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 September 30, 2023March 31, 2024
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
Commission File Number 001-38342 
INDUSTRIAL LOGISTICS PROPERTIES TRUST
(Exact Name of Registrant as Specified in Its Charter)
Maryland 82-2809631
(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. 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 ClassTrading Symbol(s)Name Of Each Exchange On Which Registered
Common Shares of Beneficial InterestILPTThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically 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 filerAccelerated filer
Non-accelerated filerSmaller 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 pursuant 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 October 23, 2023: 65,843,823.April 26, 2024: 65,831,530.



Table of Contents

INDUSTRIAL LOGISTICS PROPERTIES TRUST
 
FORM 10-Q
September 30, 2023
March 31, 2024
INDEX
 
  Page
   
   
 
  
 
   
 
   
 
   
   
   
   
 
   
 
   
   
   
 
 
References in this Quarterly Report on Form 10-Q to the Company, we, us or our include Industrial Logistics Properties Trust and its consolidated subsidiaries unless otherwise expressly stated or the context indicates otherwise.
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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)
September 30,December 31, March 31,December 31,
20232022 20242023
ASSETSASSETS  ASSETS 
Real estate properties:Real estate properties:
LandLand$1,110,279 $1,117,779 
Land
Land
Buildings and improvementsBuildings and improvements4,017,355 4,058,329 
Total real estate properties, grossTotal real estate properties, gross5,127,634 5,176,108 
Accumulated depreciationAccumulated depreciation(361,814)(273,467)
Total real estate properties, netTotal real estate properties, net4,765,820 4,902,641 
Assets of properties held for sale57,606 — 
Investment in unconsolidated joint venture
Investment in unconsolidated joint venture
Investment in unconsolidated joint ventureInvestment in unconsolidated joint venture124,411 124,358 
Acquired real estate leases, netAcquired real estate leases, net254,968 297,445 
Cash and cash equivalentsCash and cash equivalents83,283 48,261 
Restricted cash139,220 92,519 
Rents receivable, including straight line rents of $91,218 and $80,710, respectively113,665 107,011 
Restricted cash and cash equivalents
Rents receivable, including straight line rents of $97,798 and $94,309, respectively
Other assets, net
Other assets, net
Other assets, netOther assets, net95,342 103,931 
Total assetsTotal assets$5,634,315 $5,676,166 
LIABILITIES AND EQUITYLIABILITIES AND EQUITY
LIABILITIES AND EQUITY
LIABILITIES AND EQUITY
Mortgages and notes payable, netMortgages and notes payable, net$4,303,631 $4,244,501 
Liabilities of properties held for sale1,156 — 
Mortgages and notes payable, net
Mortgages and notes payable, net
Accounts payable and other liabilities
Accounts payable and other liabilities
Accounts payable and other liabilitiesAccounts payable and other liabilities86,028 73,547 
Assumed real estate lease obligations, netAssumed real estate lease obligations, net19,466 22,523 
Due to related personsDue to related persons5,896 4,824 
Due to related persons
Due to related persons
Total liabilitiesTotal liabilities4,416,177 4,345,395 
Commitments and contingenciesCommitments and contingencies
Commitments and contingencies
Commitments and contingencies
Equity:Equity:
Equity:
Equity:
Equity attributable to common shareholders:Equity attributable to common shareholders:
Common shares of beneficial interest, $.01 par value: 100,000,000 shares authorized; 65,845,073 and 65,568,145 shares issued and outstanding, respectively658 656 
Equity attributable to common shareholders:
Equity attributable to common shareholders:
Common shares of beneficial interest, $.01 par value: 100,000,000 shares authorized; 65,831,530 and 65,843,387 shares issued and outstanding, respectively
Common shares of beneficial interest, $.01 par value: 100,000,000 shares authorized; 65,831,530 and 65,843,387 shares issued and outstanding, respectively
Common shares of beneficial interest, $.01 par value: 100,000,000 shares authorized; 65,831,530 and 65,843,387 shares issued and outstanding, respectively
Additional paid in capitalAdditional paid in capital1,015,468 1,014,201 
Cumulative net income40,436 117,185 
Cumulative net (deficit) income
Cumulative other comprehensive incomeCumulative other comprehensive income22,142 21,903 
Cumulative common distributionsCumulative common distributions(365,189)(363,221)
Total equity attributable to common shareholdersTotal equity attributable to common shareholders713,515 790,724 
Noncontrolling interestNoncontrolling interest504,623 540,047 
Total equityTotal equity1,218,138 1,330,771 
Total liabilities and equityTotal liabilities and equity$5,634,315 $5,676,166 

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 September 30,Nine Months Ended September 30,
2023202220232022
Rental income$110,142 $103,215 $328,443 $281,812 
Expenses:
Real estate taxes14,926 13,749 46,493 36,460 
Other operating expenses9,907 8,453 27,744 22,278 
Depreciation and amortization43,912 48,519 134,278 114,096 
General and administrative7,712 9,110 23,750 24,896 
Acquisition and other transaction related costs— 586 — 586 
Loss on impairment of real estate— — 254 100,747 
Total expenses76,457 80,417 232,519 299,063 
Interest and other income2,397 1,068 5,340 1,900 
Interest expense (including net amortization of debt issuance costs, premiums and discounts of $6,743, $35,496, $20,177, and $90,265, respectively)(72,941)(89,739)(215,558)(208,286)
Loss on sale of real estate— — (974)(10)
Loss on equity securities— — — (5,758)
Loss on early extinguishment of debt— (21,370)(359)(22,198)
Loss before income tax expense and equity in earnings of unconsolidated joint venture(36,859)(87,243)(115,627)(251,603)
Income tax expense(51)(28)(113)(113)
Equity in earnings of unconsolidated joint venture719 3,297 7,423 6,634 
Net loss(36,191)(83,974)(108,317)(245,082)
Net loss attributable to noncontrolling interest10,079 38,347 31,568 49,402 
Net loss attributable to common shareholders(26,112)(45,627)(76,749)(195,680)
Other comprehensive income:
Unrealized (loss) gain on derivatives(6,635)8,847 (3,392)18,917 
Less: unrealized loss (gain) on derivatives attributable to noncontrolling interest2,290 (4,119)3,631 (6,617)
Other comprehensive (loss) income attributable to common shareholders(4,345)4,728 239 12,300 
Comprehensive loss attributable to common shareholders$(30,457)$(40,899)$(76,510)$(183,380)
Weighted average common shares outstanding (basic and diluted)65,488 65,250 65,389 65,228 
Per common share data (basic and diluted):
Net loss attributable to common shareholders$(0.40)$(0.70)$(1.17)$(3.00)

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



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

CumulativeTotal Equity
Number ofAdditionalOtherCumulativeAttributable to
CommonCommonPaid InCumulativeComprehensiveCommonCommonNoncontrollingTotal
SharesSharesCapitalNet IncomeIncomeDistributionsShareholdersInterestEquity
Balance at December 31, 202265,568,145 $656 $1,014,201 $117,185 $21,903 $(363,221)$790,724 $540,047 $1,330,771 
Net loss— — — (24,809)— — (24,809)(10,737)(35,546)
Share grants, repurchases and forfeitures(2,176)— 384 — — — 384 — 384 
Distributions to common shareholders— — — — — (656)(656)— (656)
Other comprehensive loss— — — — (7,018)— (7,018)(1,760)(8,778)
Balance at March 31, 202365,565,969 656 1,014,585 92,376 14,885 (363,877)758,625 527,550 1,286,175 
Net loss— — — (25,828)— — (25,828)(10,752)(36,580)
Share grants, repurchases and forfeitures131,990 553 — — — 554 — 554 
Distributions to common shareholders— — — — — (656)(656)— (656)
Other comprehensive income— — — — 11,602 — 11,602 419 12,021 
Distributions to noncontrolling interest— — — — — — (225)(225)
Balance at June 30, 202365,697,959 657 1,015,138 66,548 26,487 (364,533)744,297 516,992 1,261,289 
Net loss— — — (26,112)— — (26,112)(10,079)(36,191)
Share grants, repurchases and forfeitures147,114 330 — — — 331 — 331 
Distributions to common shareholders— — — — — (656)(656)— (656)
Other comprehensive loss— — — — (4,345)— (4,345)(2,290)(6,635)
Balance at September 30, 202365,845,073 $658 $1,015,468 $40,436 $22,142 $(365,189)$713,515 $504,623 $1,218,138 
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CumulativeTotal Equity
Number ofAdditionalOtherCumulativeAttributable to
CommonCommonPaid InCumulativeComprehensiveCommonCommonNoncontrollingTotal
SharesSharesCapitalNet IncomeIncomeDistributionsShareholdersInterestEquity
Balance at December 31, 202165,404,592 $654 $1,012,224 $343,908 $— $(318,744)$1,038,042 $— $1,038,042 
Net loss— — — (6,514)— — (6,514)(3,273)(9,787)
Share grants, repurchases and forfeitures(733)— 398 — — — 398 — 398 
Other comprehensive income— — — — 3,908 — 3,908 1,724 5,632 
Contributions from noncontrolling interest— — — — — — — 591,268 591,268 
Distributions to common shareholders— — — — — (21,584)(21,584)— (21,584)
Balance at March 31, 202265,403,859 654 1,012,622 337,394 3,908 (340,328)1,014,250 589,719 1,603,969 
Net loss— — — (143,539)— — (143,539)(7,782)(151,321)
Share grants, repurchases and forfeitures23,600 — 796 — — — 796 — 796 
Other comprehensive income— — — — 3,664 — 3,664 774 4,438 
Distributions to noncontrolling interest— — — — — — — (1,365)(1,365)
Distributions to common shareholders— — — — — (21,583)(21,583)— (21,583)
Balance at June 30, 202265,427,459 654 1,013,418 193,855 7,572 (361,911)853,588 581,346 1,434,934 
Net loss— — — (45,627)— — (45,627)(38,347)(83,974)
Share grants, repurchases and forfeitures141,245 384 — — — 386 — 386 
Other comprehensive income— — — — 4,728 — 4,728 4,119 8,847 
Contributions from noncontrolling interest— — — — — — — 1,971 1,971 
Distributions to common shareholders— — — — — (654)(654)— (654)
Balance at September 30, 202265,568,704 $656 $1,013,802 $148,228 $12,300 $(362,565)$812,421 $549,089 $1,361,510 

CumulativeTotal Equity
Number ofAdditionalCumulativeOtherCumulativeAttributable to
CommonCommonPaid InNet (Deficit)ComprehensiveCommonCommonNoncontrollingTotal
SharesSharesCapitalIncomeIncomeDistributionsShareholdersInterestEquity
Balance at December 31, 202365,843,387 $658 $1,015,777 $9,196 $10,171 $(365,848)$669,954 $491,825 $1,161,779 
Net loss— — — (23,403)— — (23,403)(10,499)(33,902)
Share grants, repurchases and forfeitures(11,857)— 290 — — — 290 — 290 
Distributions to common shareholders— — — — — (658)(658)— (658)
Other comprehensive loss— — — — (2,958)— (2,958)(1,888)(4,846)
Distributions to noncontrolling interest— — — — — — — (163)(163)
Balance at March 31, 202465,831,530 $658 $1,016,067 $(14,207)$7,213 $(366,506)$643,225 $479,275 $1,122,500 
Balance at December 31, 202265,568,145 $656 $1,014,201 $117,185 $21,903 $(363,221)$790,724 $540,047 $1,330,771 
Net loss— — — (24,809)— — (24,809)(10,737)(35,546)
Share grants, repurchases and forfeitures(2,176)— 384 — — — 384 — 384 
Distributions to common shareholders— — — — — (656)(656)— (656)
Other comprehensive loss— — — — (7,018)— (7,018)(1,760)(8,778)
Balance at March 31, 202365,565,969 $656 $1,014,585 $92,376 $14,885 $(363,877)$758,625 $527,550 $1,286,175 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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INDUSTRIAL LOGISTICS PROPERTIES TRUST 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
 Nine Months Ended September 30,
20232022
CASH FLOWS FROM OPERATING ACTIVITIES:  
Net loss$(108,317)$(245,082)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation93,545 75,014 
Loss on impairment of real estate254 100,747 
Net amortization of debt issuance costs, premiums and discounts20,177 90,265 
Amortization of acquired real estate leases and assumed real estate lease obligations38,275 33,680 
Amortization of deferred leasing costs1,723 1,170 
Loss on equity securities— 5,758 
Straight line rental income(10,531)(8,170)
Loss on early extinguishment of debt359 22,198 
Loss on sale of real estate974 10 
Proceeds from settlement of derivatives(40,426)— 
Other non-cash expenses19,865 4,443 
Distributions of earnings from unconsolidated joint venture2,970 3,962 
Equity in earnings of unconsolidated joint venture(7,423)(6,634)
Change in assets and liabilities:
Rents receivable3,260 (16,299)
Other assets(11,459)3,615 
Accounts payable and other liabilities9,745 14,921 
Due to related persons1,072 2,309 
Net cash provided by operating activities14,063 81,907 
CASH FLOWS FROM INVESTING ACTIVITIES:
Real estate acquisitions— (3,589,085)
Real estate improvements(13,649)(8,741)
Proceeds from sale of marketable securities— 140,792 
Proceeds from sale of real estate243 — 
Proceeds from settlement of derivatives40,426 — 
Distributions in excess of earnings from unconsolidated joint venture4,400 — 
Net cash provided by (used in) investing activities31,420 (3,457,034)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of mortgage notes payable91,000 3,335,000 
Repayment of mortgage notes payable(50,993)(12,591)
Proceeds from secured bridge loan facility— 1,385,158 
Repayment of secured bridge loan facility— (1,385,158)
Borrowings under revolving credit facility— 3,000 
Repayments of revolving credit facility— (185,000)
Payment of debt issuance costs(1,414)(211,996)
Distributions to common shareholders(1,968)(43,821)
Proceeds from sale of noncontrolling interest, net— 589,411 
Repurchase of common shares(160)(239)
Distributions to noncontrolling interest(225)(1,365)
Net cash provided by financing activities36,240 3,472,399 
Increase in cash, cash equivalents and restricted cash81,723 97,272 
Cash, cash equivalents and restricted cash at beginning of period140,780 29,397 
Cash, cash equivalents and restricted cash at end of period$222,503 $126,669 
 Three Months Ended March 31,
20242023
CASH FLOWS FROM OPERATING ACTIVITIES:  
Net loss$(33,902)$(35,546)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation31,540 31,224 
Net amortization of debt issuance costs, premiums and discounts6,654 6,713 
Amortization of acquired real estate leases and assumed real estate lease obligations10,974 13,414 
Amortization of deferred leasing costs705 559 
Straight line rental income(3,489)(3,762)
Loss on sale of real estate— 974 
Proceeds from settlement of derivatives(16,537)(12,976)
General and administrative expenses paid in common shares339 387 
Other non-cash expenses7,210 6,145 
Distributions of earnings from unconsolidated joint venture990 990 
Equity in earnings of unconsolidated joint venture(1,723)(3,961)
Change in assets and liabilities:
Rents receivable6,489 (242)
Other assets(3,972)(7,449)
Accounts payable and other liabilities2,138 3,747 
Due to related persons573 950 
Net cash provided by operating activities7,989 1,167 
CASH FLOWS FROM INVESTING ACTIVITIES:
Real estate improvements(2,132)(3,784)
Purchase of interest rate cap(26,175)— 
Proceeds from settlement of derivatives16,537 12,976 
Proceeds from sale of real estate— 243 
Net cash (used in) provided by investing activities(11,770)9,435 
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of mortgage notes payable(4,466)(5,530)
Payment of debt issuance costs(129)(34)
Distributions to common shareholders(658)(656)
Repurchase of common shares(49)(3)
Distributions to noncontrolling interest(163)— 
Net cash used in financing activities(5,465)(6,223)
(Decrease) increase in cash and cash equivalents and restricted cash and cash equivalents(9,246)4,379 
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period245,723 140,780 
Cash and cash equivalents and restricted cash and cash equivalents at end of period$236,477 $145,159 
SUPPLEMENTAL DISCLOSURES:
Interest paid$59,621 $68,600 
Cash received for income tax refund$80 $— 
NON-CASH INVESTING ACTIVITIES:
Real estate improvements accrued not paid$348 $2,092 
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SUPPLEMENTAL DISCLOSURES:
Interest paid$218,369 $113,748 
Income taxes paid$85 $223 
Interest capitalized$545 $68 
NON-CASH INVESTING ACTIVITIES:
Real estate acquired by assumption of mortgage notes payable$— $323,432 
Real estate improvements accrued not paid$2,810 $7,165 
NON-CASH FINANCING ACTIVITIES:
Assumption of mortgage notes payable$— $(323,432)

SUPPLEMENTAL DISCLOSURE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH:
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets to the amounts shown in the condensed consolidated statements of cash flows:
As of September 30,
20232022
Cash and cash equivalents$83,283 $26,381 
Restricted cash (1)
139,220 100,288 
Total cash, cash equivalents and restricted cash shown in the statements of cash flows$222,503 $126,669 
SUPPLEMENTAL DISCLOSURE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS:
The following table provides a reconciliation of cash and cash equivalents and restricted cash and cash equivalents reported within the condensed consolidated balance sheets to the amounts shown in the condensed consolidated statements of cash flows:
As of March 31,
20242023
Cash and cash equivalents$128,394 $61,250 
Restricted cash and cash equivalents (1)
108,083 83,909 
Total cash and cash equivalents and restricted cash shown in the statements of cash flows$236,477 $145,159 

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

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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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, 2022,2023, or our 20222023 Annual Report. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of results for the interim period have been included. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Our operating results for interim periods are not necessarily indicative of the results that may be expected for the full year.
The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in the condensed consolidated financial statements include purchase price allocations, useful lives of fixed assets and assessment of impairment of real estate and related intangibles.
Note 2. Recent Accounting Pronouncements
New Accounting Pronouncements. In November 2023, the Financial Accounting Standards Board issued Accounting Standards Update, or ASU, 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities, including those with a single reportable segment, to: (i) provide disclosures of significant segment expenses and other segment items if they are regularly provided to the chief operating decision maker, or the CODM, and included in each reported measure of segment profit or loss; (ii) provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by Accounting Standards Codification, or ASC, 280, Segment Reporting, in interim periods; and (iii) disclose the CODM’s title and position, as well as an explanation of how the CODM uses the reported measures and other disclosures. ASU 2023-07 does not change how a public entity identifies its operating segments, aggregates those operating segments or applies the quantitative thresholds to determine its reportable segments. ASU 2023-07 is required to be applied retrospectively and is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. We are currently evaluating the impact ASU 2023-07 will have on our condensed consolidated financial statements.
Note 2.3. Real Estate Investments

As of September 30, 2023,March 31, 2024, our portfolio was comprised of 413 consolidated411 properties containing approximately 59,983,00059,893,000 rentable square feet located in 39 states, including 226 buildings, leasable land parcels and easements containing approximately 16,729,000 rentable square feet ofthat were primarily industrial lands located on the island of Oahu, Hawaii, or our Hawaii Properties, and 187 industrial185 properties containing approximately 43,254,00043,164,000 rentable square feet that were industrial and logistics properties located in 38 other states, or our Mainland Properties, which included 94 properties in 27 states totaling approximately 20,981,000 rentable square feet, owned by a consolidated joint venture in which we own a 61% equity interest.Properties. As of September 30, 2023,March 31, 2024, we also owned a 22% equity interest in an unconsolidated joint venture which owns 18 industrial properties located in 12 states totaling approximately 11,726,000 rentable square feet.venture.
We operate in one business segment: ownership and leasing of properties that include industrial and logistics buildings and leased industrial lands.
We incurred capital expenditures and leasing costs at certain of our properties of $5,275$3,373, and $8,574$4,931, during the three months ended September 30,March 31, 2024 and 2023, respectively. Capital expenditures include leasing costs of $2,127 and 2022, respectively, and $17,857 and $22,419$1,562 for the ninethree months ended September 30,March 31, 2024 and 2023, and 2022, respectively. During the ninethree months ended September 30, 2023,March 31, 2024, we committed $7,273$3,471 for expenditures related to tenant improvements and leasing costs for leases executed during the period for approximately 3,868,0001,981,000 rentable square feet. Committed, but unspent, tenant related obligations based on existing leases as of September 30, 2023March 31, 2024 were $5,923,$5,981, all of which $3,529 is expected to be spent during the next 12 months.
Impairment
We regularly evaluate whether events or changes in circumstances have occurred that could indicate an impairment in the value of long lived assets. Impairment indicators may include declining tenant occupancy, lack of progress leasing vacant space, tenant bankruptcies, low long term prospects for improvement in property performance, weak or declining tenant profitability, cash flow or liquidity, our decision to dispose of an asset before the end of its estimated useful life and legislative, market or industry changes that could permanently reduce the value of a property. If there is an indication that the carrying value of an asset is not recoverable, we estimate the projected undiscounted cash flows to determine if an impairment loss should be recognized. The future net undiscounted cash flows are subjective and are based in part on assumptions regarding hold periods, market rents and terminal capitalization rates. If the carrying value exceeds the projected undiscounted cash flows, we determine the amount of any impairment loss by comparing the historical carrying value to estimated fair value. We estimate fair value through an evaluation of recent financial performance and projected discounted cash flows using standard industry valuation techniques. In addition to consideration of impairment upon the events or changes in circumstances described above, we regularly evaluate the remaining useful lives of our long lived assets. If we change our estimate of the remaining useful lives, we allocate the carrying value of the affected assets over their revised remaining useful lives.
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(dollars in thousands, except per share data)

During the nine months ended September 30, 2023, we recognized a loss on impairment of real estate of $254 to reduce the carrying value of a property that was classified as held for sale at September 30, 2023 to its estimated sales price less costs to sell.
During the nine months ended September 30, 2022, we recognized a $100,747 loss on impairment for 25 properties we acquired as part of our acquisition of Monmouth Real Estate Investment Corporation, or MNR, on February 25, 2022, to adjust the carrying value of these properties to their estimated fair value.
Disposition Activities
In March 2023, we received gross proceeds of $270 and recognized a $974 net loss on sale of real estate as a result of a property in Everett, Washington partially taken by eminent domain.
As of September 30, 2023, we had three Mainland Properties with an aggregate carrying value of $56,944, classified as held for sale in our condensed consolidated balance sheet. As of October 25, 2023, one of these properties is under agreement to sell for a sales price of $21,500, excluding closing costs. This pending sale is subject to conditions; accordingly, we cannot be sure that we will complete this sale, that this sale will not be delayed or that the terms will not change. We terminated agreements to sell two of these properties for an aggregate sales price of $43,765 and we continue to market one of these two properties for sale.
Consolidated Joint Venture
We own a 61% equity interest in Mountain Industrial REIT LLC, or Mountain JV, or our consolidated joint venture, which owns 94 properties in 27 states totaling approximately 20,981,000 rentable square feet. We control ourthis consolidated joint venture and therefore account for the properties owned by this joint venture on a consolidated basis in our condensed consolidated financial statements. We recognized a 39%net loss attributable to noncontrolling interest in our condensed consolidated financial statements for the three months ended September 30,March 31, 2024 and 2023 of $10,514 and 2022, for the nine months ended September 30, 2023 and the period from this joint venture’s formation date, February 25, 2022 to September 30, 2022. The portion of this joint venture's net loss not attributable to us, or $10,238 and $38,318, for the three months ended September 30, 2023 and 2022, respectively, and $31,642 and $49,360 for the nine months ended September 30, 2023 and for the period from February 25, 2022 to September 30, 2022, respectively, is reported as net loss attributable to noncontrolling interest in our condensed consolidated statements of comprehensive income (loss).$10,728, respectively. As of September 30, 2023,March 31, 2024, our consolidated joint venture had total assets of $3,065,834$2,991,343 and total liabilities of $1,781,222.$1,771,327.
Consolidated Tenancy in Common
An unrelated third party owns an approximate 33% tenancy in common interest in one property located in Somerset, New Jersey with approximately 64,000 rentable square feet, and we own the remaining 67% tenancy in common interest in this property. The portion of this property’sWe recognized net income (loss) not attributable to us, or $159 and ($29), for the three months ended September 30, 2023 and 2022, respectively, and $74 and ($42) for the nine months ended September 30, 2023 and the period from the date we acquired our interest in this property, February 25, 2022 to September 30, 2022, respectively, is reported as net loss attributable to noncontrolling interest in our condensed consolidated financial statements for the three months ended March 31, 2024 and 2023 of comprehensive income (loss).$15 and ($9), respectively. During the ninethree months ended September 30, 2023, thisMarch 31, 2024, the tenancy in common made cash distributions of $225$163 to the unrelated third party investor, which is reflected as a decreaseinvestor. As of March 31, 2024, the tenancy in noncontrolling interest in our condensed consolidated balance sheet.common had total assets of $10,877 and total liabilities of $60.
Unconsolidated Joint Venture
We own a 22% equity interest in The Industrial Fund REIT LLC, or the unconsolidated joint venture, which owns 18 industrial properties located in 12 states totaling approximately 11,726,000 rentable square feet. We account for the unconsolidated joint venture under the equity method of accounting under the fair value option. We recognize changes in the fair value of our investment in the unconsolidated joint venture as equity in earnings of the unconsolidated joint venture in our condensed consolidated statements of comprehensive income (loss).
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(dollars in thousands, except per share data)

Note 3.4. Leases

We are a lessor of industrial and logistics properties. Our leases provide our tenants with the contractual right to use and economically benefit from all the physical space specified in their respective leases; therefore, we have determined to evaluate our leases and are generally classified as lease arrangements.
We recognize rental income from operating leases 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. We increased rental income by $3,414 and $3,794 to record revenue on a straight line basis during the three months ended September 30, 2023 and 2022, respectively, and $10,531 and $8,170 for the nine months ended September 30, 2023 and 2022, respectively.leases.
We do not include in our measurement of our lease receivables certain variable payments, including payments determined by changes in the index or market-based indices after the inception of the lease, certain tenant reimbursements and other income until the specific events that trigger the variable payments have occurred. Such payments totaled $19,310$21,175 and $16,664$21,099 for the three months ended September 30,March 31, 2024 and 2023, and 2022, respectively, and $58,700 and $46,071 for the nine months ended September 30, 2023 and 2022, respectively.
Generally, payments of ground lease obligations are made by our tenants. However, if a tenant does not perform obligations under a ground lease or does not renew any ground lease, we may have to perform obligations under, or renew, the ground lease in order to protect our investment in the affected property.
Right of Use Assets and Lease Liabilities
We are the lessee for three of our properties subject to ground leases and one office lease that we assumed in an acquisition. For leases with a term greater than 12 months under which we are the lessee, we recognize right of use assets and lease liabilities. The values of our right of use assets and related lease liabilities were $4,534 and $4,621, respectively, as of March 31, 2024, and $4,646 and $4,730, respectively, as of December 31, 2023. Our right of use assets and related lease liabilities are included in other assets, net and accounts payable and other liabilities, respectively, in our condensed consolidated balance sheets.
Geographic Concentration
For the three months ended March 31, 2024 and 2023, our Hawaii Properties represented 28.0% and 27.4%, respectively, of our rental income.
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Tenant Concentration
We define annualized rental revenues as the annualized contractual base rents from our tenants pursuant to our lease agreements as of the measurement date, including straight line rent adjustments and estimated recurring expense reimbursements to be paid to us, and excluding lease value amortization.
Rightamortization of Use Assets and Lease Liabilities
We are the lessee for three of our properties subject to ground leases and one office property that we assumed as part of our acquisition of MNR. For leases with a term greater than 12 months under which we are the lessee, we are required to record a right of use asset and lease liability. The values of our right of use assets and related lease liabilities were $4,757 and $4,837, respectively, as of September 30, 2023, and $5,084 and $5,149, respectively, as of December 31, 2022. Our right of use assets and related lease liabilities are included in other assets, net and accounts payable and other liabilities, respectively, in our condensed consolidated balance sheets.
We sublease a portion of our office property assumed in the acquisition of MNR. Rent expense incurred under this lease, net of sublease revenue, was $12 and $176 for three months ended September 30, 2023 and 2022, respectively, and $141 and $355 for the nine months ended September 30, 2023 and the period from February 25, 2022 to September 30, 2022, respectively. Rent expense is included in general and administrative expense in our condensed consolidated statements of comprehensive income (loss).
Tenant Concentrationdeferred leasing costs.
Subsidiaries of FedEx Corporation, or FedEx, and subsidiaries of Amazon.com Services, Inc. were responsible for approximately 29.8%, or Amazon, represented 28.9% and 6.7% of our annualized rental revenues as of September 30, 2023,March 31, 2024, respectively, and 29.6%30.1% and 6.8%6.9% as of September 30, 2022,March 31, 2023, respectively.
Geographic Concentration
ForNote 5. Indebtedness
Our outstanding indebtedness as of March 31, 2024 is summarized below:
Number of
PropertiesPrincipalInterestCarrying Value
EntitySecured ByBalance
Rate (1)
TypeMaturityof Collateral
ILPT104$1,235,000 6.18%Floating10/09/2024$1,036,749 
ILPT186650,000 4.31%Fixed02/07/2029490,619 
ILPT17700,000 4.42%Fixed03/09/2032501,338 
Mountain JV821,400,000 5.81%Floating03/09/20251,843,036 
Mountain JV491,000 6.25%Fixed06/10/2030181,935 
Mountain JV111,045 3.67%Fixed05/01/203128,769 
Mountain JV112,601 4.14%Fixed07/01/203243,193 
Mountain JV128,026 4.02%Fixed10/01/203384,206 
Mountain JV139,198 4.13%Fixed11/01/2033129,302 
Mountain JV123,989 3.10%Fixed06/01/203546,063 
Mountain JV138,730 2.95%Fixed01/01/203698,411 
Mountain JV143,269 4.27%Fixed11/01/2037109,573 
Mountain JV148,620 3.25%Fixed01/01/2038112,694 
Total/weighted average4,321,478 5.35%$4,705,888 
Unamortized debt issuance costs(13,479)
Total indebtedness, net$4,307,999 
(1)Interest rates reflect the three months ended September 30, 2023impact of interest rate caps, if any, and 2022, approximately 28.1%exclude the impact of the amortization of debt issuance costs, premiums and 26.8%, respectively, of our rental income was from our Hawaii Properties. For the nine months ended September 30, 2023 and 2022, approximately 27.9% and 30.6%, respectively, of our rental income was from our Hawaii Properties.discounts.

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Note 4. Indebtedness

AsOur outstanding indebtedness as of September 30, 2023 and December 31, 2022, our outstanding indebtedness consisted of the following:
Number ofPrincipal Balance atCarrying Value of Collateral at
PropertiesSeptember 30,December 31,InterestSeptember 30,December 31,
EntitySecured By20232022
Rate (1)
TypeMaturity20232022
ILPT104$1,235,000 $1,235,000 6.18%Floating10/9/2024$1,049,983 $1,071,815 
ILPT186650,000 650,000 4.31%Fixed2/7/2029489,901 490,416 
ILPT17700,000 700,000 4.42%Fixed3/9/2032508,383 518,806 
Mountain JV821,400,000 1,400,000 6.17%Floating3/9/20241,870,541 1,909,185 
Mountain JV491,000 — 6.25%Fixed6/10/2030184,375 — 
Mountain JV111,712 12,691 3.67%Fixed5/1/203129,094 30,800 
Mountain JV113,228 14,144 4.14%Fixed7/1/203243,826 44,777 
Mountain JV129,213 30,949 4.02%Fixed10/1/203385,380 87,143 
Mountain JV140,832 43,219 4.13%Fixed11/1/2033130,197 131,539 
Mountain JV124,873 26,175 3.10%Fixed6/1/203546,725 47,718 
Mountain JV140,087 42,087 2.95%Fixed1/1/203699,805 101,896 
Mountain JV144,423 46,109 4.27%Fixed11/1/2037110,881 113,063 
Mountain JV150,002 52,031 3.25%Fixed1/1/2038114,259 116,607 
Mountain JV1— 13,556 N/AFixed10/1/2028— 63,314 
Mountain JV1— 4,865 N/AFixed4/1/2030— 39,724 
Mountain JV1— 5,145 N/AFixed4/1/2030— 39,724 
Mountain JV1— 14,392 N/AFixed9/1/2030— 50,825 
Total / weighted average4,330,370 4,290,363 5.47%$4,763,350 $4,857,352 
Unamortized debt issuance costs(26,739)(45,862)
Total indebtedness, net$4,303,631 $4,244,501 

2023 is summarized below:
Number of
PropertiesPrincipalInterestCarrying Value
EntitySecured ByBalance
Rate (1)
TypeMaturityof Collateral
ILPT104$1,235,000 6.18%Floating10/09/2024$1,044,028 
ILPT186650,000 4.31%Fixed02/07/2029490,149 
ILPT17700,000 4.42%Fixed03/09/2032505,153 
Mountain JV821,400,000 6.17%Floating03/09/20241,857,062 
Mountain JV491,000 6.25%Fixed06/10/2030183,264 
Mountain JV111,380 3.67%Fixed05/01/203128,932 
Mountain JV112,916 4.14%Fixed07/01/203243,510 
Mountain JV128,622 4.02%Fixed10/01/203384,793 
Mountain JV140,019 4.13%Fixed11/01/2033129,749 
Mountain JV124,433 3.10%Fixed06/01/203546,394 
Mountain JV139,411 2.95%Fixed01/01/203699,108 
Mountain JV143,850 4.27%Fixed11/01/2037110,097 
Mountain JV149,313 3.25%Fixed01/01/2038113,477 
Total/weighted average4,325,944 5.47%$4,735,716 
Unamortized debt issuance costs(20,003)
Total indebtedness, net$4,305,941 
(1)Interest rates are as of September 30, 2023 and reflect the impact of interest rate caps, if any, and exclude the impact of the amortization of debt issuance costs, premiums and discounts.

Our $1,235,000 loan, or the ILPT Floating Rate Loan, which is secured by 104 of our properties, matures in October 2024, subject to three, one year extension options, and requires that interest be paid at an annual rate of secured overnight financing rate, or SOFR, plus a weighted average premium of 3.93%. The weighted average interest rate payable under the ILPT Floating Rate Loan was 6.18%, including the impact of our interest rate cap on SOFR of 2.25%, as of March 31, 2024 and December 31, 2023, and for both the three and nine months ended September 30,March 31, 2024 and 2023. Beginning in October 2023, subjectSubject to the satisfaction of certain conditions, we have the option to prepay the ILPT Floating Rate Loan in full or in part at any time at par with no premium.
Our consolidated joint venture’s $1,400,000 loan, or the Mountain Floating Rate Loan, matureswas scheduled to mature in March 2024, subject to three, one year extension options, and requiresrequired that interest be paid at an annual rate of SOFR plus a premium of 2.77%. The weighted average annualIn March 2024, our consolidated joint venture exercised the first of its three, one year options to extend the maturity date of this loan. As part of the extension, our consolidated joint venture purchased a one year interest rate payablecap for $26,175 with a SOFR strike rate equal to 3.04%, which replaced the previous interest rate cap with a SOFR strike rate equal to 3.40%. As of March 31, 2024 and December 31, 2023, the interest rate under the Mountain Floating Rate Loan was 5.81% and 6.17%, respectively. The weighted average interest rate under the Mountain Floating Rate Loan was 6.09% and 6.17% for the three months ended March 31, 2024 and 2023, respectively, including the impact of our interest rate cap on SOFR of 3.40%, for both the three and nine months ended September 30, 2023. The weighted average annual interest rate payable under the Floating Rate Loan was 4.94% and 4.23% for the three months ended September 30, 2022 and the period from February 25, 2022 to September 30, 2022, respectively.caps. Subject to the satisfaction of certain conditions, we have the option to prepay up to $280,000 of the Mountain Floating Rate Loan at par with no premium, and to prepay the balance of the Mountain Floating Rate Loan at any time, subject to a premium.
See Note 9 for more information regarding our interest rate caps.
In May 2023, our consolidated joint venture obtained a $91,000 fixed rate, interest only mortgage loan secured by four properties owned by our consolidated joint venture. This mortgage loan matures in June 2030 and requires that interest be paid at an annual rate of 6.25%. A portion of the net proceeds from this mortgage loan was used to repay four outstanding mortgage loans of our consolidated joint venture with an aggregate outstanding principal balance of $35,910 and a weighted average interest rate of 3.70%. We recognized a loss on early extinguishment of debt of $359 for the nine months ended September 30, 2023 in conjunction with the repayment of these mortgage loans.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)

The agreements governing certain of our indebtedness contain customary covenants and provide for acceleration of payment of all amounts due thereunder upon the occurrence and continuation of certain events of default. See Note 10 for further information regarding our interest rate caps.
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(dollars in thousands, except per share data)

The required principal payments due during the next five years and thereafter under all our outstanding debt as of March 31, 2024 are as follows:
Principal
Payment
2024$1,248,648 
20251,418,794 
202619,495 
202720,229 
202820,989 
Thereafter1,593,323 
$4,321,478 
Note 5.6. Fair Value of Assets and Liabilities

Our financial instruments include cash and cash equivalents, restricted cash and cash equivalents, mortgages and notes payables,payable, accounts payable and interest rate caps. At September 30, 2023As of March 31, 2024 and December 31, 2022,2023, the fair value of our financial instruments approximated their carrying values in our condensed consolidated financial statements due to their short term nature or floating interest rates, except for our fixed rate mortgage notes payable. Our fixed rate mortgage notes payable had an aggregate carrying value of $1,678,351 and $1,682,501 as follows:
At September 30, 2023At December 31, 2022
CarryingCarrying
 
Value (1)
Fair Value
Value (1)
Fair Value
Fixed rate loan, 4.31% interest rate, due in 2029$647,077 $613,520 $646,669 $592,295 
Fixed rate loan, 6.25% interest rate, due in 203090,038 94,438 — — 
Fixed rate loan, 3.67% interest rate, due in 203111,712 11,009 12,691 11,713 
Fixed rate loan, 4.42% interest rate, due in 2032695,134 609,714 694,704 623,133 
Fixed rate loan, 4.14% interest rate, due in 203213,228 12,611 14,144 13,182 
Fixed rate loan, 4.02% interest rate, due in 203329,213 27,185 30,949 28,195 
Fixed rate loan, 4.13% interest rate, due in 203340,832 38,181 43,219 39,573 
Fixed rate loan, 3.10% interest rate, due in 203524,873 21,837 26,175 22,373 
Fixed rate loan, 2.95% interest rate, due in 203640,087 34,723 42,087 35,444 
Fixed rate loan, 4.27% interest rate, due in 203744,423 41,466 46,109 41,880 
Fixed rate loan, 3.25% interest rate, due in 203850,001 43,463 52,031 43,878 
Fixed rate loan, 3.76% interest rate, due in 2028 (2)
— — 13,556 12,784 
Fixed rate loan, 3.77% interest rate, due in 2030 (2)
— — 4,865 4,553 
Fixed rate loan, 3.85% interest rate, due in 2030 (2)
— — 5,145 4,829 
Fixed rate loan, 3.56% interest rate, due in 2030 (2)
— — 14,392 13,315 
$1,686,618 $1,548,147 $1,646,736 $1,487,147 
(1)Includes unamortized debt issuance costs, premiums and discounts of $8,751 and $8,628 at September 30, 2023March 31, 2024 and December 31, 2022,2023, respectively, and a fair value of $1,531,780 and $1,553,863 as of March 31, 2024 and December 31, 2023, respectively.
(2)This loan was repaid in May 2023.
We estimate the fair value of our fixed rate mortgage notes payable using significant unobservable inputs (Level 3), such asincluding discounted cash flow analyses and prevailing market ratesinterest rates.
The table below presents certain of our assets measured on a recurring basis at fair value as of March 31, 2024 and December 31, 2023, categorized by the level of inputs as defined in the fair value hierarchy under ASC 820, Fair Value Measurement, used in the valuation of each asset:
Quoted Prices inSignificant OtherSignificant
Active Markets forObservableUnobservable
Identical AssetsInputsInputs
 Total(Level 1)(Level 2)(Level 3)
As of March 31, 2024
Investment in unconsolidated joint venture$116,093 $— $— $116,093 
Interest rate caps$44,700 $— $44,700 $— 
As of December 31, 2023
Investment in unconsolidated joint venture$115,360 $— $— $115,360 
Interest rate caps$30,576 $— $30,576 $— 
The fair value of our investment in the unconsolidated joint venture is determined by applying our ownership percentage to the net asset value of the entity. The net asset value of the unconsolidated joint venture is determined by using similar estimation techniques as those used for consolidated real estate properties, including discounting expected future cash flows of the underlying real estate investments based on prevailing market rents over a holding period and including an exit capitalization rate to determine the final year of cash flows.
The fair values of our interest rate cap derivatives are based on prevailing market prices in secondary markets for similar derivative contracts as of the measurement date.
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The table below presents certain of our assets measured on a recurringdiscount rates, exit capitalization rates and non-recurring basis at fair value at September 30, 2023 and December 31, 2022, categorized by the level of inputs as defined in the fair value hierarchy under GAAP,holding periods used in the valuation of each asset:
Quoted Prices inSignificant OtherSignificant
Active Markets forObservableUnobservable
Identical AssetsInputsInputs
 Total(Level 1)(Level 2)(Level 3)
At September 30, 2023
Recurring fair value measurements
Investment in unconsolidated joint venture$124,411 $— $— $124,411 
Interest rate cap derivatives (1)
$51,322 $— $51,322 $— 
Non-recurring fair value measurements
Real estate properties (2)
$1,414 $— $— $1,414 
At December 31, 2022
Recurring fair value measurements
Investment in unconsolidated joint venture$124,358 $— $— $124,358 
Interest rate cap derivatives (1)
$73,133 $— $73,133 $— 
Non-recurring fair value measurements
Real estate properties (2)
$555,123 $— $— $555,123 
(1)The estimated fair values of our interest rate cap derivatives are based on then current market prices in secondary markets for similar derivative contracts.
(2)At September 30, 2023 and December 31, 2022, we reduced the carrying value of one property and 25 properties, respectively, to their estimated fair value based on third party offers. See Note 2 for more information.

At September 30, 2023 and December 31, 2022,determine the fair value of our investment in the unconsolidated joint venture was determined by discounting expected future cash flows based on prevailing market rents over a holding period and including an exit capitalization rate to determine the final year of cash flows. The discount rates, exit capitalization rates and holding periods used are Level 3 significant unobservable inputs and are shown in the table below:
Exit
ValuationDiscountCapitalizationHolding
TechniqueRatesRatesExitPeriods
As of March 31, 2024Capitalization
Valuation TechniqueDiscount RatesRatesHolding Periods
At September 30, 2023
Investment in unconsolidated joint ventureDiscounted cash flow5.25% - 7.00%4.95% - 6.00%10 - 12 years
At December 31, 2022
Investment in unconsolidated joint ventureDiscounted cash flow5.75% - 8.00%5.25% - 7.00%6.50%10 - 12 years
As of December 31, 20234.75%
Investment in unconsolidated joint ventureDiscounted cash flow5.75% - 6.00%8.00%5.25% - 6.50%109 - 12 years

The table below presents a summary of the changes in fair value for our investment in the unconsolidated joint venture:
Three MonthsNine Months
Ended September 30, Ended September 30,
 2023202220232022
Beginning balance$129,082 $143,716 $124,358 $143,021 
Equity in earnings of unconsolidated joint venture719 3,2977,4236,634
Distributions from unconsolidated joint venture(5,390)(1,320)(7,370)(3,962)
Ending balance$124,411 $145,693 $124,411 $145,693 

14
Three Months Ended March 31,
 20242023
Beginning balance$115,360 $124,358 
Equity in earnings of unconsolidated joint venture1,723 3,961
Distributions from unconsolidated joint venture(990)(990)
Ending balance$116,093 $127,329 

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

Note 6.7. Shareholders’ Equity

Common Share Awards

On June 1, 2023, in accordance with our Trustee compensation arrangements, we awarded to each of our seven Trustees 20,000 of our common shares, valued at $1.78 per share, the closing price of our common shares on The Nasdaq Stock Market LLC, or Nasdaq, on that day.

On September 13, 2023, we awarded under our equity compensation plan an aggregate of 188,350 of our common shares, valued at $3.63 per share, the closing price of our common shares on Nasdaq on that day, to our officers and certain other employees of The RMR Group LLC, or RMR.
Common Share Purchases
During the three and nine months ended September 30, 2023,March 31, 2024, we purchased an aggregate of 40,636 and 48,72211,857 of our common shares, respectively, valued at a weighted average price of $3.54 and $3.29$4.12 per common share, respectively, from our officers and certain other current and former employees of The RMR Group LLC, or RMR, in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares. We withheld and purchased these common shares at their fair market values based upon the trading prices of our common shares at the close of trading on The Nasdaq Stock Market LLC, or Nasdaq, on the applicable purchase dates.
Distributions
During the ninethree months ended September 30, 2023,March 31, 2024, we declared and paid a regular quarterly distributionsdistribution to common shareholders as follows:
Declaration DateRecord DatePayment DateDistribution Per ShareTotal Distribution
January 12, 2023January 23, 2023February 16, 2023$0.01 $656 
April 13, 2023April 24, 2023May 18, 20230.01 656 
July 13, 2023July 24, 2023August 17, 20230.01 656 
$0.03 $1,968 
DistributionTotal
Declaration DateRecord DatePayment DatePer ShareDistribution
January 11, 2024January 22, 2024February 15, 2024$0.01 $658 
On October 12, 2023,April 11, 2024, we declared a regular quarterly distribution to common shareholders of record on October 23, 2023April 22, 2024 of $0.01 per share, or approximately $658. We expect to pay this distribution to our shareholders on or about NovemberMay 16, 20232024 using cash balances.on hand.
Note 7.8. Business and Property Management Agreements with RMR

We have no employees. The personnel and various services we require to operate our business are provided to us by RMR. We have two agreements with RMR to provide management services to us: (1) a business management agreement, which relates to our business generally; and (2) a property management agreement, which relates to our property level operations.
Pursuant to our business management agreement with RMR, we recognized net business management fees of $5,919 and $17,301 for the three and nine months ended September 30, 2023, respectively, and $6,465 and $17,821 for the three and nine months ended September 30, 2022, respectively. Based on our common share total return, as defined in our business management agreement, as of September 30, 2023 and 2022, no incentive fees are included in the net business management fees we recognized for the three and nine months ended September 30, 2023 or 2022. The actual amount of annual incentive fees for 2023, if any, will be based on our common share total return, as defined in our business management agreement, for the three-year period ending December 31, 2023, and will be payable in January 2024. We did not incur any incentive fee payable to RMR for the year ended December 31, 2022. We include business management fees in general and administrative expenses in our condensed consolidated statements of comprehensive income (loss).
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)

Pursuant to our business management agreement with RMR, we recognized business management fees of $5,830 and $5,726 for the three months ended March 31, 2024 and 2023, respectively. Based on our common share total return, as defined in our business management agreement, as of March 31, 2024 and 2023, no incentive fees are included in the business management fees we recognized for the three months ended March 31, 2024 or 2023. The actual amount of annual incentive fees for 2024, if any, will be based on our common share total return, as defined in our business management agreement, for the three year period ending December 31, 2024, and will be payable in January 2025. We did not incur any incentive fee payable to RMR for the year ended December 31, 2023. We include business management fees in general and administrative expenses in our condensed consolidated statements of comprehensive income (loss).
Pursuant to our property management agreement with RMR, we recognized aggregate property management and construction supervision fees of $3,464$3,403 and $10,286$3,452 for the three and nine months ended September 30,March 31, 2024 and 2023, respectively, and $3,270 and $8,797 for the three and nine months ended September 30, 2022, respectively. Of these amounts, for the three and nine months ended September 30,March 31, 2024 and 2023, $3,293$3,330 and $9,745,$3,319, respectively, were included in other operating expenses in our condensed consolidated statements of comprehensive income (loss) and $171$73 and $541,$133, respectively, were capitalized as building improvements in our condensed consolidated balance sheets. For the three and nine months ended September 30, 2022, $2,976 and $8,104, respectively, were included in other operating expenses in our condensed consolidated statements of comprehensive income (loss) and $294 and $693, respectively, were capitalized as buildings and 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 on our behalf. We are generally not responsible for payment of RMR’s employment, office or administrative expenses incurred to provide management services to us, except for the employment and related expenses of RMR’s employees assigned to work exclusively or partly at our properties, our share of the wages, benefits and other related costs of RMR’s centralized accounting personnel, our share of RMR’s costs for providing our internal audit function, or as otherwise agreed. Our property level operating expenses are generally incorporated into the rents charged to our tenants, including certain payroll and related costs incurred by RMR. We reimbursed RMR $2,375$1,687 and $6,216$1,841 for these expenses and costs for the three and nine months ended September 30,March 31, 2024 and 2023, respectively, and $1,847 and $5,155 for the three and nine months ended September 30, 2022, respectively. These amounts are included in other operating expenses and general and administrative expenses, as applicable, in our condensed consolidated statements of comprehensive income (loss).
Management Agreements Between Our Joint Ventures and RMR. We have two separate joint venture arrangements, our consolidated joint venture and the unconsolidated joint venture. RMR provides management services to both of these joint ventures. We are not obligated to pay management fees to RMR under our management agreements with RMR for the services it provides to the unconsolidated joint venture. We are obligated to pay management fees to RMR under our management agreements with RMR for the services it provides to our consolidated joint venture; however, thatour consolidated joint venture pays management fees directly to RMR, and any such fees paid by our consolidated joint venture are credited against the fees payable by us to RMR. See Note 2 for further information about our joint ventures.
See Note 89 for further information regarding our relationships, agreements and transactions with RMR.
Note 8.9. Related Person Transactions

We have relationships and historical and continuing transactions with RMR, The RMR Group Inc., or RMR Inc., and others related to them, including other companies to which RMR or its subsidiaries provide management services and some of which have trustees, directors or officers who are also our Trustees or officers. RMR is a majority owned subsidiary of RMR Inc. The Chair of our Board of Trustees and one of our Managing Trustees, Adam D. Portnoy, is the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of RMR Inc., the chair of the board of directors, a managing director and the president and chief executive officer of RMR Inc. and an officer and employee of RMR. Matthew P. Jordan, our other Managing Trustee, is an executive vice president and the chief financial officer and treasurer of RMR Inc., an officer and employee of RMR and an officer of ABP Trust. John G. Murray, oneEach of our Managing Trustees until June 1, 2022 and our President and Chief Executive Officer until March 31, 2022, also serves as an officer and employee of RMR, and each of our current officers is also an officer and employee of RMR. Some of our Independent Trustees also serve as independent trustees of other public companies to which RMR or its subsidiaries provide management services. Adam D.Mr. Portnoy serves as chair of the boards and as a managing trustee of thosethese public companies. Yael Duffy, our President and Chief Operating Officer, is also the president and chief operating officer of Office Properties Income Trust, one of the public companies managed by RMR. Other officers of RMR, including Messrs.Mr. Jordan, and Murray and certain of our officers, serve as managing trustees or officers of certain of these public companies.
Our Manager, RMR. We have two agreements with RMR to provide management services to us. See Note 68 for further information relating to the awards ofregarding our common shares we made in September 2023 to our officers and certain other employees of RMR and common shares we purchased from our officers and certain other current and former officers and employees of RMR in satisfaction of tax withholding and payment obligations in connectionmanagement agreements with the vesting of awards of our common shares. We include amounts recognized as expense for awards of our common shares to our officers and RMR employees in general and administrative expenses in our condensed consolidated statements of comprehensive income (loss).

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

Our Manager, RMR. We have two agreements with RMR to provide management services to us. See Note 7 for further information regarding our management agreements with RMR.
Joint Ventures. We have two separate joint venture arrangements. RMR provides management services to each of these joint ventures. See Note 3 for further information regarding our joint ventures.
As of September 30, 2023March 31, 2024 and December 31, 2022,2023, we owed $613$652 and $616,$680, respectively, to the unconsolidated joint venture for rents that we collected on behalf of that joint venture. These amounts are presented as due to related persons in our condensed consolidated balance sheets. We paid these amounts in October 2023 and January 2023, respectively. See Notes 2 and 7 for further information regarding our joint ventures and RMR’s management agreements with our joint ventures.

For further information about these and other such relationships and certain other related person transactions, see our 20222023 Annual Report.

Note 9.10. 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 our interest rate risk. We have an interest rate cap agreementagreements to manage our interest rate risk exposure on each of the ILPT Floating Rate Loan and the Mountain Floating Rate Loan, both with interest payable at a rate equal to SOFR plus a premium. The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements are not able to perform under the agreements. To mitigate this risk, we only enter into derivative financial instruments with counterparties with high credit ratings and with major financial institutions with which we or our related parties may also have other financial relationships. We do not anticipate that any of the counterparties will fail to meet their obligations.
Cash Flow HedgesOur interest rate cap agreements are designated as cash flow hedges of Interest Rate Risk

We record all derivatives in our condensed consolidated balance sheetsinterest rate risk and are measured on a recurring basis at fair value. See Notes 5 and 6 for further information regarding the debt our interest rate caps are related to and the fair value of our interest rate caps. The following table summarizes the terms of our outstanding interest rate cap agreements designated as cash flow hedges of interest rate risk at September 30, 2023March 31, 2024 and December 31, 2022:2023:
Interest RateBalance SheetStrikeNotionalFair Value at
DerivativeLine ItemUnderlying InstrumentRateAmountSeptember 30, 2023December 31, 2022
Interest rate capOther assetsFloating Rate Loan3.40%$1,400,000 $12,712 $23,337 
Interest rate capOther assetsILPT Floating Rate Loan2.25%$1,235,000 38,610 49,796 
$51,322 $73,133 
Balance SheetUnderlyingCurrentStrikeNotionalFair Value at
Line Item InstrumentMaturityRateAmountMarch 31, 2024December 31, 2023
Other assetsMountain Floating Rate Loan03/15/20243.40%$1,400,000 $— $5,516 
Other assetsMountain Floating Rate Loan03/15/20253.04%$1,400,000 25,345 — 
Other assetsILPT Floating Rate Loan10/15/20242.25%$1,235,000 19,355 25,060 
$44,700 $30,576 
Interest rate caps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium. For derivatives designated and qualifying as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in cumulative other comprehensive income and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings. Gains and losses on the derivative representing hedge components excluded from the assessment of effectiveness are recognized over the life of the hedge on a systematic and rational basis, as documented at hedge inception in accordance with our accounting policy election. The earnings recognition of excluded components is presented in interest expense. Amounts reported in cumulative other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on our applicable debt.
In September 2022, in conjunction with the repayment of the then existing $1,385,158 bridge loan facility secured by 109 of our properties, we sold two interest rate cap instruments with an aggregate notional amount of $1,385,158, a strike rate equal to 2.70% and an original expiration date of March 15, 2023 for $7,740. As the underlying debt instrument that these interest rate caps were intended to hedge was repaid in its entirety and the related interest expense was no longer probable to occur, these interest rate caps were no longer designated as cash flow hedges and the remaining deferred gain was reclassified from cumulative other comprehensive income as a reduction of loss on early extinguishment of debt.
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INDUSTRIAL LOGISTICS PROPERTIES TRUST 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)

The following table summarizes the activity related to our cash flow hedges within cumulative other comprehensive income for the periods shown:
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Amount of gain recognized in cumulative other comprehensive income$3,428 $15,047 $19,677 $24,200 
Amount reclassified from cumulative other comprehensive income into interest expense(10,063)761 (23,069)1,678 
Amount reclassified from cumulative other comprehensive income into loss on early extinguishment of debt— (6,961)— (6,961)
Unrealized (loss) gain on derivative instrument recognized in cumulative other comprehensive loss$(6,635)$8,847 $(3,392)$18,917 
Three Months Ended March 31,
20242023
Unrealized gain (loss) on derivatives recognized in cumulative other comprehensive income$4,674 $(3,776)
Realized gain on derivatives reclassified from cumulative other comprehensive income into interest expense(9,520)(5,002)
Unrealized loss on derivatives recognized in cumulative other comprehensive income$(4,846)$(8,778)
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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 20222023 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 September 30, 2023,March 31, 2024, our portfolio was comprised of 413 consolidated411 properties containing approximately 59,983,00059,893,000 rentable square feet located in 39 states including 226 buildings, leasable land parcels and easements containing approximately 16,729,000 rentable square feet located on the island of Oahu, Hawaii, and 187 properties containing approximately 43,254,000 rentable square feet located in 38 other states.with 99.0% occupancy leased to 301 different tenants. As of September 30, 2023, our 413 consolidated properties included 94 properties that we own in a consolidated joint venture in which we own a 61% equity interest, and our consolidated properties were approximately 98.9% leased to 304 different tenants with a weighted average remaining lease term (by annualized rental revenues) of approximately 8.2 years. As of September 30, 2023,March 31, 2024, we also owned a 22% equity interest in anthe unconsolidated joint venture, which owns 18 properties locatedventure.
Our portfolio as of March 31, 2024 is summarized below (square feet in 12 states in the mainland United States containing approximately 11,726,000 rentable square feet that were 99.4% leased with an average remaining lease term (basedthousands):
Weighted
Average
Number ofRentableRemaining
OwnershipPropertiesStatesSquare FeetOccupancy
Lease Term (1)
Hawaii Properties100%226Hawaii16,729 99.0%13.1
Consolidated joint venture properties61%9427 States20,981 99.2%6.9
Wholly owned Mainland Properties100%9034 States22,119 98.9%5.0
Other67%1New Jersey64 100.0%4.2
Total/weighted average41159,893 99.0%8.0
(1)Based on annualized rental revenues) of 6.4 years. We define annualized rental revenues as of March 31, 2024.
During the annualized contractual base rents fromthree months ended March 31, 2024, our tenants pursuantrental income and net operating income, or NOI, increased compared to the 2023 period primarily due to leasing activity and rent resets at our lease agreements as of the measurement date, including straight line rent adjustments and estimated recurring expense reimbursements to be paid to us, and excluding lease value amortization.
Long termproperties. Long-term e-commerce trends and supply chain resiliency have resulted in high occupancy and increases in rents. We believe customer service expectations, growth in the number of households and demand for supply chain resiliency will keep demand for industrial properties strong for the foreseeable future. However, inflationary pressures and risinghigh interest rates in the United States and globally, and global geopolitical hostilities and tensions, have given rise to economic uncertainty and have caused disruptions in the financial markets. These conditions have increased our cost of capital and negatively impacted our ability to reduce our leverage. An economic recession, or continued or intensified disruptions in the financial markets, could adversely affect our financial condition and that of our tenants, could adversely impact the ability or willingness of our tenants to renew our leases or pay rent to us, may restrict our access to and would likely increase our cost of capital, may impact our ability to sell properties and may cause the values of our properties and of our common shares or other securities to decline.
Property Operations
Occupancy data for our properties as of September 30,March 31, 2024 and 2023 and 2022 were as follows (square feet in thousands):follows:
All Properties
Comparable Properties (1)
As of September 30,As of September 30,
2023202220232022
All PropertiesAll PropertiesComparable Properties 
as of March 31,as of March 31,
as of March 31, (1)
20242024202320242023
Total propertiesTotal properties413 413 285 285 
Total rentable square feet (in thousands) (2)
Total rentable square feet (in thousands) (2)
59,983 59,962 33,462 33,440 
Percent leased (3)
Percent leased (3)
98.9 %99.2 %98.8 %99.3 %
Percent leased (3)
99.0 %98.7 %99.0 %98.7 %
(1)Consists of properties that we owned continuously since January 1, 2022 and excludes three properties classified as held for sale at September 30, 2023.
(2)Subject to modest adjustments when space is remeasured or reconfigured for new tenants and when land leases are converted to building leases.
(3)Percent leasedLeased square feet is pursuant to existing leases as of March 31, 2024, and includes (i) space being fitted out for occupancy, pursuant to existing leases as of September 30, 2023, 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 and nine months ended September 30, 2023 and 2022 were as follows:
Three Months EndedNine Months Ended
September 30,September 30,
2023202220232022
Average effective rental rates per square foot leased: (1)
All properties$7.44 $6.96 $7.40 $6.96 
Comparable properties (2)
$7.42 $6.95 $6.73 $6.43 
(1)Average effectiverepresents total rental rates per square foot leased represents annualized rental revenues during the period specifiedincome divided by the average rentable square feet leased during the period specified.periods specified for our properties. For the three months ended March 31, 2024 and 2023, the average effective rental rates per square foot of our properties were as follows:
Three Months Ended March 31,
20242023
All properties$7.58 $7.46 
Comparable properties (1)
$7.58 $7.46 
(2)(1)Consists of properties that we owned continuously since July 1, 2022 and January 1, 2022, respectively.2023.
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During the three and nine months ended September 30, 2023,March 31, 2024, we entered into new and renewal leases as summarized in the following tables:table:
Three Months Ended September 30, 2023
New LeasesRenewalsTotals
Square feet leased during the period (in thousands)64 694 758 
Weighted average rental rate change (by rentable square feet)(15.7)%16.9 %13.5 %
Weighted average lease term by square feet (years)4.9 4.0 4.1 
Total leasing costs and concession commitments (1)
$140 $1,301 $1,441 
Total leasing costs and concession commitments per square foot (1)
$2.21 $1.87 $1.90 
Total leasing costs and concession commitments per square foot per year (1)
$0.45 $0.47 $0.46 
Nine Months Ended September 30, 2023
New LeasesRenewalsTotals
Three Months Ended March 31, 2024Three Months Ended March 31, 2024
New LeasesNew LeasesRenewalsTotals
Square feet leased during the period (in thousands)Square feet leased during the period (in thousands)594 2,892 3,486 
Weighted average rental rate change (by rentable square feet)Weighted average rental rate change (by rentable square feet)29.9 %18.1 %20.1 %Weighted average rental rate change (by rentable square feet)48.1 %38.5 %39.4 %
Weighted average lease term by square feet (years)Weighted average lease term by square feet (years)11.3 7.2 7.8 
Total leasing costs and concession commitments (1)
Total leasing costs and concession commitments (1)
$3,220 $4,053 $7,273 
Total leasing costs and concession commitments per square foot (1)
Total leasing costs and concession commitments per square foot (1)
$5.43 $1.40 $2.09 
Total leasing costs and concession commitments per square foot per year (1)
Total leasing costs and concession commitments per square foot per year (1)
$0.48 $0.20 $0.27 
(1)Includes commitments made for leasing expenditures and concessions, such as leasing commissions, tenant improvements or other tenant inducements.
During the ninethree months ended September 30, 2023,March 31, 2024, we completed rent resets for approximately 382,000106,000 square feet of land at our Hawaii Properties at rental rates that were approximately 29.9%27.5% higher than prior rental rates. There were no rent resets during the three months ended September 30, 2023.
As shown in the table below, approximately 0.8% of our total leased square feet and 0.9% of our total annualized rental revenues as of September 30, 2023 are included in leases scheduled to expire by December 31, 2023. As of September 30, 2023,March 31, 2024, our remaining lease expirations by year were as follows (dollars and square(square feet in thousands):
% of TotalCumulative
% of TotalCumulative %AnnualizedAnnualized% of Total
LeasedLeasedof TotalRentalRentalAnnualized
Number ofSquare FeetSquare FeetSquare FeetRevenuesRevenuesRental Revenues
YearTenants
Expiring (1)
Expiring (1)
Expiring (1)
ExpiringExpiringExpiring
2023489 0.8 %0.8 %$3,903 0.9 %0.9 %
202445 5,909 10.0 %10.8 %29,702 6.9 %7.8 %
202535 4,802 8.1 %18.9 %28,591 6.6 %14.4 %
202630 4,147 7.0 %25.9 %28,247 6.5 %20.9 %
202737 8,694 14.7 %40.6 %52,333 12.1 %33.0 %
202841 6,075 10.2 %50.8 %44,948 10.4 %43.4 %
202922 4,378 7.4 %58.2 %23,391 5.4 %48.8 %
203016 2,519 4.2 %62.4 %21,092 4.9 %53.7 %
203117 3,265 5.5 %67.9 %25,592 5.9 %59.6 %
203237 3,615 6.1 %74.0 %35,455 8.2 %67.8 %
Thereafter109 15,423 26.0 %100.0 %139,830 32.2 %100.0 %
Total398 59,316 100.0 %$433,084 100.0 %
Weighted average remaining lease term (in years)7.1 8.2 
% of TotalCumulative
% of TotalCumulative %AnnualizedAnnualized% of Total
LeasedLeasedof TotalRentalRentalAnnualized
No. ofSquare FeetSquare FeetSquare FeetRevenuesRevenuesRental Revenues
Period/YearLeases
Expiring (1)
Expiring (1)
Expiring (1)
Expiring (2)
Expiring (2)
Expiring (2)
202432 4,017 6.8 %6.8 %$20,420 4.6 %4.6 %
202534 4,355 7.3 %14.1 %26,598 6.0 %10.6 %
202632 4,174 7.0 %21.1 %29,664 6.7 %17.3 %
202738 8,738 14.7 %35.8 %53,275 12.1 %29.4 %
202841 6,066 10.2 %46.0 %45,274 10.3 %39.7 %
Thereafter213 31,963 54.0 %100.0 %265,595 60.3 %100.0 %
Total390 59,313 100.0 %$440,826 100.0 %
Weighted average remaining lease term (in years)7.0 8.0 
(1)Leased square feet is pursuant to existing leases as of September 30, 2023March 31, 2024, 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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Table(2)Annualized rental revenues are as of ContentsMarch 31, 2024.
As of September 30, 2023,March 31, 2024, subsidiaries of FedEx Corporation and subsidiaries of Amazon.com Services, Inc.Amazon leased 21.9%21.7% and 7.7% of our total leased square feet, respectively, and represented 29.8%28.9% and 6.7% of our total annualized rental revenues, respectively.
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Mainland Properties. As of September 30, 2023,March 31, 2024, occupancy at our Mainland Properties was 99.0% and represented approximately 72.0% 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. A majority of the leases at our Mainland Properties include periodic set dollar amount or percentage increases that increase the cash rent payable to us. Due to the capital that many of the tenants in our Mainland Properties have invested in these properties and because many of these properties appear to be of strategic importance to the tenants’ businesses, we believe that it is likely that these tenants will renew or extend their leases 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 September 30, 2023,March 31, 2024, occupancy at our Hawaii Properties was 99.0% and represented approximately 28.0% of our annualized rental revenues. As of September 30, 2023,March 31, 2024, certain of our Hawaii Properties are lands leased for rents that periodically reset based on fair market values, generally every ten10 years. Revenues from our Hawaii Properties have generally increased under our or our predecessors’ ownership as rents under the leases for those properties have been reset or renewed. Lease renewals, lease extensions, new leases and rental rates for our Hawaii Properties in the future will depend on prevailing market conditions when these lease renewals, lease extensions, new leases and rental rates are set. As rent reset dates or lease expirations approach at our Hawaii Properties, we generally negotiate with existing or new tenants for new lease terms. If we are unable to reach an agreement with a tenant on a rent reset, our Hawaii Properties’ leases typically provide that rent is reset based on an appraisal process. DespiteDue to the limited availability of land suitable for industrial uses that might compete with our andHawaii Properties, we believe that our predecessors’ prior experience withHawaii Properties offer the potential for future rent growth as a result of periodic 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.leasing.
The following table provides the annualized rental revenues scheduled to reset at our Hawaii Properties as of September 30, 2023:March 31, 2024:
Annualized
Rental Revenues
Scheduled to Reset
Scheduled Rent Reset Year for Hawaii Propertiesas of September 30, 2023
2023$— 
AnnualizedAnnualized
Rental RevenuesRental Revenues
Scheduled to ResetScheduled to Reset
202420241,150 
20252025989 
202620261,315 
20272027795 
2028 and thereafter17,605 
2028
Thereafter
TotalTotal$21,854 
As of September 30, 2023, $28,031,March 31, 2024, $24,430, or 6.5%5.5%, of our annualized rental revenues are included in leases scheduled to expire by September 30, 2024March 31, 2025 and 1.1%1.0% of our rentable square feet are currently vacant. Rental rates for which available space may be leased in the future will depend on prevailing market conditions when lease extensions, lease renewals or new leases are negotiated. Whenever we extend, renew or enter new leases for our properties, we intend to seek rents that are equal to or higher than our historical rents for the same properties; however,properties. Despite our prior experience with rent resets, lease extensions and new leases in Hawaii, our ability to maintainincrease rents when rents reset, leases are extended or increase the rents for our current properties will depend in large partleases expire depends upon market conditions, which are beyond our control. Accordingly, we cannot be sure that the historical increases achieved at our Hawaii Properties will continue in the future.
Tenant Review Process. Our manager, RMR, employs a tenant review process for us. RMR assesses tenants on an individual basis based on various applicable credit criteria. In general, depending on facts and circumstances, RMR evaluates the creditworthiness of a tenant based on information that is provided by the tenant and, in some cases, information that is publicly available or obtained from third party sources. RMR also may use a third party service to monitor the credit ratings of debt securities of our existing tenants whose debt securities are rated by a nationally recognized credit rating agency.
Disposition Activities
In March 2023, we received gross proceeds of $270 and recognized a $974 net loss on sale of real estate as a result of a property in Everett, Washington partially taken by eminent domain.
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As of September 30, 2023, we had three Mainland Properties with an aggregate carrying value of $56,944, classified as held for sale in our condensed consolidated balance sheet. As of October 25, 2023, one of these properties is under agreement to sell for a sales price of $21,500, excluding closing costs. This pending sale is subject to conditions; accordingly, we cannot be sure that we will complete this sale, that this sale will not be delayed or that the terms will not change. We terminated agreements to sell two of these properties for an aggregate sales price of $43,765 and we continue to market one of these two properties for sale.
For further information regarding our disposition activities, see Note 2 to our 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.
RESULTS OF OPERATIONS
 
Three Months Ended September 30, 2023March 31, 2024 Compared to Three Months Ended September 30, 2022March 31, 2023 (dollars and share amounts in thousands, except per share data)
Comparable Properties Results (1)
Non-Comparable Properties Results (2)
Consolidated Results
Three Months Ended September 30,Three Months Ended September 30,Three Months Ended September 30,
$%$$%
20232022ChangeChange20232022Change20232022ChangeChange
Rental income$108,571 $101,704 $6,867 6.8%$1,571 $1,511 $60 $110,142 $103,215 $6,927 6.7%
Operating expenses:
Real estate taxes14,734 13,535 1,199 8.9%192 214 (22)14,926 13,749 1,177 8.6%
Other operating expenses9,772 8,299 1,473 17.7%135 154 (19)9,907 8,453 1,454 17.2%
Total operating expenses24,506 21,834 2,672 12.2%327 368 (41)24,833 22,202 2,631 11.9%
Net operating income (3)
$84,065 $79,870 $4,195 5.3%$1,244 $1,143 $101 85,309 81,013 4,296 5.3%
Other expenses:
Depreciation and amortization43,912 48,519 (4,607)(9.5)%
General and administrative7,712 9,110 (1,398)(15.3)%
Acquisition and other transaction related costs— 586 (586)(100.0)%
Total other expenses51,624 58,215 (6,591)(11.3)%
Interest and other income2,397 1,068 1,329 124.4%
Interest expense(72,941)(89,739)16,798 (18.7)%
Loss on early extinguishment of debt— (21,370)21,370 (100.0)%
Loss before income tax expense and equity in earnings of unconsolidated joint venture(36,859)(87,243)50,384 (57.8)%
Income tax expense(51)(28)(23)82.1%
Equity in earnings of unconsolidated joint venture719 3,297 (2,578)(78.2)%
Net loss(36,191)(83,974)47,783 (56.9)%
Net loss attributable to noncontrolling interest10,079 38,347 (28,268)(73.7)%
Net loss attributable to common shareholders$(26,112)$(45,627)$19,515 (42.8)%
Weighted average common shares outstanding (basic and diluted)65,488 65,250 238 0.4%
Per common share data (basic and diluted):
Net loss attributable to common shareholders$(0.40)$(0.70)$0.30 (42.9)%

(1)Consists of properties that we owned continuously since July 1, 2022.
(2)Consists of three properties classified as held for sale at September 30, 2023 and one property we acquired during the period from July 1, 2022 to September 30, 2023.
(3)See our definition of net operating income, or NOI, and our reconciliation of net loss to NOI below under the heading "Non-GAAP Financial Measures."

References to changes in the income and expense categories below relate to the comparison of results for the three months ended September 30, 2023 compared to the three months ended September 30, 2022.
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Rental income. Rental income increased at certain of our comparable properties primarily due to increases from our leasing activity and rent resets. Rental income includes non-cash straight line rent adjustments of $3,414 and $3,794 for the 2023 and 2022 periods, respectively, and net amortization of acquired real estate leases and assumed real estate lease obligations of $252 and $250 for the 2023 and 2022 periods, respectively.
Real estate taxes. Real estate taxes at certain of our comparable properties increased due to higher assessed values.
Other operating expenses. Other operating expenses at certain of our comparable properties increased primarily due to increases in insurance expense and repairs and maintenance at certain of our properties.
Depreciation and amortization. The decrease in depreciation and amortization primarily reflects a decrease in the amortization of leasing costs relating to certain lease expirations since July 1, 2022 and the impact on depreciation expense of certain properties classified as held for sale in the comparable periods, partially offset by an increase in depreciation and amortization related to capital expenditures made since July 1, 2022.
General and administrative. The decrease in general and administrative expenses is primarily due to decreases in business management fees as a result of a decline in our average market capitalization and in professional fees in the 2023 period.
Acquisition and other transaction related costs. Acquisition and other transaction related costs primarily consist of costs related to acquisition and disposition activities that were not completed.
Interest and other income. The increase in interest and other income is primarily due to higher interest rates and average cash balances during the 2023 period as compared to the 2022 period.
Interest expense. The decrease in interest expense is due to lower average outstanding indebtedness during the 2023 period as compared to the 2022 period.
Loss on early extinguishment of debt. Loss on early extinguishment of debt primarily relates to the write off of unamortized costs related to the repayment of our $1,385,158 bridge loan facility in September 2022.
Income tax expense. Income tax expense primarily reflects state income taxes payable in certain jurisdictions.
Equity in earnings of unconsolidated joint venture. Equity in earnings of unconsolidated joint venture represents the change in the fair value of our investment in the unconsolidated joint venture.

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Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022 (dollars and share amounts in thousands, except per share data)
Comparable Properties Results (1)
Non-Comparable Properties Results (2)
Consolidated Results
Nine Months Ended September 30,Nine Months Ended September 30,Nine Months Ended September 30,
$%$$%
20232022ChangeChange20232022Change20232022ChangeChange
Rental income$166,912 $160,004 $6,908 4.3%$161,531 $121,808 $39,723 $328,443 $281,812 $46,631 16.5%
Operating expenses:
Real estate taxes23,087 21,761 1,326 6.1%23,406 14,699 8,707 46,493 36,460 10,033 27.5%
Other operating expenses14,944 13,611 1,333 9.8%12,800 8,667 4,133 27,744 22,278 5,466 24.5%
Total operating expenses38,031 35,372 2,659 7.5%36,206 23,366 12,840 74,237 58,738 15,499 26.4%
Net operating income (3)
$128,881 $124,632 $4,249 3.4%$125,325 $98,442 $26,883 254,206 223,074 31,132 14.0%
Other expenses:
Depreciation and amortization134,278 114,096 20,182 17.7%
General and administrative23,750 24,896 (1,146)(4.6)%
Acquisition and other transaction related costs— 586 (586)(100.0)%
Loss on impairment of real estate254 100,747 (100,493)(99.7)%
Total other expenses158,282 240,325 (82,043)(34.1)%
Interest and other income5,340 1,900 3,440 181.1%
Interest expense(215,558)(208,286)(7,272)3.5%
Loss on sale of real estate(974)(10)(964)n/m
Loss on equity securities— (5,758)5,758 (100.0)%
Loss on early extinguishment of debt(359)(22,198)21,839 (98.4)%
Loss before income tax expense and equity in earnings of unconsolidated joint venture(115,627)(251,603)135,976 (54.0)%
Income tax expense(113)(113)— —%
Equity in earnings of unconsolidated joint venture7,423 6,634 789 11.9%
Net loss(108,317)(245,082)136,765 (55.8)%
Net loss attributable to noncontrolling interest31,568 49,402 (17,834)(36.1)%
Net loss attributable to common shareholders$(76,749)$(195,680)$118,931 (60.8)%
Weighted average common shares outstanding (basic and diluted)65,389 65,228 161 0.2%
Per common share data (basic and diluted):
Net loss attributable to common shareholders$(1.17)$(3.00)$1.83 (61.0)%
n/m - not meaningful
ComparableNon-Comparable
Properties ResultsProperties ResultsConsolidated Results
Three Months Ended March 31, (1)
Three Months Ended March 31, (2)
Three Months Ended March 31,
$%$$%
20242023ChangeChange20242023Change20242023ChangeChange
Rental income$112,235 $110,195 $2,040 1.9%$— $63 $(63)$112,235 $110,258 $1,977 1.8%
Operating expenses:
Real estate taxes15,860 16,461 (601)(3.7%)(5)15,861 16,467 (606)(3.7%)
Other operating expenses10,290 9,307 983 10.6%32 11 21 10,322 9,318 1,004 10.8%
Total operating expenses26,150 25,768 382 1.5%33 17 16 26,183 25,785 398 1.5%
Net operating income (3)
$86,085 $84,427 $1,658 2.0%$(33)$46 $(79)86,052 84,473 1,579 1.9%
Other expenses:
Depreciation and amortization43,577 45,457 (1,880)(4.1)%
General and administrative7,689 7,907 (218)(2.8)%
Total other expenses51,266 53,364 (2,098)(3.9)%
Interest and other income2,852 1,146 1,706 148.9%
Interest expense(73,230)(70,771)(2,459)3.5%
Loss on sale of real estate— (974)974 (100.0)%
Loss before income taxes and equity in earnings of unconsolidated joint venture(35,592)(39,490)3,898 (9.9)%
Income tax expense(33)(17)(16)94.1%
Equity in earnings of unconsolidated joint venture1,723 3,961 (2,238)(56.5)%
Net loss(33,902)(35,546)1,644 (4.6)%
Net loss attributable to noncontrolling interest10,499 10,737 (238)(2.2)%
Net loss attributable to common shareholders$(23,403)$(24,809)$1,406 (5.7)%
Weighted average common shares outstanding (basic and diluted)65,556 65,309 247 0.4%
Per common share data (basic and diluted):
Net loss attributable to common shareholders$(0.36)$(0.38)$0.02 (5.3)%
(1)Consists of properties that we owned continuously since January 1, 2022.2023.
(2)Consists of three properties held for sale as of September 30, 2023 and 125two properties we acquireddisposed of during the period from January 1, 20222023 to September 30, 2023.March 31, 2024.
(3)See our definition of NOI and our reconciliation of net loss to NOI below under the heading "Non-GAAP Financial Measures."

References to changes in the income and expense categories below relate to the comparison of results for the ninethree months ended September 30, 2023March 31, 2024 compared to the ninethree months ended September 30, 2022.March 31, 2023.
Rental income. The increase in rental income is primarily a result of our acquisition activities, which includes our acquisition of MNR in February 2022. Rental income increased at certain of our comparable properties primarily due to increases from our leasing activity and rent resets. Rental income includes non-cash straight line rent adjustments of $10,531 and $8,170 for the 2023 and 2022 periods, respectively, and net amortization of acquired real estate leases and assumed real estate lease obligations of $764 and $4,265 for the 2023 and 2022 periods, respectively.
Real estate taxes. The increase in real estate taxes primarily reflects our acquisition of MNR. Real estate taxes at certain of our comparable properties increaseddecreased primarily due to higherlower assessed values.values as a result of successful real estate tax appeals.
Other operating expenses. The increase in otherOther operating expenses isincreased primarily due to our acquisition of MNR and increases in insurance expenses and repairs and maintenance at certain of our properties, partially offset by a decrease incosts and snow removal expenses at certain of our properties, during the 2023 period.properties.
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Depreciation and amortization.The increasedecrease in depreciation and amortization primarily reflects the impactcertain leasing related assets becoming fully amortized and our disposition related activities after April 1, 2023, partially offset by an increase in depreciation of the acquisitionimprovements made to certain of MNR during the 2022 period.our properties after April 1, 2023.
General and administrative.The decrease in general and administrative expenses is primarily due to decreases in business managementaccounting fees as a result of a decline in our average market capitalization and a decrease in legal fees,leasing costs, partially offset by an increase in accounting andother professional fees in the 20232024 period.
Acquisition and other transaction related costs. Acquisition and other transaction related costs primarily consists of costs related to potential acquisition and disposition activities that were not completed.
Loss on impairment of real estate. During the 2023 period, we recognized a loss on impairment of real estate on one property that was classified as held for sale at September 30, 2023. During the 2022 period, we recognized a loss on impairment of real estate on 25 properties assumed in the acquisition of MNR.
Interest and other income.The increase in interest and other income is primarily due to higher interest rates and average cash balances during the 20232024 period as compared to the 20222023 period.
Interest expense.The increase in interest expense is primarily due to refinancing activities from our consolidated joint venture in May 2023, resulting in higher average outstanding indebtednessdebt balances and interest rate and costs related to the purchase of an interest rate cap during the 2023 period as compared to the 2022 period, partially offset by lower amortization of debt costs in the 2023 period as compared to the 20222024 period.
Loss on sale of real estate. LossDuring the 2023 period, we recognized a loss on sale of real estate wasof $974 as a result of a property in Everett, Washington partially taken by eminent domain during the 2023 period and a final adjustment to the sale of properties during the year ended December 31, 2021a portion of a land parcel in the 2022 period.
Loss on equity securities. Loss on equity securities represents the realized loss on the sale of certain equity securities we acquired as part of the acquisition of MNR during the 2022 period.
Loss on early extinguishment of debt. Loss on early extinguishment of debt primarily relates to prepayment penalties incurred upon the repayment of four mortgage loans in May 2023, the write off of unamortized costs related to the repayment of our $1,385,158 bridge loan facility in September 2022 and the write off of unamortized costs related to the termination of our unsecured revolving credit facility in February 2022.Everett, Washington.
Income tax expense. Income tax expense primarily reflects state income taxes payable in certain jurisdictions.
Equity in earnings of unconsolidated joint venture. Equity in earnings of unconsolidated joint venture representsis the change in the fair value of our investment in the unconsolidated joint venture.
Non-GAAP Financial Measures (dollars in thousands, except per share data)

We present certain “non-GAAP financial measures” within the meaning of the applicable rules of the Securities and Exchange Commission, or the SEC, rules, including NOI, funds from operations, or FFO, attributable to common shareholders and normalized funds from operations, or Normalized FFO, attributable to common shareholders. These measures do not represent cash generated by operating activities in accordance with GAAP and should not be considered as alternatives to net loss or net loss attributable to common shareholders, as indicators of our operating performance or as measures of our liquidity. These measures should be considered in conjunction with net loss and net loss attributable to common shareholders as presented in our condensed consolidated statements of comprehensive income (loss). We consider these non-GAAP measures to be appropriate supplemental measures of operating performance for a REIT, along with net loss and net loss attributable to common shareholders. We believe these measures provide useful information to investors because by excluding the effects of certain historical amounts, such as depreciation and amortization expense, they may facilitate a comparison of our operating performance between periods and with other REITs and, in the case of NOI, reflecting only those income and expense items that are generated and incurred at the property level may help both investors and management to understand the operations of our properties.
Net Operating Income
We calculate NOI as shown below. We define NOI as income from our rental of real estate less our property operating expenses. The calculation of NOI excludes certain components of net loss in order to provide results that are more closely related to our property level results of operations. NOI excludes 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.
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The following table presents the reconciliation of net loss to NOI for the three and nine months ended September 30, 2023March 31, 2024 and 2022 (dollars in thousands):2023:
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Net loss$(36,191)$(83,974)$(108,317)$(245,082)
Equity in earnings of unconsolidated joint venture(719)(3,297)(7,423)(6,634)
Income tax expense51 28 113 113 
Loss before income tax expense and equity in earnings of unconsolidated joint venture(36,859)(87,243)(115,627)(251,603)
Loss on early extinguishment of debt— 21,370 359 22,198 
Interest and other income(2,397)(1,068)(5,340)(1,900)
Interest expense72,941 89,739 215,558 208,286 
Loss on sale of real estate— — 974 10 
Loss on equity securities— — — 5,758 
General and administrative7,712 9,110 23,750 24,896 
Acquisition and other transaction related costs— 586 — 586 
Loss on impairment of real estate— — 254 100,747 
Depreciation and amortization43,912 48,519 134,278 114,096 
NOI$85,309 $81,013 $254,206 $223,074 
NOI:
Hawaii Properties$22,572 $20,049 $67,313 $64,087 
Mainland Properties62,737 60,964 186,893 158,987 
NOI$85,309 $81,013 $254,206 $223,074 

Three Months Ended March 31,
20242023
Net loss$(33,902)$(35,546)
Equity in earnings of unconsolidated joint venture(1,723)(3,961)
Income tax expense33 17 
Loss before income taxes and equity in earnings of unconsolidated joint venture(35,592)(39,490)
Loss on sale of real estate— 974 
Interest expense73,230 70,771 
Interest and other income(2,852)(1,146)
General and administrative7,689 7,907 
Depreciation and amortization43,577 45,457 
NOI$86,052 $84,473 
NOI:
Hawaii Properties$23,433 $22,122 
Mainland Properties62,619 62,351 
NOI$86,052 $84,473 
Funds From Operations Attributable to Common Shareholders and Normalized Funds From Operations Attributable to Common Shareholders
We calculate FFO attributable to common shareholders and Normalized FFO attributable to common shareholders as shown below. FFO attributable to common shareholders is calculated on the basis defined by The National Association of Real Estate Investment Trusts, which isis: (1) net loss attributable to common shareholders calculated in accordance with GAAP, excluding loss on impairment of real estate, any gain or loss on sale of real estate and equity in earnings of unconsolidated joint venture and any realized and unrealized gains or losses on equity securities,venture; (2) plus real estate depreciation and amortization of consolidatedour properties and our proportionate share of FFO offrom unconsolidated joint venture properties andproperties; (3) minus FFO adjustments attributable to noncontrolling interest, as well asinterest; and (4) certain other adjustments currently not applicable to us. In calculating Normalized FFO attributable to common shareholders, we adjust for thecertain non-recurring items shown below, including similar adjustments for such items related to the unconsolidated joint venture, if any.
FFO attributable to common shareholders and Normalized FFO attributable to common shareholders are among the factors considered by our Board of Trustees when determining the amount of distributions to our shareholders. Other factors include, but are not limited to, requirements to maintain our qualification for taxation as a REIT, 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.
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The following table presents our calculation of FFO attributable to common shareholders and Normalized FFO attributable to common shareholders and reconciliations of net loss attributable to common shareholders to FFO attributable to common shareholders and Normalized FFO attributable to common shareholders for the three months ended September 30, 2023March 31, 2024 and 2022 (dollars in thousands, except per share data):2023:
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Net loss attributable to common shareholders$(26,112)$(45,627)$(76,749)$(195,680)
Depreciation and amortization43,912 48,519 134,278 114,096 
Equity in earnings of unconsolidated joint venture(719)(3,297)(7,423)(6,634)
Loss on equity securities— — — 5,758 
Share of FFO from unconsolidated joint venture1,446 1,678 4,416 5,115 
Loss on impairment of real estate— — 254 100,747 
Loss on sale of real estate— — 974 10 
FFO adjustments attributable to noncontrolling interest(10,582)(11,407)(32,514)(27,445)
FFO attributable to common shareholders7,945 (10,134)23,236 (4,033)
Loss on early extinguishment of debt— 21,370 359 22,198 
Acquisition, transaction related and certain other financing costs (1)
— 32,016 — 80,992 
Normalized FFO adjustments attributable to noncontrolling interest— (28,379)(140)(28,379)
Normalized FFO attributable to common shareholders$7,945 $14,873 $23,455 $70,778 
Weighted average common shares outstanding (basic and diluted)65,488 65,250 65,389 65,228 
Per common share data (basic and diluted):
FFO attributable to common shareholders$0.12 $(0.16)$0.36 $(0.06)
Normalized FFO attributable to common shareholders$0.12 $0.23 $0.36 $1.09 
(1)Amounts for the three and nine months ended September 30, 2022 primarily include certain debt issuance costs recognized as interest expense related to the then existing bridge loan facility and other transaction related costs expensed under GAAP.
Three Months Ended March 31,
20242023
Net loss attributable to common shareholders$(23,403)$(24,809)
Equity in earnings of unconsolidated joint venture(1,723)(3,961)
Loss on sale of real estate— 974 
Depreciation and amortization43,577 45,457 
Share of FFO from unconsolidated joint venture1,459 1,468 
FFO adjustments attributable to noncontrolling interest(10,460)(11,213)
FFO and Normalized FFO attributable to common shareholders$9,450 $7,916 
Weighted average common shares outstanding (basic and diluted)65,556 65,309 
Per common share data (basic and diluted):
FFO and Normalized FFO attributable to common shareholders$0.14 $0.12 
LIQUIDITY AND CAPITAL RESOURCES
 
Our Operating Liquidity and Resources (dollars in thousands) 
Our principal sources of funds to meet our operating and capital expenses, pay debt service obligations and make distributions to our shareholders are rents from tenants at our properties. As of September 30, 2023,March 31, 2024, investment grade rated tenants, subsidiaries of investment grade rated parent entities or our Hawaii land leases represented 77.2%76.6% of our annualized rental revenues and only 6.5%5.5% of our annualized rental revenues were from leases expiring over the next 12 months. We believe that these sources of funds will be sufficient to meet our operating and capital expenses, pay debt service obligations and make distributions to our shareholders for the next 12 months and for the foreseeable future thereafter.
Our future cash flows from operating activities will depend primarily upon our ability to:
collect rents from our tenants when due;
maintain the occupancy of, and maintain or increase the rental rates at, our properties;
control our operating cost increases, including interest and other financing costs;
develop properties to produce cash flows in excess of our costs of capital; and
purchase additional properties that produce cash flows in excess of our costs of acquisition and the cost to our capital and property operating expenses; andexpenses.
develop properties to produce cash flows in excess of our costs of capital.

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The following is a summary of our sources and uses of cash flows for the periods presented, as reflected in our condensed consolidated statements of cash flows:
 Three Months Ended March 31,
 20242023
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period$245,723 $140,780 
Net cash provided by (used in):
Operating activities7,989 1,167 
Investing activities(11,770)9,435 
Financing activities(5,465)(6,223)
Cash and cash equivalents and restricted cash and cash equivalents at end of period$236,477 $145,159 
 Nine Months Ended September 30,
 20232022
Cash and cash equivalents and restricted cash at beginning of period$140,780 $29,397 
Net cash provided by (used in):
Operating activities14,063 81,907 
Investing activities31,420 (3,457,034)
Financing activities36,240 3,472,399 
Cash and cash equivalents and restricted cash at end of period$222,503 $126,669 
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The decreaseincrease in net cash provided by operating activities for the ninethree months ended September 30, 2023March 31, 2024 compared to the prior year2023 period is primarily due to higher interest expense paid in the 2023 period, partially offset by higher cash flows from our properties and favorable changes in working capital in the properties we acquired pursuant to our acquisition of MNR in February 2022.2024 period. The change in net cash used in investing activities for the 2024 period compared to net cash provided by investing activities for the 2023 period is primarily due to our acquisitioncosts associated with the purchase of MNRan interest rate cap for $26,175 in February 2022 as compared to no acquisitions during the 20232024 period. The decrease in net cash provided byused in financing activities was primarily due to proceeds from borrowings and sale of joint venture equity interests to financea decrease in principal repayments on our acquisition of MNR in the 2022 period.amortizing loans.
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, our ability to successfully acquire and develop 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 certain of our financial metrics and debt covenants. 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.
As of September 30, 2023,March 31, 2024, we had cash and cash equivalents, excluding restricted cash and cash equivalents, of $83,283.$128,394. 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. 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 our distributions to our shareholders.

The ILPT Floating Rate Loan matures in October 2024, subject to three, one year extension options, and requires that interest be paid at an annual rate of SOFR plus a weighted average premium of 3.93%. The weighted average interest rate payable under the ILPT Floating Rate Loan was 6.18%, including the impact of our interest rate cap on SOFR of 2.25%, for both the three and nine months ended September 30, 2023. Beginning in October 2023, subject to the satisfaction of certain conditions, we have the option to prepay the ILPT Floating Rate Loan in full or in part at any time at par with no premium.
The Floating Rate Loan matures in March 2024, subject to three, one year extension options, and requires that interest be paid at an annual rate of SOFR plus a premium of 2.77%. The weighted average annual interest rate payable under the Floating Rate Loan was 6.17%, including the impact of our interest rate cap on SOFR of 3.40%, for both the three and nine months ended September 30, 2023. The weighted average annual interest rate payable under the Floating Rate Loan was 4.94% and 4.23% for the three months ended September 30, 2022 and the period from February 25, 2022 to September 30, 2022, respectively. Subject to the satisfaction of certain conditions, we have the option to prepay up to $280,000 of the Floating Rate Loan at par with no premium, and to prepay the balance of the Floating Rate Loan at any time, subject to a premium.
The one year options to extend the Floating Rate Loan and the ILPT Floating Rate Loan require, among other things, that we obtain a replacement interest rate cap, as defined in the applicable agreement.
In May 2023, our consolidated joint venture obtained a $91,000 fixed rate, interest only mortgage loan secured by four properties owned by our consolidated joint venture. This mortgage loan matures in June 2030 and requires that interest be paid at an annual rate of 6.25%. A portion of the net proceeds from this mortgage loan was used to repay four outstanding mortgage loans of our consolidated joint venture with an aggregate outstanding principal balance of $35,910 and a weighted average interest rate of 3.70%.
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As of September 30, 2023, we had an aggregate principal amount of $4,330,370 of debt, including the Floating Rate Loan and the ILPT Floating Rate Loan, scheduled to mature between 2024 and 2038.
For further information regarding our investing and financing activities, see Notes 2 and 4 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Consolidated Joint Venture
We own a 61% equity interest in Mountain Industrial REIT LLC, which owns 94 properties in 27 states totaling approximately 20,981,000 rentable square feet. We control our consolidated joint venture and therefore account for the properties owned by this joint venture on a consolidated basis in our condensed consolidated financial statements. We recognized a 39% noncontrolling interest in our condensed consolidated financial statements for the three months ended September 30, 2023 and 2022, for the nine months ended September 30, 2023 and the period from this joint venture’s formation date, February 25, 2022 to September 30, 2022. The portion of this joint venture's net loss not attributable to us, or $10,238 and $38,318, for the three months ended September 30, 2023 and 2022, respectively, and $31,642 and $49,360 for the nine months ended September 30, 2023 and for the period from February 25, 2022 to September 30, 2022, respectively, is reported as net loss attributable to noncontrolling interest in our condensed consolidated statements of comprehensive income (loss). As of September 30, 2023, our consolidated joint venture had total assets of $3,065,834 and total liabilities of $1,781,222.
Unconsolidated Joint Venture
We own a 22% equity interest in The Industrial Fund REIT LLC, which owns 18 industrial properties located in 12 states totaling approximately 11,726,000 rentable square feet. We account for the unconsolidated joint venture under the equity method of accounting under the fair value option. We recognize changes in the fair value of our investment in the unconsolidated joint venture as equity in earnings of unconsolidated joint venture in our condensed consolidated statements of comprehensive income (loss). In addition, the unconsolidated joint venture made aggregate cash distributions to us of $5,390 and $1,320 during the three months ended September 30, 2023 and 2022, respectively, and $7,370 and $3,962 for the nine months ended September 30, 2023 and 2022, respectively.
For further information regarding these joint ventures, see Note 2 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
We expect to usefund any future property acquisitions, developments and redevelopments with proceeds we may receive from the other investors in our joint ventures in connection with any additional properties we may sell to our joint ventures, equity contributions from any third party investors in our joint ventures or any future joint ventures, and net proceeds from offerings of equity or debt securities to fund any future property acquisitions, developments and redevelopments.securities. We may also assume mortgage loans or incur debt in connection with future acquisitions, developments and redevelopments. When the maturities of our debt approach or we desire to reduce our leverage or refinance maturing debt, we intend to explore refinancing alternatives, property sales or sales of equity interests in joint ventures. Such alternatives may include incurring term debt, obtaining financing secured by mortgages on properties we own, issuing new equity or debt securities, obtaining a revolving credit facility, participating or selling equity interests in joint ventures or selling properties. We currently have an effective shelf registration statement that allows us to issue up to $500,000 in aggregate amount of 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.
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.Real Estate Activities
During the nine months ended September 30, 2023, we paid quarterly cash distributions to our shareholders totaling $1,968 using cash balances.
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On October 12, 2023, we declared a regular quarterly distribution to common shareholders of record on October 23, 2023 of $0.01 per share, or approximately $658. We expect to pay this distribution to our shareholders on or about November 16, 2023 using cash balances. For more information regarding these distributions, see Note 6 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
During the three and nine months ended September 30,March 31, 2024 and 2023, and 2022, amounts capitalized for tenant improvements and leasing costs, building improvements and development and redevelopment activities were as follows:
Three Months EndedNine Months Ended
September 30,September 30,
2023202220232022
Tenant improvements and leasing costs (1)
$1,241 $2,302 $5,779 $8,290 
Building improvements (2)
2,720 1,292 4,373 1,778 
Development, redevelopment and other activities (3)
1,314 4,980 7,705 12,351 
$5,275 $8,574 $17,857 $22,419 
Three Months Ended March 31,
20242023
Tenant improvements and leasing costs (1)
$2,571 $2,040 
Building improvements (2)
802 370 
Development, redevelopment and other activities (3)
— 2,521 
$3,373 $4,931 
(1)Tenant improvements and leasing costs include capital expenditures used to improve tenants’ space or amounts paid directly to tenants to improve their space and leasing related costs, such as brokerage commissions and tenant inducements.
(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 September 30, 2023,March 31, 2024, we had estimated unspent leasing related obligations of $5,923,$5,981, all of which $3,529 is expected to be spent during the next 12 months.
Debt Covenants (dollarsConsolidated Joint Venture
We own a 61% equity interest in thousands)
Our principal debt obligations as of September 30, 2023 were: (1) $1,235,000 outstanding principal amount ofour consolidated joint venture, which owns 94 properties in 27 states totaling approximately 20,981,000 rentable square feet. We control our consolidated joint venture and therefore account for the ILPT Floating Rate Loan secured by 104 of our properties; (2) $1,400,000 outstanding principal amount of the Floating Rate Loan secured by 82 properties owned by ourthis joint venture on a consolidated joint venture; (3) $700,000 outstanding principal amountbasis. We recognized net loss attributable to noncontrolling interest of a mortgage loan secured by 17 our properties; (4) $650,000 outstanding principal amount of a mortgage loan secured by 186 of our Hawaii Properties; and (5) $345,370 aggregate principal amount of mortgage loans secured by 12 properties owned by our consolidated joint venture in which weour condensed consolidated financial statements for the three months ended March 31, 2024 and 2023 of $10,514 and $10,728, respectively. As of March 31, 2024, our consolidated joint venture had total assets of $2,991,343 and total liabilities of $1,771,327.
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Unconsolidated Joint Venture
We own a 61%22% equity interest. interest in the unconsolidated joint venture, which owns 18 industrial properties located in 12 states totaling approximately 11,726,000 rentable square feet. We account for the unconsolidated joint venture under the equity method of accounting under the fair value option. We recognize changes in the fair value of our investment in the unconsolidated joint venture as equity in earnings of the unconsolidated joint venture in our condensed consolidated statements of comprehensive income (loss). The unconsolidated joint venture made aggregate cash distributions to us of $990 during the three months ended March 31, 2024 and 2023, respectively.
For further information regarding our indebtedness,these joint ventures, see Note 43 to our Condensed Consolidated Financial Statementscondensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Indebtedness
The ILPT Floating Rate Loan, which is secured by 104 of our properties, matures in October 2024, subject to three, one year extension options, and requires that interest be paid at an annual rate of SOFR plus a weighted average premium of 3.93%. The weighted average interest rate under the ILPT Floating Rate Loan was 6.18%, including the impact of our interest rate cap on SOFR of 2.25%, as of March 31, 2024 and December 31, 2023, and for the three months ended March 31, 2024 and 2023. Subject to the satisfaction of certain conditions, we have the option to prepay the ILPT Floating Rate Loan in full or in part at any time at par with no premium.
The Mountain Floating Rate Loan was scheduled to mature in March 2024, subject to three, one year extension options, and required that interest be paid at an annual rate of SOFR plus a premium of 2.77%. In March 2024, our consolidated joint venture exercised the first of its three, one year options to extend the maturity date of this loan. As part of the extension, our consolidated joint venture purchased a one year interest rate cap for $26,175 with a SOFR strike rate equal to 3.04%, which replaced the previous interest rate cap with a SOFR strike rate equal to 3.40%. As of March 31, 2024 and December 31, 2023, the interest rate under the Mountain Floating Rate Loan was 5.81% and 6.17%, respectively. The weighted average interest rate under the Mountain Floating Rate Loan was 6.09% and 6.17% for the three months ended March 31, 2024 and 2023, respectively, including the impact of our interest rate caps. Subject to the satisfaction of certain conditions, we have the option to prepay up to $280,000 of the Mountain Floating Rate Loan at par with no premium, and to prepay the balance of the Mountain Floating Rate Loan at any time, subject to a premium.
The one year options to extend the ILPT Floating Rate Loan and the Mountain Floating Rate Loan require, among other things, that we obtain a replacement interest rate cap, as defined in the applicable agreement.
As of March 31, 2024, we had an aggregate principal amount of $4,321,478 of indebtedness, including the ILPT Floating Rate Loan, the Mountain Floating Rate Loan, the $700,000 mortgage loan and the $650,000 mortgage loan, scheduled to mature between 2024 and 2038.
The agreements and related documents governing the ILPT Floating Rate Loan, the Mountain Floating Rate Loan, theour $700,000 mortgage loan and theour $650,000 mortgage loan contain customary covenants, provide for acceleration of payment of all amounts due thereunder upon the occurrence and continuation of certain events of default and, in the case of the $650,000 mortgage loan, also require us to maintain a minimum consolidated net worth of at least $250,000 and liquidity of at least $15,000. As of September 30, 2023,March 31, 2024, we believe that we were in compliance with all of the covenants and other terms under the agreements governing these loans.
CertainFor further information regarding our indebtedness, see Notes 5 and 6 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Distributions
During the mortgage loansthree months ended March 31, 2024, we assumed in connection withpaid quarterly cash distributions to our acquisitionshareholders totaling $658 using cash on hand.
On April 11, 2024, we declared a regular quarterly distribution to common shareholders of MNR are non-recourse, subjectrecord on April 22, 2024 of $0.01 per share, or approximately $658. We expect to certain limitations, and do not contain any material financial covenants. The agreements governing the ILPT Floating Rate Loan, the Floating Rate Loan, the $700,000 mortgage loan and the $650,000 mortgage loan contain certain exceptionspay this distribution to the general non-recourse provisions, including our obligation to indemnify the lenders for certain potential environmental losses.shareholders on or about May 16, 2024 using cash on hand.
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Related Person Transactions
We have relationships and historical and continuing transactions with RMR, RMR Inc. and others related to them. For further information about these and other such relationships and related person transactions, see Notes 78 and 89 to our Condensed Consolidated Financial Statementscondensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, our 20222023 Annual Report, our definitive Proxy Statement for our 20232024 Annual Meeting of Shareholders and our other filings with the SEC. In addition, see the section captioned “Risk Factors” of our 20222023 Annual Report for a description of risks that may arise as a result of these and other related person transactions and relationships. We may engage in additional transactions with related persons, including businesses to which RMR or its subsidiaries provide management services.
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Critical Accounting Estimates
The preparation of our condensed consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in the condensed consolidated financial statements include purchase price allocations, useful lives of fixed assets and assessment of impairment of real estate and related intangibles.
A discussion of our critical accounting estimates is included in our 20222023 Annual Report. There have been no significant changes in our critical accounting estimates since the year ended December 31, 2022.2023.
Item 3. Quantitative and Qualitative Disclosures About Market Risk (dollars in thousands, except per share data)
 
We are exposed to risks associated with market changes in interest rates. We manage our exposure to this market risk by monitoring available financing alternatives. Our strategyalternatives, including fixed rate debt, and employing derivative instruments, including interest rate caps, to managelimit our exposure to changes inincreasing interest rates is materially unchanged since December 31, 2022.rates. Other than as described below, we do not currently expect any significant changes in our exposure to fluctuations in interest rates or in how we manage this exposure in the near future.
Floating Rate Debt
At September 30, 2023,As of March 31, 2024, our outstanding floating rate debt consisted of the following:
AnnualAnnualInterest
PrincipalInterestInterestPayments
AnnualAnnualAnnualInterest
PrincipalPrincipalInterestCurrentPayments
DebtDebtBalance
Rate (1)
Expense (1)
MaturityDueDebtBalance
Rate (1)
ExpenseMaturityDue
ILPT Floating Rate LoanILPT Floating Rate Loan$1,235,000 6.18 %$77,383 2024MonthlyILPT Floating Rate Loan$1,235,000 6.18%6.18%$77,383 10/09/202410/09/2024Monthly
Floating Rate Loan1,400,000 6.17 %87,580 2024Monthly
Mountain Floating Rate LoanMountain Floating Rate Loan1,400,000 5.81%82,470 03/09/2025Monthly
Total/weighted average
$2,635,000 $164,963 
(1)The annual interest rate and annual interest expense areis the amountsrate stated in the applicable contract, as adjusted by our interest rate caps as applicable.caps.

At September 30, 2023, our aggregate floating rate debt was $2,635,000, consisting of the $1,235,000 outstanding principal amount of the ILPT Floating Rate Loan, and the $1,400,000 outstanding principal amount of the Floating Rate Loan secured by 82 properties owned by our consolidated joint venture. The ILPT Floating Rate Loan matures on October 9, 2024,is subject to three, one year extension options, and requires that interest be paid at an annual rate of SOFR plus a weighted average premium of 3.93%. The Mountain Floating Rate Loan matures on March 9, 2024,is subject to three,two, one year extension options, and requires that interest be paid at an annual rate of SOFR plus a premium of 2.77%. We are vulnerable to changes in the U.S. dollar based on short term interest rates, specifically SOFR. In conjunction with these borrowings, to hedge our exposure to risks related to changes in SOFR, rates, we purchased interest rate caps with a SOFR strike rate equal to 2.25% for the ILPT Floating Rate Loan and 3.40%3.04% for the Mountain Floating Rate Loan.
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In addition, upon renewal or refinancing of these obligations, we are vulnerable to increases in interest rate premiums, including increases in the cost of replacement interest rate caps, due to market conditions and 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 September 30, 2023, excludingMarch 31, 2024, including the impact of our interest rate caps:
Impact of an Increase in Interest Rates
Total Interest Annual
Interest Rate OutstandingExpenseEarnings Per
Per YearDebtPer Year
Share Impact (1)
At September 30, 20236.17 %$2,635,000 $164,963 $2.52 
One percentage point increase7.17 %$2,635,000 $191,679 $2.93 
Impact of an Increase in Interest Rates
Total Interest Annual
Weighted AverageOutstandingExpenseEarnings Per
Interest RateDebtPer Year
Share Impact (1)
At March 31, 20245.98 %$2,635,000 $159,853 $(2.44)
One percentage point increase (2)
5.98 %$2,635,000 $159,853 $(2.44)
(1)Based on the diluted weighted average common shares outstanding for the ninethree months ended September 30, 2023.March 31, 2024.
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Table(2)A one percentage point increase in interest rates would not have an impact on annual total interest expense for our floating rate debt because current interest rates exceed the strike rates of Contentsour interest rate caps. Excluding the impact of our interest rate caps, a one percentage point increase in interest rates would result in a weighted average interest rate of 6.98%, a total interest expense per year of $186,568 and an annual earnings per share impact of $(2.85) for our floating rate debt.
The foregoing table shows the impact of an immediate one percentage point change in floating interest rates. If interest rates, were to change gradually over time,including the impact would be spread over time.of our interest rate caps. Our exposure to fluctuations in floating interest rates will increase or decrease in the future with increases or decreases in the outstanding amounts of any floating rate debt we may incur.incur and the impact, if any, of interest rate caps we may purchase. Generally, if interest rates were to change gradually over time, the impact would be spread over time.
Fixed Rate Debt
At September 30, 2023, our outstanding fixed rate debt consisted of the following mortgage notes:
AnnualAnnualInterest
PrincipalInterestInterestPayments
DebtBalance
Rate (1)
Expense (1)
MaturityDue
Mortgage notes (186 Hawaii Properties)$650,000 4.31 %$28,015 2029Monthly
Mortgage notes (17 Mainland Properties)700,000 4.42 %30,940 2032Monthly
Mortgage note (2)
91,000 6.25 %5,688 2030Monthly
Mortgage note (3)
11,712 3.67 %430 2031Monthly
Mortgage note (3)
13,228 4.14 %548 2032Monthly
Mortgage note (3)
29,213 4.02 %1,174 2033Monthly
Mortgage note (3)
40,832 4.13 %1,686 2033Monthly
Mortgage note (3)
24,873 3.10 %771 2035Monthly
Mortgage note (3)
40,087 2.95 %1,183 2036Monthly
Mortgage note (3)
44,423 4.27 %1,897 2037Monthly
Mortgage note (3)
50,002 3.25 %1,625 2038Monthly
$1,695,370 $73,957 

(1)The annualThere have been no material changes to market interest rate and annual interest expense are the amounts stated in the applicable contract.
(2)Our consolidated joint venture, in which we own a 61% equity interest, obtained this mortgage loan, which is secured by four properties.
(3)Our consolidated joint venture, in which we own a 61% equity interest, assumed these former MNR mortgage loans, which are secured by eight properties in aggregate.

Our $650,000, $700,000 and $91,000 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 $16,953.
Changes in market interest rates would affect the fair value ofrisks associated with our fixed rate debt obligations. Increases induring the three months ended March 31, 2024. For a discussion of market interest rates decrease the fair value ofrate risks associated with our fixed rate debt, while decreasessee “Quantitative and Qualitative Disclosures About Market Risk” included in market interest rates increase the fair valuePart II, Item 7A of our fixed rate debt. The U.S. Federal Reserve has raised interest rates multiple times since the beginning of 2022 in an effort to combat inflation and may continue to do so. Based on the balances outstanding at September 30, 2023 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 these obligations by approximately $89,267.Annual Report.
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 Operating Officer and our Chief Financial Officer and Treasurer, of the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, our Managing Trustees, our President and Chief Operating Officer and our Chief Financial Officer and Treasurer concluded that our disclosure controls and procedures are effective.
There have been no changes in our internal control over financial reporting during the quarter ended September 30, 2023March 31, 2024 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 forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws that are subject to risks and uncertainties. These statements may include words such as “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”, “will”, “may” and negatives or derivatives of these or similar expressions. These forward-looking statements include, among others, statements about: economic and market conditions; our expectations regarding the demand for industrial properties; our future leasing activity; our leverage levels and possible future financings; our liquidity needs and sources; our capital expenditure plans and commitments; acquisitions and dispositions; our existing and possible future joint venture arrangements; our redevelopment and construction activities and plans; and the amount and timing of future distributions.
Forward-looking statements reflect our current expectations, are based on judgments and assumptions, are inherently uncertain and are subject to risks, uncertainties and other factors, which could cause our actual results, performance or achievements to differ materially from expected future results, performance or achievements expressed or implied in those forward-looking statements. Some of the risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements include, but are not limited to, the following:
Demand for industrialOur ability to reduce our leverage, generate cash flow and logistics properties,take advantage of mark-to-market leasing opportunities,
Our ability andWhether our tenants will renew or extend their leases or whether we will obtain replacement tenants on terms as favorable to us as the abilityterms of our tenants to operate under unfavorable market and economic conditions, such as rising or sustained high interest rates, high inflation, labor market challenges, disruption and volatility in the public equity and debt markets, challenges in the commercial real estate industry generally and in the industrial and logistics sector, global geopolitical hostilities and tensions and economic recessions or downturns,existing leases,
Our ability to successfully compete for tenancies, the likelihood that the rents we realize will increase when we renew or extend our leases, enter new leases, or our rents reset at our properties in Hawaii
Whether 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,
Our ability to maintain high occupancy at our properties,
Our tenant and geographic concentrations,
Our ability to reduce our leverage, generate cash flow and take advantage of mark-to-market leasing opportunities, Properties,
Our ability to cost-effectively raise and balance our use of debt or equity capital,
Our ability to purchase cost effective interest rate caps,
Non-performance by the counterparties to our interest rate caps,
Our ability to pay interest on and principal of our debt,
Our ability to maintain sufficient liquidity,
Non-performance by the counterparties to our interest rate capsDemand for industrial and logistics properties,
Our ability and the costs for renewingability of our tenants to operate under unfavorable market and commercial real estate industry conditions, due to high interest rates, prolonged high inflation, labor market challenges, supply chain disruptions, emerging technologies, volatility in the public equity and debt markets, pandemics, geopolitical instability and tensions, economic downturns or replacing the interest rate caps,a possible recession or changes in real estate utilization,
Our ability to maintain high occupancy at our properties,
Our tenant and geographic concentrations,
Our tenants’ ability and willingness to pay their rent obligations to us,
The credit qualities of our tenants,
Changes in the security of cash flows from our properties,
Potential defaults of our leases by our tenants,
Changes in global supply chain conditions and emerging technologies,
Whether the industrial and logistics sector and the extent to which our tenants’ businesses are critical to sustaining a resilient supply chain and that our business will benefit as a result,
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Acts of terrorism, outbreaks or continuation of pandemics or other significant adverse public health safety events or conditions, war or other hostilities, supply chain disruptions, climate change or other manmade or natural disasters beyond our control,
Our ability to pay distributions to our shareholders and to increase or sustain the amount of such distributions,
Our ability to sell properties at prices we target,
Our ability to complete pending sales without delay, or at all, at existing agreement terms,
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Our ability to prudently pursue, and successfully and profitably complete, expansion and renovation projects at our properties and to realize our expected returns on those projects,
Our expected capital expenditures and leasing costs, as well as risks and uncertainties regarding the development, redevelopment or repositioning of our properties, including as a result of prolonged high inflation, cost overruns, supply chain challenges, labor shortages, construction delays or inability to obtain necessary permits, and our ability to lease space at these properties at targeted returns and volatility in the commercial real estate markets,
Our ability to sell additional equity interests in, or contribute additional properties to, our existing joint ventures, orto enter into additional real estate joint ventures or to attract co-venturers and benefit from our existing joint ventures or any real estate joint ventures we may enter into,
Our ability to acquire properties that realize our targeted returns,
The ability of our manager, RMR, to successfully manage us,
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,
Competition within the commercial real estate industry, particularly for industrial and logistics properties in those markets in which our properties are located,
Compliance with, and changes to, federal, state and local laws and regulations, accounting rules, tax laws and similar matters,
Limitations imposed on our businessby 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 and others affiliated with them,
Our ability to acquire properties that realizeActs of terrorism, outbreaks of pandemics or other public health safety events or conditions, war or other hostilities, global climate change or other manmade or natural disasters beyond our targeted returns,control, and
Other matters.
These risks, uncertainties and other factors are not exhaustive and should be read in conjunction with other cautionary statements that are included in our periodic filings. The information contained elsewhere in our filings with the SEC, including under the caption “Risk Factors” in our periodic reports, or incorporated therein, identifies important factors that could cause differences from our forward-looking statements in this Quarterly Report on Form 10-Q. Our filings with the SEC are available on the SEC’s website at www.sec.gov.
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.



PART II.Other Information
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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 20222023 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 September 30, 2023:March 31, 2024:
Maximum
Total Number ofApproximate Dollar
Shares PurchasedValue of Shares that
Number ofAverageas Part of PubliclyMay Yet Be Purchased
SharesPrice PaidAnnounced PlansUnder the Plans or
MaximumMaximum
Total Number ofTotal Number ofApproximate Dollar
Shares PurchasedShares PurchasedValue of Shares that
Number ofNumber ofAverageas Part of PubliclyMay Yet Be Purchased
SharesSharesPrice PaidAnnounced PlansUnder the Plans or
Calendar MonthCalendar Month
Purchased (1)
per Shareor ProgramsProgramsCalendar Month
Purchased (1)
per Shareor ProgramsPrograms
July 1, 2023 - July 31, 20231,017 $3.65 — $— 
September 1, 2023 - September 30, 202339,619 $3.54 — $— 
January 1, 2024 - January 31, 2024
March 1, 2024 - March 31, 2024
TotalTotal40,636 $3.54 — $— 

(1)
(1)    These common share withholdings and purchases were made to satisfy tax withholding and payment obligations of our officers and certain other current and former employees of RMR in connection with the vesting of prior awards of our common shares to them.shares. We withheld and purchased these common shares at their fair market values based upon the trading prices of our common shares at the close of trading on Nasdaq on the applicable purchase dates.
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Table of Contents
Item 6. Exhibits
 
Exhibit Number
Description
  
3.1
3.2
4.1
10.1
10.2
31.1
31.2
31.3
31.4
32.1
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCHXBRL Taxonomy Extension Schema Document. (Filed herewith.)
101.CALXBRL Taxonomy Extension Calculation Linkbase Document. (Filed herewith.)
101.DEFXBRL Taxonomy Extension Definition Linkbase Document. (Filed herewith.)
101.LABXBRL Taxonomy Extension Label Linkbase Document. (Filed herewith.)
101.PREXBRL Taxonomy Extension Presentation Linkbase Document. (Filed herewith.)
104Cover Page Interactive Data File. (Formatted as Inline XBRL and contained in Exhibit 101.)
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SIGNATURES

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

 INDUSTRIAL LOGISTICS PROPERTIES TRUST
   
   
 By:/s/ Yael Duffy
  Yael Duffy
  President and Chief Operating Officer
  Dated: October 25, 2023April 30, 2024
   
   
 By:/s/ Tiffany R. Sy
  Tiffany R. Sy
  Chief Financial Officer and Treasurer
  (Principal Financial Officer and Principal Accounting Officer)
  Dated: October 25, 2023April 30, 2024

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