Industrial Logistics Properties Trust (ILPT) 10-Q 27 Jul 18 2018 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2018	Jul. 26, 2018
Document And Entity Information [Abstract]
Entity Registrant Name	Industrial Logistics Properties Trust
Entity Central Index Key	1,717,307
Document Type	10-Q
Document Period End Date	Jun. 30, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		65,020,000
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	Q2

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Real estate properties:
Land	$ 657,931	$ 642,706
Buildings and improvements	729,823	700,896
Real estate properties, gross	1,387,754	1,343,602
Accumulated depreciation	(83,581)	(74,614)
Real estate properties, net	1,304,173	1,268,988
Acquired real estate leases, net	73,848	79,103
Cash and cash equivalents	15,565	0
Rents receivable, including straight line rents of $52,409 and $50,177, respectively, net of allowance for doubtful accounts of $766 and $1,241, respectively	54,069	51,672
Debt issuance costs, net	5,169	1,724
Deferred leasing costs, net	5,190	5,254
Due from related persons	2,955	0
Other assets, net	381	4,942
Total assets	1,461,350	1,411,683
LIABILITIES AND SHAREHOLDERS' EQUITY
Revolving credit facility	335,000	750,000
Mortgage note payable, net	49,311	49,427
Assumed real estate lease obligations, net	19,339	20,384
Accounts payable and other liabilities	10,250	11,082
Rents collected in advance	5,852	5,794
Security deposits	5,802	5,674
Due to related persons	1,479	7,114
Total liabilities	427,033	849,475
Commitments and contingencies
Shareholders' equity:
Common shares of beneficial interest, $.01 par value: 100,000,000 shares authorized; 65,020,000 and 45,000,000 shares issued and outstanding, respectively	650	450
Additional paid in capital	997,991	546,489
Cumulative net income	53,227	15,269
Cumulative common distributions	(17,551)	0
Total shareholders' equity	1,034,317	562,208
Total liabilities and shareholders' equity	$ 1,461,350	$ 1,411,683

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Rents receivable, including straight line rents	$ 52,409	$ 50,177
Rents receivable, allowance for doubtful accounts	$ 766	$ 1,241
Common shares, par value (in dollars per share)	$ 0.01	$ 0.01
Common shares, shares authorized (in shares)	100,000,000	100,000,000
Common shares, shares issued (in shares)	65,020,000	45,000,000
Common shares, shares outstanding (in shares)	65,020,000	45,000,000

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
REVENUES:
Rental income	$ 33,880	$ 33,427	$ 68,689	$ 67,297
Tenant reimbursements and other income	5,540	5,178	11,336	10,748
Total revenues	39,420	38,605	80,025	78,045
EXPENSES:
Real estate taxes	4,582	4,339	9,167	8,678
Other operating expenses	2,824	2,701	6,369	5,433
Depreciation and amortization	6,890	6,855	13,763	13,666
General and administrative	2,888	2,564	5,462	7,200
Total expenses	17,184	16,459	34,761	34,977
Operating income	22,236	22,146	45,264	43,068
Interest income	50	0	63	0
Interest expense (including net amortization of debt issuance costs and premiums of $311, ($75), $622 and ($148), respectively)	(3,552)	(560)	(7,354)	(1,115)
Income before income tax expense	18,734	21,586	37,973	41,953
Income tax expense	(8)	(11)	(15)	(22)
Net income	$ 18,726	$ 21,575	$ 37,958	$ 41,931
Weighted average common shares outstanding - basic and diluted (in shares)	65,011	45,000	63,238	45,000
Net income per common share—basic and diluted (in dollars per share)	$ 0.29	$ 0.48	$ 0.60	$ 0.93

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Income Statement [Abstract]
Amortization of debt issuance discount (premium)	$ 311	$ (75)	$ 622	$ (148)

CONDENSED CONSOLIDATED STATEME6

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 37,958	$ 41,931
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	8,967	8,877
Net amortization of debt issuance costs and premiums	622	(148)
Amortization of acquired real estate leases and assumed real estate lease obligations	4,210	4,220
Amortization of deferred leasing costs	393	387
Provision for losses on rents receivable	507	164
Straight line rental income	(2,232)	(2,945)
Other non-cash expenses	418	0
Change in assets and liabilities:
Rents receivable	(672)	2,654
Deferred leasing costs	(318)	(352)
Due from related persons	(2,955)	0
Other assets	4,561	437
Accounts payable and other liabilities	(208)	(587)
Rents collected in advance	58	(1,744)
Security deposits	128	15
Due to related persons	(5,635)	0
Net cash provided by operating activities	45,802	52,909
CASH FLOWS FROM INVESTING ACTIVITIES:
Real estate acquisitions	(43,326)	(281)
Real estate improvements	(1,461)	(2,885)
Net cash used in investing activities	(44,787)	(3,166)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common shares, net	444,309	0
Borrowings under revolving credit facility	55,000	0
Repayments of revolving credit facility	(470,000)	0
Repayment of mortgage notes payable	0	(16)
Payment of debt issuance costs	(4,183)	0
Distributions to common shareholders	(17,551)	0
Contributions	16,162	27,317
Distributions	(9,187)	(77,044)
Net cash provided by (used in) financing activities	14,550	(49,743)
Increase in cash and cash equivalents	15,565	0
Cash and cash equivalents at beginning of period	0	0
Cash and cash equivalents at end of period	15,565	0
SUPPLEMENTAL DISCLOSURES:
Interest paid	$ 6,703	$ 1,270

Organization and Basis of Prese

Organization and Basis of Presentation	6 Months Ended
	Jun. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization and Basis of Presentation	Organization and Basis of Presentation Industrial Logistics Properties Trust, or, collectively with its consolidated subsidiaries, we, us or our, is a real estate investment trust, or REIT, formed under Maryland law in 2017 as a wholly owned subsidiary of Select Income REIT, or SIR. On January 17, 2018, we completed an initial public offering and listing on The Nasdaq Stock Market LLC, or Nasdaq, of 20,000,000 of our common shares, or our IPO. The accompanying condensed consolidated financial statements of Industrial Logistics Properties Trust and its consolidated subsidiaries are unaudited. Certain information and disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted. We believe the disclosures made are adequate to make the information presented not misleading. However, the accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2017 , or our Annual Report. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of results for the interim period have been included. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Our operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. Because of the significant changes resulting from our IPO on January 17, 2018, the financial results reported may not be indicative of our expected future results. For periods prior to January 17, 2018, our historical operating information and financial position have been derived from the financial statements of SIR. The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in the condensed consolidated financial statements include the allowance for doubtful accounts, purchase price allocations, useful lives of fixed assets and the assessments of the carrying values and impairments of long lived assets.

Recent Accounting Pronouncement

Recent Accounting Pronouncements	6 Months Ended
	Jun. 30, 2018
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]
Recent Accounting Pronouncements	Recent Accounting Pronouncements On January 1, 2018, we adopted the Financial Accounting Standards Board, or FASB, Accounting Standards Update, or ASU, No. 2014-09 (and related clarifying guidance issued by the FASB), Revenue From Contracts With Customers , which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU No. 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” A substantial portion of our revenue consists of rental income from leasing arrangements, which is specifically excluded from ASU No. 2014-09. We have adopted ASU No. 2014-09 using the modified retrospective approach. The adoption of ASU No. 2014-09 did not have a material impact on the amount or timing of our revenue recognition in our condensed consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases , which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). ASU No. 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease. A lessee is also required to record a right of use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales type leases, direct financing leases and operating leases. ASU No. 2016-02 is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. We are currently assessing the potential impact the adoption of ASU No. 2016-02 will have in our condensed consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which requires that entities use a new forward looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU No. 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We are currently assessing the potential impact the adoption of ASU No. 2016-13 will have in our condensed consolidated financial statements. We currently expect to adopt the standard using the modified retrospective approach. In June 2018, the FASB issued ASU No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting , which aligns the measurement and classification guidance for share based payments to nonemployees with the guidance for share based payments to employees, with certain exceptions. ASU No. 2018-07 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are currently assessing the potential impact the adoption of ASU No. 2018-07 will have in our condensed consolidated financial statements.

Real Estate Properties

Real Estate Properties	6 Months Ended
	Jun. 30, 2018
Real Estate [Abstract]
Real Estate Properties	Real Estate Properties As of June 30, 2018 , we owned 267 properties with a total of approximately 28,780,000 rentable square feet, including 226 buildings, leasable land parcels and easements with a total of approximately 16,834,000 rentable square feet that are primarily industrial lands located on the island of Oahu, HI, or our Hawaii Properties, and 41 buildings with a total of approximately 11,946,000 rentable square feet that are industrial and logistics properties located in 24 other states, or our Mainland Properties. We operate in one business segment: ownership and leasing of properties that include buildings and leased industrial lands. For both the three months ended June 30, 2018 and 2017, approximately 60.2% , of our total revenues were from our Hawaii Properties. For the six months ended June 30, 2018 and 2017, approximately 60.4% and 60.0% , respectively, of our total revenues were from our Hawaii Properties. In addition, two subsidiaries of Amazon.com, Inc., which are tenants of our Mainland Properties, accounted for $ 3,963 , or 10.1% , and $ 3,892 , or 10.1% , of our total revenues for the three months ended June 30, 2018 and 2017, respectively, and $ 8,230 , or 10.3% , and $ 8,037 , or 10.3% , of our total revenues for the six months ended June 30, 2018 and 2017, respectively. During the six months ended June 30, 2018 , we acquired one property in Doral, FL with 240,283 rentable square feet for a purchase price of $43,326 , including acquisition related costs of $251 . This property was acquired and simultaneously leased back to the seller. This acquisition was accounted for as an acquisition of assets. We allocated the purchase price of this acquisition based on the estimated fair values of the acquired assets as follows: Rentable Number of Square Purchase Building and Date Location Properties Feet Price Land Improvements June 27, 2018 Doral, FL 1 240,283 $ 43,326 $ 15,225 $ 28,101 During the six months ended June 30, 2018 , we committed $ 608 for expenditures related to tenant improvements and leasing costs for approximately 514,000 square feet of leases executed during the period. Committed but unspent tenant related obligations based on existing leases as of June 30, 2018 were $272 . In July 2018, we entered an agreement to acquire a single tenant, net leased property located in Upper Marlboro, MD with approximately 221,000 rentable square feet for a purchase price of $29,250 , excluding acquisition related costs. This acquisition is expected to occur before the end of the third quarter of 2018. This acquisition is subject to conditions; accordingly, we cannot be sure that we will acquire this property, that the acquisition will not be delayed or that the terms will not change. Certain of our industrial lands in Hawaii may require environmental remediation, especially if the use of those lands is changed; however, we do not have any present plans to change the use of those lands or to undertake this environmental remediation. As of both June 30, 2018 and December 31, 2017, accrued environmental remediation costs of $7,002 were included in accounts payable and other liabilities in our condensed consolidated balance sheets. These accrued environmental remediation costs relate to maintenance of our properties for current uses, and, because of the indeterminable timing of the remediation, these amounts have not been discounted to present value. In general, we do not have any insurance designated to limit any losses that we may incur as a result of known or unknown environmental conditions which are not caused by an insured event, such as fire or flood, although some of our tenants may maintain such insurance that may benefit us. Although we do not believe that there are environmental conditions at any of our properties that will have a material adverse effect on us, we cannot be sure that such conditions are not present at our properties or that costs we incur to remediate any contamination will not have a material adverse effect on our business or financial condition. Charges for environmental remediation costs, if any, are included in other operating expenses in our condensed consolidated statements of comprehensive income.

Indebtedness

Indebtedness	6 Months Ended
	Jun. 30, 2018
Debt Disclosure [Abstract]
Indebtedness	Indebtedness Our principal debt obligations at June 30, 2018 were: (1) $335,000 of outstanding borrowings under our $750,000 unsecured revolving credit facility; and (2) a mortgage note with an outstanding principal amount of $48,750 . We have a $750,000 unsecured revolving credit facility that is available for our general business purposes, including acquisitions. The maturity date of our revolving credit facility is December 29, 2021. We may borrow, repay and reborrow funds under our revolving credit facility until maturity, and no principal repayment is due until maturity. Interest on borrowings under our revolving credit facility is calculated at floating rates based on LIBOR plus a premium that varies based on our leverage ratio. We have the option to extend the maturity date of our revolving credit facility for two , six month periods, subject to payment of extension fees and satisfaction of other conditions. If we later achieve an investment grade credit rating, we will then be able to elect to continue to have the interest premium based on our leverage ratio or we may instead elect to have the interest premium based on our credit rating, or a ratings election. We are also required to pay a commitment fee on the unused portion of our revolving credit facility until and if such time as we make a ratings election, and thereafter we will be required to pay a facility fee in lieu of such commitment fee based on the maximum amount of our revolving credit facility. The agreement governing our revolving credit facility, or our credit agreement, also includes a feature under which the maximum borrowing availability under our revolving credit facility may be increased to up to $1,500,000 in certain circumstances. In addition, during the first quarter of 2018, we completed the syndication of our revolving credit facility with a group of institutional lenders. As of June 30, 2018 and December 31, 2017 , the interest rate payable on borrowings under our revolving credit facility was 3.38% and 2.89% , respectively. The weighted average interest rate for borrowings under our revolving credit facility was 3.26% and 3.10% for the three and six months ended June 30, 2018 , respectively. As of June 30, 2018 and July 26, 2018 , we had $335,000 outstanding under our revolving credit facility, and $ 415,000 available to borrow under our revolving credit facility. Our credit agreement provides for acceleration of payment of all amounts due thereunder upon the occurrence and continuation of certain events of default, such as a change of control of us, which includes The RMR Group LLC, or RMR LLC, ceasing to act as our business manager and property manager. Our credit agreement also contains a number of covenants, including covenants that restrict our ability to incur debts or to make distributions in certain circumstances, and generally requires us to maintain certain financial ratios. We believe we were in compliance with the terms and conditions of the covenants under our credit agreement at June 30, 2018 . As of June 30, 2018 , the principal amount outstanding under our mortgage note was $48,750 . This mortgage note was secured by one of our properties with a net book value of $65,744 . This mortgage note is non-recourse, subject to certain limited exceptions, and does not contain any material financial covenants.

Fair Value of Assets and Liabil

Fair Value of Assets and Liabilities	6 Months Ended
	Jun. 30, 2018
Fair Value Disclosures [Abstract]
Fair Value of Assets and Liabilities	Fair Value of Assets and Liabilities Our financial instruments include cash and cash equivalents, rents receivable, our revolving credit facility, a mortgage note payable, accounts payable, rents collected in advance, security deposits and amounts due from or to related persons. At June 30, 2018 and December 31, 2017 , the fair value of our financial instruments approximated their carrying values in our condensed consolidated financial statements, due to their short term nature or variable interest rates, except as follows: At June 30, 2018 At December 31, 2017 Carrying Estimated Carrying Estimated Value (1) Fair Value Value (1) Fair Value Mortgage note payable $ 49,311 $ 48,641 $ 49,427 $ 48,919 (1) Includes unamortized premiums of $561 and $677 as of June 30, 2018 and December 31, 2017 , respectively. We estimate the fair value of our mortgage note payable using a discounted cash flow analysis and currently prevailing market rates as of the measurement date (Level 3 inputs). Because Level 3 inputs are unobservable, our estimated fair value may differ materially from the actual fair value.

Shareholders' Equity

Shareholders' Equity	6 Months Ended
	Jun. 30, 2018
Equity [Abstract]
Shareholders' Equity	Shareholders’ Equity Share Issuances: On January 17, 2018, we issued 20,000,000 of our common shares in our IPO at a price to the public of $24.00 per common share, raising net proceeds of $444,309 , after deducting the underwriting discounts and commissions and expenses. On March 27, 2018, in accordance with our Trustee compensation arrangements, we granted 1,000 of our common shares, valued at $20.87 per share, the closing price of our common shares on Nasdaq on that day, to each of our five Trustees as compensation for the period from our IPO to May 2018. On May 23, 2018, in accordance with our Trustee compensation arrangements, we granted 3,000 of our common shares, valued at $ 20.93 per share, the closing price of our common shares on Nasdaq on that day, to each of our five Trustees as part of their annual compensation. Distributions: On May 14, 2018, we paid a prorated distribution of $0.27 per common share, or $17,551 , for the period from January 17, 2018 (the date we completed our IPO) through March 31, 2018 to shareholders of record on April 30, 2018. This distribution was based on an expected regular quarterly distribution of $ 0.33 per common share ($ 1.32 per common share per year). On July 19, 2018, we declared a regular quarterly distribution of $ 0.33 per common share, or approximately $ 21,500 , to shareholders of record on July 30, 2018. We expect to pay this distribution on or about August 13, 2018. Additional Paid in Capital Adjustments: Until January 17, 2018, we were a wholly owned subsidiary of SIR and SIR managed and controlled our cash management function through a series of commingled centralized accounts. As a result, until that date, the cash receipts collected by SIR on our behalf were accounted for as distributions within shareholders' equity and the cash disbursements paid by SIR on our behalf were accounted for as contributions within shareholders' equity. During the period from January 1, 2018 to January 16, 2018, we recorded net contributions from SIR of $6,975 as an increase to additional paid in capital.

Earnings per Common Share

Earnings per Common Share	6 Months Ended
	Jun. 30, 2018
Earnings Per Share [Abstract]
Earnings per Common Share	Earnings per Common Share We calculate earnings per common share by dividing net income by the weighted average number of common shares outstanding during the period. Basic earnings per share equal diluted earnings per share as there are no common share equivalent securities outstanding.

Income Taxes

Income Taxes	6 Months Ended
	Jun. 30, 2018
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes Until January 17, 2018, we were a wholly owned subsidiary of SIR, which is taxed as a REIT under the Internal Revenue Code of 1986, as amended, or the IRC. Accordingly, until January 17, 2018, we were a qualified REIT subsidiary and a disregarded entity for federal income tax purposes. We intend to qualify for taxation as a REIT under the IRC for U.S. federal income tax purposes commencing with our taxable year ending December 31, 2018 and to maintain such qualification thereafter. Accordingly, we generally are not, and will not be, subject to U.S. federal income taxes provided that we distribute our taxable income and meet certain other requirements to qualify for taxation as a REIT. We are subject to certain state and local taxes, certain of which amounts are reported as income taxes in our condensed consolidated statements of comprehensive income. We do not currently expect recent amendments to the IRC to have a significant impact on us; however, we will monitor future interpretations of such amendments as they develop, and accordingly, our estimates and disclosures may change.

Certain Historical Arrangements

Certain Historical Arrangements and Operations Prior to our IPO	6 Months Ended
	Jun. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Certain Historical Arrangements and Operations Prior to our IPO	Certain Historical Arrangements and Operations Prior to our IPO In connection with our IPO, on September 29, 2017, SIR contributed to us 266 properties with a total of approximately 28,540,000 rentable square feet, or our Initial Properties. In connection with our formation and this contribution from SIR, we issued to SIR 45,000,000 of our common shares and a $ 750,000 non-interest bearing demand note, or the SIR Note, and we assumed three mortgage notes totaling $ 63,069 , as of September 30, 2017, that were secured by three of our Initial Properties. In December 2017, we obtained a $ 750,000 secured revolving credit facility, and we used the proceeds of an initial borrowing of $ 750,000 under this credit facility to pay the SIR Note in full. Also in December 2017, SIR prepaid on our behalf two of the mortgage notes totaling approximately $ 14,319 that had encumbered two of our Initial Properties. In connection with our IPO, we reimbursed SIR for approximately $ 7,271 of costs that SIR incurred in connection with our formation and preparation for our IPO. In addition, SIR collected rents from our tenants for the period subsequent to our IPO, of which SIR owed to us $2,955 as of June 30, 2018, which amount is presented as due from related persons in our condensed consolidated balance sheet as of June 30, 2018. SIR paid this amount due to us in July 2018. Neither we nor SIR have any employees. As a wholly owned subsidiary of SIR, until the completion of our IPO, we had received services from RMR LLC under SIR’s business and property management agreements with RMR LLC. For periods prior to the completion of our IPO on January 17, 2018, base management fees payable by SIR under SIR’s business management agreement with RMR LLC were calculated based on the historical costs of our Initial Properties and incentive management fees and internal audit costs payable by SIR and allocated to us were based on the percentage of our base management fees compared to the total base management fees paid by SIR. During the period from January 1, 2018 to January 16, 2018, the base management fees payable by SIR and allocated to us were $ 308 . During the three months ended June 30, 2017, the base management fees, internal audit costs and estimated incentive management fees payable by SIR allocated to us were $ 1,704 , $ 21 and $ 281 , respectively. During the six months ended June 30, 2017, the base management fees, internal audit costs and estimated incentive management fees payable by SIR allocated to us were $3,405 , $42 and $2,690 , respectively. These amounts are included in general and administrative expenses in our condensed consolidated statements of comprehensive income. The property management and construction supervision fees payable by SIR under SIR’s property management agreement with RMR LLC that were allocated to us for services to our Initial Properties for the period from January 1, 2018 to January 16, 2018 and for the three and six months ended June 30, 2017 were $230 , $1,090 and $2,120 , respectively. These amounts are included in other operating expenses or have been capitalized, as appropriate, in our condensed consolidated financial statements. For the period from January 1, 2018 to January 16, 2018 and the three and six months ended June 30, 2017, the total property management related reimbursements paid under SIR’s property management agreement with RMR LLC for costs incurred by RMR LLC with respect to our Initial Properties were $120 , $ 638 and $1,270 , respectively. These amounts are included in other operating expenses in our condensed consolidated statements of comprehensive income. All these management fees and reimbursements allocated to us for periods prior to January 17, 2018 were paid by SIR and not us. In connection with our IPO, we entered into two agreements with RMR LLC to provide management services to us. See Notes 10 and 11 for further information regarding our relationships, agreements and transactions with RMR LLC and SIR.

Business and Property Managemen

Business and Property Management Agreements with RMR LLC	6 Months Ended
	Jun. 30, 2018
Related Party Transactions [Abstract]
Business and Property Management Agreements with RMR LLC	Business and Property Management Agreements with RMR LLC We have no employees. The personnel and various services we require to operate our business are provided to us by RMR LLC. We have two agreements with RMR LLC to provide management services to us, which we entered on January 17, 2018 in connection with the completion of our IPO: (1) a business management agreement, which relates to our business generally; and (2) a property management agreement, which relates to our property level operations. Pursuant to our business management agreement with RMR LLC, we recognized business management fees of $ 1,824 for the three months ended June 30, 2018 and $ 3,306 for the period from January 17, 2018 through June 30, 2018 . These amounts are included in general and administrative expenses in our condensed consolidated statements of comprehensive income. Pursuant to our property management agreement with RMR LLC, we recognized aggregate property management and construction supervision fees of $ 1,155 for the three months ended June 30, 2018 and $ 2,122 for the period from January 17, 2018 through June 30, 2018 . These amounts are included in other operating expenses or have been capitalized, as appropriate, in our condensed consolidated financial statements. We are generally responsible for all of our operating expenses, including certain expenses incurred by RMR LLC on our behalf. Our property level operating expenses, including certain payroll and related costs incurred by RMR LLC, are generally incorporated into rents charged to our tenants. We reimbursed RMR LLC $ 644 for property management related expenses for the three months ended June 30, 2018 and $ 1,186 for the period from January 17, 2018 through June 30, 2018 . These amounts are included in other operating expenses in our condensed consolidated statements of comprehensive income. In addition, we are responsible for our share of RMR LLC’s costs for providing our internal audit function. The amount recognized as expense for internal audit costs was $ 69 for the three months ended June 30, 2018 and $ 121 for the period from January 17, 2018 through June 30, 2018 , which amounts are included in general and administrative expenses in our condensed consolidated statements of comprehensive income. See Notes 9 and 11 for further information regarding our relationships, agreements and transactions with RMR LLC.

Related Person Transactions

Related Person Transactions	6 Months Ended
	Jun. 30, 2018
Related Party Transactions [Abstract]
Related Person Transactions	Related Person Transactions We have relationships and historical and continuing transactions with RMR LLC, SIR and others related to them, including other companies to which RMR LLC or its subsidiaries provide management services and which have trustees, directors and officers who are also our Trustees or officers. Our Manager, RMR LLC . We have two agreements with RMR LLC to provide management services to us. See Note 10 for further information regarding our management agreements with RMR LLC. SIR . SIR is our largest shareholder. As of June 30, 2018 , SIR owned 45,000,000 of our common shares, or approximately 69.2% of our outstanding common shares. We were SIR’s wholly owned subsidiary until we completed our IPO on January 17, 2018. Adam D. Portnoy, one of our Managing Trustees, is also a managing trustee of SIR. John C. Popeo, our other Managing Trustee and our President and Chief Executive Officer, also serves as the chief financial officer and treasurer of SIR. RMR LLC provides management services to SIR and us. In connection with our IPO, we entered a transaction agreement with SIR that governs our separation from and relationship with SIR. The transaction agreement provides that, among other things, (1) our current assets and current liabilities, as of the time of closing of our IPO, were settled so that SIR retained all pre-closing current assets and pre-closing current liabilities and we assumed all post-closing current assets and post-closing current liabilities, (2) we will indemnify SIR with respect to any of our liabilities, and SIR will indemnify us with respect to any of SIR’s liabilities, after giving effect to the settlement between us and SIR of our current assets and current liabilities, and (3) we and SIR will cooperate to enforce the ownership limitations in our and SIR’s respective declaration of trust as may be appropriate to qualify for and maintain qualification for taxation as a REIT under the IRC, and otherwise to ensure each receives the economics of its assets and liabilities and to file future tax returns, including appropriate allocations of taxable income, expenses and other tax attributes. SIR, ABP Trust and five other companies to which RMR LLC provides management services equally own Affiliates Insurance Company, or AIC, and participate in a combined property insurance program arranged and reinsured in part by AIC. Our properties are included in this program as a majority owned subsidiary of SIR. We pay or reimburse SIR for the part of the premiums allocated to our properties. We currently expect to pay, as of June 30, 2018, aggregate annual premiums, including taxes and fees, of approximately $266 in connection with this insurance program for the policy year ending June 30, 2019, which amount may be adjusted from time to time as we acquire and dispose of properties that are included in this insurance program. See Note 9 for further information regarding our IPO and our relationships, agreements and transactions with SIR. For further information about these and other such relationships and certain other related person transactions, refer to our Annual Report.

Recent Accounting Pronounceme18

Recent Accounting Pronouncements (Policies)	6 Months Ended
	Jun. 30, 2018
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]
Organization and basis of presentation	The accompanying condensed consolidated financial statements of Industrial Logistics Properties Trust and its consolidated subsidiaries are unaudited. Certain information and disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted. We believe the disclosures made are adequate to make the information presented not misleading. However, the accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2017 , or our Annual Report. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of results for the interim period have been included. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Our operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. Because of the significant changes resulting from our IPO on January 17, 2018, the financial results reported may not be indicative of our expected future results.
Use of estimates	The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in the condensed consolidated financial statements include the allowance for doubtful accounts, purchase price allocations, useful lives of fixed assets and the assessments of the carrying values and impairments of long lived assets.
Recent Accounting Pronouncements	On January 1, 2018, we adopted the Financial Accounting Standards Board, or FASB, Accounting Standards Update, or ASU, No. 2014-09 (and related clarifying guidance issued by the FASB), Revenue From Contracts With Customers , which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU No. 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” A substantial portion of our revenue consists of rental income from leasing arrangements, which is specifically excluded from ASU No. 2014-09. We have adopted ASU No. 2014-09 using the modified retrospective approach. The adoption of ASU No. 2014-09 did not have a material impact on the amount or timing of our revenue recognition in our condensed consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases , which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). ASU No. 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease. A lessee is also required to record a right of use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales type leases, direct financing leases and operating leases. ASU No. 2016-02 is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. We are currently assessing the potential impact the adoption of ASU No. 2016-02 will have in our condensed consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which requires that entities use a new forward looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU No. 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We are currently assessing the potential impact the adoption of ASU No. 2016-13 will have in our condensed consolidated financial statements. We currently expect to adopt the standard using the modified retrospective approach. In June 2018, the FASB issued ASU No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting , which aligns the measurement and classification guidance for share based payments to nonemployees with the guidance for share based payments to employees, with certain exceptions. ASU No. 2018-07 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are currently assessing the potential impact the adoption of ASU No. 2018-07 will have in our condensed consolidated financial statements.
Fair Value of Assets and Liabilities	We estimate the fair value of our mortgage note payable using a discounted cash flow analysis and currently prevailing market rates as of the measurement date (Level 3 inputs). Because Level 3 inputs are unobservable, our estimated fair value may differ materially from the actual fair value.
Earnings per Common Share	We calculate earnings per common share by dividing net income by the weighted average number of common shares outstanding during the period. Basic earnings per share equal diluted earnings per share as there are no common share equivalent securities outstanding.

Real Estate Properties (Tables)

Real Estate Properties (Tables)	6 Months Ended
	Jun. 30, 2018
Real Estate [Abstract]
Schedule of real estate properties	We allocated the purchase price of this acquisition based on the estimated fair values of the acquired assets as follows: Rentable Number of Square Purchase Building and Date Location Properties Feet Price Land Improvements June 27, 2018 Doral, FL 1 240,283 $ 43,326 $ 15,225 $ 28,101

Fair Value of Assets and Liab20

Fair Value of Assets and Liabilities (Tables)	6 Months Ended
	Jun. 30, 2018
Fair Value Disclosures [Abstract]
Schedule of carrying value and the estimated fair market value of mortgage notes payable	At June 30, 2018 and December 31, 2017 , the fair value of our financial instruments approximated their carrying values in our condensed consolidated financial statements, due to their short term nature or variable interest rates, except as follows: At June 30, 2018 At December 31, 2017 Carrying Estimated Carrying Estimated Value (1) Fair Value Value (1) Fair Value Mortgage note payable $ 49,311 $ 48,641 $ 49,427 $ 48,919 (1) Includes unamortized premiums of $561 and $677 as of June 30, 2018 and December 31, 2017 , respectively.

Organization and Basis of Pre21

Organization and Basis of Presentation (Details)	Jan. 17, 2018shares
IPO
Subsidiary, Sale of Stock [Line Items]
Common shares issued (in shares)	20,000,000

Real Estate Properties (Details

Real Estate Properties (Details) $ in Thousands	Jun. 27, 2018USD ($)ft²property	Jun. 30, 2018USD ($)ft²statepropertybuilding	Jun. 30, 2017USD ($)	Jun. 30, 2018USD ($)ft²statepropertysegmentbuilding	Jun. 30, 2017USD ($)	Jul. 27, 2018USD ($)ft²	Dec. 31, 2017USD ($)	Sep. 29, 2017ft²property
Real Estate Properties [Line Items]
Number of properties owned | property		267		267				266
Net rentable area | ft²		28,780,000		28,780,000				28,540,000
Number of business segments | segment				1
Real estate revenue		$ 39,420	$ 38,605	$ 80,025	$ 78,045
Commitments related to tenant improvements and leasing costs				$ 608
Square feet committed expenditures related to tenant improvements and leasing costs | ft²				514,000
Committed bus unspent tenant related obligations		272		$ 272
Accrued environmental remediation costs		7,002		7,002			$ 7,002
Amazon Inc Subsidiaries
Real Estate Properties [Line Items]
Real estate revenue		$ 3,963	$ 3,892	$ 8,230	$ 8,037
Sales Revenue, Net | Customer Concentration Risk | Amazon Inc Subsidiaries
Real Estate Properties [Line Items]
Percentage of revenues		10.10%	10.10%	10.30%	10.30%
Hawaii
Real Estate Properties [Line Items]
Net rentable area | ft²		16,834,000		16,834,000
Number of buildings, leasable land parcels easements | building		226		226
Hawaii | Sales Revenue, Net | Geographic Concentration Risk
Real Estate Properties [Line Items]
Percentage of revenues		60.20%	60.20%	60.40%	60.00%
Other States
Real Estate Properties [Line Items]
Number of properties owned | building		41		41
Net rentable area | ft²		11,946,000		11,946,000
Number of states where real estate is located | state		24		24
Building | Doral, FL
Real Estate Properties [Line Items]
Net rentable area | ft²		240,283		240,283
Payments to acquire property, plant, and equipment				$ 43,326
Land, Buildings and Improvements | Doral, FL
Real Estate Properties [Line Items]
Acquisition related costs				$ 251
Subsequent Event | Marlboro, MD
Real Estate Properties [Line Items]
Net rentable area | ft²						221,000
Real estate aggregate purchase price						$ 29,250
Office and Industrial Properties | Doral, FL
Real Estate Properties [Line Items]
Net rentable area | ft²	240,283
Number of properties acquired | property	1			1
Payments to acquire property, plant, and equipment	$ 43,326

Real Estate Properties - Schedu

Real Estate Properties - Schedule of Real Estate Properties (Details) $ in Thousands	Jun. 27, 2018USD ($)ft²property	Jun. 30, 2018USD ($)ft²property	Dec. 31, 2017USD ($)	Sep. 29, 2017ft²
Real Estate [Line Items]
Rentable Square Feet | ft²		28,780,000		28,540,000
Land		$ 657,931	$ 642,706
Building and Improvements		$ 729,823	$ 700,896
Doral, FL | Office and Industrial Properties
Real Estate [Line Items]
Number of Properties | property	1	1
Rentable Square Feet | ft²	240,283
Purchase Price	$ 43,326
Land	15,225
Building and Improvements	$ 28,101

Indebtedness (Details)

Indebtedness (Details) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2018USD ($)property	Jun. 30, 2018USD ($)propertyoption	Jul. 26, 2018USD ($)	Dec. 31, 2017USD ($)
Indebtedness
Revolving credit facility	$ 335,000	$ 335,000		$ 750,000
Number of buildings collateralized | property	1	1
Aggregate net book value of secured properties	$ 65,744	$ 65,744
Revolving credit facility
Indebtedness
Revolving credit facility	335,000	335,000
Maximum borrowing capacity of revolving credit facility and term loan	750,000	$ 750,000		$ 750,000
Number of options to extend maturity date | option		2
Period of extension of maturity date		6 months
Option to increase maximum borrowing capacity	$ 1,500,000	$ 1,500,000
Interest rate at the end of the period (as a percent)	3.38%	3.38%		2.89%
Weighted average interest rate (as a percent)	3.26%	3.10%
Remaining borrowing capacity	$ 415,000	$ 415,000
Revolving credit facility | Subsequent Event
Indebtedness
Revolving credit facility			$ 335,000
Remaining borrowing capacity			$ 415,000
Mortgage note payable
Indebtedness
Assumed mortgage principal	$ 48,750	$ 48,750

Fair Value of Assets and Liab25

Fair Value of Assets and Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Fair Value of Financial Instruments
Mortgage notes payable	$ 49,311	$ 49,427
Carrying Value
Fair Value of Financial Instruments
Mortgage notes payable	49,311	49,427
Estimated Fair Value
Fair Value of Financial Instruments
Mortgage notes payable	48,641	48,919
Mortgage note payable
Fair Value of Financial Instruments
Unamortized premium	$ 561	$ 677

Shareholders' Equity (Details)

Shareholders' Equity (Details) $ / shares in Units, $ in Thousands	Jul. 19, 2018USD ($)$ / shares	May 23, 2018trustee$ / sharesshares	May 14, 2018USD ($)$ / shares	Mar. 27, 2018trustee$ / sharesshares	Jan. 17, 2018USD ($)$ / sharesshares	Jan. 16, 2018USD ($)	Jun. 30, 2018USD ($)$ / shares	Jun. 30, 2017USD ($)
Shareholders' Equity
Proceeds from issuance of common shares, net | $							$ 444,309	$ 0
Number of trustees | trustee		5		5
Dividends paid (in dollars per share)			$ 0.27
Dividends payable | $			$ 17,551
Quarterly dividends (in dollars per share)							$ 0.33
Annual dividends (in dollars per share)							$ 1.32
Net contribution from parent | $						$ 6,975
Subsequent Event
Shareholders' Equity
Dividends payable | $	$ 21,500
Dividends declared (in dollars per share)	$ 0.33
Trustees | Common shares
Shareholders' Equity
Common shares granted (in shares) | shares		3,000		1,000
Grant date fair value of shares granted (in dollars per share)		$ 20.93		$ 20.87
IPO
Shareholders' Equity
Common shares issued (in shares) | shares					20,000,000
Sale of stock, price per share (in dollars per share)					$ 24
Proceeds from issuance of common shares, net | $					$ 444,309

Certain Historical Arrangemen27

Certain Historical Arrangements and Operations Prior to our IPO (Details) ft² in Thousands, $ in Thousands	Jan. 17, 2018USD ($)agreement	Sep. 30, 2017USD ($)propertynote	Jan. 16, 2018USD ($)	Dec. 31, 2017USD ($)propertynoteshares	Jun. 30, 2018USD ($)ft²propertyagreementshares	Jun. 30, 2017USD ($)	Jun. 30, 2018USD ($)ft²propertyagreementshares	Jun. 30, 2018USD ($)ft²propertyagreementshares	Jun. 30, 2017USD ($)	Sep. 29, 2017USD ($)ft²propertyshares
Line of Credit Facility [Line Items]
Number of properties owned | property					267		267	267		266
Net rentable area | ft²					28,780		28,780	28,780		28,540
Common shares, shares issued (in shares) | shares				45,000,000	65,020,000		65,020,000	65,020,000
Repayment of mortgage notes payable								$ 0	$ 16
Due from related persons				$ 0	$ 2,955		$ 2,955	2,955
Revolving credit facility
Line of Credit Facility [Line Items]
Maximum borrowing capacity of revolving credit facility and term loan				$ 750,000	750,000		750,000	750,000
Mortgage note payable
Line of Credit Facility [Line Items]
Number of instruments assumed | note		3
Debt assumed in acquisition		$ 63,069
Number of properties used as collateral | property		3		2
Number of debt instruments prepaid | note				2
Repayment of mortgage notes payable				$ 14,319
Affiliated Entity
Line of Credit Facility [Line Items]
Common shares, shares issued (in shares) | shares										45,000,000
Due from related persons					2,955		2,955	$ 2,955
Affiliated Entity | Revolving credit facility
Line of Credit Facility [Line Items]
Maximum borrowing capacity of revolving credit facility and term loan										$ 750,000
Repurchased amount of debt				$ 750,000
Reit Management And Research L L C
Line of Credit Facility [Line Items]
Business management fees			$ 308		1,824	$ 1,704	3,306		3,405
Internal audit expense					69	21	121		42
Incentive fee expense						281			2,690
Construction supervision fees			230		1,155	1,090	2,122		2,120
Related party reimbursement expense			$ 120		$ 644	$ 638	$ 1,186		$ 1,270
Number of management service agreements | agreement	2				2		2	2
Select Income REIT
Line of Credit Facility [Line Items]
Payments of stock issuance costs	$ 7,271

Business and Property Managem28

Business and Property Management Agreements with RMR LLC (Details) $ in Thousands	1 Months Ended	3 Months Ended		5 Months Ended	6 Months Ended
	Jan. 16, 2018USD ($)	Jun. 30, 2018USD ($)employeeagreement	Jun. 30, 2017USD ($)	Jun. 30, 2018USD ($)employeeagreement	Jun. 30, 2017USD ($)	Jan. 17, 2018agreement
Related Party Transaction [Line Items]
Number of Employees | employee		0		0
Reit Management And Research L L C
Related Party Transaction [Line Items]
Number of management service agreements | agreement		2		2		2
Business management fees	$ 308	$ 1,824	$ 1,704	$ 3,306	$ 3,405
Construction supervision fees	230	1,155	1,090	2,122	2,120
Related party reimbursement expense	$ 120	644	638	1,186	1,270
Internal audit expense		$ 69	$ 21	$ 121	$ 42

Related Person Transactions - N

Related Person Transactions - Narrative (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2018USD ($)agreementshares	Jan. 17, 2018agreement
Select Income REIT | Industrial Logistics Properties Trust
Related Party Transaction [Line Items]
Common shares, shares outstanding (in shares) | shares	45,000,000
Percentage of ownership	69.20%
Reit Management And Research L L C
Related Party Transaction [Line Items]
Number of management service agreements | agreement	2	2
Affiliates Insurance Company
Related Party Transaction [Line Items]
Revenue from related parties | $	$ 266