0001717307-19-000056.txt : 20191030 0001717307-19-000056.hdr.sgml : 20191030 20191029194737 ACCESSION NUMBER: 0001717307-19-000056 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 52 CONFORMED PERIOD OF REPORT: 20190930 FILED AS OF DATE: 20191030 DATE AS OF CHANGE: 20191029 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Industrial Logistics Properties Trust CENTRAL INDEX KEY: 0001717307 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 822809631 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-38342 FILM NUMBER: 191176876 BUSINESS ADDRESS: STREET 1: TWO NEWTON PLACE STREET 2: 255 WASHINGTON STREET, SUITE 300 CITY: NEWTON STATE: MA ZIP: 02458 BUSINESS PHONE: 617-796-8303 MAIL ADDRESS: STREET 1: TWO NEWTON PLACE STREET 2: 255 WASHINGTON STREET, SUITE 300 CITY: NEWTON STATE: MA ZIP: 02458 10-Q 1 ilpt9301910qdocument.htm 10-Q Document
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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, 2019
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)
 
(IRS Employer Identification No.)
 
Two Newton Place,
255 Washington Street,
Suite 300,
Newton,
Massachusetts
02458-1634
(Address of Principal Executive Offices)
(Zip Code)

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

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
 
Accelerated filer
Non-accelerated filer
 
Smaller reporting company
Emerging growth company
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided in 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 28, 2019: 65,181,333




INDUSTRIAL LOGISTICS PROPERTIES TRUST
 
FORM 10-Q
 
September 30, 2019
 
INDEX
 
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
References in this Quarterly Report on Form 10-Q to the Company, we, us or our include Industrial Logistics Properties Trust and its consolidated subsidiaries unless otherwise expressly stated or the context indicates otherwise.

2


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,
 
 
2019
 
2018
ASSETS
 
 
 
 
Real estate properties:
 
 
 
 
Land
 
$
747,814

 
$
670,501

Buildings and improvements
 
1,580,689

 
791,895

 
 
2,328,503

 
1,462,396

Accumulated depreciation
 
(120,452
)
 
(93,291
)
 
 
2,208,051

 
1,369,105

Acquired real estate leases, net
 
145,555

 
75,803

Cash and cash equivalents
 
23,336

 
9,608

Rents receivable, including straight line rents of $57,951 and $54,916, respectively
 
60,896

 
56,940

Deferred leasing costs, net
 
6,215

 
6,157

Debt issuance costs, net
 
3,323

 
4,430

Due from related persons
 
532

 
1,390

Other assets, net
 
19,749

 
11,178

Total assets
 
$
2,467,657

 
$
1,534,611

 
 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
 
Revolving credit facility
 
$
650,000

 
$
413,000

Mortgage notes payable, net
 
749,640

 
49,195

Assumed real estate lease obligations, net
 
18,087

 
18,316

Accounts payable and other liabilities
 
22,904

 
12,040

Rents collected in advance
 
12,110

 
6,004

Security deposits
 
6,818

 
6,130

Due to related persons
 
2,650

 
1,653

Total liabilities
 
1,462,209

 
506,338

 
 
 
 
 
Commitments and contingencies
 


 


 
 
 
 
 
Shareholders' equity:
 
 
 
 
Common shares of beneficial interest, $.01 par value: 100,000,000 shares authorized; 65,181,913 and 65,074,791 shares issued and outstanding, respectively
 
652

 
651

Additional paid in capital
 
999,134

 
998,447

Cumulative net income
 
130,481

 
89,657

Cumulative other comprehensive income
 
91

 

Cumulative common distributions
 
(124,910
)
 
(60,482
)
Total shareholders' equity
 
1,005,448

 
1,028,273

Total liabilities and shareholders' equity
 
$
2,467,657

 
$
1,534,611


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

3


INDUSTRIAL LOGISTICS PROPERTIES TRUST 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(amounts in thousands, except per share data)
(unaudited)
 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
 
Rental income
 
$
60,958


$
40,431

 
$
167,035

 
$
120,456

 
 
 
 
 
 
 
 
 
Expenses:
 
 

 
 

 
 

 
 

Real estate taxes
 
8,586

 
4,942

 
21,646

 
14,109

Other operating expenses
 
4,821

 
3,281

 
12,405

 
9,650

Depreciation and amortization
 
17,568

 
7,152

 
43,888

 
20,915

General and administrative
 
4,475

 
2,924

 
13,131

 
8,386

Total expenses
 
35,450

 
18,299

 
91,070

 
53,060

 
 
 
 
 
 
 
 
 
Interest income
 
81

 
71

 
580

 
134

Interest expense (including net amortization of debt issuance costs and premiums of $524, $309, $1,421 and $931, respectively)
 
(14,687
)
 
(4,052
)
 
(36,207
)
 
(11,406
)
Income before income tax expense and equity in earnings of an investee
 
10,902

 
18,151

 
40,338

 
56,124

Income tax expense
 
(63
)
 
(9
)
 
(131
)
 
(24
)
Equity in earnings of an investee
 
83



 
617

 

Net income
 
10,922

 
18,142

 
40,824

 
56,100

 
 
 
 
 
 
 
 
 
Other comprehensive income:
 
 
 
 
 
 
 
 
Equity in unrealized gains (losses) of an investee
 
(46
)
 

 
91

 

Other comprehensive income
 
(46
)


 
91

 

Comprehensive income
 
$
10,876

 
$
18,142

 
$
40,915

 
$
56,100

 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding - basic
 
65,055


65,022

 
65,042


63,839

Weighted average common shares outstanding - diluted
 
65,060


65,022

 
65,048


63,839

 
 
 
 
 
 
 
 
 
Net income per common share - basic and diluted
 
$
0.17


$
0.28


$
0.63


$
0.88


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




4


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

 
 

    

    

    

    
Cumulative
    

    

 
 
Number of
 

 
Additional
 
Cumulative
 
Other
 
Cumulative
 

 
 
Common
 
Common
 
Paid In
 
Net
 
Comprehensive
 
Common
 
 
 
 
Shares
 
Shares
 
Capital
 
Income
 
Income
 
Distributions
 
Total
Balance at December 31, 2018
 
65,074,791

 
$
651

 
$
998,447

 
$
89,657

 
$

 
$
(60,482
)
 
$
1,028,273

Net income
 

 

 

 
16,786

 

 

 
16,786

Equity in unrealized gains of investee
 

 

 

 

 
66

 

 
66

Share grants
 

 

 
73

 

 

 

 
73

Distributions to common shareholders
 

 

 

 

 

 
(21,474
)
 
(21,474
)
Balance at March 31, 2019
 
65,074,791

 
651

 
998,520

 
106,443

 
66

 
(81,956
)
 
1,023,724

Net income
 

 

 

 
13,116

 

 

 
13,116

Equity in unrealized gains of investee
 

 

 

 

 
71

 

 
71

Share grants
 
15,000

 

 
345

 

 

 

 
345

Share repurchases
 
(1,362
)
 

 
(28
)
 

 

 

 
(28
)
Share forfeitures
 
(240
)
 

 
(1
)
 

 

 

 
(1
)
Distributions to common shareholders
 

 

 

 

 

 
(21,475
)
 
(21,475
)
Balance at June 30, 2019
 
65,088,189

 
651

 
998,836

 
119,559

 
137

 
(103,431
)
 
1,015,752

Net income
 

 

 

 
10,922

 

 

 
10,922

Equity in unrealized losses of investee
 

 

 

 

 
(46
)
 

 
(46
)
Share grants
 
104,200

 
1

 
521

 

 

 

 
522

Share repurchases
 
(10,476
)
 

 
(223
)
 

 

 

 
(223
)
Distributions to common shareholders
 

 

 

 

 

 
(21,479
)
 
(21,479
)
Balance at September 30, 2019
 
65,181,913

 
$
652

 
$
999,134

 
$
130,481

 
$
91

 
$
(124,910
)
 
$
1,005,448



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

5


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

 
 
 
    
 
    
 
    
 
    
 
    
 
 
 
Number of
 
 
 
Additional
 
Cumulative
 
Cumulative
 
 
 
 
Common
 
Common
 
Paid In
 
Net
 
Common
 
 
 
 
Shares
 
Shares
 
Capital
 
Income
 
Distributions
 
Total
Balance at December 31, 2017
 
45,000,000

 
$
450

 
$
546,489

 
$
15,269

 
$

 
$
562,208

Net income
 

 

 

 
19,232

 

 
19,232

Contributions
 

 

 
16,162

 

 

 
16,162

Distributions
 

 

 
(9,187
)
 

 

 
(9,187
)
Issuance of common shares, net
 
20,000,000

 
200

 
444,109

 

 

 
444,309

Share grants
 
5,000

 

 
104

 

 

 
104

Balance at March 31, 2018
 
65,005,000

 
650

 
997,677

 
34,501

 

 
1,032,828

Net income
 

 

 

 
18,726

 

 
18,726

Share grants
 
15,000

 

 
314

 

 

 
314

Distributions to common shareholders
 

 

 

 

 
(17,551
)
 
(17,551
)
Balance at June 30, 2018
 
65,020,000

 
650

 
997,991

 
53,227

 
(17,551
)
 
1,034,317

Net income







18,142




18,142

Share grants

54,400


1


256






257

Share repurchases

(2,369
)



(52
)





(52
)
Distributions to common shareholders









(21,457
)

(21,457
)
Balance at September 30, 2018

65,072,031


$
651


$
998,195


$
71,369


$
(39,008
)

$
1,031,207



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


6


INDUSTRIAL LOGISTICS PROPERTIES TRUST 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
 
 
Nine Months Ended September 30,
 
 
2019
 
2018
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
Net income
 
$
40,824

 
$
56,100

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation
 
27,161

 
13,715

Net amortization of debt issuance costs and premiums
 
1,421

 
931

Amortization of acquired real estate leases and assumed real estate lease obligations
 
15,085

 
6,304

Amortization of deferred leasing costs
 
659

 
616

Provision for losses on rents receivable
 

 
982

Straight line rental income
 
(3,960
)
 
(3,360
)
Other non-cash expenses
 
939

 
681

Equity in earnings of an investee
 
(617
)
 

Change in assets and liabilities:
 
 
 
 
Rents receivable
 
4

 
(1,556
)
Deferred leasing costs
 
(584
)
 
(483
)
Due from related persons
 
858

 
(1,433
)
Other assets
 
(7,863
)
 
(407
)
Accounts payable and other liabilities
 
7,440

 
1,180

Rents collected in advance
 
6,106

 
1,875

Security deposits
 
688

 
221

Due to related persons
 
997

 
(5,138
)
Net cash provided by operating activities
 
89,158

 
70,228

 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
 
Real estate acquisitions and deposits
 
(884,445
)
 
(95,078
)
Real estate improvements
 
(7,789
)
 
(2,091
)
Net cash used in investing activities
 
(892,234
)
 
(97,169
)
 
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
 
Proceeds from issuance of common shares, net
 

 
444,309

Proceeds from issuance of mortgage notes payable
 
650,000

 

Borrowings under revolving credit facility
 
736,000

 
160,000

Repayments of revolving credit facility
 
(499,000
)
 
(530,000
)
Payment of debt issuance costs
 
(5,517
)
 
(4,183
)
Distributions to common shareholders
 
(64,428
)
 
(39,008
)
Repurchase of common shares
 
(251
)
 
(52
)
Contributions
 

 
16,162

Distributions
 

 
(9,187
)
Net cash provided by financing activities
 
816,804

 
38,041

 
 
 
 
 
Increase in cash and cash equivalents
 
13,728

 
11,100

Cash and cash equivalents at beginning of period
 
9,608

 

Cash and cash equivalents at end of period
 
$
23,336

 
$
11,100

 
 
 
 
 
SUPPLEMENTAL DISCLOSURES:
 
 
 
 
Interest paid
 
$
31,995

 
$
10,195

Income taxes paid
 
$
164

 
$

 
 
 
 
 
NON-CASH INVESTING ACTIVITIES:
 
 
 
 
Real estate acquired by assumption of mortgage notes payable
 
$
(56,980
)
 
$

 
 
 
 
 
NON-CASH FINANCING ACTIVITIES:
 
 
 
 
Assumption of mortgage notes payable
 
$
56,980

 
$

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

7

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 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, 2018, or our 2018 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. Reclassifications have been made to the prior year’s condensed consolidated financial statements to conform to the current year’s presentation. In part because of the significant changes resulting from our initial public offering, or 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 our former parent, Select Income REIT, or SIR, a former publicly traded real estate investment trust, or REIT, that merged with and into a wholly owned subsidiary of Office Properties Income Trust, or OPI, on December 31, 2018.

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

Note 2. Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2016-02, Leases. In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases and ASU No. 2018-11, Leases (Topic 842): Targeted Improvements. In December 2018, the FASB issued ASU No. 2018-20, Leases (Topic 842), Narrow-Scope Improvements for Lessors. Collectively, these standards set 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. ASU No. 2016-02 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. These standards were effective as of January 1, 2019. Upon adoption, we applied the package of practical expedients that has allowed us to not reassess (i) whether any expired or existing contracts are or contain leases, (ii) lease classification for any expired or existing leases and (iii) initial direct costs for any expired or existing leases. Furthermore, we applied the optional transition method in ASU No. 2018-11, which has allowed us to initially apply the new leases standard at the adoption date and recognize a cumulative effect adjustment to the opening balance of retained earnings in the adoption period, although we did not have an adjustment. Additionally, our leases met the criteria in ASU No. 2018-11 to not separate non-lease components from the related lease component; therefore, the accounting for these leases remained largely unchanged from the previous standard. The adoption of ASU No. 2016-02 and the related improvements did not have a material impact in our condensed consolidated financial statements. Upon adoption, (i) amounts previously recognized as tenant reimbursements and other income, which totaled $5,650 and $16,986 for the three and nine months ended September 30, 2018, respectively, have been reclassified as rental income, (ii) allowances for bad debts are now recognized as a direct reduction of rental income, and (iii) legal costs associated with the execution of our leases, which were previously capitalized and amortized over the life of their respective leases, are expensed as incurred. Subsequent to January 1, 2019, provisions for credit losses are included in rental income in our condensed consolidated financial statements. Provisions for credit losses prior to January 1, 2019 were previously included in other operating expenses in our condensed consolidated financial statements and prior periods are not reclassified to conform to the current presentation.



8

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

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 will be 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 although lease related receivables are governed by the lease standards referred to above and are not subject to ASU No. 2016-13. We currently expect to adopt the standard using the modified retrospective approach.

Note 3. Real Estate Properties

As of September 30, 2019, we owned 300 properties with a total of approximately 42,745,000 rentable square feet, including 226 buildings, leasable land parcels and easements with a total of approximately 16,756,000 rentable square feet of primarily industrial lands located on the island of Oahu, HI, or our Hawaii Properties, and 74 properties with a total of approximately 25,989,000 rentable square feet of industrial properties located in 29 other states, or our Mainland Properties.

We operate in one business segment: ownership and leasing of properties that include industrial and logistics buildings and leased industrial lands. For the three months ended September 30, 2019 and 2018, approximately 40.5% and 60.1%, respectively, of our rental income was from our Hawaii Properties. For the nine months ended September 30, 2019 and 2018, approximately 45.2% and 60.3%, respectively, of our rental income was from our Hawaii Properties. In addition, a subsidiary of Amazon.com, Inc., which is a tenant at certain of our Mainland Properties, accounted for $8,992, or 14.8%, and $3,874, or 9.6%, of our rental income for the three months ended September 30, 2019 and 2018, respectively, and $22,557, or 13.5%, and $12,104, or 10.0%, of our rental income for the nine months ended September 30, 2019 and 2018, respectively.

During the nine months ended September 30, 2019, we completed the acquisition of 30 industrial properties containing a combined 13,288,180 rentable square feet for an aggregate purchase price of $941,425, including acquisition related costs of $4,675. These acquisitions were accounted for as asset acquisitions. We allocated the purchase prices for these acquisitions based on the estimated fair value of the acquired assets and assumed liabilities as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquired
 
 
 
 
 
 
Number
 
Rentable
 
 
 
 
 
Buildings
 
Acquired
 
Real Estate
 
Discount
 
 
 
 
of
 
Square
 
Purchase
 
 
 
and
 
Real Estate
 
Lease
 
on Assumed
Date
 
Market Area
 
Properties
 
Feet
 
Price
 
Land
 
Improvements
 
Leases
 
Obligations
 
Debt
February 2019
 
2 mainland states
 
7

 
3,708,343

 
$
250,276

 
$
19,558

 
$
205,811

 
$
24,907

 
$

 
$

April 2019
 
Indianapolis, IN
 
1

 
493,500

 
30,517

 
2,817

 
24,836

 
2,864

 

 

April 2019
 
12 mainland states
 
20

 
8,694,321

 
628,323

 
52,546

 
519,695

 
56,715

 
(1,965
)
 
1,332

August 2019
 
Columbus, OH
 
2

 
392,016

 
32,309

 
2,393


27,372


2,544

 

 

 
 
 
 
30

 
13,288,180

 
$
941,425

 
$
77,314

 
$
777,714

 
$
87,030

 
$
(1,965
)
 
$
1,332



During the nine months ended September 30, 2019, we committed $1,268 for expenditures related to tenant improvements and leasing costs for leases executed during the period for approximately 729,000 square feet. Committed but unspent tenant related obligations based on existing leases as of September 30, 2019 were $404.

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 September 30, 2019 and December 31, 2018, accrued environmental remediation costs of $6,940 were included in accounts payable and other liabilities in our condensed consolidated balance sheets. These accrued environmental remediation costs relate to maintenance of our properties for current uses, and, because of the indeterminable timing of the remediation, these amounts have not been discounted to present value. In general, we do not have any insurance designated to limit any losses that we may incur as a result of known or unknown environmental conditions which are not caused by an insured event, such as fire or flood, although some of our tenants may maintain such insurance that may benefit us. Although we do not believe that there are environmental conditions at any of our properties that will have a material adverse effect on us, we cannot be sure that such conditions are not present at our properties or that costs we incur to remediate contamination will

9

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

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.

Note 4. Leases

We are a lessor of industrial and logistics properties. Our leases provide our tenants with the contractual right to use and economically benefit from all the physical space specified in the leases; therefore, we have determined to evaluate our leases as lease arrangements.

Our leases provide for base rent payments and in addition may include variable payments. Rental income from operating leases, including any payments derived by index or market based indices, is recognized on a straight line basis over the lease term when we have determined that the collectability of substantially all the lease payments is probable. Some of our leases have options to extend or terminate the lease exercisable at the option of our tenants, which are considered when determining the lease term. We do not include in our measurement of our lease receivables certain variable payments, including changes in the index or market based indices after the inception of the lease, certain tenant reimbursements and other income, and percentage rents until the specific events that trigger the variable payments have occurred. Such payments totaled $10,915 and $28,679 for the three and nine months ended September 30, 2019, respectively, of which tenant reimbursements totaled $10,915 and $27,517, respectively.

Certain of our leases contain non-lease components, such as property level operating expenses and capital expenditures reimbursed by our tenants as well as other required lease payments. We have determined that all our leases qualify for the practical expedient to not separate the lease and non-lease components because (i) the lease components are operating leases and (ii) the timing and pattern of recognition of the non-lease components are the same as those of the lease components. We apply Accounting Standards Codification 842, Leases, to the combined component. Income derived by our leases is recorded in rental income in our condensed consolidated statements of comprehensive income.

Certain tenants are obligated to pay directly their obligations under their leases for insurance, real estate taxes and certain other expenses. These obligations, which have been assumed by the tenants under the terms of their respective leases, are not reflected in our condensed consolidated financial statements. To the extent any tenant responsible for any such obligations under the applicable lease defaults on such lease or if it is deemed probable that the tenant will fail to pay for such obligations, we would record a liability for such obligations.

The following table presents our operating lease maturity analysis as of September 30, 2019:
Year
 
Amount
2019
 
$
50,503

2020
 
201,117

2021
 
196,700

2022
 
186,968

2023
 
166,945

Thereafter
 
1,262,250

Total
 
$
2,064,483



Note 5. Indebtedness

Our principal debt obligations at September 30, 2019 were: (1) $650,000 of outstanding borrowings under our $750,000 unsecured revolving credit facility; and (2) three mortgage notes with an aggregate outstanding principal amount of $755,730.

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

10

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

to payment of extension fees and satisfaction of other conditions. We are also required to pay a commitment fee on the unused portion of our revolving credit facility 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. As of September 30, 2019, interest payable on the amount outstanding under our revolving credit facility was LIBOR plus 155 basis points and our commitment fee was 15 basis points. As of September 30, 2019 and December 31, 2018, the interest rate payable on borrowings under our revolving credit facility was 3.59% and 3.81%, respectively. The weighted average interest rate for borrowings under our revolving credit facility was 3.73% and 3.39% for the three months ended September 30, 2019 and 2018, respectively, and 3.75% and 3.21% for the nine months ended September 30, 2019 and 2018, respectively. As of September 30, 2019 and October 28, 2019, we had $650,000 and $310,000, respectively, outstanding under our revolving credit facility, and $100,000 and $440,000, respectively, 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 covenants, including those 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 September 30, 2019.

In January 2019, we obtained a $650,000 mortgage loan secured by 186 of our properties containing approximately 9.6 million square feet located on the island of Oahu, Hawaii. This non-amortizing loan matures on February 7, 2029 and requires monthly payments of interest only at a fixed rate of 4.31% per annum.
In connection with the acquisition of a portfolio of 20 industrial properties in April 2019, as discussed in Note 3, we assumed a $56,980 mortgage note secured by one property containing approximately 1.0 million square feet located in Ruskin, FL. This non-amortizing loan matures on October 1, 2023 and requires monthly payments of interest only at a fixed rate of 3.60% per annum. We recorded a $1,332 discount in connection with this assumed mortgage debt, which increased its effective interest rate to 4.22% per annum. We recorded this discount because we believed the interest rate payable on this mortgage note was below the rate we would have had to pay for debt with the same maturity and similar other terms at the time we assumed this obligation.

As of September 30, 2019, the aggregate principal amount outstanding under our three mortgage notes was $755,730. These mortgage notes were secured by 188 properties with an aggregate net book value of $662,565 as of September 30, 2019.

In October 2019, we obtained a $350,000 mortgage loan secured by 11 of our Mainland Properties containing an aggregate of approximately 8.0 million rentable square feet and are located in eight states. This non-amortizing loan matures in November 2029 and requires monthly payments of interest at a fixed rate of 3.33% per annum. We used the proceeds from this loan to reduce outstanding borrowings under our revolving credit facility.

Note 6. Fair Value of Assets and Liabilities

Our financial instruments include cash and cash equivalents, rents receivable, our revolving credit facility, mortgage notes payable, accounts payable, rents collected in advance, security deposits and amounts due from or to related persons. At September 30, 2019 and December 31, 2018, the fair value of our financial instruments approximated their carrying values in our condensed consolidated financial statements, due to their short term nature or floating interest rates, except as follows:
 
 
At September 30, 2019
 
At December 31, 2018
 
 
Carrying
 
Estimated
 
Carrying
 
Estimated
 
 
Value (1)
 
Fair Value
 
Value (1)
 
Fair Value
Mortgage notes payable
 
$
749,640

 
$
823,036

 
$
49,195

 
$
48,642

(1)
Includes unamortized premiums (discounts) and debt issuance costs of ($6,090) and $445 as of September 30, 2019 and December 31, 2018, respectively.


11

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

We estimate the fair value of our mortgage notes payable using discounted cash flow analyses and currently 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.

Note 7. Shareholders’ Equity

Share Issuances:

On June 3, 2019, in accordance with our Trustee compensation arrangements, we granted 3,000 of our common shares, valued at $18.73 per share, the closing price of our common shares on The Nasdaq Stock Market LLC, or Nasdaq, on that day, to each of our five trustees as part of their annual compensation.

On September 18, 2019, we granted an aggregate of 104,200 of our common shares, valued at $21.69 per share, the closing price of our common shares on Nasdaq on that day, to our officers and certain other employees of RMR LLC under our equity compensation plan.

Distributions:

During the nine months ended September 30, 2019, we declared and paid regular quarterly distributions to common shareholders as follows:
Record Date
 
Payment Date
 
Distribution Per Share
 
Total Distribution
January 28, 2019
 
February 21, 2019
 
$0.33
 
$21,474
April 29, 2019
 
May 16, 2019
 
$0.33
 
$21,475
July 29, 2019
 
August 15, 2019
 
$0.33
 
$21,479

On October 17, 2019, we declared a regular quarterly distribution of $0.33 per common share, or approximately $21,500, to shareholders of record on October 28, 2019. We expect to pay this distribution on or about November 14, 2019.

Common Share Purchases:

On April 5, 2019, we purchased an aggregate of 1,362 of our common shares, valued at $20.49 per common share, the closing price of our common shares on Nasdaq on that day, from one of our former officers in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares.

On July 3, 2019, we purchased an aggregate of 668 of our common shares, valued at $21.48 per common share, the closing price of our common shares on Nasdaq on that day, from a former employee of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares.

On September 25, 2019, we purchased an aggregate of 9,808 of our common shares, valued at $21.27 per common share, the closing price of our common shares on Nasdaq on that day, from our officers and certain other former and current employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares.


12

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

Note 8. Weighted Average Common Shares

The following table provides a reconciliation of the weighted average number of common shares used in the calculation of basic and diluted earnings per share (in thousands):
 
 
Three Months Ended
September 30,
 
Nine Months ended September 30,
 
 
2019
 
2018
 
2019
 
2018
Weighted average common shares for basic earnings per share
 
65,055

 
65,022

 
65,042

 
63,839

Effect of dilutive securities: unvested share awards
 
5

 

 
6

 

Weighted average common shares for diluted earnings per share
 
65,060

 
65,022

 
65,048

 
63,839



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

In connection with our IPO, on September 29, 2017, SIR contributed to us 266 properties with a total of approximately 28,540,000 rentable square feet, or our Initial Properties, including 16,834,000 rentable square feet of primarily industrial lands in Hawaii and approximately 11,706,000 rentable square feet of industrial and logistics properties in 24 other states. 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.

We do not 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 and allocated to us 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. This amount is 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 the period from January 1, 2018 to January 16, 2018 were $230. This amount is included in other operating expenses or has been capitalized, as appropriate, in our condensed consolidated financial statements. For the period from January 1, 2018 to January 16, 2018, the total amount allocated to us for reimbursements that SIR paid to RMR LLC for employment and related expenses of RMR LLC employees assigned to work exclusively or partly at properties then owned by SIR, including the Initial Properties, SIR’s share of the wages, benefits and other related costs of RMR LLC’s centralized accounting personnel, SIR’s share of RMR LLC’s costs for providing SIR’s internal audit function and for other agreed upon amounts with respect to SIR’s business and property management agreements with RMR LLC was $120. This amount was 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 two agreements with RMR LLC to provide management services to us. See Notes 10 and 11 for further information regarding our relationships, agreements and transactions with RMR LLC and SIR.

Note 10. 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: (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 $3,291 and $8,576 for the three and nine months ended September 30, 2019, respectively, and $1,923 and $5,229 for the three months ended September 30, 2018 and for the period from January 17, 2018 through September 30, 2018, respectively. Based on our common share total return, as defined in our business management agreement, as of September 30, 2019, no estimated 2019 incentive fees are included in the net business management fees we recognized for the three or nine months ended September 30, 2019. The actual amount of annual incentive fees for 2019, if any, will be based on our common share

13

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

total return, as defined in our business management agreement, for the period from January 12, 2018 to December 31, 2019 and will be payable in 2020. No estimated 2018 incentive fees are included in the net business management fees we recognized for the three months ended September 30, 2018 or for the period from January 17, 2018 through September 30, 2018. The amounts for business management fees 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 $2,098 and $5,367 for the three and nine months ended September 30, 2019, respectively, and $1,205 and $3,327 for the three months ended September 30, 2018 and for the period from January 17, 2018 through September 30, 2018, respectively. 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 our operating expenses, including certain expenses incurred or arranged by RMR LLC on our behalf. We are generally not responsible for payment of RMR LLC’s employment, office or administrative expenses incurred to provide management services to us, except for the employment and related expenses of RMR LLC’s employees assigned to work exclusively or partly at our properties, our share of the wages, benefits and other related costs of RMR LLC’s centralized accounting personnel, our share of RMR LLC’s costs for providing our internal audit function, or as otherwise agreed. Our property level operating expenses are generally incorporated into the rents charged to our tenants, including certain payroll and related costs incurred by RMR LLC. We reimbursed RMR LLC $1,203 and $3,132 for these expenses and costs for the three and nine months ended September 30, 2019, respectively, and $809 and $2,116 for the three months ended September 30, 2018 and for the period from January 17, 2018 through September 30, 2018, respectively. These amounts are included in other operating expenses and general and administrative expenses, as applicable, 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.

Note 11. Related Person Transactions

We have relationships and historical and continuing transactions with RMR LLC, OPI (as successor by merger to 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 and Note 9 for information regarding the management services that RMR LLC provided to SIR prior to our IPO that related to our Initial Properties.

RMR LLC is a majority owned subsidiary of The RMR Group Inc., or RMR Inc., and RMR Inc. is the managing member of RMR LLC. Adam D. Portnoy, the Chair of our Board of Trustees and one of our Managing Trustees, is the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of RMR Inc., a managing director, president and chief executive officer of RMR Inc. and an officer and employee of RMR LLC. John G. Murray, our other Managing Trustee and our President and Chief Executive Officer, also serves as an officer and employee of RMR LLC, and each of our other officers is an officer and employee of RMR LLC.

See Note 7 for information relating to the awards of our common shares we made in 2019 to our officers and certain other employees of RMR LLC and common shares we purchased in 2019 from our current and former officers and certain other employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection 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 LLC employees in general and administrative expenses in our condensed consolidated statements of comprehensive income.

SIR and OPI. Effective December 31, 2018, SIR merged with and into a wholly owned subsidiary of OPI. Adam Portnoy is also a managing trustee of OPI and was a managing trustee of SIR prior to its merger with OPI’s subsidiary. RMR LLC provided management services to SIR until its merger with OPI’s subsidiary and continues to provide management services to OPI and to us. As a condition to the closing of the merger, on December 27, 2018, SIR distributed all 45,000,000 of our common shares that it owned to SIR’s shareholders of record on December 20, 2018. As a result of the merger, OPI succeeded to all of SIR’s rights and obligations, including with respect to SIR’s agreements with us.

14

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


OPI and SIR owed to us $532 and $865 as of September 30, 2019 and December 31, 2018, respectively, for rents that they collected from certain of our tenants and which were due to us. OPI paid these amounts due to us in October 2019 and January 2019, respectively.

AIC. We, ABP Trust and five other companies to which RMR LLC provides management services currently own Affiliates Insurance Company, or AIC, an Indiana insurance company, in equal amounts. We purchased our AIC interest from SIR on December 31, 2018 for $8,632. We (including SIR prior to our IPO) and the other AIC shareholders historically participated in a combined property insurance program arranged and reinsured in part by AIC. The policies under that program expired on June 30, 2019, and we and the other AIC shareholders elected not to renew the AIC property insurance program; we have instead purchased standalone property insurance coverage with unrelated third party insurance providers.

As of September 30, 2019 and December 31, 2018, our investment in AIC had a carrying value of $9,340 and $8,632, respectively. These amounts are included in other assets in our condensed consolidated balance sheets. We recognized income of $83 and $617 for the three and nine months ended September 30, 2019, respectively, related to our investment in AIC, which amount is presented as equity in earnings of an investee in our condensed consolidated statements of comprehensive income. Our other comprehensive income includes our proportionate share of unrealized gains (losses) on fixed income securities, which are owned by AIC, related to our investment in AIC.

AIC is in the process of dissolving. In connection with its dissolution, we expect to receive a capital distribution in the fourth quarter of 2019.

For further information about these and other such relationships and certain other related person transactions, see our 2018 Annual Report.

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 2018 Annual Report.

OVERVIEW
 
We are a REIT organized under Maryland law. As of September 30, 2019, we owned 300 properties with approximately 42.7 million rentable square feet, including 226 buildings, leasable land parcels and easements with approximately 16.8 million rentable square feet located on the island of Oahu, HI, and 74 properties with approximately 26.0 million rentable square feet located in 29 other states. As of September 30, 2019, our properties were approximately 99.5% leased (based on rentable square feet) to 270 different tenants with a weighted average remaining lease term (based on annualized rental revenues) of approximately 9.6 years. We define the term annualized rental revenues as used in this section as the annualized contractual rents, as of September 30, 2019, including straight line rent adjustments and excluding lease value amortization, adjusted for tenant concessions including free rent and amounts reimbursed to tenants, plus estimated recurring expense reimbursements from tenants.

Property Operations
 
As of September 30, 2019, 99.5% of our rentable square feet was leased, compared to 99.3% of our rentable square feet as of September 30, 2018. Occupancy data for our properties as of September 30, 2019 and 2018 is as follows (square feet in thousands):
 
 
All Properties
 
Comparable Properties (1)
 
 
As of September 30,
 
As of September 30,
 
    
2019
 
2018
 
2019
 
2018
Total properties
 
300

 
269

 
266

 
266

Total rentable square feet (2)
 
42,745

 
29,216

 
28,472

 
28,550

Percent leased (3)
 
99.5
%
 
99.3
%
 
99.2
%
 
99.2
%

15


(1)
Consists of properties that we owned (including for the period SIR owned our properties prior to our IPO) continuously since January 1, 2018.
(2)
Subject to modest adjustments when space is remeasured or reconfigured for new tenants and when land leases are converted to building leases.
(3)
Percent leased includes (i) space being fitted out for occupancy pursuant to existing leases as of September 30, 2019, if any, and (ii) space which is leased but is not occupied or is being offered for sublease by tenants, if any.
 
The average effective rental rates per square foot, as defined below, for our properties for the three and nine months ended September 30, 2019 and 2018 are as follows:
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2019
 
2018
 
2019
 
2018
Average effective rental rates per square foot leased: (1)
 
 
 
 
 
 
 
 
All properties
 
$
5.76

 
$
5.66

 
$
5.82

 
$
5.65

Comparable properties (2)
 
$
5.76

 
$
5.68

 
$
5.83

 
$
5.66

(1)
Average effective rental rates per square foot leased represents annualized rental income during the period specified divided by the average rentable square feet leased during the period specified.
(2)
Comparable properties for the three months ended September 30, 2019 and 2018 consist of 267 buildings, leasable land parcels and easements that we owned continuously since July 1, 2018. Comparable properties for the nine months ended September 30, 2019 and 2018 consist of 266 buildings, leasable land parcels and easements that we owned (including for the period that SIR owned our properties prior to our IPO) continuously since January 1, 2018.

During the three months ended September 30, 2019, we entered new leases and lease renewals for approximately 99,000 square feet at weighted average (by square feet) rental rates that were approximately 13.4% higher than prior rates for the same land area or building area (with leasing rate increases for vacant space based upon the most recent rental rate for the same space). Commitments for tenant improvements, leasing costs and concessions for leases entered during the three months ended September 30, 2019 totaled $708,000, or approximately $0.44 per square foot per year of the new weighted average lease term.

As shown in the table below, approximately 0.1% of our total rented square feet and approximately 0.1% of our total annualized rental revenues as of September 30, 2019 are included in leases scheduled to expire by December 31, 2019.

As of September 30, 2019, our lease expirations by year are as follows (dollars and square feet in thousands):
 
 
 
 
 
 
 
 
 
 
 
 
% of Total
 
Cumulative
 
 
 
 
 
 
% of Total
 
Cumulative %
 
Annualized
 
Annualized
 
% of Total
 
 
 
 
Rented
 
Rented
 
of Total Rented
 
Rental
 
Rental
 
Annualized
 
 
Number of
 
Square Feet
 
Square Feet
 
Square Feet
 
 Revenues
 
 Revenues
 
Rental Revenues
Period / Year
 
Tenants
 
Expiring (1)
 
Expiring (1)
 
Expiring (1)
 
Expiring
 
Expiring
 
Expiring
10/1/2019-12/31/2019
 
2

 
38

 
0.1
%
 
0.1
%
 
$
274

 
0.1
%
 
0.1
%
2020
 
16

 
687

 
1.6
%
 
1.7
%
 
2,898

 
1.2
%
 
1.3
%
2021
 
31

 
3,045

 
7.2
%
 
8.9
%
 
17,267

 
7.0
%
 
8.3
%
2022
 
68

 
3,080

 
7.2
%
 
16.1
%
 
23,267

 
9.5
%
 
17.8
%
2023
 
28

 
2,757

 
6.5
%
 
22.6
%
 
17,203

 
7.0
%
 
24.8
%
2024
 
28

 
10,270

 
24.1
%
 
46.7
%
 
43,453

 
17.7
%
 
42.5
%
2025
 
14

 
1,445

 
3.4
%
 
50.1
%
 
8,146

 
3.3
%
 
45.8
%
2026
 
2

 
611

 
1.4
%
 
51.5
%
 
3,128

 
1.3
%
 
47.1
%
2027
 
9

 
5,538

 
13.0
%
 
64.5
%
 
27,171

 
11.1
%
 
58.2
%
2028
 
21

 
2,921

 
6.9
%
 
71.4
%
 
20,605

 
8.4
%
 
66.6
%
Thereafter
 
86

 
12,139

(2 
) 
28.6
%
 
100.0
%
 
81,865

 
33.4
%
 
100.0
%
    Total
 
305

 
42,531

 
100.0
%
 
 
 
$
245,277

 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average remaining lease term (in years):
 
8.6

 
 
 
 
 
9.6

 
 
 
 
(1)
Rented square feet is pursuant to existing leases as of September 30, 2019 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.

16


(2)
Rented square feet excludes a 194 square foot expansion under construction until the commencement of the lease f