	939	1.6	%	1.2	%
10	10	Shurtech Brands, LLC	OH	1	645	1.9	%	1.6	%	10	EF Transit, Inc.	IN	1	535	0.9	%	1.0	%
11	11	Coca-Cola Bottling of Hawaii, LLC	HI	4	351	1.0	%	1.6	%	11	Shaw Industries, Inc.	GA	1	832	1.4	%	1.0	%
12	12	Safeway Inc.	HI	2	146	0.4	%	1.6	%	12	Mercedes Benz US International, Inc.	AL	1	530	0.9	%	1.0	%
13	13	ELC Distribution Center LLC	KS	1	645	1.9	%	1.5	%	13	UGN, Inc.	OH, SC	2	703	1.2	%	1.0	%
14		Manheim Remarketing, Inc.	HI	1	338	1.0	%	1.5	%
15		Exel Inc.	SC	1	945	2.8	%	1.4	%
16		Avnet, Inc.	OH	1	581	1.7	%	1.4	%
17		Warehouse Rentals Inc.	HI	5	278	0.8	%	1.3	%
18		YNAP Corporation	NJ	1	167	0.5	%	1.2	%
19		ODW Logistics, Inc.	OH	3	760	2.2	%	1.1	%
20		Honolulu Warehouse Co., Ltd.	HI	1	298	0.9	%	1.1	%
21		Refresco Beverages US Inc.	MO, SC	2	421	1.2	%	1.1	%
22		Hellmann Worldwide Logistics Inc.	FL	1	240	0.7	%	1.1	%
23		AES Hawaii, Inc.	HI	2	1,242	3.6	%	1.0	%
24		General Mills Operations, LLC	MI	1	158	0.5	%	1.0	%

		Total		66	19,474	56.9	%	50.0	%

											Total		119	28,278	47.8	%	50.8	%

Tenant Concentration. We have a concentration of Mainland Properties leased to FDX, which as of March 31, 2022, consisted of approximately 21.8% of our rentable square feet located in 34 states, with a weighted average remaining lease term of 7.5 years.

For the three months ended March 31, 2022, approximately $13,468, or 18.9% of our rental income was from FDX. Other than FDX, the only other tenants that leased over 5% of our total rentable square footage were subsidiaries of Amazon.com, Inc. at certain of our Mainland Properties. Subsidiaries of Amazon.com, Inc. accounted for $5,615 and $5,538, or 7.9% and 10.2%, of our rental income for the three months ended March 31, 2022 and 2021, respectively.

Mainland Properties. As of March 31, ~~2021,~~2022, our Mainland Properties represented approximately ~~49.2%~~72.7% of our annualized rental revenues. We generally will seek to renew or extend the terms of leases at our Mainland Properties as their expirations approach. Due to the capital many of the tenants in our Mainland Properties have invested in these properties and because many of these properties appear to be of strategic importance to the tenants’ businesses, we believe that it is likely that these tenants will renew or extend their leases prior to their expirations. If we are unable to extend or renew our leases, it may be time consuming and expensive to relet some of these properties and the terms of any leases we may enter may be less favorable to us than the terms of our existing leases for those properties.

Hawaii Properties. As of March 31, ~~2021,~~2022, our Hawaii Properties represented approximately ~~50.8%~~27.3% of our annualized rental revenues. As of March 31, ~~2021,~~2022, certain of our Hawaii Properties are lands leased for rents that periodically reset based on fair market values, generally every ten 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 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

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process. Despite our and our predecessors’ prior experience with rent resets, lease extensions and new leases in Hawaii, our ability to increase rents when rents reset, leases are extended, or leases expire depends upon market conditions which are beyond our control. Accordingly, we cannot be sure that the historical increases achieved at our Hawaii Properties will continue in the future.

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The following chart shows the annualized rental revenues as of March 31, ~~2021~~2022 scheduled to reset at our Hawaii Properties:

Scheduled Rent Resets at Hawaii Properties

(dollars in thousands)


		Annualized			Annualized
		Rental Revenues as of			Rental Revenues as of
		March 31, 2021			March 31, 2022
		Scheduled to Reset			Scheduled to Reset

4/1/2021-12/31/2021		$	701
2022		3,860
4/1/2022-12/31/2022				4/1/2022-12/31/2022	$	1,132
2023	2023	2,535		2023	2,085
2024	2024	2,103		2024	1,266
2025	2025	3,115		2025	3,103
2026 and thereafter		17,018
2026				2026	1,296
2027 and thereafter				2027 and thereafter	17,454
Total	Total	$	29,332	Total	$	26,336

As of March 31, ~~2021, $2,725,~~2022, $16,591, or ~~1.3%~~4.1%, of our annualized rental revenues are included in leases scheduled to expire through March 31, ~~2022~~2023 and ~~1.4%~~1.1% 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; however, our ability to maintain or increase the rents for our current properties will depend in large part upon market conditions, which are beyond our control.

Tenant Review Process. Our manager, RMR, ~~LLC,~~ employs a tenant review process for us. RMR ~~LLC~~ assesses tenants on an individual basis based on various applicable credit criteria. In general, depending on facts and circumstances, RMR ~~LLC~~ evaluates the creditworthiness of a tenant based on information that is provided by the tenant and, in some cases, information that is publicly available or obtained from third party sources. RMR ~~LLC~~ also often uses a third party service to monitor the credit ratings of debt securities of our existing tenants whose debt securities are rated by a nationally recognized credit rating agency.

Investing and Financing Activities (dollars in thousands)

~~In March 2021,~~As previously disclosed, on February 25, 2022, we completed the acquisition of MNR. MNR’s portfolio included 124 Class A, single tenant, net leased, e-commerce focused industrial properties located in 32 states containing approximately 25,745,000 rentable square feet with a remaining weighted average (by rental revenues) lease term of eight years as of the date of the acquisition, and two committed, but not yet completed, property acquisitions. The aggregate value of the consideration paid in the Merger was $3,734,485, including the assumption of $323,432 aggregate principal amount of existing MNR mortgage debt, the repayment of $885,269 of MNR debt and the payment of certain transaction fees and expenses, net of MNR’s cash on hand, and excluding two pending property acquisitions for an aggregate purchase price of $78,843, excluding acquisition related costs.

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Immediately following the closing of the Merger, we entered into an agreement to acquire a newly built property located near the Rickenbacker intermodal terminal and airport in Columbus, Ohio containing approximately 358,000 rentable square feet and net leased to a single tenant for a purchase price of $31,500, excluding acquisition related costs. This acquisition is expected to close during the second quarter of 2021. However, this acquisition is subject to conditions; accordingly, we cannot be sure that we will complete this acquisition, that this acquisition will not be delayed or that the terms will not change.

~~During the three months ended March 31, 2020, we entered into agreements related to~~ a joint venture ~~for 12 of our properties in the mainland United States~~arrangement with an ~~Asian~~ institutional investor ~~and contributed those 12~~for 95 of the acquired MNR properties, ~~to our joint venture. We received an aggregate of $108,266 from that~~including two committed, but not yet completed, property acquisitions. The investor ~~for~~acquired a 39% noncontrolling equity interest in ~~our~~the joint venture from us for $587,440, and we retained the remaining 61% equity interest in ~~our~~the joint venture. AsThe joint venture assumed $323,432 aggregate principal amount of existing MNR mortgage debt on certain of the properties and entered into a $1,400,000 floating rate CMBS loan secured by 82 properties. The Floating Rate Loan matures in March ~~31, 2020, we incurred transaction costs~~2024, subject to three one year extension options, and requires that interest be paid at an annual rate of ~~$626 in~~SOFR plus a premium of 2.765%.

In connection with the ~~formation~~closing of the Merger, we entered into a $1,385,158 bridge loan facility, secured by 109 properties not owned by the joint venture in which we retained a 61% equity interest. We also entered into a $700,000 fixed rate CMBS loan secured by 17 of our properties. We control this joint ~~venture.~~

~~We recognized~~venture and therefore account for the properties on a ~~39% noncontrolling interest~~consolidated basis in our condensed consolidated financial ~~statements for the three months ended~~statements.

As of March 31, ~~2020. The portion of our joint venture's net loss not attributable to us, or $152 for the three months ended March 31, 2020, is reported as noncontrolling~~2022, we also own an interest in ~~our condensed consolidated statements of comprehensive income. No distributions were made by our~~an unconsolidated joint venture ~~during the three months ended March 31, 2020.~~

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In November 2020, we sold an additional 39% equity interest from our remaining 61% equity interest to a second unrelated third party institutional investor and retained a 22% equity interest in our joint venture. Effective as of the date of the sale, we deconsolidated our joint venture and, since that ~~time, we~~owns 18 properties. We account for our 18 property unconsolidated joint venture ~~using~~under the equity method of accounting under the fair value option.

During the three months ended March 31, ~~2021,~~2022, we recorded the change in the fair value of our investment in our unconsolidated joint venture of ~~$2,581~~$1,727 in our condensed consolidated statements of comprehensive ~~income.~~income (loss). In addition, during the three months ended March 31, ~~2021,~~2022, our unconsolidated joint venture made aggregate cash distributions of ~~$660~~$1,320 to us.

For further information regarding our investing and financing activities, see Notes 2, 4, 5, 9 and 511 to the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Our Investing and Financing Liquidity and Resources” of this Quarterly Report on Form 10-Q.

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RESULTS OF OPERATIONS

Three Months Ended March 31, ~~2021,~~2022, Compared to Three Months Ended March 31, ~~2020~~2021 (dollars and share amounts in thousands, except per share data)


		Comparable Properties Results (1)								Non-Comparable Properties Results (2)						Consolidated Results									Comparable Properties Results (1)								Non-Comparable Properties Results (2)							Consolidated Results
		Three Months Ended March 31,								Three Months Ended March 31,						Three Months Ended March 31,									Three Months Ended March 31,								Three Months Ended March 31,							Three Months Ended March 31,
						$		%						$						$		%							$		%						$									$			%
		2021		2020		Change		Change		2021		2020		Change		2021		2020		Change		Change			2022		2021		Change		Change		2022		2021		Change			2022			2021			Change			Change

Rental income	Rental income	$	52,181	$	50,358	$	1,823	3.6	%	$	2,036	$	13,920	$	(11,884)	$	54,217	$	64,278	$	(10,061)	(15.7	%)	Rental income	$	52,109	$	52,411	$	(302)	(0.6	%)	$	19,266	$	1,806	$	17,460		$	71,375		$	54,217		$	17,158		31.6		%

Operating expenses:	Operating expenses:																							Operating expenses:
Real estate taxes	Real estate taxes	7,036		6,996		40		0.6	%	211		1,815		(1,604)		7,247		8,811		(1,564)		(17.8	%)	Real estate taxes	7,242		7,045		197		2.8	%	2,194		202		1,992			9,436			7,247			2,189			30.2		%
Other operating expenses	Other operating expenses	4,824		3,808		1,016		26.7	%	152		1,373		(1,221)		4,976		5,181		(205)		(4.0	%)	Other operating expenses	4,912		4,772		140		2.9	%	1,860		204		1,656			6,772			4,976			1,796			36.1		%
Total operating expenses	Total operating expenses	11,860		10,804		1,056		9.8	%	363		3,188		(2,825)		12,223		13,992		(1,769)		(12.6	%)	Total operating expenses	12,154		11,817		337		2.9	%	4,054		406		3,648			16,208			12,223			3,985			32.6		%

Net operating income (3)	Net operating income (3)	$	40,321	$	39,554	$	767	1.9	%	$	1,673	$	10,732	$	(9,059)	41,994		50,286		(8,292)		(16.5	%)	Net operating income (3)	$	39,955	$	40,594	$	(639)	(1.6	%)	$	15,212	$	1,400	$	13,812		55,167			41,994			13,173			31.4		%

Other expenses:	Other expenses:																							Other expenses:
Depreciation and amortization	Depreciation and amortization															12,678		18,290		(5,612)		(30.7	%)	Depreciation and amortization																22,878			12,678			10,200			80.5		%

General and administrative	General and administrative															3,756		4,831		(1,075)		(22.3	%)	General and administrative																6,077			3,756			2,321			61.8		%
Total other expenses	Total other expenses															16,434		23,121		(6,687)		(28.9	%)	Total other expenses																28,955			16,434			12,521			76.2		%
Interest income																—		111		(111)		(100.0	%)
Realized gain on sale of equity securities																							Realized gain on sale of equity securities																1,232			—			1,232			—		%
Unrealized gain on equity securities																							Unrealized gain on equity securities																2,460			—			2,460			—		%
Dividend income																							Dividend income																478			—			478			—		%
Interest expense	Interest expense															(8,741)		(14,519)		5,778		(39.8	%)	Interest expense																(40,999)			(8,741)			(32,258)			N/M

Income before income tax expense and equity in earnings of investees																16,819		12,757		4,062		31.8	%
Loss on early extinguishment of debt																							Loss on early extinguishment of debt																(828)			—			(828)			N/M
Income (loss) before income tax expense and equity in earnings of investees																							Income (loss) before income tax expense and equity in earnings of investees																(11,445)			16,819			(28,264)			(168.0		%)
Income tax expense	Income tax expense															(63)		(63)		—		—	%	Income tax expense																(69)			(63)			(6)			9.5		%
Equity in earnings of investees	Equity in earnings of investees															2,581		—		2,581		N/M		Equity in earnings of investees																1,727			2,581			(854)			(33.1		%)
Net income																19,337		12,694		6,643		52.3	%
Net (loss) income																							Net (loss) income																(9,787)			19,337			(29,124)			(150.6		%)
Net loss attributable to noncontrolling interest	Net loss attributable to noncontrolling interest															—		152		(152)		(100.0	%)	Net loss attributable to noncontrolling interest																3,273			—			3,273			—		%
Net income attributable to common shareholders																$	19,337	$	12,846	$	6,491	50.5	%
Net (loss) income attributable to common shareholders																							Net (loss) income attributable to common shareholders																$	(6,514)		$	19,337		$	(25,851)		(133.7		%)

Weighted average common shares outstanding - basic	Weighted average common shares outstanding - basic															65,139		65,075		64		0.1	%	Weighted average common shares outstanding - basic																65,212			65,139			73			0.1		%
Weighted average common shares outstanding - diluted	Weighted average common shares outstanding - diluted															65,177		65,082		95		0.1	%	Weighted average common shares outstanding - diluted																65,212			65,177			35			0.1		%

Per common share data (basic and diluted):	Per common share data (basic and diluted):																							Per common share data (basic and diluted):
Net income attributable to common shareholders																$	0.30	$	0.20	$	0.1	50.0	%
Net (loss) income attributable to common shareholders																							Net (loss) income attributable to common shareholders																$	(0.10)		$	0.30		$	(0.40)		(133.3		%)

N/M - Not Meaningful

(1)Consists of properties that we owned continuously since January 1, ~~2020~~2021 and excludes 12 properties owned by an unconsolidated joint venture.

(2)Consists of 131 properties that we acquired during the period from January 1, 2021 to March 31, 2022, including 93 properties we contributed to a consolidated joint venture in which we own a 61% equity interest and six properties we sold in December 2021 to our 18 property unconsolidated joint venture in which we own a 22% equity interest.

~~(2)~~Consists of two properties that we acquired during the period from January 1, 2020 to March 31, 2021, one property we sold in 2020 and 12 properties we contributed in the first quarter of 2020 to a joint venture in which we currently own a 22% equity interest. We consolidated our properties owned by the joint venture until November 2020.

(3)See our definition of NOI and our reconciliation of net income (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, ~~2021~~2022 compared to the three months ended March 31, ~~2020.~~2021.

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Rental income. The ~~decrease~~increase in rental income is primarily a result of our acquisition and disposition activities, which includes ~~the contribution~~our acquisition of ~~12 properties to~~MNR. The increase also reflects our ~~joint venture that was deconsolidated in November 2020, partially offset by increases from~~ leasing activity and rent resets at certain of our comparable properties. Rental income at our comparable properties decreased primarily due to the sale of six properties to our unconsolidated joint venture in December 2021. Rental income includes non-cash straight line rent adjustments totaling approximately $1,156 for the 2022 period and approximately $2,044 for the 2021 ~~period and approximately $1,967 for the 2020~~ period, and net amortization of acquired real estate leases and assumed real estate lease obligations totaling approximately $320 for the 2022 period and approximately $180 for the 2021 ~~period and approximately $200 for the 2020~~ period.

Real estate taxes. The ~~decrease~~increase in real estate taxes primarily reflects our acquisition and disposition activities.

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Other operating expenses. Other operating expenses primarily include repairs and maintenance, utilities, insurance, snow removal, legal and property management fees. The ~~decrease~~increase in other operating expenses is primarily due to our acquisition and disposition activities, ~~partially offset by~~as well as an increase in ~~snow removal and~~ insurance costs ~~in the 2021 period~~ at certain of our comparable ~~properties.~~properties in the 2022 period.

Depreciation and amortization. The ~~decrease~~increase in depreciation and amortization primarily reflects our acquisition and disposition ~~activities, partially offset by certain leasing related assets becoming fully amortized in the 2021 period.~~activities.

General and administrative. General and administrative expenses primarily include fees paid under our business management agreement with RMR, ~~LLC,~~ legal fees, audit fees, Trustee fees and expenses and equity compensation expense. The ~~decrease~~increase in general and administrative expenses is primarily due to ~~a decrease~~an increase in business management fees as a result of our net ~~disposition of properties~~acquisition activity since ~~April 1, 2020.~~January 2021.

~~Interest~~Realized gain on sale of equity securities. Realized gain on sale of equity securities represents the realized gain of $1,232 on the sale of certain equity securities we acquired as part of our acquisition of MNR.

Unrealized gain on equity securities. Unrealized gain on equity securities represents the increase in fair value of certain equity securities we acquired as part of our acquisition of MNR for the period from February 25, 2022 to March 31, 2022.

Dividend income. ~~Interest~~Dividend income represents ~~interest earned~~the distributions received on ~~our cash balances.The decrease in interest income is primarily due to a decrease in the interest rate earned on invested cash~~certain equity securities we held during the ~~2021~~ period ~~as compared~~from February 25, 2022 to ~~the 2020 period.~~March 31, 2022.

Interest expense. The ~~decrease~~increase in interest expense is ~~primarily~~ due to ~~lower~~higher average interest rates incurred on larger average outstanding ~~indebtedness during~~balances in the ~~2021~~2022 period as compared to the ~~2020~~2021 period, primarily due to our acquisition of MNR.

Loss on early extinguishment of debt. Loss on extinguishment of debt relates to unamortized costs related the termination of our $750,000 unsecured credit facility during the 2022 period.

Income tax expense. Income tax expense primarily reflects state income taxes payable in certain jurisdictions.

Equity in earnings of investees. Equity in earnings of investees is the change in the fair value of our investment in our unconsolidated joint venture.

Net (loss) income. The ~~increase in~~net loss for the 2022 period compared to the net income for the 2021 ~~period compared to the 2020~~ period reflects the changes noted above.

Net loss attributable to noncontrolling interest. Net loss attributable to noncontrolling interest represents the net loss attributable to the 39% equity interest in our consolidated joint venture that we did not own during the ~~2020 period when we owned a 61% equity interest in the venture.~~2022 period.

Weighted average common shares ~~outstanding.~~outstanding - basic and diluted. The increase in weighted average common shares outstanding primarily reflects common shares awarded under our equity compensation plan since January 1, ~~2020.~~2021.

Net (loss) income attributable to common shareholders per common share - basic and diluted. The ~~increase in~~net loss attributable to common shareholders per common share for the 2022 period compared to the net income attributable to common shareholders per ~~common~~ share for the 2021 period reflects the changes to net income attributable to common shareholders and weighted average common shares noted above.

2028

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Non-GAAP Financial Measures

We present certain “non-GAAP financial measures” within the meaning of the applicable rules of the Securities and Exchange Commission, or SEC, including net operating income, or 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 alternatives to net income (loss) or net income (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 income (loss) and net income (loss) attributable to common shareholders as presented in our condensed consolidated statements of comprehensive ~~income.~~income (loss). We consider these non-GAAP measures to be appropriate supplemental measures of operating performance for a REIT, along with net income (loss) and net income (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 income (loss) in order to provide results that are more closely related to our property level results of operations. NOI excludes amortization of capitalized tenant improvement costs and leasing commissions that we record as 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.

The following table presents the reconciliation of net income to NOI for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 (dollars in thousands):


		Three Months Ended March 31,						Three Months Ended March 31,
		2021		2020					2022			2021
Reconciliation of Net Income to NOI:
Net income		$	19,337	$	12,694
Reconciliation of Net (Loss) Income to NOI:							Reconciliation of Net (Loss) Income to NOI:
Net (loss) income							Net (loss) income				$	(9,787)		$	19,337
Equity in earnings of investees	Equity in earnings of investees	(2,581)		—		Equity in earnings of investees			(1,727)			(2,581)
Income tax expense	Income tax expense	63		63		Income tax expense			69			63
Income before income tax expense and equity earnings of investees		16,819		12,757
Income (loss) before income tax expense and equity in earnings of investees							Income (loss) before income tax expense and equity in earnings of investees				(11,445)			16,819

Loss on early extinguishment of debt							Loss on early extinguishment of debt				828			—
Interest expense	Interest expense	8,741		14,519		Interest expense			40,999			8,741
Interest income		—		(111)
Realized gain on sale of equity securities							Realized gain on sale of equity securities				(1,232)			—
Unrealized gain on equity securities							Unrealized gain on equity securities				(2,460)			—
Dividend income							Dividend income				(478)			—

General and administrative	General and administrative	3,756		4,831		General and administrative			6,077			3,756

Depreciation and amortization	Depreciation and amortization	12,678		18,290		Depreciation and amortization			22,878			12,678
NOI	NOI	$	41,994	$	50,286	NOI			$	55,167		$	41,994

NOI:	NOI:					NOI:
Hawaii Properties	Hawaii Properties	$	19,992	$	19,517	Hawaii Properties			$	19,294		$	19,992
Mainland Properties	Mainland Properties	22,002		30,769		Mainland Properties			35,873			22,002
NOI	NOI	$	41,994	$	50,286	NOI			$	55,167		$	41,994

Funds From Operations 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 net income (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 an unconsolidated joint venture and realized and unrealized gain on equity securities, plus real estate depreciation and amortization of consolidated properties and our

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proportionate share of FFO of unconsolidated joint venture properties and minus FFO adjustments attributable to noncontrolling interest, as well as certain other adjustments currently not applicable to us. In calculating Normalized FFO attributable to common shareholders, we adjust for the items shown below including similar adjustments for our unconsolidated joint venture, if ~~any.~~any, and exclude acquisition and transaction costs expensed under GAAP. FFO attributable to common shareholders and

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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, limitations in the agreements governing our debt, the availability to us of debt and equity capital, our distribution rate as a percentage of the trading price of our common shares, or dividend yield, and our dividend yield compared to the dividend yields of other 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.

The following table presents our calculation of FFO attributable to common shareholders and Normalized FFO attributable to common shareholders and reconciliations of net income (loss) attributable to common shareholders to FFO attributable to common shareholders and Normalized FFO attributable to common shareholders for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 (dollars in thousands, except per share data):


		Three Months Ended March 31,						Three Months Ended March 31,
		2021		2020						2022		2021
Reconciliation of Net Income attributable to common shareholders to FFO attributable to common shareholders and Normalized FFO attributable to common shareholders:
Net income attributable to common shareholders		$	19,337	$	12,846
Reconciliation of Net Income (Loss) Attributable to Common Shareholders to FFO Attributable to Common Shareholders and Normalized FFO Attributable to Common Shareholders:						Reconciliation of Net Income (Loss) Attributable to Common Shareholders to FFO Attributable to Common Shareholders and Normalized FFO Attributable to Common Shareholders:
Net (loss) income attributable to common shareholders						Net (loss) income attributable to common shareholders			$	(6,514)	$	19,337
Depreciation and amortization	Depreciation and amortization	12,678		18,290			Depreciation and amortization			22,878		12,678
Equity in earnings of unconsolidated joint venture	Equity in earnings of unconsolidated joint venture	(2,581)		—			Equity in earnings of unconsolidated joint venture			(1,727)		(2,581)
Realized gain on sale of equity securities						Realized gain on sale of equity securities			(1,232)		—
Unrealized gain on equity securities						Unrealized gain on equity securities			(2,460)		—
Share of FFO from unconsolidated joint venture	Share of FFO from unconsolidated joint venture	1,236		—			Share of FFO from unconsolidated joint venture			1,761		1,236

FFO adjustments attributable to noncontrolling interest	FFO adjustments attributable to noncontrolling interest	—		(977)			FFO adjustments attributable to noncontrolling interest			(4,604)		—
FFO attributable to common shareholders and Normalized FFO attributable to common shareholders		$	30,670	$	30,159
FFO attributable to common shareholders						FFO attributable to common shareholders			8,102		30,670

Loss on early extinguishment of debt						Loss on early extinguishment of debt			828		—
Acquisition and certain other transaction costs						Acquisition and certain other transaction costs			18,673		—
Normalized FFO attributable to common shareholders						Normalized FFO attributable to common shareholders			$	27,603	$	30,670

Weighted average common shares outstanding - basic	Weighted average common shares outstanding - basic	65,139		65,075			Weighted average common shares outstanding - basic			65,212		65,139
Weighted average common shares outstanding - diluted	Weighted average common shares outstanding - diluted	65,177		65,082			Weighted average common shares outstanding - diluted			65,212		65,177

Per common share data (basic and diluted)
FFO attributable to common shareholders and Normalized FFO attributable to common shareholders		$	0.47	$	0.46

Per common share data (basic and diluted):						Per common share data (basic and diluted):
FFO attributable to common shareholders						FFO attributable to common shareholders			$	0.12	$	0.47
Normalized FFO attributable to common shareholders						Normalized FFO attributable to common shareholders			$	0.42	$	0.47

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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 ~~properties and borrowings under our revolving credit facility.~~properties. With ~~$533,000~~$275,075 of ~~availability under our revolving credit facility as of April 22, 2021, 72.3%~~cash on hand, 77.3% of our annualized rental revenues derived from investment grade rated tenants, subsidiaries of investment grade rated parent entities or our Hawaii land leases and only ~~1.3%~~4.1% of our annualized rental revenues as of March 31, ~~2021~~2022 from expiring leases 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;

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•control our operating cost increases; ~~and~~

•purchase additional properties that produce cash flows in excess of our costs of acquisition capital and property operating ~~expenses.~~expenses; and

•develop properties to produce cash flows in excess of our cost of capital.

The following is a summary of our sources and uses of cash flows for the periods presented, as reflected in our condensed consolidated statements of cash flows (dollars in thousands):


		Three Months Ended March 31,					Three Months Ended March 31,
		2021		2020			2022		2021
Cash and cash equivalents and restricted cash at beginning of period	Cash and cash equivalents and restricted cash at beginning of period	$	22,834	$	34,550	Cash and cash equivalents and restricted cash at beginning of period	$	29,397	$	22,834
Net cash provided by (used in):	Net cash provided by (used in):					Net cash provided by (used in):
Operating activities	Operating activities	29,652		29,445		Operating activities	56,639		29,652
Investing activities	Investing activities	(789)		(73,935)		Investing activities	(3,442,485)		(789)
Financing activities	Financing activities	(25,550)		41,112		Financing activities	3,777,878		(25,550)
Cash and cash equivalents and restricted cash at end of period	Cash and cash equivalents and restricted cash at end of period	$	26,147	$	31,172	Cash and cash equivalents and restricted cash at end of period	$	421,429	$	26,147

The increase in net cash provided by operating activities for the three months ended March 31, ~~2021~~2022 compared to the ~~2020~~2021 period is primarily due to increased operating cash flow from the acquisition of MNR and changes in our working capital. The ~~decrease~~increase in net cash used in investing activities for the three months ended March 31, ~~2021~~2022 compared to the ~~2020~~2021 period is primarily due to ~~the~~our acquisition of ~~one property~~MNR during the ~~2020~~2022 period as compared to no property acquisitions during the 2021 period. The change in net cash provided by financing activities for the three months ended March 31, ~~2021~~2022 to net cash ~~provided by~~used in financing activities ~~for~~during the ~~2020~~2021 period is primarily due to the ~~proceeds we received from our~~net borrowings and sale of joint venture equity interests inused to finance our ~~joint venture~~acquisition of MNR in the ~~2020~~2022 period.

Our Investing and Financing Liquidity and Resources (dollars in thousands, except per share and per square foot data)

Our future acquisition or development activity cannot be accurately projected because such activity depends upon available opportunities that come to our attention and upon our ability to successfully acquire, develop and operate properties, financing available to us, our cost of capital, other commitments we have made and alternative uses for the amounts that would be required for the acquisition or development, the extent of our leverage, and the expected impact of the acquisition or development on our debt covenants and certain other financial metrics. We generally do not intend to purchase “turn around” properties, or properties that do not generate positive cash flows, but we may conduct construction or redevelopment activities on our properties.

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As of March 31, ~~2021,~~2022, we had cash and cash equivalents of ~~$26,147.~~$275,075. To maintain our qualification for taxation as a REIT under the Internal Revenue Code of 1986, as amended, or the IRC, we generally are required to distribute at least 90% of our REIT taxable income annually, subject to specified adjustments and excluding any net capital gain. This distribution requirement limits our ability to retain earnings and thereby provide capital for our operations or acquisitions. ~~In order~~We may use our cash and cash equivalents on hand, the cash flow from our operations, net proceeds from any sales of assets and net proceeds of 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 or~~our shareholders. We currently expect to ~~fund any future property acquisitions, development or redevelopment efforts,~~reduce our debt with the proceeds from the sale of 30 properties we ~~maintain a $750,000 unsecured revolving credit facility with a group~~have classified as held for sale as of ~~lenders. The maturity date~~March 31, 2022.

On February 25, 2022, subsidiaries of our ~~revolving credit facility is December 29, 2021. We have~~consolidated joint venture entered into a loan agreement with Citi Real Estate Funding Inc., UBS AG, Bank of America, N.A., Bank of Montreal and Morgan Stanley Bank, N.A., or collectively, the ~~option~~Floating Rate Lenders, pursuant to ~~extend~~which this joint venture obtained the ~~maturity date~~Floating Rate Loan. Also on February 25, 2022, our consolidated joint venture entered into a guaranty in favor of ~~our revolving credit facility for two, six month periods,~~the Floating Rate Lenders, pursuant to which this joint venture guaranteed certain limited recourse obligations of its subsidiaries with respect to the Floating Rate Loan. The Floating Rate Loan matures in March 2024, subject to ~~payment of~~three, one year extension ~~fees~~options, and ~~satisfaction of other conditions. We pay~~requires that interest ~~on borrowings under our revolving credit facility~~be paid at ~~the~~a rate of ~~LIBOR~~SOFR plus a premium ~~that varies based on our leverage ratio. We are required~~of 2.25%. Effective in March 2022, the Floating Rate Lenders exercised their option to ~~pay a commitment fee on~~increase the ~~unused portion~~premium in connection with the securitization of ~~our revolving credit facility. At March 31, 2021,~~ the ~~interest rate premium on our revolving credit facility was 130~~Floating Rate Loan resulting in an increase of 51.5 basis points ~~and our commitment fee was 25 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.~~in the premium. As of March 31, ~~2021,~~2022, the weighted average annual interest rate payable onunder our Floating Rate Loan was 3.060% and the weighted average interest rate for borrowings under the Floating Rate Loan was 3.011% for the period from February 25, 2022 to March 31, 2022.

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Also on February 25, 2022, certain of our ~~revolving credit facility was 1.41%.~~subsidiaries entered into a loan agreement with Citibank, N.A., UBS AG, Bank of America, N.A., Bank of Montreal and Morgan Stanley Bank, N.A., or collectively, the Bridge Lenders, and a mezzanine loan agreement with an institutional lender, or the Bridge Mezz Lender, together pursuant to which we obtained the Bridge Loan. Also on February 25, 2022, we entered into a guaranty in favor of the Bridge Lenders and the Bridge Mezz Lender, pursuant to which we guaranteed certain limited recourse obligations of its subsidiaries with respect to the Bridge Loan. The Bridge Loan matures in February 2023 and requires that interest be paid at an annual rate of SOFR plus a premium of 1.75% under the loan agreement and a premium of 8.0% under the mezzanine loan agreement. As of March 31, ~~2021 and April 22, 2021, we had $217,000 outstanding~~2022, the weighted average annual interest rate payable under our ~~revolving credit facility,~~Bridge Loan was 3.214% and ~~$533,000 available to borrow under our revolving credit facility.~~

~~Our credit agreement includes a feature under which~~ the ~~maximum borrowing availability~~weighted average annual interest rate for borrowings under the ~~facility may~~Bridge Loan was 3.143% for the period from February 25, 2022 to March 31, 2022.

Also on February 25, 2022, certain of our subsidiaries entered into a loan agreement with Citi Real Estate Funding Inc., UBS AG, Bank of America, N.A., Bank of Montreal and Morgan Stanley Bank, N.A., or collectively, the Fixed Rate Lenders, and mezzanine loan agreements with Citigroup Global Markets Realty Corp., UBS AG, Bank of America, N.A., Bank of Montreal and Morgan Stanley Mortgage Capital Holdings LLC, or collectively the Fixed Mezz Lenders, pursuant to which we obtained the Fixed Rate Loan. Also on February 25, 2022, we entered into a guaranty in favor of the Fixed Rate Lenders and the Fixed Mezz Lenders, pursuant to which we guaranteed certain limited recourse obligations of our subsidiaries with respect to the Fixed Rate Loan. The Fixed Rate Loan matures in March 2032 and requires that interest be ~~increased~~paid at a weighted average annual fixed rate of 4.417%.

We used the aggregate net proceeds from the Loans to fund the acquisition of MNR. Principal payments on the Loans are not required prior to the end of the respective initial term, subject to certain conditions set forth in the applicable loan agreement. Subject to the satisfaction of certain stated conditions, we have the option under the applicable loan agreement: (1) to prepay up to ~~$1,500,000~~$280,000 of the Floating Rate Loan after March 2023, at par with no premium, and to prepay the balance of the Floating Rate Loan at any time, subject to a premium; (2) to prepay the Bridge Loan, in full or in part at any time, subject to breakage costs; and (3) to prepay the Fixed Rate Loan in full or part at any time, subject to a premium, and beginning in September 2031, without a premium.

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

As of March 31, ~~2021, our debt maturities (other than our revolving credit facility), consisted of mortgage notes with~~2022, we have an aggregate principal amount of ~~$650,000, which is~~$4,456,808 of debt, including the Loans, scheduled to mature between 2022 and 2038.

For further information regarding our investing and financing activities, including our acquisition of MNR, see Notes 2, 4, 5, 9 and 11 to the Notes to Condensed Consolidated Financial Statements included in ~~2029.~~Part I, Item 1 of this Quarterly Report on Form 10-Q.

~~During~~

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Consolidated Joint Venture

Immediately following the ~~three months ended March 31, 2020,~~closing of the Merger, we entered into ~~agreements related to~~ a joint venture ~~for 12 of our properties in the mainland United States~~arrangement with an ~~Asian~~ institutional investor ~~and contributed those 12~~for 95 of the acquired MNR properties, ~~to our joint venture. We received an aggregate of $108,266 from that~~including two committed, but not yet completed, property acquisitions. The investor ~~for~~acquired a 39% noncontrolling equity interest in ~~our~~the joint venture from us for $587,440, and we retained the remaining 61% equity interest in ~~our~~the joint venture. AsThe joint venture assumed $323,432 aggregate principal amount of ~~March 31, 2020, we incurred transaction costs~~existing MNR mortgages on certain of ~~$626 in connection with~~ the ~~formation of~~properties. We account for this joint ~~venture.~~venture on a consolidated basis in our condensed consolidated financial statements.

We recognized a 39% noncontrolling interest in our condensed consolidated financial statements for the three months ~~ended~~ending March 31, ~~2020.~~2022. The portion of ~~our~~this joint venture's net loss not attributable to us, or ~~$152~~$3,261 for the three months ended March 31, ~~2020,~~2022, is reported as noncontrolling interest in our condensed consolidated statements of comprehensive ~~income. No~~income (loss). There were no distributions ~~were~~ made by ~~our~~this joint venture during the three months ended March 31, ~~2020.~~

~~In November 2020, we sold an~~2022. We may seek to sell additional ~~39%~~ equity ~~interest from our remaining 61% equity interest to a second unrelated third party institutional investor and retained a 22% equity interest~~interests in ~~our joint venture. Effective as of the date of the sale, we deconsolidated our~~this joint venture and ~~since that time,~~use the proceeds to reduce our debt. See Notes 1, 9 and 11 to the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information regarding this joint venture.

Unconsolidated Joint Venture

As of March 31, 2022 and December 31, 2021, we also owned an interest in an unconsolidated joint venture. We account for ~~our~~the unconsolidated joint venture ~~using~~under the equity method of accounting under the fair value option.

During the three months ended March 31, 2022 and 2021, we recorded the change in the fair value of our investment in our unconsolidated joint venture of $1,727 and $2,581, respectively, as equity in earnings of investees in our condensed consolidated statements of comprehensive ~~income.~~income (loss). In addition, during the three months ended March 31, 2022 and 2021, our unconsolidated joint venture made aggregate cash distributions of $1,320 and $660, respectively, to us.

For further information regarding ~~our investing and financing activities,~~this joint venture, see Notes 2, 5 and 511 to the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

We expect to use ~~borrowings under our revolving credit facility,~~ payments we may receive ~~for pro rata equity contributions~~ from the other investors in our joint ~~venture~~ventures in connection with any additional properties we may ~~contribute~~sell to our joint ~~venture,~~ventures, equity contributions from ~~the~~any third party investors in our joint ~~venture~~ventures or any future joint ventures and net proceeds from offerings of equity or debt securities to fund any future property acquisitions, development or redevelopment efforts. We may also assume mortgage notes in connection with future acquisitions. When ~~significant amounts are outstanding under our revolving credit facility or~~ the maturities of our ~~revolving credit facility or our other~~ debt approach, we intend to explore refinancing alternatives. 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 our~~obtaining a revolving credit facility, participating in joint ventures or selling properties. We currently have an effective shelf registration statement that allows us to issue public securities on an expedited basis, but we cannot be sure that there will be purchasers for such securities. 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 or equity offerings, to fund capital expenditures, future acquisitions, development, redevelopment and other activities and to pay our obligations.

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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 which will afford us reasonable access to capital for investing and financing activities. However, as noted elsewhere in this Quarterly Report on Form 10-Q, it is uncertain what the duration and severity of the current economic downturn resulting from the COVID-19 pandemic will be. A protracted and extensive downturn may have various negative consequences, including a decline in financing availability and increased costs for financing. Further, such conditions could also disrupt capital markets and limit our access to financing from public sources, particularly if the global financial markets experience significant disruptions.

During the three months ended March 31, ~~2021,~~2022, we paid a quarterly cash distribution to our shareholders totaling ~~$21,550~~$21,584 using existing cash ~~balances and borrowings under our revolving credit facility.~~balances. For more information regarding the distribution we paid in ~~2021,~~2022, see Note 6 to the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

On April ~~15, 2021,~~14, 2022, we declared a regular quarterly distribution of $0.33 per common share, or approximately ~~$21,550,~~$21,600, to shareholders of record on April ~~26, 2021.~~25, 2022. We expect to pay this distribution to our shareholders on or about May ~~20, 2021~~19, 2022 using existing cash ~~balances and borrowings under our revolving credit facility.~~balances.

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During the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, amounts capitalized for tenant improvements, leasing costs, building improvements and development and redevelopment activities were as follows:


		Three Months Ended					Three Months Ended
		March 31,					March 31,
		2021		2020			2022		2021
Tenant improvements and leasing costs (1)	Tenant improvements and leasing costs (1)	$	823	$	293	Tenant improvements and leasing costs (1)	$	3,361	$	823

Building improvements (2)	Building improvements (2)	232		1,237		Building improvements (2)	110		232
Development, redevelopment and other activities (3)	Development, redevelopment and other activities (3)	—		1		Development, redevelopment and other activities (3)	294		—
		$	1,055	$	1,531		$	3,765	$	1,055

(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.

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

(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, ~~2021,~~2022, we had estimated unspent leasing related obligations of ~~$1,704.~~

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~~During the three months ended March 31, 2021, commitments made for expenditures, such as tenant improvements and leasing costs in connection with leasing space, were as follows:~~

Three Months Ended March 31, 2021
New Leases Renewals Totals
Square feet leased during the period (in thousands) 273 347 620
Total leasing costs and concession commitments (1)
$ 1,964 $ 1,292 $ 3,256
Total leasing costs and concession commitments per square foot (1)
$ 7.20 $ 3.72 $ 5.25
Weighted average lease term by square feet (years) 8.5 14.2 11.7
Total leasing costs and concession commitments per square foot per year (1)
$ 0.85 $ 0.26 $ 0.45

~~(1)Includes commitments made for leasing expenditures and concessions, such as leasing commissions, tenant improvements or other tenant inducements~~.

$28,700.

Debt Covenants (dollars in thousands)

Our principal debt obligations at March 31, ~~2021 were borrowings~~2022 were: (1) $1,385,158 outstanding ~~under our revolving credit facility and~~principal amount of the Bridge Loan; (2) $1,400,000 outstanding principal amount of the Floating Rate Loan; (3) $700,000 outstanding principal amount of the Fixed Rate Loan; (4) $650,000 outstanding principal amount of a ~~$650,000 non-recourse,~~ mortgage loan ~~that is~~ secured by 186 of our ~~properties. The mortgage loan agreement contains certain exceptions~~properties; and (5) $321,650 aggregate principal amount of mortgages secured by 11 properties owned by our consolidated joint venture in which we own a 61% equity interest. For further information regarding our indebtedness, see Note 4 to the ~~general non-recourse provisions that obligate us~~Notes to ~~indemnify the lenders for certain potential environmental losses relating to hazardous materials and violations~~Condensed Consolidated Financial Statements included in Part I, Item 1 of ~~environmental law.~~

Our credit agreement provides for acceleration of payment of all amounts outstanding upon the occurrence and continuation of certain events of default, such as a change of control of us, which includes RMR LLC ceasing to act as our business and property manager. Our credit agreement contains covenants, including those that restrict our ability to incur debts, including debts secured by mortgagesthis Quarterly Report on our properties, in excess of calculated amounts, restrict our ability to make distributions to our shareholders in certain circumstances and generally require us to maintain certain financial ratios. As of March 31, 2021, we believe we were in compliance with all the covenants and other terms under our credit agreement.

Our credit agreement does not contain provisions for acceleration which could be triggered by our leverage ratio. However, under our credit agreement, our leverage ratio is used to determine the interest rates for calculating the amount of interest payable on outstanding borrowings and the fees we pay. Accordingly, if our leverage ratio increases above the applicable thresholds, our interest expense and related costs under our credit agreement would increase.

~~Our revolving credit facility has cross default provisions to other indebtedness that is recourse of $25,000 or more and indebtedness that is non-recourse of $50,000 or more.~~Form 10-Q.

The ~~loan agreement~~agreements and related documents governing ~~our~~the Loans and the $650,000 mortgage loan contain customary covenants, ~~and~~ provide for acceleration of payment of all amounts due thereunder upon the occurrence and continuation of certain events of default and, in the case of the $650,000 mortgage loan, also require us to maintain a minimum consolidated net worth of at least $250,000 and liquidity of at least $15,000. As of March 31, ~~2021,~~2022, we believe we were in compliance with all the covenants and other terms under ~~this~~the agreements governing the Loans and the $650,000 mortgage loan.

Certain of the mortgages we assumed in conjunction with our acquisition of MNR are non-recourse, subject to certain limitations, and do not contain any material financial covenants. The agreements governing the Loans and the $650,000 mortgage loan ~~agreement.~~contain certain exceptions to the general non-recourse provisions, including our obligation to indemnify the lenders for certain potential environmental losses.

Related Person Transactions

We have relationships and historical and continuing transactions with RMR, ~~LLC,~~ RMR Inc. and others related to them. For further information about these and other such relationships and related person transactions, see Notes 8 and 9 to the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, our ~~2020~~2021 Annual Report, our definitive Proxy Statement for our ~~2021~~2022 Annual Meeting of Shareholders and our other filings with the SEC. In addition, see the section captioned “Risk Factors” of our ~~2020~~2021 Annual Report for a description of risks that may arise as a result of these and other related person transactions and relationships. We may engage in additional transactions with related persons, including businesses to which RMR ~~LLC~~ or its subsidiaries provide management services.

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 strategy to manage exposure to changes in interest rates is materially unchanged since December 31, ~~2020.~~2021. 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.

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Fixed Rate Debt

At March 31, ~~2021,~~2022, our outstanding fixed rate debt consisted of the following mortgage notes:

Annual Annual Interest
Principal Interest Interest Payments
Debt
Balance (1)
Rate (1)
Expense (1)
Maturity Due
Mortgage notes (186 properties in Hawaii) $ 650,000 4.31 % $ 28,015 2029 Monthly
$ 650,000 $ 28,015



			Annual		Annual			Interest
	Principal		Interest		Interest			Payments
Debt	Balance (1)		Rate (1)		Expense (1)		Maturity	Due

Mortgage notes (186 properties in Hawaii)	$	650,000	4.310	%	$	28,015	2029	Monthly
Mortgage notes (17 U.S. Mainland Properties )	700,000		4.417	%	30,919		2032	Monthly
Mortgage note (2)	13,644		3.670	%	501		2031	Monthly
Mortgage note (2)	27,446		3.100	%	851		2035	Monthly
Mortgage note (2)	15,585		3.560	%	555		2030	Monthly
Mortgage note (2)	45,534		4.130	%	1,881		2033	Monthly
Mortgage note (2)	15,032		4.140	%	622		2032	Monthly
Mortgage note (2)	32,634		4.020	%	1,312		2033	Monthly
Mortgage note (2)	5,290		3.770	%	199		2030	Monthly
Mortgage note (2)	5,594		3.850	%	215		2030	Monthly
Mortgage note (2)	44,042		2.950	%	1,299		2036	Monthly
Mortgage note (2)	47,742		4.270	%	2,039		2037	Monthly
Mortgage note (2)	54,012		3.250	%	1,755		2038	Monthly
Mortgage note (2)	15,095		3.760	%	568		2028	Monthly



	$	1,671,650			$	70,731

(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 values and recorded interest expense may differ from these amounts because of market conditions at the time we assumed or issued this debt.

~~These~~(2)Our consolidated joint venture, in which we have a 61% interest, assumed MNR’s existing mortgages secured by 11 properties in aggregate.

Our $650,000 and $700,000 mortgage notes require interest only payments until maturity. The remaining fixed rate mortgage notes require amortizing payment of principal and interest until maturity. Because our mortgage notes require interest to be paid at a fixed rate, changes in market interest rates during the terms of these mortgage notes will not affect our interest obligations. If these mortgage notes are refinanced at an interest rate which is one percentage point higher or lower than shown above, our annual interest cost would increase or decrease by approximately ~~$6,500.~~$16,717.

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, ~~2021~~2022 and discounted cash flow analyses 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 one percentage point change in the interest rates would change the fair value of this obligation by approximately ~~$46,008.~~$55,883.

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Floating Rate Debt

At March 31, 2022, our outstanding floating rate debt consisted of the following:


			Annual		Annual				Interest
	Principal		Interest		Interest				Payments
Debt	Balance (1)		Rate (1)		Expense (1)		Maturity		Due
Bridge Loan - mortgage	$	1,125,982	2.040	%	$	22,970	2023		Monthly
Bridge Loan - mezzanine	259,176		8.290	%	21,486		2023		Monthly
Floating Rate Loan	1,400,000		3.060	%	42,840		2024	(2)	Monthly
	2,785,158				$	87,296

(2)The Floating Rate Loan matures in March 2024, subject to three, one year extension options.

At March 31, ~~2021,~~2022, our aggregate floating rate debt ~~consisted~~was $2,785,158, consisting of ~~$217,000~~the $1,400,000 outstanding ~~under~~principal amount of the Floating Rate Loan secured by 82 properties owned by our ~~revolving credit facility. Our revolving credit facility~~consolidated joint venture and the $1,385,158 outstanding principal amount of the Bridge Loan. The Bridge Loan matures on ~~December 29, 2021~~February 24, 2023 and subject to the payment of extension fees 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 require~~requires that interest to be paid at ~~LIBOR~~an annual rate of SOFR plus a premium of 1.75% under the loan agreement and a premium of 8.00% under the mezzanine loan agreement. The Floating Rate Loan matures on March 9, 2024, subject to three, one year extension options, and requires that ~~varies based on~~interest be paid at an annual rate of SOFR plus a premium of 2.765% . In conjunction with these borrowings, to hedge our ~~leverage ratio. Accordingly,~~exposure to risks related to changes in SOFR rates, we purchased interest rate caps with a strike rate of 2.70% for the Bridge Loan and 3.40% for the Floating Rate Loan. However, we are vulnerable to changes in the U.S. dollar based short term rates, specifically ~~LIBOR.~~ SOFR.

In addition, upon renewal or refinancing of ~~this obligation,~~these obligations, we are vulnerable to increases in interest rate premiums due to market conditions or 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, ~~2021:~~2022:


		Impact of an Increase in Interest Rates									Impact of an Increase in Interest Rates
						Total Interest		Annual							Total Interest		Annual
		Interest Rate		Outstanding		Expense		Earnings Per			Interest Rate		Outstanding		Expense		Earnings Per
		Per Year		Debt		Per Year		Share Impact (1)			Per Year		Debt		Per Year		Share Impact (1)
At March 31, 2021		1.41	%	$	217,000	$	3,060	$	(0.05)
At March 31, 2022										At March 31, 2022	3.13	%	$	2,785,158	$	87,296	$	1.34
One percentage point increase	One percentage point increase	2.41	%	$	217,000	$	5,230	$	(0.08)	One percentage point increase	4.13	%	$	2,785,158	$	115,148	$	1.77

(1)Based on the diluted weighted average common shares outstanding for the three months ended March 31, ~~2021.~~2022.

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, 2021 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, 2021 1.41 % $ 750,000 $ 10,575 $ (0.16)
One percentage point increase 2.41 % $ 750,000 $ 18,075 $ (0.28)

~~(1)Based on the diluted weighted average common shares outstanding for the three months ended March 31, 2021.~~

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The foregoing tables show the impact of an immediate one percentage point change in floating interest rates. If interest rates were to change gradually over time, the impact would be spread over time. 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.~~

~~LIBOR Phase Out~~

LIBOR is currently expected to be phased out for new contracts by December 31, 2021 and for pre-existing contracts by June 30, 2023. We are required to pay interest on borrowings under our revolving credit facility at floating rates based on LIBOR. Interestdebt we may pay on any future debt that we may incur may also require that we pay interest based upon LIBOR. We currently expect that the determination of interest under our revolving credit facility would be revised as provided under our credit agreement or amended as necessary to provide for an interest rate that approximates the existing interest rate as calculated in accordance with LIBOR. Despite our current expectations, we cannot be sure that, if LIBOR is phased out or transitioned, the changes to the determination of interest under our agreements would approximate the current calculation in accordance with LIBOR. We do not know what standard, if any, will replace LIBOR if it is phased out or transitioned.incur.

Item 4. Controls and Procedures

As of the end of the period covered by this 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 ~~Executive~~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 ~~Executive~~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, ~~2021~~2022 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 Statements

This Quarterly Report on Form 10-Q contains statements that constitute 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”, “expect”, “anticipate”, “intend”, “plan”, “estimate”, “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 Quarterly Report on Form 10-Q relate to various aspects of our business, including:

•Our tenants’ ability and willingness to pay their rent obligations to us,

•The likelihood that our tenants will renew or extend their leases or that we will be able to obtain replacement tenants on terms as favorable to us as the terms of our existing leases,

•~~The duration and severity of the economic downturn resulting from the COVID-19 pandemic and its impact on us and our tenants,~~

•Our expectations about our ability and the ability of the industrial and logistics properties real estate sector and our tenants to operate throughout the COVID-19 pandemic and current economic conditions,

•Our belief that the industrial and logistics sector and many of our tenants are critical to sustaining a resilient supply chain and that our business will benefit as a result,

•Our acquisitions or sales of properties,

•The development, redevelopment or repositioning of our properties,

•Our ability to compete for ~~acquisitions~~tenancies and ~~tenancies~~acquisitions effectively,

•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 pay distributions to our shareholders and to sustain the amount of such distributions,

•~~The future availability of borrowings under our revolving credit facility,~~

•Our policies and plans regarding investments, financings and dispositions,

•Our ability to raise debt or equity capital,

•Our ability to pay interest on and principal of our debt or refinance such debt,

•Our ability to appropriately balance our use of debt and equity capital,

•Our ability to expand our existing, or enter into additional, real estate joint ventures or to attract co-venturers and benefit from our existing joint ~~venture~~ventures or any real estate joint ventures we may enter into,

•Whether we may contribute additional properties to our joint ~~venture~~ventures and receive proceeds from the other investors in our joint ~~venture~~ventures in connection with ~~those~~any such contributions,

•The credit qualities of our tenants,

•Changes in the security of cash flows from our properties,

•Our expectations about our ability and the ability of the industrial and logistics properties real estate sector and our tenants to operate throughout the remainder of the COVID-19 pandemic and current economic conditions,

•Our ability to maintain sufficient liquidity, including for the ~~duration~~remainder of the COVID-19 pandemic and any resulting economic ~~downturn,~~impact,

•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 expectation that we benefit from our relationships with RMR, ~~LLC,~~

•Our qualification for taxation as a REIT under the IRC,

•Changes in federal or state tax laws,

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•Changes 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,

•Changes in global supply chain conditions, and

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•Other matters.

Our actual results may differ materially from those contained in or implied by our forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors, some of which are beyond our control. Risks, uncertainties and other factors that could have a material adverse effect on our forward-looking statements and upon our business, results of operations, financial condition, FFO attributable to common shareholders, Normalized FFO attributable to common shareholders, NOI, cash flows, liquidity and prospects include, but are not limited to:

•The impact of economic conditions and the capital markets on us and our tenants, including if the current inflationary environment continues or intensifies,

•Competition within the 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 on our business and our ability to satisfy complex rules in order for us to maintain our qualification 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~~ and others affiliated with them, and

•Acts of terrorism, outbreaks of pandemics, ~~including COVID-19,~~war or other hostilities, further material or prolonged disruption to supply chains, 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 receipt of rent from our tenants, 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 increase or maintain our current rate of 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 acquire properties and lease them for rents, less their property operating costs, that exceed our capital costs. We may be unable to further grow our business by acquiring additional properties. We may be unable to identify properties that we want to acquire, and we may fail to reach agreement with the sellers and complete the purchases of any properties we do want to acquire. In addition, we might encounter unanticipated difficulties and expenditures relating to ~~any~~the properties we acquired ~~properties, and any~~in the MNR acquisition or other properties we may acquire in the future, and these properties may not provide us with rents less property operating costs that exceed our capital costs or achieve our expected returns,

•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 may not be able to sell the MNR properties we ~~can charge~~acquired and are seeking to sell, and any such sales may be at prices lower than the carrying values,

•We may experience declining rents or incur significant costs when we renew our leases with current tenants or lease our properties to new tenants or when our rents reset at our properties ~~may decline upon rent resets, lease renewals or lease expirations because of changing market conditions or otherwise,~~in Hawaii,

•Leasing for some of our properties depends on a single tenant and we may be adversely affected by the bankruptcy, insolvency, a downturn of business or a lease termination of a single tenant at these properties,

•Certain of our Hawaii Properties are lands leased for rents that periodically reset based on then current fair market values. Rental income from our properties in Hawaii have generally increased during our and our predecessors’ ownership as the leases for those properties have been reset, extendedAny existing or renewed. Although we expect that rents for our Hawaii Properties could increase in the future, subject to the impact of the COVID-19 pandemic and its resulting economic downturn, we cannot be sure they will increase. Future rents from these properties could decrease or not increase to the extent they have in the past or by the amount we expect, particularly in the current economic conditions,

•~~Any~~ possible development, redevelopment or ~~redevelopment~~repositioning of our properties may not be ~~realized~~successful and may cost more or ~~be successful,~~take longer to complete than we currently expect or than we expected when the project commenced. In addition, we may not realize the returns we expect from these projects and we may incur losses from these projects,

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•It is difficult to accurately estimate leasing related obligations and costs of development and tenant improvement costs. Our leasing related obligations, development projects and tenant improvements may cost more and may

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take longer to complete than we currently expect or than we expected when the project commenced, and we may incur increasing amounts for these and similar purposes in the future,

•Economic conditions in areas where our properties are located may decline 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 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 rents from, our properties,

•We may not achieve or sustain our targeted capitalization rates for properties we acquire and we may incur losses with respect to those acquisitions,

•Our belief that there is a likelihood that tenants may renew or extend our leases prior to their expirations 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, and we may need to make significant expenditures to lease our properties,

•We may not be able to maintain good relations with, and continue to be responsive to the needs of, our significant and other tenants,

•The competitive advantages we believe we have may not in fact exist or provide us with the advantages we expect. We may fail to maintain any of these advantages or our competition may obtain or increase their competitive advantages relative to us,

•We intend to conduct our business activities in a manner that will afford us reasonable access to capital for investing 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. However, if challenging market conditions last for a long period or worsen, our tenants may experience liquidity constraints and as a result may be unable to pay rent to us and our ability to operate our business effectively may be challenged. If our operating results and financial condition are significantly negatively impacted by the current economic conditions or otherwise, we may fail to satisfy those covenants and conditions,

•Actual costs under our ~~revolving credit facility~~floating rate debt will be higher than ~~LIBOR~~the stated rate plus a premium because of fees and expenses associated with ~~such debt,~~

•~~The maximum borrowing availability under our revolving credit~~the applicable 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,~~

•~~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. Changes in our~~incur additional debt. Additional debt leverage may ~~cause the interest~~limit our ability to make acquisitions, pay distributions and ~~fees~~pursue other opportunities we ~~pay to~~may deem desirable. Further, increased leverage may increase our cost of capital,

•We may not ~~reduce~~be able to obtain replacement financing on desirable terms when our ~~level of indebtedness~~debts mature,

•Our existing, and any future, derivative contracts we are party to or ~~maintain any reduction we~~ may ~~effect~~enter into may not have the intended or desired beneficial impact, and ~~increased leverage~~ may ~~restrict our ability~~expose us to ~~acquire properties~~additional risks such as counterparty credit risk and ~~pursue business opportunities,~~may involve additional costs,

•We may spend more for capital expenditures than we currently expect orand we expect to spend more than we have in the past,

•Our existing joint ~~venture~~ventures and any ~~other~~additional joint ventures ~~that~~ we may enter into in the future may not be successful, and we may not be able to sell any additional equity interests in our existing joint ventures at expected prices or at all,

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•Our Board of Trustees considers, among other factors, our dividend yield and our dividend yield compared to the dividend yields of other industrial REITs when setting our distributions to shareholders. This may imply that we will maintain or seek to maintain a specific dividend yield on our common shares. However, the dividend yield is only one of many factors our Board of Trustees considers in its discretion when setting our distributions to shareholders. Further, various market and other factors impact trading prices for our and our competitors’ securities and the corresponding yields on those securities. As a result, the trading prices on our common shares

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and the yields on our common shares are subject to change and may fluctuate significantly. We do not intend to maintain or to seek to maintain any specific yield on our common shares,

•We believe that we are well positioned to weather the present disruptions of the COVID-19 pandemic facing the real estate industry. However, the full extent of the future impact of the COVID-19 pandemic to us is unknown and we may not realize similar or better operating results in the future,

•We face limited lease expirations in 2021 and we have granted requests to certain of our tenants to defer rent payments in exchange for increased payments over, in most cases, a 12-month period which began in September 2020. However, current market and economic conditions may deteriorate and such deterioration may result in an increase in tenant defaults and terminations, and these concessions and assistance given to our tenants may not allow them to continue to be successful during this challenging time,

•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 expect that we will benefit from RMR’s Environmental, Social and Governance, or ESG, program and initiatives. However, we may incur extensive costs and may not realize the benefits we expect from such program and initiatives and we or RMR may not succeed in meeting existing or future standards, or investors’ expectations, regarding ESG,

•We believe that our relationships with our related parties, including RMR, ~~LLC,~~ RMR Inc. 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.~~materialize, and

•We may not succeed in selling the marketable securities acquired as part of the MNR acquisition on the expected timeline or at all.

Currently unexpected results could occur due to many different circumstances, some of which are beyond our control, such as ~~the COVID-19 pandemic and its aftermath,~~ acts of terrorism, war or other hostilities, pandemics, natural disasters, climate change and climate related events, 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 ~~2020~~2021 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 January 11, 2018, 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.

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PART II. Other Information

Item 1A. Risk Factors

There have been no material changes to the risk factors from those we previously provided in our ~~2020~~2021 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, 2022:

Maximum

Total Number of

Approximate Dollar

Shares Purchased

Value of Shares that

Number of

Average

as Part of Publicly

May Yet Be Purchased

Price Paid

Announced Plans

Under the Plans or

Calendar Month

Purchased (1)

per Share

or Programs

Programs

March 2022

333

22.67

—

Total

333

22.67

—

(1) This common share withholding and purchase was made to satisfy tax withholding and payment obligations of a former employee of RMR in connection with the vesting of our common share awards. We withheld and purchased these common shares at their fair market value based upon the trading price of our common shares at the close of trading on Nasdaq on the purchase date.

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Item 6. Exhibits


Exhibit Number			Description

3.1			Composite Copy of Amended and Restated Declaration of Trust of the Company, dated as of January 11, 2018, as amended to date. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020.)

3.2			Amended and Restated Bylaws of the Company, adopted March 25, 2019. (Incorporated by reference to the Company's Current Report on Form 8-K filed on March 26, 2019.)

4.1			Form of Common Share Certificate. (Incorporated by reference to Amendment No. 2 to the Company's Registration Statement on Form S-11, File No. 333-221708.)

10.1			Loan Agreement, dated as of February 25, 2022, among certain subsidiaries of Mountain Industrial REIT LLC and Citi Real Estate Funding Inc., UBS AG, Bank of America, N.A., Bank of Montreal and Morgan Stanley Bank, N.A. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on February 28, 2022.)

10.2			First Amendment to Loan Agreement and Other Loan Documents, dated as of March 8, 2022, among certain subsidiaries of Mountain Industrial REIT LLC and Citi Real Estate Funding Inc., UBS AG, Bank of America, N.A., Bank of Montreal and Morgan Stanley Bank, N.A. (Filed herewith.)

10.3			Loan Agreement, dated as of February 25, 2022, among certain subsidiaries of the Company, Citibank, N.A., UBS AG Stamford Branch, Bank of America, N.A., Bank of Montreal and Morgan Stanley Bank, N.A. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on February 28, 2022.)

10.4			Mezzanine Loan Agreement, dated as of February 25, 2022, among certain subsidiaries of the Company and BREF VI Holdings LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on February 28, 2022.)

10.5			Loan Agreement, dated as of February 25, 2022, among certain subsidiaries of the Company and Citi Real Estate Funding Inc., UBS AG, Bank of America, N.A., Bank of Montreal and Morgan Stanley Bank, N.A. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on February 28, 2022.)

10.6			Mezzanine A Loan Agreement, dated as of February 25, 2022, among ILPT Mezz Fixed Borrower 2 LLC, Citigroup Global Markets Realty Corp., UBS AG, Bank of America, N.A., Bank of Montreal and Morgan Stanley Mortgage Capital Holdings LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on February 28, 2022.)

10.7			Mezzanine B Loan Agreement, dated as of February 25, 2022, among ILPT Mezz Fixed Borrower LLC, Citigroup Global Markets Realty Corp., UBS AG, Bank of America, N.A., Bank of Montreal and Morgan Stanley Mortgage Capital Holdings LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on February 28, 2022.)

10.8			Form of Indemnification Agreement. (Filed herewith.)

31.1			Rule 13a-14(a) Certification. (Filed herewith.)

31.2			Rule 13a-14(a) Certification. (Filed herewith.)

31.3			Rule 13a-14(a) Certification. (Filed herewith.)

31.4			Rule 13a-14(a) Certification. (Filed herewith.)

32.1			Section 1350 Certification. (Furnished herewith.)

99.1			Letter dated February 25, 2022, between the Company and The RMR Group LLC, regarding the Business Management Agreement. (Filed herewith.)

101.INS			XBRL 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.SCH			XBRL Taxonomy Extension Schema Document. (Filed herewith.)

101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document. (Filed herewith.)

101.DEF			XBRL Taxonomy Extension Definition Linkbase Document. (Filed herewith.)

101.LAB			XBRL Taxonomy Extension Label Linkbase Document. (Filed herewith.)

101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document. (Filed herewith.)

104			Cover 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 G. Murray~~Yael Duffy
						~~John G. Murray~~Yael Duffy
						President and Chief ~~Executive~~Operating Officer
						Dated: April 26, ~~2021~~2022


			By:			/s/ Richard W. Siedel, Jr.
						Richard W. Siedel, Jr.
						Chief Financial Officer and Treasurer
						~~(principal financial officer and principal accounting officer)~~
						Dated: April 26, ~~2021~~2022

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	At March 31, 2021				At December 31, 2020
	Carrying		Estimated		Carrying		Estimated
	Value (1)		Fair Value		Value (1)		Fair Value
Mortgage notes payable	$	645,715	$	706,152	$	645,579	$	730,119


	Three Months Ended March 31, 2021
	New Leases		Renewals		Totals
Square feet leased during the period (in thousands)	273		347		620
Total leasing costs and concession commitments (1)	$	1,964	$	1,292	$	3,256
Total leasing costs and concession commitments per square foot (1)	$	7.20	$	3.72	$	5.25
Weighted average lease term by square feet (years)	8.5		14.2		11.7
Total leasing costs and concession commitments per square foot per year (1)	$	0.85	$	0.26	$	0.45