10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended		December 31, 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 of Organization)	(IRS Employer Identification No.)

Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458-1634

(Address of Principal Executive Offices) (Zip Code)

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

Securities registered pursuant to Section 12(b) of the Act:

Title Of Each Class	Trading Symbol	Name of Each Exchange On Which Registered
Common Shares of Beneficial Interest	ILPT	The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒  No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

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 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 pursuant to Section 13(a) of the Exchange Act. ☐

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

The aggregate market value of the voting common shares of beneficial interest, $.01 par value, or common shares, of the registrant held by non-affiliates was $1.3 billion based on the $20.82 closing price per common share on The Nasdaq Stock Market LLC on June 28, 2019. For purposes of this calculation, an aggregate of 844,704 common shares held directly by, or by affiliates of, the trustees and the executive officers of the registrant have been included in the number of common shares held by affiliates.

Number of the registrant’s common shares outstanding as of February 19, 2020: 65,180,208.

References in this Annual Report on Form 10-K to the Company, ILPT, we, us or our mean Industrial Logistics Properties Trust and its consolidated subsidiaries unless otherwise expressly stated or the context indicates otherwise.

DOCUMENTS INCORPORATED BY REFERENCE

Certain information required by Items 10, 11, 12, 13 and 14 of Part III of this Annual Report on Form 10-K is incorporated by reference to our definitive Proxy Statement for the 2020 Annual Meeting of Shareholders, to be filed with the Securities and Exchange Commission within 120 days after the fiscal year ended December 31, 2019.

Warning Concerning Forward-Looking Statements

This Annual Report on Form 10-K contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Also, whenever we use words such as “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”, “will”, “may” and negatives or derivatives of these or similar expressions, we are making forward-looking statements. These forward-looking statements are based upon our present intent, beliefs or expectations, but forward-looking statements are not guaranteed to occur and may not occur. Forward-looking statements in this report relate to various aspects of our business, including:

• The likelihood that our tenants will pay rent or be negatively affected by cyclical economic conditions,

• The likelihood that our tenants will renew or extend their leases or that we will be able to obtain replacement tenants,

• Our acquisitions of properties,

• Our ability to compete for acquisitions and tenancies effectively,

• The likelihood that our rents will increase when we renew or extend our leases, when we enter new leases, or when our rents reset at our properties in Hawaii,

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

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

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

• Our ability to raise debt or equity capital,

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

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

• Our ability to enter into real estate joint ventures or to attract co-venturers and our ability to manage successfully and benefit from any real estate joint ventures we may enter into,

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

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

• Our ability to successfully and profitably complete expansion and renovation projects at our properties and to realize our expected returns on those projects,

• Our expectation that we benefit from our relationships with The RMR Group Inc., or RMR Inc.,

• Our qualification for taxation as a real estate investment trust, or REIT,

• Changes in federal or state tax laws,

• The credit qualities of our tenants,

• Changes in environmental laws or in their interpretations or enforcement as a result of climate change or otherwise, or our incurring environmental remediation costs or other liabilities,

• Our sales of properties, and

• Other matters.

(i)

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

• The impact of conditions in the economy and the capital markets on us and our tenants,

• Competition within the real estate industry, particularly for industrial and logistics properties in those markets in which our properties are located,

• Compliance with, and changes to, federal, state and local laws and regulations, accounting rules, tax laws and similar matters,

• Limitations imposed on our business and our ability to satisfy complex rules in order for us to maintain our qualification for taxation as a REIT for U.S. federal income tax purposes,

• Actual and potential conflicts of interest with our related parties, including our managing trustees, The RMR Group LLC, or RMR LLC, RMR Inc. and others affiliated with them, and

• Acts of terrorism, outbreaks of so called pandemics or other manmade or natural disasters beyond our control.

For example:

• Our ability to make future distributions to our shareholders and to make payments of principal and interest on our indebtedness depends upon a number of factors, including our future earnings, the capital costs we incur to lease our properties and our working capital requirements. We may be unable to pay our debt obligations or to increase or maintain our current rate of distributions on our common shares and future distributions may be reduced or eliminated,

• Our leasing activity and our recent acquisitions may fail to achieve the expected increases in future cash flows and enhancements in our ability to increase our distributions to shareholders in the future. Even if we realize increased cash flows and enhancements in our ability to increase our distributions to shareholders, we may elect to utilize that cash for purpose other than increasing our distributions to shareholders. Our distributions are set from time to time by our Board of Trustees. FFO and Normalized FFO are among the factors considered by our Board of Trustees when determining the amount of distributions to our shareholders. Other factors include, but are not limited to, requirements to maintain our qualification for taxation as a REIT, limitations in our credit agreement, the availability to us of debt and equity capital, our distribution rate as a percentage of the trading price of our common shares, or dividend yield, and our dividend yield compared to the dividend yields of other industrial REITs, our expectation of our future capital requirements and operating performance and our expected needs for and availability of cash to pay our obligations. Accordingly, for these and other reasons, we may not increase our distributions in the future and our distributions to shareholders may be decreased,

• Our ability to grow our business and increase our distributions depends in large part upon our ability to buy properties and lease them for rents, less their property operating costs, that exceed our capital costs. We may be unable to identify properties that we want to acquire, and we may fail to reach agreement with the sellers and complete the purchases of any properties we do want to acquire. In addition, any properties we may acquire may not provide us with rents less property operating costs that exceed our capital costs or achieve our expected returns,

• Contingencies in our acquisition and sale agreements may not be satisfied and any expected acquisitions and sales may not occur, may be delayed or the terms of such transactions may change, 

• Rents that we can charge at our properties may decline upon rent resets, lease renewals or lease expirations because of changing market conditions or otherwise,

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

• Certain of our Hawaii Properties are lands leased for rents that periodically reset based on then current fair market values. Rental income from our properties in Hawaii have generally increased during our and our predecessors’

(ii)

ownership as the leases for those properties have been reset, extended or renewed. Although we expect that rents for our Hawaii Properties will increase in the future, we cannot be sure they will increase. Future rents from these properties could decrease or not increase to the extent they have in the past or by the amount we expect,

• Our possible development or redevelopment of certain of our properties may not be realized or be successful,

• It is difficult to accurately estimate leasing related obligations and costs of development and tenant improvement costs. Our leasing related obligations, development projects and tenant improvements may cost more and may take longer to complete than we currently expect and we may incur increasing amounts for these and similar purposes in the future,

• Economic conditions in areas where our properties are located may decline in the future. Such circumstances or other conditions may reduce demand for leasing industrial space. If the demand for leasing industrial space is reduced, we may be unable to renew leases with our tenants as leases expire or enter new leases at rental rates as high as expiring rents and our financial results may decline,

• E-commerce retail sales may not continue to grow and increase the demand for industrial and logistics real estate as we expect,

• Increasing development of industrial and logistics properties may reduce the demand for, and rents from, our properties,

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

• Our belief that there is a likelihood that tenants may renew or extend our leases prior to their expirations whenever they have made significant investments in the leased properties, or because those properties may be of strategic importance to them, may not be realized,

• Some of our tenants may not renew expiring leases, and we may be unable to obtain new tenants to maintain or increase the historical occupancy rates of, or rents from, our properties,

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

• We intend to conduct our business activities in a manner that will afford us reasonable access to capital for investment and financing activities. However, we may not succeed in this regard and we may not have reasonable access to capital,

• Continued availability of borrowings under our revolving credit facility is subject to our satisfying certain financial covenants and other credit facility conditions that we may be unable to satisfy,

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

• We may be unable to repay our debt obligations when they become due,

• The maximum borrowing availability under our revolving credit facility may be increased to up to $1.5 billion in certain circumstances. However, increasing the maximum borrowing availability under our revolving credit facility is subject to our obtaining additional commitments from lenders, which may not occur,

• We have the option to extend the maturity date of our revolving credit facility upon payment of a fee and meeting other conditions. However, the applicable conditions may not be met,

• The premiums used to determine the interest rate payable on our revolving credit facility and the unused fee payable on our revolving credit facility are based on our leverage. Changes in our leverage may cause the interest and fees we pay to increase,

• We may not reduce our level of indebtedness or maintain any reduction we may effect and increased leverage may restrict our ability to acquire properties and pursue business opportunities,

(iii)

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

• In February 2020, we entered into agreements related to a joint venture with an Asian institutional investor for up to 12 of our properties in mainland United States. The investor will contribute approximately $108.3 million for a 39% equity interest in the joint venture, with the investor initially contributing $82.0 million and the balance to be contributed when the twelfth property is added. However, the addition of the twelfth property may not occur or may be delayed,

• We expect to use the net proceeds from the joint venture transaction to reduce outstanding borrowings under our revolving credit facility, which may imply that our leverage will be reduced. However, our revolving credit facility permits us to borrow, repay and reborrow amounts and we may seek to obtain additional debt financing in the future. As a result, our leverage may not be reduced as expected or we may not maintain the reduced leverage achieved as a result of joint venture,

• Our existing joint venture and any other joint ventures that we may enter may not be successful,

• Our Board of Trustees considers, among other factors, our distribution rate compared to the trading price of our common shares and to the dividend yields of other industrial REITs when setting our distributions to shareholders. This may imply that we will maintain or seek to maintain a specific dividend yield on our common shares. However, the dividend yield is only one of many factors our Board of Trustees considers in its discretion when setting our distributions to shareholders. Further, various market and other factors impact trading prices for our and our competitors’ securities and the corresponding yields on those securities. As a result, the trading prices on our common shares and the yields on our common shares are subject to change and may fluctuate significantly. We do not intend to maintain or to seek to maintain any specific yield on our common shares,

• The business and property management agreements between us and RMR LLC have continuing 20 year terms. However, those agreements permit early termination in certain circumstances. Accordingly, we cannot be sure that these agreements will remain in effect for continuing 20 year terms, and

• We believe that our relationships with our related parties, including RMR LLC, RMR Inc. and others affiliated with them may benefit us and provide us with competitive advantages in operating and growing our business. However, the advantages we believe we may realize from these relationships may not materialize.

Currently unexpected results could occur due to many different circumstances, some of which are beyond our control, such as acts of terrorism, natural disasters, changes in our tenants’ financial conditions, the market demand for leased space or changes in capital markets or the economy generally.

The information contained elsewhere in this Annual Report on Form 10-K or in our other filings with the Securities and Exchange Commission, or SEC, including under the caption “Risk Factors”, or incorporated herein or therein, identifies other important factors that could cause differences from our forward-looking statements. Our filings with the SEC are available on the SEC’s website at www.sec.gov.

You should not place undue reliance upon our forward-looking statements.

Except as required by law, we do not intend to update or change any forward-looking statements as a result of new information, future events or otherwise.

Statement Concerning Limited Liability

The Amended and Restated Declaration of Trust establishing Industrial Logistics Properties Trust, dated January 11, 2018, as filed with the State Department of Assessments and Taxation of Maryland, provides that no trustee, officer, shareholder, employee or agent of Industrial Logistics Properties Trust shall be held to any personal liability, jointly or severally, for any obligation of, or claim against, Industrial Logistics Properties Trust. All persons dealing with Industrial Logistics Properties Trust in any way shall look only to the assets of Industrial Logistics Properties Trust for the payment of any sum or the performance of any obligation.

(iv)

INDUSTRIAL LOGISTICS PROPERTIES TRUST

2019 FORM 10-K ANNUAL REPORT

Table of Contents

		Page
	Part I
Item 1.	Business	1
Item 1A.	Risk Factors	25
Item 1B.	Unresolved Staff Comments	41
Item 2.	Properties	42
Item 3.	Legal Proceedings	42
Item 4.	Mine Safety Disclosures	42
	Part II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	42
Item 6.	Selected Financial Data	43
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	44
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	57
Item 8.	Financial Statements and Supplementary Data	59
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	59
Item 9A.	Controls and Procedures	59
Item 9B.	Other Information	60
	Part III
Item 10.	Directors, Executive Officers and Corporate Governance	61
Item 11.	Executive Compensation	61
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	61
Item 13.	Certain Relationships and Related Transactions, and Director Independence	61
Item 14.	Principal Accountant Fees and Services	61
	Part IV
Item 15.	Exhibits and Financial Statement Schedules	62
Item 16.	Form 10-K Summary	63
	Signatures

PART 1

Item 1. Business

Our Company

We are a real estate investment trust, or REIT, that was organized under Maryland law in 2017. We own and lease industrial and logistics properties throughout the United States. We have qualified for taxation as a REIT for U.S. federal income tax purposes beginning with our taxable year ended December 31, 2018.

As of December 31, 2019, we owned 300 properties that were approximately 99.3% leased to 270 tenants with a weighted average (by annualized rental revenues) remaining lease term of approximately 9.6 years. These properties consisted of 226 buildings, leasable land parcels and easements with a total of approximately 16.8 million rentable square feet (all square footage amounts included within this Annual Report on Form 10-K are unaudited) that were primarily industrial lands located on the island of Oahu, HI, or our Hawaii Properties, and 74 buildings with a total of approximately 26.1 million rentable square feet that were industrial and logistics properties located in 29 other states, or our Mainland Properties.

As of December 31, 2019, our Hawaii Properties represented 40.9% of our annualized rental revenues and our Mainland Properties represented 59.1% of our annualized rental revenues. We define the term annualized rental revenues as used in this Annual Report on Form 10-K as the annualized contractual rents as of December 31, 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.

Our principal executive offices are located at Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458-1634, and our telephone number is (617) 219-1460.

Our Business and Growth Strategies

We own and lease industrial and logistics properties located throughout the United States. We believe our current properties provide a stable base of increasing income. We intend to expand our business by acquiring additional industrial and logistics properties in the United States that may benefit from the growth of e-commerce.

Internal Growth through Rent Resets and Leasing Activity, Fixed Increases in Our Leases and Selective Development. Certain of the leases for our Hawaii Properties provide for rents to be reset to fair market value periodically during the lease terms. Since our predecessors began acquiring our Hawaii Properties in December 2003, our Hawaii Properties have remained over 98% leased, and periodic rent resets, together with lease extensions and new leasing activity following lease expirations, at our Hawaii Properties have resulted in significant rent increases. Because of the limited availability of land suitable for industrial uses that might compete with our Hawaii Properties, we believe that our Hawaii Properties offer the potential for rent growth as a result of periodic rent resets, lease extensions and new leasing. In addition to the internal rent growth which may result from our rent resets and lease expirations at our Hawaii Properties, a majority of the leases at our Mainland Properties and certain leases at our Hawaii Properties include periodic set dollar amount or percentage increases that raise the cash rent payable to us.

Since the leases at certain of our Hawaii Properties were originally entered, in some cases, as long as 40 or 50 years ago, the characteristics of the neighborhoods in the vicinity of some of those properties have changed. In such circumstances, we and our predecessors have sometimes engaged in redevelopment activities to change the character of certain properties in order to increase rents. Because our Hawaii Properties are currently experiencing strong demand for their current uses, we do not currently expect redevelopment efforts in Hawaii to become a major activity of ours in the near term; however, we may undertake such activities on a selective basis. Also, we and our predecessors have sometimes built expansions for tenants at our Mainland Properties in return for lease extensions and rent increases, and we expect to continue such activities.

External Growth through Acquisitions. Our external growth strategy is to acquire additional industrial and logistics properties that we believe will produce NOI in excess of our cost of capital used to purchase the properties. We intend to grow our business by investing primarily in industrial and logistics properties that serve the growing needs of e-commerce. We believe that e-commerce sales will continue to grow, in both dollar value and as a percentage of total retail sales, and that this will create strong demand for industrial and logistics properties and rental growth for the next several years. We are focused on acquiring industrial and logistics properties that are of strategic importance to our tenants’ businesses, such as build to suit properties, strategic distribution hubs or other properties in which tenants have invested a significant amount of capital. We target occupied properties, where tenants are financially responsible for all, or substantially all, property operating expenses, including increases with respect thereto. Because there are a limited number of industrial and logistics properties in Hawaii, we expect that most of our acquisitions will be in other states.

1

Our Leases

The following is an overview of the general lease terms for our properties. The terms of a particular lease may vary from those described below.

Mainland Properties’ Leases. In general, our Mainland Properties are subject to leases pursuant to which the tenants pay fixed annual rents on a monthly, quarterly or semi-annual basis, and also pay or reimburse us for all, or substantially all, property level operating and maintenance expenses, such as real estate taxes, insurance, utilities and repairs, including increases with respect thereto. Many of our Mainland Properties’ leases require us to maintain the roof, exterior walls, foundation and other structural elements of the buildings at our expense; however, because we believe our Mainland Properties have been well maintained, we do not believe these expenses will be material to us during the remaining lease terms.

Our Mainland Properties are fully leased, but we expect to have opportunities to raise rents or redevelop these properties when these leases start to expire beginning in 2020. Also, some of the tenant renewal options at our Mainland Properties provide for rents to be reset to fair market values, and we may be able to raise rents if and as these options are exercised. We regularly confer with tenants at our Mainland Properties to determine if they are interested in our expanding or otherwise improving their leased properties in return for increased rents and extended terms. For example, in 2018 we negotiated a build to suit expansion of 194,000 square feet for an existing tenant at our Ankeny, IA property that resulted in a lease extension of approximately seven years after completion of the expansion and a rent increase of 2% annually for the extended term.

Hawaii Properties’ Leases. In general, our Hawaii Properties are subject to leases pursuant to which the tenants pay fixed annual rent on a monthly, quarterly or semi-annual basis, and also pay or reimburse us for all, or substantially all, property level operating and maintenance expenses, such as real estate taxes, insurance, utilities and repairs, including increases with respect thereto. Certain of our Hawaii Properties are leased for fixed annual rents that periodically reset based on fair market values and others are subject to leases with fixed increases. In some cases, the resets are based on fair market value rent and in other cases a percentage of the fair market value of the leased land. Fair market value rent reset rates are generally determined through negotiations between us and individual tenants; however, when no agreement is achieved, our Hawaii Properties’ leases require an appraisal process. In the appraisal process for land leases that are periodically reset based on fair market value rents, the appraisers are required to determine the fair and reasonable rent, exclusive of improvements. In the appraisal process for land leases that are periodically reset based on a percentage of the fair market value of the land, the appraisers are required to determine the fair market value of the land, usually exclusive of improvements, with such fair market value being based on the highest and best use of such land and as though unencumbered by the lease, and then the appraisers apply a rent return rate to the land value which may be set in the lease or determined by the appraisers based on market conditions.

Our Investment Policies

Our target investments include all industrial and logistics buildings in top tier markets. Outside of top tier markets, our focus is on newer buildings, high credit quality tenants and longer lease terms. We target estimated capitalization rates of 5% - 7% for new investments. If and as market conditions change, our target investments and target estimated capitalization rates may change.

In evaluating potential property acquisitions, we consider various factors, including, but not limited to, the following:

• the location of the property;

• the historic and projected rents received and to be received from the property;

• our cost of capital compared to projected returns we may realize by owning the property;

• the experience and credit quality of the property’s tenants;

• the industries in which the tenants operate;

• the remaining term of the leases at the property and other lease terms;

• the type of property (e.g., distribution facility, light industrial, etc.);

• the tax and regulatory circumstances of the market area in which the property is located;

• the occupancy and demand for similar properties in the same or nearby locations;

2

• the construction quality, physical condition and design of the property;

• the expected capital expenditures that may be needed at the property;

• the price at which the property may be acquired as compared to the estimated replacement cost of the property;

• the price at which the property may be acquired as compared to the prices of comparable properties as evidenced by recent market sales;

• the strategic fit of the property with the rest of our portfolio; and

• the existence of alternative sources, uses or needs for our capital.

Also, we may invest in or enter into real estate joint ventures if we conclude that by doing so we may benefit from the participation of co-venturers or that our opportunity to participate in the investment is contingent on the use of a joint venture structure or to take advantage of property valuation differences among private and public sources of equity capital. For example, in February 2020, we entered agreements related to a joint venture with an Asian institutional investor for up to 12 of our Mainland Properties. Further, we may acquire interests in joint ventures as part of an acquisition of properties or entities.

We have no limitations on the amount or percentage of our total assets that may be invested in any one property and no limits on the concentration of investments in any one location.

Our Board of Trustees may change our acquisition and investment policies at any time without a vote of, or advance notice to, our shareholders. We may in the future adopt policies with respect to investments in real estate mortgages or securities of other entities engaged in real estate activities. We may in the future consider the possibility of entering into mergers, strategic combinations or additional joint ventures with other companies.

Our Disposition Policies

We generally consider ourselves to be a long term owner of our properties. We have no current plans to sell any of our properties, but we may decide to sell some of our properties or a stake in some of our properties in the future. We expect our decision to sell properties or a stake in some of our properties will be based upon the following considerations, among others, which may be relevant to a particular property at a particular time:

• whether the property is leased and, if so, the remaining lease term and likelihood of lease renewal;

• whether the property’s tenants are current on their lease obligations;

• our evaluation of the property’s tenants’ abilities to pay their contractual rents;

• our ability to identify new tenants if the property has or is likely to develop vacancies;

• our evaluation of future rents which may be achieved from the property;

• the potential costs associated with finding replacement tenants, including tenant improvements, leasing commissions and concessions, the cost to operate the property while vacant, and required building improvement capital, if any, all as compared to our projected returns from future rents;

• the estimated proceeds we may receive by selling the property;

• the strategic fit of the property with the rest of our portfolio;

• our intended use of the proceeds we may realize from the sale of a property;

• the existence of alternative sources, uses or needs for capital; and

• the tax implications to us and our shareholders of any proposed disposition.

Our Board of Trustees may change our disposition policies at any time without a vote of, or notice to, our shareholders.

3

Our Financing Policies

To qualify for taxation as a REIT under the Internal Revenue Code of 1986, as amended, or the IRC, we generally are required to distribute annually at least 90% of our REIT taxable income, subject to specified adjustments and excluding any net capital gain. We expect to repay our debts, invest in our properties or fund acquisitions, developments or redevelopments by borrowing under our revolving credit facility, issuing equity or debt securities or using retained cash from operations that may exceed distributions paid. We also expect that our operating and investment activities will be financed by rents from tenants at our properties in excess of planned distributions to our shareholders and by borrowings under our revolving credit facility. As the maximum borrowing under, or the maturity of, our revolving credit facility approaches, we expect to renew that facility or refinance that indebtedness with equity issuances or new debt. We will decide when and whether to issue equity or new debt depending primarily upon our success in operating our business and upon market conditions. Because our ability to raise capital will depend, in large part, upon market conditions, we cannot be sure that we will be able to raise sufficient capital to repay our debts or to fund our growth strategies.

We currently have a $750.0 million unsecured revolving credit facility that we use for working capital and general business purposes, including for acquisition funding on an interim basis until we are able to refinance acquisitions with equity or debt. In addition, in January 2019, we obtained a $650.0 million mortgage loan secured by 186 properties containing 9.6 million rentable square feet located on the island of Oahu, HI. In October 2019, we obtained a $350.0 million mortgage loan secured by 11 of our Mainland Properties containing an aggregate of approximately 8.2 million rentable square feet located in eight states. In April 2019, we assumed a $57.0 million secured mortgage note in connection with one of our acquisitions. For more information regarding our financing sources and activities, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Our Investment and Financing Liquidity and Resources” of this Annual Report on Form 10-K.

We do not have policies limiting the amount of debt we may incur or the number or amount of mortgages that may be placed on our properties. Our Board of Trustees may change our financing policies at any time without a vote of, or notice to, our shareholders.

Structure and Formation of Our Company

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. At that time, we owned 266 properties, or our Initial Properties, with a total of approximately 28.5 million rentable square feet (all square footage amounts included within this Annual Report on Form 10-K are unaudited). Our Initial Properties were contributed to us on September 29, 2017 by Select Income REIT, or SIR, a former publicly traded REIT that merged with a wholly owned subsidiary of Office Properties Income Trust (formerly known as Government Properties Income Trust), or OPI, on December 31, 2018. In connection with our formation and the contribution of our Initial Properties, we (i) issued to SIR 45,000,000 of our common shares, (ii) issued to SIR a $750.0 million non-interest bearing demand note, or the SIR Note, and (iii) assumed three mortgage notes totaling $63.1 million, excluding premiums, that were secured by three of our Initial Properties. In December 2017, we obtained a $750.0 million secured revolving credit facility, and we used the proceeds of an initial borrowing 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 $14.3 million that had encumbered two of our Initial Properties. Upon the closing of our IPO, our secured revolving credit facility was converted into a four year unsecured revolving credit facility and we used substantially all of the net proceeds from our IPO to reduce amounts outstanding under our revolving credit facility. We also reimbursed SIR for costs that SIR incurred in connection with our formation and the preparation for our IPO. On December 27, 2018, SIR distributed all 45,000,000 of our common shares that SIR owned to SIR's shareholders of record as of the close of business on December 20, 2018.

Environmental Matters

Ownership of real estate is subject to risks associated with environmental matters. When we acquire properties we perform environmental site assessments and where there are concerns we do additional monitoring and periodic assessments. Some of our properties are used or have been used for industrial purposes such that there may be forms of contamination present. We require our tenants to maintain compliance with environmental laws and we also monitor any known conditions and in some cases have set up reserves for potential environmental liabilities. Although we do not believe that there are environmental conditions at any of our properties that will materially and adversely affect us, we cannot be sure that such conditions or costs we may be required to incur in the future to address environmental contamination will not materially and adversely affect us.

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Competition

Investing in and operating real estate is a very competitive business. We compete against publicly traded and private REITs, numerous financial institutions, individuals and public and private companies. Some of our competitors may have greater financial and other resources than us. We believe the experience and abilities of our management and our manager, the quality of our properties, the diversity and credit qualities of our tenants, and the structure of our leases may afford us some competitive advantages and allow us to operate our business successfully despite the competitive nature of our business. For more information, see “Risk Factors—Risks Related to Our Business—We face significant competition” in this Annual Report on Form 10-K.

Our Manager

RMR Inc. is a holding company and substantially all of its business is conducted by its majority owned subsidiary, RMR LLC. Our Chair of our Board of Trustees and one of our Managing Trustees, Adam D. Portnoy, as the sole trustee of ABP Trust, is the controlling shareholder of RMR Inc. and is a managing director and the 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. Our day to day operations are conducted by RMR LLC. RMR LLC originates and presents investment and divestment opportunities to our Board of Trustees and provides management and administrative services to us. RMR LLC has a principal place of business at Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458-1634, and its telephone number is (617) 796-8390. RMR LLC or its subsidiaries also act as the manager to Service Properties Trust (formerly known as Hospitality Properties Trust), or SVC, OPI, Diversified Healthcare Trust (formerly known as Senior Housing Properties Trust), or DHC, and Tremont Mortgage Trust, or TRMT, and provides management and other services to other private and public companies, including Five Star Senior Living Inc., or Five Star, TravelCenters of America Inc., or TA, and Sonesta International Hotels Corporation, or Sonesta. As of the date of this Annual Report on Form 10-K, the executive officers of RMR LLC are: Adam Portnoy, President and Chief Executive Officer; David M. Blackman, Executive Vice President; Jennifer B. Clark, Executive Vice President, General Counsel and Secretary; Matthew P. Jordan, Executive Vice President, Chief Financial Officer and Treasurer; John Murray, Executive Vice President; and Jonathan M. Pertchik, Executive Vice President. Our Chief Financial Officer and Treasurer, Richard W. Siedel, Jr., is a Senior Vice President of RMR LLC. Messrs. Murray and Siedel and other officers of RMR LLC also serve as officers of other companies to which RMR LLC or its subsidiaries provide management services.

Employees

We have no employees. Services which would otherwise be provided to us by employees are provided by RMR LLC and by our Managing Trustees and officers. As of December 31, 2019, RMR LLC had more than 600 full time employees in its headquarters and regional offices located throughout the United States.

Insurance

The leases for our properties generally provide that our tenants are responsible for the costs of insurance for the properties we lease to them and the operations conducted on them, including for casualty, liability, fire, extended coverage and rental or business interruption losses. Under the leases for our Hawaii Properties, our tenants generally are responsible for maintaining insurance; and, under the leases for our Mainland Properties, our tenants generally are either required to reimburse us for the costs of maintaining the insurance coverage or to purchase such insurance directly and list us as an insured party. We previously participated with other companies to which RMR LLC provides management services in a combined property insurance program through Affiliates Insurance Company, or AIC. The policies under that program expired on June 30, 2019 and we and the other companies to which RMR LLC provides management services elected not to renew the AIC property insurance program; we instead have purchased standalone property insurance coverage with unrelated third party insurance providers. For more information, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Related Person Transactions" and Note 10 to the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

Other Matters

Legislative and regulatory developments may occur at the federal, state and local levels that have direct or indirect impact on the ownership, leasing and operation of our properties. We may need to make expenditures due to changes in federal, state or local laws and regulations, or the application of these laws and regulations to our properties, including the Americans with Disabilities Act, fire and safety regulations, building codes, land use regulations or environmental regulations for containment, abatement or removal of hazardous substances. Under some of our leases, some of these costs are required to be paid or reimbursed to us by our tenants.

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Internet Website

Our internet website address is www.ilptreit.com. Copies of our governance guidelines, our code of business conduct and ethics, or our Code of Conduct, and the charters of our audit, compensation and nominating and governance committees are posted on our website and also may be obtained free of charge by writing to our Secretary, Industrial Logistics Properties Trust, Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts, 02458-1634. We also have a policy outlining procedures for handling concerns or complaints about accounting, internal accounting controls or auditing matters and a governance hotline accessible on our website that shareholders can use to report concerns or complaints about accounting, internal accounting controls or auditing matters or violations or possible violations of our Code of Conduct. We make available, free of charge, through the “Investors” section of our website, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, as soon as reasonably practicable after these forms are filed with, or furnished to the SEC. Any material we file with or furnish to the SEC is also maintained on the SEC website, www.sec.gov. Securityholders may send communications to our Board of Trustees or individual Trustees by writing to the party for whom the communication is intended at c/o Secretary, Industrial Logistics Properties Trust, Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458-1634 or by email at secretary@ilptreit.com. Our website address is included several times in this Annual Report on Form 10-K as a textual reference only. The information on or accessible through our website is not incorporated by reference into this Annual Report on Form 10-K or other documents we file with, or furnish to, the SEC. We intend to use our website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Those disclosures will be included on our website in the “Investors” section. Accordingly, investors should monitor our website, in addition to following our press releases, SEC filings and public conference calls and webcasts.

Segment Information

As of December 31, 2019, we had one operating segment: ownership and leasing of properties that include industrial and logistics buildings and leased industrial lands. For more information, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

The following summary of material United States federal income tax considerations is based on existing law, and is limited to investors who own our shares as investment assets rather than as inventory or as property used in a trade or business. The summary does not discuss all of the particular tax considerations that might be relevant to you if you are subject to special rules under federal income tax law, for example if you are:

• a bank, insurance company or other financial institution;

• a regulated investment company or REIT;

• a subchapter S corporation;

• a broker, dealer or trader in securities or foreign currencies;

• a person who marks-to-market our shares for U.S. federal income tax purposes;

• a U.S. shareholder (as defined below) that has a functional currency other than the U.S. dollar;

• a person who acquires or owns our shares in connection with employment or other performance of services;

• a person subject to alternative minimum tax;

• a person who acquires or owns our shares as part of a straddle, hedging transaction, constructive sale transaction, constructive ownership transaction or conversion transaction, or as part of a “synthetic security” or other integrated financial transaction;

• a person who owns 10% or more (by vote or value, directly or constructively under the IRC) of any class of our shares;

• a U.S. expatriate;

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• a non-U.S. shareholder (as defined below) whose investment in our shares is effectively connected with the conduct of a trade or business in the United States;

• a nonresident alien individual present in the United States for 183 days or more during an applicable taxable year;

• a “qualified shareholder” (as defined in Section 897(k)(3)(A) of the IRC);

• a “qualified foreign pension fund” (as defined in Section 897(l)(2) of the IRC) or any entity wholly owned by one or more qualified foreign pension funds;

• a person subject to special tax accounting rules as a result of their use of applicable financial statements (within the meaning of Section 451(b)(3) of the IRC); or

• except as specifically described in the following summary, a trust, estate, tax-exempt entity or foreign person.

The sections of the IRC that govern the federal income tax qualification and treatment of a REIT and its shareholders are complex. This presentation is a summary of applicable IRC provisions, related rules and regulations, and administrative and judicial interpretations, all of which are subject to change, possibly with retroactive effect. Future legislative, judicial or administrative actions or decisions could also affect the accuracy of statements made in this summary. We have not received a ruling from the U.S. Internal Revenue Service, or the IRS, with respect to any matter described in this summary, and we cannot be sure that the IRS or a court will agree with all of the statements made in this summary. The IRS could, for example, take a different position from that described in this summary with respect to our acquisitions, operations, valuations, restructurings or other matters, which, if a court agreed, could result in significant tax liabilities for applicable parties. In addition, this summary is not exhaustive of all possible tax considerations, and does not discuss any estate, gift, state, local or foreign tax considerations. For all these reasons, we urge you and any holder of or prospective acquiror of our shares to consult with a tax advisor about the federal income tax and other tax consequences of the acquisition, ownership and disposition of our shares. Our intentions and beliefs described in this summary are based upon our understanding of applicable laws and regulations that are in effect as of the date of this Annual Report on Form 10-K. If new laws or regulations are enacted which impact us directly or indirectly, we may change our intentions or beliefs.

Your federal income tax consequences generally will differ depending on whether or not you are a “U.S. shareholder.” For purposes of this summary, a “U.S. shareholder” is a beneficial owner of our shares that is:

• an individual who is a citizen or resident of the United States, including an alien individual who is a lawful permanent resident of the United States or meets the substantial presence residency test under the federal income tax laws;

• an entity treated as a corporation for federal income tax purposes that is created or organized in or under the laws of the United States, any state thereof or the District of Columbia;

• an estate the income of which is subject to federal income taxation regardless of its source; or

• a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or, to the extent provided in Treasury regulations, a trust in existence on August 20, 1996 that has elected to be treated as a domestic trust;

whose status as a U.S. shareholder is not overridden by an applicable tax treaty. Conversely, a “non-U.S. shareholder” is a beneficial owner of our shares that is not an entity (or other arrangement) treated as a partnership for federal income tax purposes and is not a U.S. shareholder.

If any entity (or other arrangement) treated as a partnership for federal income tax purposes holds our shares, the tax treatment of a partner in the partnership generally will depend upon the tax status of the partner and the activities of the partnership. Any entity (or other arrangement) treated as a partnership for federal income tax purposes that is a holder of our shares and the partners in such a partnership (as determined for federal income tax purposes) are urged to consult their own tax advisors about the federal income tax consequences and other tax consequences of the acquisition, ownership and disposition of our shares.

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Taxation as a REIT

We have elected to be taxed as a REIT under Sections 856 through 860 of the IRC, commencing with our 2018 taxable year. Our REIT election, assuming continuing compliance with the then applicable qualification tests, has continued and will continue in effect for subsequent taxable years. Although we cannot be sure, we believe that from and after our 2018 taxable year we have been organized and have operated, and will continue to be organized and to operate, in a manner that qualified us and will continue to qualify us to be taxed as a REIT under the IRC.

As a REIT, we generally are not subject to federal income tax on our net income distributed as dividends to our shareholders. Distributions to our shareholders generally are included in our shareholders’ income as dividends to the extent of our available current or accumulated earnings and profits. Our dividends are not generally entitled to the preferential tax rates on qualified dividend income, but a portion of our dividends may be treated as capital gain dividends or as qualified dividend income, all as explained below. In addition, for taxable years beginning before 2026 and pursuant to the deduction-without-outlay mechanism of Section 199A of the IRC, our noncorporate U.S. shareholders are generally eligible for lower effective tax rates on our dividends that are not treated as capital gain dividends or as qualified dividend income. No portion of any of our dividends is eligible for the dividends received deduction for corporate shareholders. Distributions in excess of our current or accumulated earnings and profits generally are treated for federal income tax purposes as returns of capital to the extent of a recipient shareholder’s basis in our shares, and will reduce this basis. Our current or accumulated earnings and profits are generally allocated first to distributions made on our preferred shares, of which there are none outstanding at this time, and thereafter to distributions made on our common shares. For all these purposes, our distributions include cash distributions, any in kind distributions of property that we might make, and deemed or constructive distributions resulting from capital market activities (such as some redemptions), as described below.

Our counsel, Sullivan & Worcester LLP, is of the opinion that we have been organized and have qualified for taxation as a REIT under the IRC for our 2018 and 2019 taxable years, and that our current and anticipated investments and plan of operation will enable us to continue to meet the requirements for qualification and taxation as a REIT under the IRC. Our counsel’s opinions are conditioned upon the assumption that our leases, our declaration of trust, and all other legal documents to which we have been or are a party have been and will be complied with by all parties to those documents, upon the accuracy and completeness of the factual matters described in this Annual Report on Form 10-K and upon representations made by us to our counsel as to certain factual matters relating to our organization and operations and our expected manner of operation. If this assumption or a description or representation is inaccurate or incomplete, our counsel’s opinions may be adversely affected and may not be relied upon. The opinions of our counsel are based upon the law as it exists today, but the law may change in the future, possibly with retroactive effect. Given the highly complex nature of the rules governing REITs, the ongoing importance of factual determinations, and the possibility of future changes in our circumstances, neither Sullivan & Worcester LLP nor we can be sure that we will qualify as or be taxed as a REIT for any particular year. Any opinion of Sullivan & Worcester LLP as to our qualification or taxation as a REIT will be expressed as of the date issued. Our counsel will have no obligation to advise us or our shareholders of any subsequent change in the matters stated, represented or assumed, or of any subsequent change in the applicable law. Also, the opinions of our counsel are not binding on either the IRS or a court, and either could take a position different from that expressed by our counsel.

Our continued qualification and taxation as a REIT will depend upon our compliance with various qualification tests imposed under the IRC and summarized below. While we believe that we have satisfied and will satisfy these tests, our counsel does not review compliance with these tests on a continuing basis. If we fail to qualify for taxation as a REIT in any year, we will be subject to federal income taxation as if we were a corporation taxed under subchapter C of the IRC, or a C corporation, and our shareholders will be taxed like shareholders of regular C corporations, meaning that federal income tax generally will be applied at both the corporate and shareholder levels. In this event, we could be subject to significant tax liabilities, and the amount of cash available for distribution to our shareholders could be reduced or eliminated.

If we continue to qualify for taxation as a REIT and meet the tests described below, we generally will not pay federal income tax on amounts we distribute to our shareholders. However, even if we continue to qualify for taxation as a REIT, we may still be subject to federal tax in the following circumstances, as described below:

• We will be taxed at regular corporate income tax rates on any undistributed “real estate investment trust taxable income,” determined by including our undistributed ordinary income and net capital gains, if any.

• If we have net income from the disposition of “foreclosure property,” as described in Section 856(e) of the IRC, that is held primarily for sale to customers in the ordinary course of a trade or business or other nonqualifying income from foreclosure property, we will be subject to tax on this income at the highest regular corporate income tax rate.

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• If we have net income from “prohibited transactions”—that is, dispositions at a gain of inventory or property held primarily for sale to customers in the ordinary course of a trade or business other than dispositions of foreclosure property and other than dispositions excepted by statutory safe harbors—we will be subject to tax on this income at a 100% rate.

• If we fail to satisfy the 75% gross income test or the 95% gross income test discussed below, due to reasonable cause and not due to willful neglect, but nonetheless maintain our qualification for taxation as a REIT because of specified cure provisions, we will be subject to tax at a 100% rate on the greater of the amount by which we fail the 75% gross income test or the 95% gross income test, with adjustments, multiplied by a fraction intended to reflect our profitability for the taxable year.

• If we fail to satisfy any of the REIT asset tests described below (other than a de minimis failure of the 5% or 10% asset tests) due to reasonable cause and not due to willful neglect, but nonetheless maintain our qualification for taxation as a REIT because of specified cure provisions, we will be subject to a tax equal to the greater of $50,000 or the highest regular corporate income tax rate multiplied by the net income generated by the nonqualifying assets that caused us to fail the test.

• If we fail to satisfy any provision of the IRC that would result in our failure to qualify for taxation as a REIT (other than violations of the REIT gross income tests or violations of the REIT asset tests described below) due to reasonable cause and not due to willful neglect, we may retain our qualification for taxation as a REIT but will be subject to a penalty of $50,000 for each failure.

• If we fail to distribute for any calendar year at least the sum of 85% of our REIT ordinary income for that year, 95% of our REIT capital gain net income for that year and any undistributed taxable income from prior periods, we will be subject to a 4% nondeductible excise tax on the excess of the required distribution over the amounts actually distributed.

• If we acquire a REIT asset where our adjusted tax basis in the asset is determined by reference to the adjusted tax basis of the asset in the hands of a C corporation, under specified circumstances we may be subject to federal income taxation on all or part of the built-in gain (calculated as of the date the property ceased being owned by the C corporation) on such asset. We generally do not expect to sell assets if doing so would result in the imposition of a material built-in gains tax liability; but if and when we do sell assets that may have associated built-in gains tax exposure, then we expect to make appropriate provision for the associated tax liabilities on our financial statements.

• If we acquire a corporation in a transaction where we succeed to its tax attributes, to preserve our qualification for taxation as a REIT we must generally distribute all of the C corporation earnings and profits inherited in that acquisition, if any, no later than the end of our taxable year in which the acquisition occurs. However, if we fail to do so, relief provisions would allow us to maintain our qualification for taxation as a REIT provided we distribute any subsequently discovered C corporation earnings and profits and pay an interest charge in respect of the period of delayed distribution.

• Our subsidiaries that are C corporations, including our “taxable REIT subsidiaries” as defined in Section 856(l) of the IRC, or TRSs, generally will be required to pay federal corporate income tax on their earnings, and a 100% tax may be imposed on any transaction between us and one of our TRSs that does not reflect arm’s length terms.

If we fail to qualify for taxation as a REIT in any year, then we will be subject to federal income tax in the same manner as a regular C corporation. Further, as a regular C corporation, distributions to our shareholders will not be deductible by us, nor will distributions be required under the IRC. Also, to the extent of our current and accumulated earnings and profits, all distributions to our shareholders will generally be taxable as ordinary dividends potentially eligible for the preferential tax rates discussed below under the heading “—Taxation of Taxable U.S. Shareholders” and, subject to limitations in the IRC, will be potentially eligible for the dividends received deduction for corporate shareholders. Finally, we will generally be disqualified from taxation as a REIT for the four taxable years following the taxable year in which the termination of our REIT status is effective. Our failure to qualify for taxation as a REIT for even one year could result in us reducing or eliminating distributions to our shareholders, or in us incurring substantial indebtedness or liquidating substantial investments in order to pay the resulting corporate-level income taxes. Relief provisions under the IRC may allow us to continue to qualify for taxation as a REIT even if we fail to comply with various REIT requirements, all as discussed in more detail below. However, it is impossible to state whether in any particular circumstance we would be entitled to the benefit of these relief provisions.

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REIT Qualification Requirements

General Requirements. Section 856(a) of the IRC defines a REIT as a corporation, trust or association:

(1) that is managed by one or more trustees or directors;

(2) the beneficial ownership of which is evidenced by transferable shares or by transferable certificates of beneficial interest;

(3) that would be taxable, but for Sections 856 through 859 of the IRC, as a domestic C corporation;

(4) that is not a financial institution or an insurance company subject to special provisions of the IRC;

(5) the beneficial ownership of which is held by 100 or more persons;

(6) that is not “closely held,” meaning that during the last half of each taxable year, not more than 50% in value of the outstanding shares are owned, directly or indirectly, by five or fewer “individuals” (as defined in the IRC to include specified tax-exempt entities);

(7) that does not have (and has not succeeded to) the post-December 7, 2015 tax-free spin-off history proscribed by Section 856(c)(8) of the IRC; and

(8) that meets other tests regarding the nature of its income and assets and the amount of its distributions, all as described below.

Section 856(b) of the IRC provides that conditions (1) through (4) must be met during the entire taxable year and that condition (5) must be met during at least 335 days of a taxable year of 12 months, or during a proportionate part of a taxable year of less than 12 months. Although we cannot be sure, we believe that we have met conditions (1) through (8) during each of the requisite periods ending on or before the close of our most recently completed taxable year, and that we will continue to meet these conditions in our current and future taxable years.

To help comply with condition (6), our declaration of trust restricts transfers of our shares that would otherwise result in concentrated ownership positions. These restrictions, however, do not ensure that we have previously satisfied, and may not ensure that we will in all cases be able to continue to satisfy, the share ownership requirements described in condition (6). If we comply with applicable Treasury regulations to ascertain the ownership of our outstanding shares and do not know, or by exercising reasonable diligence would not have known, that we failed condition (6), then we will be treated as having met condition (6). Accordingly, we have complied and will continue to comply with these regulations, including by requesting annually from holders of significant percentages of our shares information regarding the ownership of our shares. Under our declaration of trust, our shareholders are required to respond to these requests for information. A shareholder that fails or refuses to comply with the request is required by Treasury regulations to submit a statement with its federal income tax return disclosing its actual ownership of our shares and other information.

For purposes of condition (6), an “individual” generally includes a natural person, a supplemental unemployment compensation benefit plan, a private foundation, or a portion of a trust permanently set aside or used exclusively for charitable purposes, but does not include a qualified pension plan or profit-sharing trust. As a result, REIT shares owned by an entity that is not an “individual” are considered to be owned by the direct and indirect owners of the entity that are individuals (as so defined), rather than to be owned by the entity itself. Similarly, REIT shares held by a qualified pension plan or profit-sharing trust are treated as held directly by the individual beneficiaries in proportion to their actuarial interests in such plan or trust. Consequently, five or fewer such trusts could own more than 50% of the interests in an entity without jeopardizing that entity’s qualification for taxation as a REIT.

The IRC provides that we will not automatically fail to qualify for taxation as a REIT if we do not meet conditions (1) through (7), provided we can establish that such failure was due to reasonable cause and not due to willful neglect. Each such excused failure will result in the imposition of a $50,000 penalty instead of REIT disqualification. This relief provision may apply to a failure of the applicable conditions even if the failure first occurred in a year prior to the taxable year in which the failure was discovered.

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Our Wholly Owned Subsidiaries and Our Investments Through Partnerships. Except in respect of a TRS as discussed below, Section 856(i) of the IRC provides that any corporation, 100% of whose stock is held by a REIT and its disregarded subsidiaries, is a qualified REIT subsidiary and shall not be treated as a separate corporation for U.S. federal income tax purposes. The assets, liabilities and items of income, deduction and credit of a qualified REIT subsidiary are treated as the REIT’s. We believe that each of our direct and indirect wholly owned subsidiaries, other than the TRSs discussed below (and entities owned in whole or in part by the TRSs), will be either a qualified REIT subsidiary within the meaning of Section 856(i)(2) of the IRC or a noncorporate entity that for federal income tax purposes is not treated as separate from its owner under Treasury regulations issued under Section 7701 of the IRC, each such entity referred to as a QRS. Thus, in applying all of the REIT qualification requirements described in this summary, all assets, liabilities and items of income, deduction and credit of our QRSs are treated as ours, and our investment in the stock and other securities of such QRSs will be disregarded.

We have invested and may in the future invest in real estate through one or more entities that are treated as partnerships for federal income tax purposes. In the case of a REIT that is a partner in a partnership, Treasury regulations under the IRC provide that, for purposes of the REIT qualification requirements regarding income and assets described below, the REIT is generally deemed to own its proportionate share, based on respective capital interests, of the income and assets of the partnership (except that for purposes of the 10% value test, described below, the REIT’s proportionate share of the partnership’s assets is based on its proportionate interest in the equity and specified debt securities issued by the partnership). In addition, for these purposes, the character of the assets and items of gross income of the partnership generally remains the same in the hands of the REIT. In contrast, for purposes of the distribution requirements discussed below, we must take into account as a partner our share of the partnership’s income as determined under the general federal income tax rules governing partners and partnerships under Subchapter K of the IRC.

Subsidiary REITs. We indirectly own real estate through a subsidiary that we believe has qualified and will remain qualified for taxation as a REIT under the IRC, and we may in the future invest in real estate through one or more other subsidiary entities that are intended to qualify for taxation as REITs. When a subsidiary qualifies for taxation as a REIT separate and apart from its REIT parent, the subsidiary’s shares are qualifying real estate assets for purposes of the REIT parent’s 75% asset test described below. However, failure of the subsidiary to separately satisfy the various REIT qualification requirements described in this summary or that are otherwise applicable (and failure to qualify for the applicable relief provisions) would generally result in (a) the subsidiary being subject to regular U.S. corporate income tax, as described above, and (b) the REIT parent’s ownership in the subsidiary (i) ceasing to be qualifying real estate assets for purposes of the 75% asset test, (ii) becoming subject to the 5% asset test, the 10% vote test and the 10% value test generally applicable to a REIT’s ownership in corporations other than REITs and TRSs, and (iii) thereby jeopardizing the REIT parent’s own REIT qualification and taxation on account of the subsidiary’s failure cascading up to the REIT parent, all as described below under the heading “—Asset Tests”.

We intend to join with our subsidiary REIT in filing a protective TRS election, effective for the first quarter of 2020, and to reaffirm this protective election with this subsidiary every January thereafter, and we may continue to do so unless and until our ownership of this subsidiary falls below 10%. Pursuant to this protective TRS election, we believe that if our subsidiary is not a REIT for some reason, then it would instead be considered one of our TRSs, and as such its value would fit within our REIT gross asset tests described below. We expect to make similar protective TRS elections with respect to any other subsidiary REIT that we form or acquire. We do not expect protective TRS elections to impact our compliance with the 75% and 95% gross income tests described below, because we do not expect our gains and dividends from a subsidiary REIT’s shares to jeopardize compliance with these tests even if for some reason the subsidiary is not a REIT.

Taxable REIT Subsidiaries. As a REIT, we are permitted to own any or all of the securities of a TRS, provided that no more than 20% of the total value of our assets, at the close of each quarter, is comprised of our investments in the stock or other securities of our TRSs. Very generally, a TRS is a subsidiary corporation other than a REIT in which a REIT directly or indirectly holds stock and that has made a joint election with its affiliated REIT to be treated as a TRS. Our ownership of stock and other securities in our TRSs is exempt from the 5% asset test, the 10% vote test and the 10% value test discussed below.

In addition, any corporation (other than a REIT) in which a TRS directly or indirectly owns more than 35% of the voting power or value of the outstanding securities is automatically a TRS. Subject to the discussion below, we believe that we and each of our TRSs have complied with, and will continue to comply with, the requirements for TRS status at all times during which we intend for the subsidiary’s TRS election to be in effect, and we believe that the same will be true for any TRS that we later form or acquire.

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As discussed below, TRSs can perform services for our tenants without disqualifying the rents we receive from those tenants under the 75% gross income test or the 95% gross income test discussed below. Moreover, because our TRSs are taxed as C corporations that are separate from us, their assets, liabilities and items of income, deduction and credit generally are not imputed to us for purposes of the REIT qualification requirements described in this summary. Therefore, our TRSs may generally conduct activities that would be treated as prohibited transactions or would give rise to nonqualified income if conducted by us directly. As regular C corporations, TRSs may generally utilize net operating losses and other tax attribute carryforwards to reduce or otherwise eliminate federal income tax liability in a given taxable year. Net operating losses and other carryforwards are subject to limitations, however, including limitations imposed under Section 382 of the IRC following an “ownership change” (as defined in applicable Treasury regulations) and a limitation providing that carryforwards of net operating losses generally cannot offset more than 80% of the current year’s taxable income. Moreover, net operating losses may not be carried back, but may be carried forward indefinitely. As a result, we cannot be sure that our TRSs will be able to utilize, in full or in part, any net operating losses or other carryforwards that they may generate in the future.

Restrictions and sanctions are imposed on TRSs and their affiliated REITs to ensure that the TRSs will be subject to an appropriate level of federal income taxation. For example, if a TRS pays interest, rent or other amounts to its affiliated REIT in an amount that exceeds what an unrelated third party would have paid in an arm’s length transaction, then the REIT generally will be subject to an excise tax equal to 100% of the excessive portion of the payment. Further, if in comparison to an arm’s length transaction, a third-party tenant has overpaid rent to the REIT in exchange for underpaying the TRS for services rendered, and if the REIT has not adequately compensated the TRS for services provided to or on behalf of the third-party tenant, then the REIT may be subject to an excise tax equal to 100% of the undercompensation to the TRS. A safe harbor exception to this excise tax applies if the TRS has been compensated at a rate at least equal to 150% of its direct cost in furnishing or rendering the service. Finally, the 100% excise tax also applies to the underpricing of services provided by a TRS to its affiliated REIT in contexts where the services are unrelated to services for REIT tenants. We cannot be sure that arrangements involving our TRSs will not result in the imposition of one or more of these restrictions or sanctions, but we do not believe that we or our TRSs are or will be subject to these impositions.

Income Tests. We must satisfy two gross income tests annually to maintain our qualification for taxation as a REIT. First, at least 75% of our gross income for each taxable year must be derived from investments relating to real property, including “rents from real property” within the meaning of Section 856(d) of the IRC, interest and gain from mortgages on real property or on interests in real property, income and gain from foreclosure property, gain from the sale or other disposition of real property (including specified ancillary personal property treated as real property under the IRC), or dividends on and gain from the sale or disposition of shares in other REITs (but excluding in all cases any gains subject to the 100% tax on prohibited transactions). When we receive new capital in exchange for our shares or in a public offering of our five-year or longer debt instruments, income attributable to the temporary investment of this new capital in stock or a debt instrument, if received or accrued within one year of our receipt of the new capital, is generally also qualifying income under the 75% gross income test. Second, at least 95% of our gross income for each taxable year must consist of income that is qualifying income for purposes of the 75% gross income test, other types of interest and dividends, gain from the sale or disposition of stock or securities, or any combination of these. Gross income from our sale of property that we hold primarily for sale to customers in the ordinary course of business, income and gain from specified “hedging transactions” that are clearly and timely identified as such, and income from the repurchase or discharge of indebtedness is excluded from both the numerator and the denominator in both gross income tests. In addition, specified foreign currency gains will be excluded from gross income for purposes of one or both of the gross income tests.

In order to qualify as “rents from real property” within the meaning of Section 856(d) of the IRC, several requirements must be met:

• The amount of rent received generally must not be based on the income or profits of any person, but may be based on a fixed percentage or percentages of receipts or sales.

• Rents generally do not qualify if the REIT owns 10% or more by vote or value of stock of the tenant (or 10% or more of the interests in the assets or net profits of the tenant, if the tenant is not a corporation), whether directly or after application of attribution rules. We generally do not intend to lease property to any party if rents from that property would not qualify as “rents from real property,” but application of the 10% ownership rule is dependent upon complex attribution rules and circumstances that may be beyond our control. Our declaration of trust generally disallows transfers or purported acquisitions, directly or by attribution, of our shares to the extent necessary to maintain our qualification for taxation as a REIT under the IRC. Nevertheless, we cannot be sure that these restrictions will be effective to prevent our qualification for taxation as a REIT from being jeopardized under the 10% affiliated tenant rule. Furthermore, we cannot be sure that we will be able to monitor and enforce

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these restrictions, nor will our shareholders necessarily be aware of ownership of our shares attributed to them under the IRC’s attribution rules.

• There is a limited exception to the above prohibition on earning “rents from real property” from a 10% affiliated tenant where the tenant is a TRS. If at least 90% of the leased space of a property is leased to tenants other than TRSs and 10% affiliated tenants, and if the TRS’s rent to the REIT for space at that property is substantially comparable to the rents paid by nonaffiliated tenants for comparable space at the property, then otherwise qualifying rents paid by the TRS to the REIT will not be disqualified on account of the rule prohibiting 10% affiliated tenants.

• In order for rents to qualify, a REIT generally must not manage the property or furnish or render services to the tenants of the property, except through an independent contractor from whom it derives no income or through one of its TRSs. There is an exception to this rule permitting a REIT to perform customary management and tenant services of the sort that a tax-exempt organization could perform without being considered in receipt of “unrelated business taxable income” as defined in Section 512(b)(3) of the IRC, or UBTI. In addition, a de minimis amount of noncustomary services provided to tenants will not disqualify income as “rents from real property” as long as the value of the impermissible tenant services does not exceed 1% of the gross income from the property.

• If rent attributable to personal property leased in connection with a lease of real property is 15% or less of the total rent received under the lease, then the rent attributable to personal property will qualify as “rents from real property”; if this 15% threshold is exceeded, then the rent attributable to personal property will not so qualify. The portion of rental income treated as attributable to personal property is determined according to the ratio of the fair market value of the personal property to the total fair market value of the real and personal property that is rented.

• In addition, “rents from real property” includes both charges we receive for services customarily rendered in connection with the rental of comparable real property in the same geographic area, even if the charges are separately stated, as well as charges we receive for services provided by our TRSs when the charges are not separately stated. Whether separately stated charges received by a REIT for services that are not geographically customary and provided by a TRS are included in “rents from real property” has not been addressed clearly by the IRS in published authorities; however, our counsel, Sullivan & Worcester LLP, is of the opinion that, although the matter is not free from doubt, “rents from real property” also includes charges we receive for services provided by our TRSs when the charges are separately stated, even if the services are not geographically customary. Accordingly, we expect that any revenues from TRS-provided services, whether the charges are separately stated or not, will qualify as “rents from real property” because the services will satisfy the geographically customary standard, because the services will be provided by a TRS, or for both reasons.

We believe that all or substantially all of our rents and related service charges have qualified and will continue to qualify as “rents from real property” for purposes of Section 856 of the IRC.

Absent the “foreclosure property” rules of Section 856(e) of the IRC, a REIT’s receipt of active, nonrental gross income from a property would not qualify under the 75% and 95% gross income tests. But as foreclosure property, the active, nonrental gross income from the property would so qualify. Foreclosure property is generally any real property, including interests in real property, and any personal property incident to such real property:

• that is acquired by a REIT as a result of the REIT having bid on such property at foreclosure, or having otherwise reduced such property to ownership or possession by agreement or process of law, after there was a default or when default was imminent on a lease of such property or on indebtedness that such property secured;

• for which any related loan acquired by the REIT was acquired at a time when the default was not imminent or anticipated; and

• for which the REIT makes a proper election to treat the property as foreclosure property.

Any gain that a REIT recognizes on the sale of foreclosure property held as inventory or primarily for sale to customers, plus any income it receives from foreclosure property that would not otherwise qualify under the 75% gross income test in the absence of foreclosure property treatment, reduced by expenses directly connected with the production of those items of income, would be subject to income tax at the highest regular corporate income tax rate under the foreclosure property income tax rules of Section 857(b)(4) of the IRC. Thus, if a REIT should lease foreclosure property in exchange for rent that qualifies as “rents from real property” as described above, then that rental income is not subject to the foreclosure property income tax.

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Property generally ceases to be foreclosure property at the end of the third taxable year following the taxable year in which the REIT acquired the property, or longer if an extension is obtained from the IRS. However, this grace period terminates and foreclosure property ceases to be foreclosure property on the first day:

• on which a lease is entered into for the property that, by its terms, will give rise to income that does not qualify for purposes of the 75% gross income test (disregarding income from foreclosure property), or any nonqualified income under the 75% gross income test is received or accrued by the REIT, directly or indirectly, pursuant to a lease entered into on or after such day;

• on which any construction takes place on the property, other than completion of a building or any other improvement where more than 10% of the construction was completed before default became imminent and other than specifically exempted forms of maintenance or deferred maintenance; or

• which is more than 90 days after the day on which the REIT acquired the property and the property is used in a trade or business which is conducted by the REIT, other than through an independent contractor from whom the REIT itself does not derive or receive any income or a TRS.

Other than sales of foreclosure property, any gain that we realize on the sale of property held as inventory or other property held primarily for sale to customers in the ordinary course of a trade or business, together known as dealer gains, may be treated as income from a prohibited transaction that is subject to a penalty tax at a 100% rate. The 100% tax does not apply to gains from the sale of property that is held through a TRS, although such income will be subject to tax in the hands of the TRS at regular corporate income tax rates; we may therefore utilize our TRSs in transactions in which we might otherwise recognize dealer gains. Whether property is held as inventory or primarily for sale to customers in the ordinary course of a trade or business is a question of fact that depends on all the facts and circumstances surrounding each particular transaction. Sections 857(b)(6)(C) and (E) of the IRC provide safe harbors pursuant to which limited sales of real property held for at least two years and meeting specified additional requirements will not be treated as prohibited transactions. However, compliance with the safe harbors is not always achievable in practice. We intend to structure our activities to avoid transactions that are prohibited transactions, or otherwise conduct such activities through TRSs; but, we cannot be sure whether or not the IRS might successfully assert that one or more of our dispositions is subject to the 100% penalty tax. Gains subject to the 100% penalty tax are excluded from the 75% and 95% gross income tests, whereas real property gains that are not dealer gains or that are exempted from the 100% penalty tax on account of the safe harbors are considered qualifying gross income for purposes of the 75% and 95% gross income tests.

We believe that any gain from dispositions of assets that we might make in the future, including through any partnerships, will generally qualify as income that satisfies the 75% and 95% gross income tests, and will not be dealer gains or subject to the 100% penalty tax. This is because our general intent has been and is to: (a) own our assets for investment with a view to long-term income production and capital appreciation; (b) engage in the business of developing, owning, leasing and managing our existing properties and acquiring, developing, owning, leasing and managing new properties; and (c) make occasional dispositions of our assets consistent with our long-term investment objectives.

If we fail to satisfy one or both of the 75% gross income test or the 95% gross income test in any taxable year, we may nevertheless qualify for taxation as a REIT for that year if we satisfy the following requirements: (a) our failure to meet the test is due to reasonable cause and not due to willful neglect; and (b) after we identify the failure, we file a schedule describing each item of our gross income included in the 75% gross income test or the 95% gross income test for that taxable year. Even if this relief provision does apply, a 100% tax is imposed upon the greater of the amount by which we failed the 75% gross income test or the amount by which we failed the 95% gross income test, with adjustments, multiplied by a fraction intended to reflect our profitability for the taxable year. This relief provision may apply to a failure of the applicable income tests even if the failure first occurred in a year prior to the taxable year in which the failure was discovered.

Based on the discussion above, we believe that we have satisfied, and will continue to satisfy, the 75% and 95% gross income tests outlined above on a continuing basis beginning with our first taxable year as a REIT.

Asset Tests. At the close of each calendar quarter of each taxable year, we must also satisfy the following asset percentage tests in order to qualify for taxation as a REIT for federal income tax purposes:

• At least 75% of the value of our total assets must consist of “real estate assets,” defined as real property (including interests in real property and interests in mortgages on real property or on interests in real property), ancillary personal property to the extent that rents attributable to such personal property are treated as rents from real property in accordance with the rules described above, cash and cash items, shares in other REITs, debt instruments issued by “publicly offered REITs” as defined in Section 562(c)(2) of the IRC, government securities

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and temporary investments of new capital (that is, any stock or debt instrument that we hold that is attributable to any amount received by us (a) in exchange for our stock or (b) in a public offering of our five-year or longer debt instruments, but in each case only for the one-year period commencing with our receipt of the new capital).

• Not more than 25% of the value of our total assets may be represented by securities other than those securities that count favorably toward the preceding 75% asset test.

• Of the investments included in the preceding 25% asset class, the value of any one non-REIT issuer’s securities that we own may not exceed 5% of the value of our total assets. In addition, we may not own more than 10% of the vote or value of any one non-REIT issuer’s outstanding securities, unless the securities are “straight debt” securities or otherwise excepted as discussed below. Our stock and other securities in a TRS are exempted from these 5% and 10% asset tests.

• Not more than 20% of the value of our total assets may be represented by stock or other securities of our TRSs.

• Not more than 25% of the value of our total assets may be represented by “nonqualified publicly offered REIT debt instruments” as defined in Section 856(c)(5)(L)(ii) of the IRC.

Our counsel, Sullivan & Worcester LLP, is of the opinion that, although the matter is not free from doubt, our investments in the equity or debt of a TRS of ours, to the extent that and during the period in which they qualify as temporary investments of new capital, will be treated as real estate assets, and not as securities, for purposes of the above REIT asset tests.

The above REIT asset tests must be satisfied at the close of each calendar quarter of each taxable year as a REIT. After a REIT meets the asset tests at the close of any quarter, it will not lose its qualification for taxation as a REIT in any subsequent quarter solely because of fluctuations in the values of its assets. This grandfathering rule may be of limited benefit to a REIT such as us that makes periodic acquisitions of both qualifying and nonqualifying REIT assets. When a failure to satisfy the above asset tests results from an acquisition of securities or other property during a quarter, the failure can be cured by disposition of sufficient nonqualifying assets within thirty days after the close of that quarter.

In addition, if we fail the 5% asset test, the 10% vote test or the 10% value test at the close of any quarter and we do not cure such failure within thirty days after the close of that quarter, that failure will nevertheless be excused if (a) the failure is de minimis and (b) within six months after the last day of the quarter in which we identify the failure, we either dispose of the assets causing the failure or otherwise satisfy the 5% asset test, the 10% vote test and the 10% value test. For purposes of this relief provision, the failure will be de minimis if the value of the assets causing the failure does not exceed $10,000,000. If our failure is not de minimis, or if any of the other REIT asset tests have been violated, we may nevertheless qualify for taxation as a REIT if (a) we provide the IRS with a description of each asset causing the failure, (b) the failure was due to reasonable cause and not willful neglect, (c) we pay a tax equal to the greater of (1) $50,000 or (2) the highest regular corporate income tax rate imposed on the net income generated by the assets causing the failure during the period of the failure, and (d) within six months after the last day of the quarter in which we identify the failure, we either dispose of the assets causing the failure or otherwise satisfy all of the REIT asset tests. These relief provisions may apply to a failure of the applicable asset tests even if the failure first occurred in a year prior to the taxable year in which the failure was discovered.

The IRC also provides an excepted securities safe harbor to the 10% value test that includes among other items (a) “straight debt” securities, (b) specified rental agreements in which payment is to be made in subsequent years, (c) any obligation to pay “rents from real property,” (d) securities issued by governmental entities that are not dependent in whole or in part on the profits of or payments from a nongovernmental entity, and (e) any security issued by another REIT. In addition, any debt instrument issued by an entity classified as a partnership for federal income tax purposes, and not otherwise excepted from the definition of a security for purposes of the above safe harbor, will not be treated as a security for purposes of the 10% value test if at least 75% of the partnership’s gross income, excluding income from prohibited transactions, is qualifying income for purposes of the 75% gross income test.

We have maintained and will continue to maintain records of the value of our assets to document our compliance with the above asset tests and intend to take actions as may be required to cure any failure to satisfy the tests within thirty days after the close of any quarter or within the six month periods described above.

Based on the discussion above, we believe that we have satisfied, and will continue to satisfy, the REIT asset tests outlined above on a continuing basis beginning with our first taxable year as a REIT.

Annual Distribution Requirements. In order to qualify for taxation as a REIT under the IRC, we are required to make annual distributions other than capital gain dividends to our shareholders in an amount at least equal to the excess of:    

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(1) the sum of 90% of our “real estate investment trust taxable income” and 90% of our net income after tax, if any, from property received in foreclosure, over

(2) the amount by which our noncash income (e.g., imputed rental income or income from transactions inadvertently failing to qualify as like-kind exchanges) exceeds 5% of our “real estate investment trust taxable income.”

For these purposes, our “real estate investment trust taxable income” is as defined under Section 857 of the IRC and is computed without regard to the dividends paid deduction and our net capital gain and will generally be reduced by specified corporate-level income taxes that we pay (e.g., taxes on built-in gains or foreclosure property income).

The IRC generally limits the deductibility of net interest expense paid or accrued on debt properly allocable to a trade or business to 30% of “adjusted taxable income,” subject to specified exceptions. Any deduction in excess of the limitation is carried forward and may be used in a subsequent year, subject to that year’s 30% limitation. Provided a taxpayer makes an election (which is irrevocable), the 30% limitation does not apply to a trade or business involving real property development, redevelopment, construction, reconstruction, acquisition, conversion, rental, operation, management, leasing, or brokerage, within the meaning of Section 469(c)(7)(C) of the IRC. While legislative history and proposed Treasury regulations indicate that a real property trade or business includes a trade or business conducted by a corporation or a REIT, we have not yet made an election to be treated as a real property trade or business.

Distributions must be paid in the taxable year to which they relate, or in the following taxable year if declared before we timely file our federal income tax return for the earlier taxable year and if paid on or before the first regular distribution payment after that declaration. If a dividend is declared in October, November or December to shareholders of record during one of those months and is paid during the following January, then for federal income tax purposes such dividend will be treated as having been both paid and received on December 31 of the prior taxable year to the extent of any undistributed earnings and profits.

The 90% distribution requirements may be waived by the IRS if a REIT establishes that it failed to meet them by reason of distributions previously made to meet the requirements of the 4% excise tax discussed below. To the extent that we do not distribute all of our net capital gain and all of our “real estate investment trust taxable income,” as adjusted, we will be subject to federal income tax at regular corporate income tax rates on undistributed amounts. In addition, we will be subject to a 4% nondeductible excise tax to the extent we fail within a calendar year to make required distributions to our shareholders of 85% of our ordinary income and 95% of our capital gain net income plus the excess, if any, of the “grossed up required distribution” for the preceding calendar year over the amount treated as distributed for that preceding calendar year. For this purpose, the term “grossed up required distribution” for any calendar year is the sum of our taxable income for the calendar year without regard to the deduction for dividends paid and all amounts from earlier years that are not treated as having been distributed under the provision. We will be treated as having sufficient earnings and profits to treat as a dividend any distribution by us up to the amount required to be distributed in order to avoid imposition of the 4% excise tax.

If we do not have enough cash or other liquid assets to meet the 90% distribution requirements, or if we so choose, we may find it necessary or desirable to arrange for new debt or equity financing to provide funds for required distributions in order to maintain our qualification for taxation as a REIT. We cannot be sure that financing would be available for these purposes on favorable terms, or at all.

We may be able to rectify a failure to pay sufficient dividends for any year by paying “deficiency dividends” to shareholders in a later year. These deficiency dividends may be included in our deduction for dividends paid for the earlier year, but an interest charge would be imposed upon us for the delay in distribution. While the payment of a deficiency dividend will apply to a prior year for purposes of our REIT distribution requirements and our dividends paid deduction, it will be treated as an additional distribution to the shareholders receiving it in the year such dividend is paid.

In addition to the other distribution requirements above, to preserve our qualification for taxation as a REIT we are required to timely distribute all C corporation earnings and profits that we inherit from acquired corporations, as described below.

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Acquisitions of C Corporations

We may in the future engage in transactions where we acquire all of the outstanding stock of a C corporation. Upon these acquisitions, except to the extent we make an applicable TRS election, each of our acquired entities and their various wholly-owned corporate and noncorporate subsidiaries will become our QRSs. Thus, after such acquisitions, all assets, liabilities and items of income, deduction and credit of the acquired and then disregarded entities will be treated as ours for purposes of the various REIT qualification tests described above. In addition, we generally will be treated as the successor to the acquired (and then disregarded) entities’ federal income tax attributes, such as those entities’ (a) adjusted tax bases in their assets and their depreciation schedules; and (b) earnings and profits for federal income tax purposes, if any. The carryover of these attributes creates REIT implications such as built-in gains tax exposure and additional distribution requirements, as described below. However, when we make an election under Section 338(g) of the IRC with respect to corporations that we acquire, we generally will not be subject to such attribute carryovers in respect of attributes existing prior to such election.

Built-in Gains from C Corporations. Notwithstanding our qualification and taxation as a REIT, under specified circumstances we may be subject to corporate income taxation if we acquire a REIT asset where our adjusted tax basis in the asset is determined by reference to the adjusted tax basis of the asset as owned by a C corporation. For instance, we may be subject to federal income taxation on all or part of the built-in gain that was present on the last date an asset was owned by a C corporation, if we succeed to a carryover tax basis in that asset directly or indirectly from such C corporation and if we sell the asset during the five year period beginning on the day the asset ceased being owned by such C corporation. To the extent of our income and gains in a taxable year that are subject to the built-in gains tax, net of any taxes paid on such income and gains with respect to that taxable year, our taxable dividends paid in the following year will be potentially eligible for taxation to noncorporate U.S. shareholders at the preferential tax rates for “qualified dividends” as described below under the heading “—Taxation of Taxable U.S. Shareholders”. We generally do not expect to sell assets if doing so would result in the imposition of a material built-in gains tax liability; but if and when we do sell assets that may have associated built-in gains tax exposure, then we expect to make appropriate provision for the associated tax liabilities on our financial statements.

Earnings and Profits. Following a corporate acquisition, we must generally distribute all of the C corporation earnings and profits inherited in that transaction, if any, no later than the end of our taxable year in which the transaction occurs, in order to preserve our qualification for taxation as a REIT. However, if we fail to do so, relief provisions would allow us to maintain our qualification for taxation as a REIT provided we distribute any subsequently discovered C corporation earnings and profits and pay an interest charge in respect of the period of delayed distribution. C corporation earnings and profits that we inherit are, in general, specially allocated under a priority rule to the earliest possible distributions following the event causing the inheritance, and only then is the balance of our earnings and profits for the taxable year allocated among our distributions to the extent not already treated as a distribution of C corporation earnings and profits under the priority rule. The distribution of these C corporation earnings and profits is potentially eligible for taxation to noncorporate U.S. shareholders at the preferential tax rates for “qualified dividends” as described below under the heading “—Taxation of Taxable U.S. Shareholders”.

Depreciation and Federal Income Tax Treatment of Leases

Our initial tax bases in our assets will generally be our acquisition cost. We will generally depreciate our depreciable real property on a straight-line basis over forty years and our personal property over the applicable shorter periods. These depreciation schedules, and our initial tax bases, may vary for properties that we acquire through tax-free or carryover basis acquisitions (for example, our initial properties contributed to us by SIR as discussed below), or that are the subject of cost segregation analyses.

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The initial tax bases and depreciation schedules for the assets we held immediately after we separated from SIR depends upon whether the deemed exchange that resulted for federal income tax purposes from that separation, or the Deemed Exchange, was an exchange governed by Sections 351(a), 351(b) and 357(a) of the IRC. Our counsel, Sullivan & Worcester LLP, is of the opinion that the Deemed Exchange should be treated as an exchange governed by Sections 351(a) and 357(a) of the IRC, except for a modest amount of gain recognized by SIR under Section 351(b) of the IRC in respect of our obligation to reimburse SIR for certain offering costs, and we agreed with SIR to perform all of our tax reporting accordingly. This opinion is conditioned upon the assumption that the transaction agreement between us and SIR that governed our relationship with SIR, or the Transaction Agreement, has been and will be complied with by all parties thereto, upon the accuracy and completeness of the factual matters described in our Registration Statement on Form S-11 filed with the SEC on November 21, 2017, as amended through the date hereof (File No. 333-221708), and upon representations made by us and SIR as to specified factual matters. Therefore, we carried over SIR’s tax basis and depreciation schedule in each of the assets that we received from SIR, as adjusted by the gain SIR recognized under Section 351(b) of the IRC in the Deemed Exchange. This conclusion regarding the applicability of Sections 351(a), 351(b) and 357(a) of the IRC is dependent upon favorable determinations with regard to each of the following three issues: (a) Section 351(e) of the IRC did not apply to the Deemed Exchange, or else it would have disqualified the Deemed Exchange from Section 351(a) and 351(b) treatment altogether; (b) Section 357(a) of the IRC rather than Section 357(b) of the IRC applied to the Deemed Exchange, or else the liabilities assumed by us from SIR in the Deemed Exchange would have been taxable consideration (up to the amount of actual realized gains) to SIR; and (c) a judicial recharacterization rule, developed in Waterman Steamship v. Commissioner, 430 F.2d 1185 (5th Cir. 1970), and subsequent tax cases, did not apply to recharacterize our pre-transaction distributions paid to SIR as a taxable sale by SIR for cash. We cannot be sure that the IRS or a court would reach the same conclusion.

If, contrary to our belief and the opinion of our counsel, the Deemed Exchange was taxable to SIR because Sections 351(a), 351(b) or 357(a) of the IRC did not apply, then we would be treated as though we acquired our initial assets from SIR in a mostly or fully taxable acquisition, thereby acquiring aggregate tax bases in our assets at such deemed acquisition cost, which would be greater than the amount that would have otherwise carried over from SIR but also very possibly depreciable over longer depreciable lives. In that event, our aggregate depreciation deductions beginning with our first taxable year and for many taxable years thereafter may be lower than we have reported and are anticipating from a carryover transaction. If the IRS were to successfully challenge our reported depreciation methods and the associated tax reporting, then, including for purposes of qualifying for taxation as a REIT, we could be required to amend our tax reporting, including tax information reporting sent to our shareholders, or could be required to pay deficiency dividends, including the associated interest charge, as discussed above.

We are entitled to depreciation deductions from our facilities only if we are treated for federal income tax purposes as the owner of the facilities. This means that the leases of our facilities must be classified for U.S. federal income tax purposes as true leases, rather than as sales or financing arrangements, and we believe this to be the case.

Distributions to our Shareholders

As described above, we expect to make distributions to our shareholders from time to time. These distributions may include cash distributions, in kind distributions of property, and deemed or constructive distributions resulting from capital market activities. The U.S. federal income tax treatment of our distributions will vary based on the status of the recipient shareholder as more fully described below under the headings “—Taxation of Taxable U.S. Shareholders,” “—Taxation of Tax-Exempt U.S. Shareholders,” and “—Taxation of Non-U.S. Shareholders.”

Section 302 of the IRC treats a redemption of our shares for cash only as a distribution under Section 301 of the IRC, and hence taxable as a dividend to the extent of our available current or accumulated earnings and profits, unless the redemption satisfies one of the tests set forth in Section 302(b) of the IRC enabling the redemption to be treated as a sale or exchange of the shares. The redemption for cash only will be treated as a sale or exchange if it (a) is “substantially disproportionate” with respect to the surrendering shareholder’s ownership in us, (b) results in a “complete termination” of the surrendering shareholder’s entire share interest in us, or (c) is “not essentially equivalent to a dividend” with respect to the surrendering shareholder, all within the meaning of Section 302(b) of the IRC. In determining whether any of these tests have been met, a shareholder must generally take into account shares considered to be owned by such shareholder by reason of constructive ownership rules set forth in the IRC, as well as shares actually owned by such shareholder. In addition, if a redemption is treated as a distribution under the preceding tests, then a shareholder’s tax basis in the redeemed shares generally will be transferred to the shareholder’s remaining shares in us, if any, and if such shareholder owns no other shares in us, such basis generally may be transferred to a related person or may be lost entirely. Because the determination as to whether a shareholder will satisfy any of the tests of Section 302(b) of the IRC depends upon the facts and circumstances at the time that our shares are redeemed, we urge you to consult your own tax advisor to determine the particular tax treatment of any redemption.

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Taxation of Taxable U.S. Shareholders

For noncorporate U.S. shareholders, to the extent that their total adjusted income does not exceed applicable thresholds, the maximum federal income tax rate for long-term capital gains and most corporate dividends is generally 15%. For those noncorporate U.S. shareholders whose total adjusted income exceeds the applicable thresholds, the maximum federal income tax rate for long-term capital gains and most corporate dividends is generally 20%. However, because we are not generally subject to federal income tax on the portion of our “real estate investment trust taxable income” distributed to our shareholders, dividends on our shares generally are not eligible for these preferential tax rates, except that any distribution of C corporation earnings and profits and taxed built-in gain items will potentially be eligible for these preferential tax rates. As a result, our ordinary dividends generally are taxed at the higher federal income tax rates applicable to ordinary income (subject to the lower effective tax rates applicable to qualified REIT dividends via the deduction-without-outlay mechanism of Section 199A of the IRC, which is generally available to our noncorporate U.S. shareholders for taxable years before 2026). To summarize, the preferential federal income tax rates for long-term capital gains and for qualified dividends generally apply to:

(1) long-term capital gains, if any, recognized on the disposition of our shares;

(2) our distributions designated as long-term capital gain dividends (except to the extent attributable to real estate depreciation recapture, in which case the distributions are subject to a maximum 25% federal income tax rate);

(3) our dividends attributable to dividend income, if any, received by us from C corporations such as TRSs;

(4) our dividends attributable to earnings and profits that we inherit from C corporations; and

(5) our dividends to the extent attributable to income upon which we have paid federal corporate income tax (such as taxes on foreclosure property income or on built-in gains), net of the corporate income taxes thereon.

As long as we qualify for taxation as a REIT, a distribution to our U.S. shareholders that we do not designate as a capital gain dividend generally will be treated as an ordinary income dividend to the extent of our available current or accumulated earnings and profits (subject to the lower effective tax rates applicable to qualified REIT dividends via the deduction-without-outlay mechanism of Section 199A of the IRC, which is available to our noncorporate U.S. shareholders for taxable years before 2026). Distributions made out of our current or accumulated earnings and profits that we properly designate as capital gain dividends generally will be taxed as long-term capital gains, as discussed below, to the extent they do not exceed our actual net capital gain for the taxable year. However, corporate shareholders may be required to treat up to 20% of any capital gain dividend as ordinary income under Section 291 of the IRC.

In addition, we may elect to retain net capital gain income and treat it as constructively distributed. In that case:    

(1) we will be taxed at regular corporate capital gains tax rates on retained amounts;

(2) each of our U.S. shareholders will be taxed on its designated proportionate share of our retained net capital gains as though that amount were distributed and designated as a capital gain dividend;

(3) each of our U.S. shareholders will receive a credit or refund for its designated proportionate share of the tax that we pay;

(4) each of our U.S. shareholders will increase its adjusted basis in our shares by the excess of the amount of its proportionate share of these retained net capital gains over the U.S. shareholder’s proportionate share of the tax that we pay; and

(5) both we and our corporate shareholders will make commensurate adjustments in our respective earnings and profits for federal income tax purposes.

If we elect to retain our net capital gains in this fashion, we will notify our U.S. shareholders of the relevant tax information within sixty days after the close of the affected taxable year.

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If for any taxable year we designate capital gain dividends for our shareholders, then a portion of the capital gain dividends we designate will be allocated to the holders of a particular class of shares on a percentage basis equal to the ratio of the amount of the total dividends paid or made available for the year to the holders of that class of shares to the total dividends paid or made available for the year to holders of all outstanding classes of our shares. We will similarly designate the portion of any dividend that is to be taxed to noncorporate U.S. shareholders at preferential maximum rates (including any qualified dividend income and any capital gains attributable to real estate depreciation recapture that are subject to a maximum 25% federal income tax rate) so that the designations will be proportionate among all outstanding classes of our shares.

Distributions in excess of our current or accumulated earnings and profits will not be taxable to a U.S. shareholder to the extent that they do not exceed the shareholder’s adjusted tax basis in our shares, but will reduce the shareholder’s basis in such shares. To the extent that these excess distributions exceed a U.S. shareholder’s adjusted basis in such shares, they will be included in income as capital gain, with long-term gain generally taxed to noncorporate U.S. shareholders at preferential maximum rates. No U.S. shareholder may include on its federal income tax return any of our net operating losses or any of our capital losses. In addition, no portion of any of our dividends is eligible for the dividends received deduction for corporate shareholders.

If a dividend is declared in October, November or December to shareholders of record during one of those months and is paid during the following January, then for federal income tax purposes the dividend will be treated as having been both paid and received on December 31 of the prior taxable year.

A U.S. shareholder will generally recognize gain or loss equal to the difference between the amount realized and the shareholder’s adjusted basis in our shares that are sold or exchanged. This gain or loss will be capital gain or loss, and will be long-term capital gain or loss if the shareholder’s holding period in our shares exceeds one year. In addition, any loss upon a sale or exchange of our shares held for six months or less will generally be treated as a long-term capital loss to the extent of any long-term capital gain dividends we paid on such shares during the holding period.

U.S. shareholders who are individuals, estates or trusts are generally required to pay a 3.8% Medicare tax on their net investment income (including dividends on our shares (without regard to any deduction allowed by Section 199A of the IRC) and gains from the sale or other disposition of our shares), or in the case of estates and trusts on their net investment income that is not distributed, in each case to the extent that their total adjusted income exceeds applicable thresholds. U.S. shareholders are urged to consult their tax advisors regarding the application of the 3.8% Medicare tax.

If a U.S. shareholder recognizes a loss upon a disposition of our shares in an amount that exceeds a prescribed threshold, it is possible that the provisions of Treasury regulations involving “reportable transactions” could apply, with a resulting requirement to separately disclose the loss-generating transaction to the IRS. These Treasury regulations are written quite broadly, and apply to many routine and simple transactions. A reportable transaction currently includes, among other things, a sale or exchange of our shares resulting in a tax loss in excess of (a) $10 million in any single year or $20 million in a prescribed combination of taxable years in the case of our shares held by a C corporation or by a partnership with only C corporation partners or (b) $2 million in any single year or $4 million in a prescribed combination of taxable years in the case of our shares held by any other partnership or an S corporation, trust or individual, including losses that flow through pass through entities to individuals. A taxpayer discloses a reportable transaction by filing IRS Form 8886 with its federal income tax return and, in the first year of filing, a copy of Form 8886 must be sent to the IRS’s Office of Tax Shelter Analysis. The annual maximum penalty for failing to disclose a reportable transaction is generally $10,000 in the case of a natural person and $50,000 in any other case.

Noncorporate U.S. shareholders who borrow funds to finance their acquisition of our shares could be limited in the amount of deductions allowed for the interest paid on the indebtedness incurred. Under Section 163(d) of the IRC, interest paid or accrued on indebtedness incurred or continued to purchase or carry property held for investment is generally deductible only to the extent of the investor’s net investment income. A U.S. shareholder’s net investment income will include ordinary income dividend distributions received from us and, only if an appropriate election is made by the shareholder, capital gain dividend distributions and qualified dividends received from us; however, distributions treated as a nontaxable return of the shareholder’s basis will not enter into the computation of net investment income.

Taxation of Tax-Exempt U.S. Shareholders

The rules governing the federal income taxation of tax-exempt entities are complex, and the following discussion is intended only as a summary of material considerations of an investment in our shares relevant to such investors. If you are a tax-exempt shareholder, we urge you to consult your own tax advisor to determine the impact of federal, state, local and foreign tax laws, including any tax return filing and other reporting requirements, with respect to your acquisition of or investment in our shares.

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Our distributions made to shareholders that are tax-exempt pension plans, individual retirement accounts or other qualifying tax-exempt entities should not constitute UBTI, provided that the shareholder has not financed its acquisition of our shares with “acquisition indebtedness” within the meaning of the IRC, that the shares are not otherwise used in an unrelated trade or business of the tax-exempt entity, and that, consistent with our present intent, we do not hold a residual interest in a real estate mortgage investment conduit or otherwise hold mortgage assets or conduct mortgage securitization activities that generate “excess inclusion” income.

Taxation of Non-U.S. Shareholders

The rules governing the U.S. federal income taxation of non-U.S. shareholders are complex, and the following discussion is intended only as a summary of material considerations of an investment in our shares relevant to such investors. If you are a non-U.S. shareholder, we urge you to consult your own tax advisor to determine the impact of U.S. federal, state, local and foreign tax laws, including any tax return filing and other reporting requirements, with respect to your acquisition of or investment in our shares.

We expect that a non-U.S. shareholder’s receipt of (a) distributions from us, and (b) proceeds from the sale of our shares, will not be treated as income effectively connected with a U.S. trade or business and a non-U.S. shareholder will therefore not be subject to the often higher federal tax and withholding rates, branch profits taxes and increased reporting and filing requirements that apply to income effectively connected with a U.S. trade or business. This expectation and a number of the determinations below are predicated on our shares being listed on a U.S. national securities exchange, such as Nasdaq. Each class of our shares has been listed on a U.S. national securities exchange; however, we cannot be sure that our shares will continue to be so listed in future taxable years or that any class of our shares that we may issue in the future will be so listed.

Distributions. A distribution by us to a non-U.S. shareholder that is not designated as a capital gain dividend will be treated as an ordinary income dividend to the extent that it is made out of our current or accumulated earnings and profits. A distribution of this type will generally be subject to U.S. federal income tax and withholding at the rate of 30%, or at a lower rate if the non-U.S. shareholder has in the manner prescribed by the IRS demonstrated to the applicable withholding agent its entitlement to benefits under a tax treaty. Because we cannot determine our current and accumulated earnings and profits until the end of the taxable year, withholding at the statutory rate of 30% or applicable lower treaty rate will generally be imposed on the gross amount of any distribution to a non-U.S. shareholder that we make and do not designate as a capital gain dividend. Notwithstanding this potential withholding on distributions in excess of our current and accumulated earnings and profits, these excess portions of distributions are a nontaxable return of capital to the extent that they do not exceed the non-U.S. shareholder’s adjusted basis in our shares, and the nontaxable return of capital will reduce the adjusted basis in these shares. To the extent that distributions in excess of our current and accumulated earnings and profits exceed the non-U.S. shareholder’s adjusted basis in our shares, the distributions will give rise to U.S. federal income tax liability only in the unlikely event that the non-U.S. shareholder would otherwise be subject to tax on any gain from the sale or exchange of these shares, as discussed below under the heading “—Dispositions of Our Shares.” A non-U.S. shareholder may seek a refund from the IRS of amounts withheld on distributions to it in excess of such shareholder’s allocable share of our current and accumulated earnings and profits.

For so long as a class of our shares is listed on a U.S. national securities exchange, capital gain dividends that we declare and pay to a non-U.S. shareholder on those shares, as well as dividends to a non-U.S. shareholder on those shares attributable to our sale or exchange of “United States real property interests” within the meaning of Section 897 of the IRC, or USRPIs, will not be subject to withholding as though those amounts were effectively connected with a U.S. trade or business, and non-U.S. shareholders will not be required to file U.S. federal income tax returns or pay branch profits tax in respect of these dividends. Instead, these dividends will generally be treated as ordinary dividends and subject to withholding in the manner described above.

Tax treaties may reduce the withholding obligations on our distributions. Under some treaties, however, rates below 30% that are applicable to ordinary income dividends from U.S. corporations may not apply to ordinary income dividends from a REIT or may apply only if the REIT meets specified additional conditions. A non-U.S. shareholder must generally use an applicable IRS Form W-8, or substantially similar form, to claim tax treaty benefits. If the amount of tax withheld with respect to a distribution to a non-U.S. shareholder exceeds the shareholder’s U.S. federal income tax liability with respect to the distribution, the non-U.S. shareholder may file for a refund of the excess from the IRS. Treasury regulations also provide special rules to determine whether, for purposes of determining the applicability of a tax treaty, our distributions to a non-U.S. shareholder that is an entity should be treated as paid to the entity or to those owning an interest in that entity, and whether the entity or its owners are entitled to benefits under the tax treaty.

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If, contrary to our expectation, a class of our shares was not listed on a U.S. national securities exchange and we made a distribution on those shares that was attributable to gain from the sale or exchange of a USRPI, then a non-U.S. shareholder holding those shares would be taxed as if the distribution was gain effectively connected with a trade or business in the United States conducted by the non-U.S. shareholder. In addition, the applicable withholding agent would be required to withhold from a distribution to such a non-U.S. shareholder, and remit to the IRS, up to 21% of the maximum amount of any distribution that was or could have been designated as a capital gain dividend. The non-U.S. shareholder also would generally be subject to the same treatment as a U.S. shareholder with respect to the distribution (subject to any applicable alternative minimum tax and a special alternative minimum tax in the case of a nonresident alien individual), would be subject to fulsome U.S. federal income tax return reporting requirements, and, in the case of a corporate non-U.S. shareholder, may owe the up to 30% branch profits tax under Section 884 of the IRC (or lower applicable tax treaty rate) in respect of these amounts.

Dispositions of Our Shares. If as expected our shares are not USRPIs, then a non-U.S. shareholder’s gain on the sale of these shares generally will not be subject to U.S. federal income taxation or withholding. We expect that our shares will not be USRPIs because one or both of the following exemptions will be available at all times.

First, for so long as a class of our shares is listed on a U.S. national securities exchange, a non-U.S. shareholder’s gain on the sale of those shares will not be subject to U.S. federal income taxation as a sale of a USRPI. Second, our shares will not constitute USRPIs if we are a “domestically controlled” REIT. We will be a “domestically controlled” REIT if less than 50% of the value of our shares (including any future class of shares that we may issue) is held, directly or indirectly, by non-U.S. shareholders at all times during the preceding five years, after applying specified presumptions regarding the ownership of our shares as described in Section 897(h)(4)(E) of the IRC. For these purposes, we believe that the statutory ownership presumptions apply to validate our status as a “domestically controlled” REIT. Accordingly, we believe that we are and will remain a “domestically controlled” REIT.

If, contrary to our expectation, a gain on the sale of our shares is subject to U.S. federal income taxation (for example, because neither of the above exemptions were then available, i.e., that class of our shares were not then listed on a U.S. national securities exchange and we were not a “domestically controlled” REIT), then (a) a non-U.S. shareholder would generally be subject to the same treatment as a U.S. shareholder with respect to its gain (subject to any applicable alternative minimum tax and a special alternative minimum tax in the case of nonresident alien individuals), (b) the non-U.S. shareholder would also be subject to fulsome U.S. federal income tax return reporting requirements, and (c) a purchaser of that class of our shares from the non-U.S. shareholder may be required to withhold 15% of the purchase price paid to the non-U.S. shareholder and to remit the withheld amount to the IRS.

Information Reporting, Backup Withholding, and Foreign Account Withholding

Information reporting, backup withholding, and foreign account withholding may apply to distributions or proceeds paid to our shareholders under the circumstances discussed below. If a shareholder is subject to backup or other U.S. federal income tax withholding, then the applicable withholding agent will be required to withhold the appropriate amount with respect to a deemed or constructive distribution or a distribution in kind even though there is insufficient cash from which to satisfy the withholding obligation. To satisfy this withholding obligation, the applicable withholding agent may collect the amount of U.S. federal income tax required to be withheld by reducing to cash for remittance to the IRS a sufficient portion of the property that the shareholder would otherwise receive or own, and the shareholder may bear brokerage or other costs for this withholding procedure.

Amounts withheld under backup withholding are generally not an additional tax and may be refunded by the IRS or credited against the shareholder’s federal income tax liability, provided that such shareholder timely files for a refund or credit with the IRS. A U.S. shareholder may be subject to backup withholding when it receives distributions on our shares or proceeds upon the sale, exchange, redemption, retirement or other disposition of our shares, unless the U.S. shareholder properly executes, or has previously properly executed, under penalties of perjury an IRS Form W-9 or substantially similar form that:

• provides the U.S. shareholder’s correct taxpayer identification number;

• certifies that the U.S. shareholder is exempt from backup withholding because (a) it comes within an enumerated exempt category, (b) it has not been notified by the IRS that it is subject to backup withholding, or (c) it has been notified by the IRS that it is no longer subject to backup withholding; and    

• certifies that it is a U.S. citizen or other U.S. person.

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If the U.S. shareholder has not provided and does not provide its correct taxpayer identification number and appropriate certifications on an IRS Form W-9 or substantially similar form, it may be subject to penalties imposed by the IRS, and the applicable withholding agent may have to withhold a portion of any distributions or proceeds paid to such U.S. shareholder. Unless the U.S. shareholder has established on a properly executed IRS Form W-9 or substantially similar form that it comes within an enumerated exempt category, distributions or proceeds on our shares paid to it during the calendar year, and the amount of tax withheld, if any, will be reported to it and to the IRS.

Distributions on our shares to a non-U.S. shareholder during each calendar year and the amount of tax withheld, if any, will generally be reported to the non-U.S. shareholder and to the IRS. This information reporting requirement applies regardless of whether the non-U.S. shareholder is subject to withholding on distributions on our shares or whether the withholding was reduced or eliminated by an applicable tax treaty. Also, distributions paid to a non-U.S. shareholder on our shares will generally be subject to backup withholding, unless the non-U.S. shareholder properly certifies to the applicable withholding agent its non-U.S. shareholder status on an applicable IRS Form W-8 or substantially similar form. Information reporting and backup withholding will not apply to proceeds a non-U.S. shareholder receives upon the sale, exchange, redemption, retirement or other disposition of our shares, if the non-U.S. shareholder properly certifies to the applicable withholding agent its non-U.S. shareholder status on an applicable IRS Form W-8 or substantially similar form. Even without having executed an applicable IRS Form W-8 or substantially similar form, however, in some cases information reporting and backup withholding will not apply to proceeds that a non-U.S. shareholder receives upon the sale, exchange, redemption, retirement or other disposition of our shares if the non-U.S. shareholder receives those proceeds through a broker’s foreign office.

Non-U.S. financial institutions and other non-U.S. entities are subject to diligence and reporting requirements for purposes of identifying accounts and investments held directly or indirectly by U.S. persons. The failure to comply with these additional information reporting, certification and other requirements could result in a 30% U.S. withholding tax on applicable payments to non-U.S. persons, notwithstanding any otherwise applicable provisions of an income tax treaty. In particular, a payee that is a foreign financial institution that is subject to the diligence and reporting requirements described above must enter into an agreement with the U.S. Department of the Treasury requiring, among other things, that it undertake to identify accounts held by “specified United States persons” or “United States owned foreign entities” (each as defined in the IRC and administrative guidance thereunder), annually report information about such accounts, and withhold 30% on applicable payments to noncompliant foreign financial institutions and account holders. Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States with respect to these requirements may be subject to different rules. The foregoing withholding regime generally applies to payments of dividends on our shares. In general, to avoid withholding, any non-U.S. intermediary through which a shareholder owns our shares must establish its compliance with the foregoing regime, and a non-U.S. shareholder must provide specified documentation (usually an applicable IRS Form W-8) containing information about its identity, its status, and if required, its direct and indirect U.S. owners. Non-U.S. shareholders and shareholders who hold our shares through a non-U.S. intermediary are encouraged to consult their own tax advisors regarding foreign account tax compliance.

Other Tax Considerations

Our tax treatment and that of our shareholders may be modified by legislative, judicial or administrative actions at any time, which actions may have retroactive effect. The rules dealing with federal income taxation are constantly under review by the U.S. Congress, the IRS and the U.S. Department of the Treasury, and statutory changes, new regulations, revisions to existing regulations and revised interpretations of established concepts are issued frequently. Likewise, the rules regarding taxes other than U.S. federal income taxes may also be modified. No prediction can be made as to the likelihood of passage of new tax legislation or other provisions, or the direct or indirect effect on us and our shareholders. Revisions to tax laws and interpretations of these laws could adversely affect our ability to qualify and be taxed as a REIT, as well as the tax or other consequences of an investment in our shares. We and our shareholders may also be subject to taxation by state, local or other jurisdictions, including those in which we or our shareholders transact business or reside. These tax consequences may not be comparable to the U.S. federal income tax consequences discussed above.

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ERISA PLANS, KEOGH PLANS AND INDIVIDUAL RETIREMENT ACCOUNTS

General Fiduciary Obligations

The Employee Retirement Income Security Act of 1974, as amended, or ERISA, the IRC and similar provisions to those described below under applicable foreign or state law, individually and collectively, impose certain duties on persons who are fiduciaries of any employee benefit plan subject to Title I of ERISA, or an ERISA Plan, or an individual retirement account or annuity, or an IRA, a Roth IRA, a tax-favored account (such as an Archer MSA, Coverdell education savings account or health savings account), a Keogh plan or other qualified retirement plan not subject to Title I of ERISA, each a Non-ERISA Plan. Under ERISA and the IRC, any person who exercises any discretionary authority or control over the administration of, or the management or disposition of the assets of, an ERISA Plan or Non-ERISA Plan, or who renders investment advice for a fee or other compensation to an ERISA Plan or Non-ERISA Plan, is generally considered to be a fiduciary of the ERISA Plan or Non-ERISA Plan.

Fiduciaries of an ERISA Plan must consider whether:

• their investment in our shares or other securities satisfies the diversification requirements of ERISA;

• the investment is prudent in light of possible limitations on the marketability of our shares;

• they have authority to acquire our shares or other securities under the applicable governing instrument and Title I of ERISA; and

• the investment is otherwise consistent with their fiduciary responsibilities.

Fiduciaries of an ERISA Plan may incur personal liability for any loss suffered by the ERISA Plan on account of a violation of their fiduciary responsibilities. In addition, these fiduciaries may be subject to a civil penalty of up to 20% of any amount recovered by the ERISA Plan on account of a violation. Fiduciaries of any Non-ERISA Plan should consider that the Non-ERISA Plan may only make investments that are authorized by the appropriate governing instrument and applicable law.

Fiduciaries considering an investment in our securities should consult their own legal advisors if they have any concern as to whether the investment is consistent with the foregoing criteria or is otherwise appropriate. The sale of our securities to an ERISA Plan or Non-ERISA Plan is in no respect a representation by us or any underwriter of the securities that the investment meets all relevant legal requirements with respect to investments by the arrangements generally or any particular arrangement, or that the investment is appropriate for arrangements generally or any particular arrangement.

Prohibited Transactions

Fiduciaries of ERISA Plans and persons making the investment decision for Non-ERISA Plans should consider the application of the prohibited transaction provisions of ERISA and the IRC in making their investment decision. Sales and other transactions between an ERISA Plan or a Non-ERISA Plan and disqualified persons or parties in interest, as applicable, are prohibited transactions and result in adverse consequences absent an exemption. The particular facts concerning the sponsorship, operations and other investments of an ERISA Plan or Non-ERISA Plan may cause a wide range of persons to be treated as disqualified persons or parties in interest with respect to it. A non-exempt prohibited transaction, in addition to imposing potential personal liability upon ERISA Plan fiduciaries, may also result in the imposition of an excise tax under the IRC or a penalty under ERISA upon the disqualified person or party in interest. If the disqualified person who engages in the transaction is the individual on behalf of whom an IRA, Roth IRA or other tax-favored account is maintained (or his beneficiary), the IRA, Roth IRA or other tax-favored account may lose its tax-exempt status and its assets may be deemed to have been distributed to the individual in a taxable distribution on account of the non-exempt prohibited transaction, but no excise tax will be imposed. Fiduciaries considering an investment in our securities should consult their own legal advisors as to whether the ownership of our securities involves a non-exempt prohibited transaction.

“Plan Assets” Considerations

The U.S. Department of Labor has issued a regulation defining “plan assets.” The regulation, as subsequently modified by ERISA, generally provides that when an ERISA Plan or a Non-ERISA Plan otherwise subject to Title I of ERISA and/or Section 4975 of the IRC acquires an interest in an entity that is neither a “publicly offered security” nor a security issued by an investment company registered under the Investment Company Act of 1940, as amended, the assets of the ERISA Plan or Non-ERISA Plan include both the equity interest and an undivided interest in each of the underlying assets of the entity, unless it is established either that the entity is an operating company or that equity participation in the entity by benefit plan investors is not significant. We are not an investment company registered under the Investment Company Act of 1940, as amended.

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Each class of our equity (that is, our common shares and any other class of equity that we may issue) must be analyzed separately to ascertain whether it is a publicly offered security. The regulation defines a publicly offered security as a security that is “widely held,” “freely transferable” and either part of a class of securities registered under the Exchange Act, or sold under an effective registration statement under the Securities Act of 1933, as amended, or the Securities Act, provided the securities are registered under the Exchange Act within 120 days after the end of the fiscal year of the issuer during which the offering occurred. Each class of our outstanding shares has been registered under the Exchange Act within the necessary time frame to satisfy the foregoing condition.

The regulation provides that a security is “widely held” only if it is part of a class of securities that is owned by 100 or more investors independent of the issuer and of one another. However, a security will not fail to be “widely held” because the number of independent investors falls below 100 subsequent to the initial public offering as a result of events beyond the issuer’s control. Although we cannot be sure, we believe our common shares have been and will remain widely held, and we expect the same to be true of any future class of equity that we may issue.

The regulation provides that whether a security is “freely transferable” is a factual question to be determined on the basis of all relevant facts and circumstances. The regulation further provides that, where a security is part of an offering in which the minimum investment is $10,000 or less, some restrictions on transfer ordinarily will not, alone or in combination, affect a finding that these securities are freely transferable. The restrictions on transfer enumerated in the regulation as not affecting that finding include:    

• any restriction on or prohibition against any transfer or assignment that would result in a termination or reclassification for federal or state tax purposes, or would otherwise violate any state or federal law or court order;

• any requirement that advance notice of a transfer or assignment be given to the issuer and any requirement that either the transferor or transferee, or both, execute documentation setting forth representations as to compliance with any restrictions on transfer that are among those enumerated in the regulation as not affecting free transferability, including those described in the preceding clause of this sentence;

• any administrative procedure that establishes an effective date, or an event prior to which a transfer or assignment will not be effective; and

• any limitation or restriction on transfer or assignment that is not imposed by the issuer or a person acting on behalf of the issuer.

We believe that the restrictions imposed under our declaration of trust on the transfer of shares do not result in the failure of our shares to be “freely transferable.” Furthermore, we believe that there exist no other facts or circumstances limiting the transferability of our shares that are not included among those enumerated as not affecting their free transferability under the regulation, and we do not expect or intend to impose in the future, or to permit any person to impose on our behalf, any limitations or restrictions on transfer that would not be among the enumerated permissible limitations or restrictions.

Assuming that each class of our shares will be “widely held” and that no other facts and circumstances exist that restrict transferability of these shares, our counsel, Sullivan & Worcester LLP, is of the opinion that our shares will not fail to be “freely transferable” for purposes of the regulation due to the restrictions on transfer of our shares in our declaration of trust and that under the regulation each class of our currently outstanding shares is publicly offered and our assets will not be deemed to be “plan assets” of any ERISA Plan or Non-ERISA Plan that acquires our shares in a public offering. This opinion is conditioned upon certain assumptions and representations, as discussed above under the heading “Material United States Federal Income Tax Considerations—Taxation as a REIT.”

Item 1A. Risk Factors

Our business is subject to a number of risks and uncertainties. Investors and prospective investors should carefully consider the risks described below, together with all of the other information in this Annual Report on Form 10-K. The risks described below may not be the only risks we face but are risks we believe may be material at this time. Additional risks that we do not yet know of, or that we currently think are immaterial, also may impair our business operations or financial results. If any of the events or circumstances described below occurs, our business, financial condition, results of operations or ability to make distributions to our shareholders and the value of our securities could be adversely affected. Investors and prospective investors should consider the following risks, the information contained under the heading “Warning Concerning Forward Looking Statements” and the risks described elsewhere in this Annual Report on Form 10-K before deciding whether to invest in our securities.

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Risks Related to Our Business

Our investments are and will be concentrated in industrial and logistics properties.

Our properties are substantially all industrial and logistics properties and we intend to acquire similar additional properties. The market demand to lease industrial and logistics properties generally reflects conditions in the U.S. economy. If the general economy slows, the demand to lease industrial and logistics properties may be reduced and the value of our common shares may decline. Because we expect to continue to be concentrated in industrial and logistics properties, the adverse impact of cyclical economic conditions affecting industrial and logistics properties may have a greater impact on the value of our common shares than if we were invested in several different types of properties, including residential, office or other properties, in addition to industrial and logistics properties.

The development of new industrial and logistics properties may exceed any increase in demand for such properties.

The current strong demand for industrial and logistics properties is encouraging new development of such properties. If the development of new industrial and logistics properties exceeds the increase in demand for such properties, our existing properties may be unable to successfully compete for tenants with newer developed buildings, our income may decline and the value of our common shares may decline.

We may be unable to lease our properties when our leases expire.

Although we typically will seek to renew our leases with current tenants when they expire, we cannot be sure that we will be successful in doing so. If our tenants do not renew their leases, we may be unable to obtain new tenants to maintain or increase the historical occupancy rates of, or rents from, our properties.

We may experience declining rents or incur significant costs to renew our leases with current tenants or lease our properties to new tenants.

When we renew our leases with current tenants or lease to new tenants, we may experience rent decreases, and we may have to spend substantial amounts for leasing commissions, tenant improvements or other tenant inducements. Moreover, many of our Mainland Properties have been specially designed for the particular businesses of our tenants; if the current leases for such properties are terminated or are not renewed, we may be required to renovate such properties at substantial costs, decrease the rents we charge or provide other concessions in order to lease such properties to new tenants. When rents are reset under the leases at our Hawaii Properties, the rents may decline.

A significant number of our properties are located on the island of Oahu, HI, and we are exposed to risks as a result of this geographic concentration.

A significant number of our properties are located on the island of Oahu, HI. This geographic concentration creates risks. For example, Oahu’s remote location on a volcanic island makes our properties there vulnerable to certain risks from natural disasters, such as tsunamis, hurricanes, flooding, volcanic eruptions and earthquakes, which could cause damage to our properties, affect our Hawaii tenants’ abilities to pay rent to us and cause the value of our properties and our securities to decline.

The majority of our properties are leased to single tenants which may subject us to greater risks of loss than if each of our properties had multiple tenants.

The majority of our rental revenues from our properties as of December 31, 2019 were from properties leased to single tenants. The value of single tenant properties is materially dependent on the performance of those tenants under their respective leases. Many of our single tenant leases require that certain property level operating expenses and capital expenditures, such as real estate taxes, insurance, utilities, maintenance and repairs, including increases with respect thereto, be paid, or reimbursed to us, by our tenants. Accordingly, in addition to our not receiving rental income, a tenant default on such leases could make us responsible for paying these expenses. Because most of our properties are leased to single tenants, the adverse impact of individual tenant defaults or non-renewals is likely to be greater than would be the case if our properties were leased to multiple tenants.

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Our business depends upon our tenants satisfying their lease obligations to us, which depends, to a large degree, on our tenants’ abilities to successfully operate their businesses.

The value of our business and the value of our common shares are dependent, in part, on our tenants’ abilities to meet their lease obligations to us. The financial capacities of our tenants may be adversely affected by factors over which we have no control. In particular, a subsidiary of Amazon.com, Inc. contributes approximately 14.2% of our annualized rental revenues, under six separate leases, which are guaranteed by Amazon.com, Inc., as of December 31, 2019. The inability of our tenants and any applicable parent guarantor to satisfy their lease obligations to us, whether due to a downturn in their business or otherwise, could materially and adversely affect us.

Bankruptcy law may adversely impact us.

The occurrence of a tenant bankruptcy could reduce the rent we receive from such tenant’s lease. If a tenant becomes bankrupt, federal law may prohibit us from evicting such tenant based solely upon its bankruptcy. In addition, a bankrupt tenant may be authorized to reject and terminate its lease with us. Any claims against a bankrupt tenant for unpaid future rent would be subject to statutory limitations that may be substantially less than the contractually specified rent we are owed under the lease, and any claim we have for unpaid past rent, may not be paid in full.

Many of our tenants do not have credit ratings.

The majority of our tenants are not rated by any nationally recognized credit rating organization. It is more difficult to assess the ability of a tenant that is not rated to meet its obligations than that of a rated tenant. Moreover, tenants may be rated when we enter leases with them but their ratings may be later lowered or terminated during the term of the leases. Because we have many unrated tenants, we may experience a higher percentage of tenant defaults than landlords who have a higher percentage of highly rated tenants.

When we reset rents, renew or extend leases or lease to new tenants at our Hawaii Properties, our rents may decrease, and our ability to increase rents may be limited in the future by government action.

Some of our Hawaii Properties require the rents to be reset periodically based on fair market values, which could result in rental increases or decreases. Our ability to increase rents when rent resets occur will depend upon then prevailing market conditions, which are beyond our control. While rent resets involving our Hawaii Properties have, in the aggregate, resulted in rent increases during the period of our and our predecessors’ ownership, in some instances rent resets have resulted in rent decreases. Accordingly, the historical increases achieved from rent resets involving our Hawaii Properties may not be repeated in the future.

In the past, the Hawaii state legislature has enacted legislation that would have limited rent increases at certain of our Hawaii Properties. The U.S. District Court in Hawaii later held that this legislation violated the U.S. Constitution and therefore was unenforceable. However, the Hawaii state legislature may in the future adopt laws to limit rent increases at our Hawaii Properties, and we may not be successful in any challenge we make to that legislation. Moreover, even if we were successful in challenging such laws, the cost of doing so may be significant.

REIT distribution requirements and limitations on our ability to access reasonably priced capital may adversely impact our ability to carry out our business plan.

To maintain our qualification for taxation as a REIT under the IRC, we are required to satisfy distribution requirements imposed by the IRC. See "Material United States Federal Income Tax Considerations—REIT Qualification Requirements—Annual Distribution Requirements." Accordingly, we may not be able to retain sufficient cash to fund our operations, repay our debts, invest in our properties or fund our acquisitions or development or redevelopment efforts. Our business strategies therefore depend, in part, upon our ability to raise additional capital at reasonable costs. The volatility in the availability of capital to businesses on a global basis in most debt and equity markets generally may limit our ability to raise reasonably priced capital. We may also be unable to raise reasonably priced capital because of reasons related to our business, market perceptions of our prospects, the terms of our indebtedness, the extent of our leverage or for reasons beyond our control, such as market conditions. Because the earnings we are permitted to retain are limited by the rules governing REIT qualification and taxation, if we are unable to raise reasonably priced capital, we may not be able to carry out our business plan.

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We may be unable to grow our business by acquisitions of additional properties.

Our business plans involve the acquisition of additional properties. Our ability to make profitable acquisitions is subject to risks, including, but not limited to, risks associated with:

• competition from other investors, including publicly traded and private REITs, numerous financial institutions, individuals, foreign investors and other public and private companies;

• our long term cost of capital;

• contingencies in our acquisition agreements; and

• the availability and terms of financing.

We might encounter unanticipated difficulties and expenditures relating to our acquired properties. For example:

• we do not believe that it is possible to understand fully a property before it is owned and operated for a reasonable period of time, and, notwithstanding pre-acquisition due diligence, we could acquire a property that contains undisclosed defects in design or construction;

• the market in which an acquired property is located may experience unexpected changes that adversely affect the property’s value;

• the occupancy of and rents from properties that we acquire may decline during our ownership;

• property operating costs for our acquired properties may be higher than anticipated, which may result in tenants that pay or reimburse us for those costs terminating their leases or our acquired properties not yielding expected returns;

• we may acquire properties subject to unknown liabilities and without any recourse, or with limited recourse, such as liability for the cleanup of undisclosed environmental contamination or for claims by tenants, vendors or other persons related to actions taken by former owners of the properties; and

• acquired properties might require significant management attention that would otherwise be devoted to our other business activities.

For these reasons, among others, we might not realize the anticipated benefits of our acquisitions, and our business plan to acquire additional properties may not succeed or may cause us to experience losses.

Future leases may require us to pay property operating costs.

While our properties are generally leased to tenants that are financially responsible to pay or reimburse us for all, or substantially all, increases in property level operating and maintenance expenses, many industrial and logistics properties do not utilize this lease structure. In the future, we may enter into new leases or acquire properties subject to leases that make us responsible for property level operating costs; and we may be adversely affected if such costs increase.

We face significant competition.

We face significant competition for acquisition opportunities from other investors, including publicly traded and private REITs, numerous financial institutions, individuals, foreign investors and other public and private companies. Some of our competitors may have greater financial and other resources than us. Because of competition for acquisitions, we may be unable to acquire desirable properties or we may pay higher prices for, and realize lower net cash flows than we hope to achieve from, acquisitions.

We also face competition for tenants at our properties. Some competing properties may be newer, better located or more attractive to tenants. Competing properties may have lower rates of occupancy than our properties, which may result in competing owners offering available space at lower rents than we offer at our properties. Development activities may increase the supply of properties of the type we own in the leasing markets in which we own properties and increase the competition we face. Competition may make it difficult for us to attract and retain tenants and may reduce the rents we are able to charge.

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Changes in market interest rates, including changes that may result from the expected phase out of LIBOR, may adversely affect us.

Since the most recent U.S. recession, the Board of Governors of the U.S. Federal Reserve System, or the U.S. Federal Reserve, has taken actions which have resulted in low interest rates prevailing in the marketplace for a historically long period of time. The U.S. Federal Reserve steadily increased the targeted federal funds rate over the last several years, but recently took action to decrease the federal funds rate and may continue to make adjustments in the near future. In addition, as noted in Part II, Item 7A of this Annual Report, LIBOR is expected to be phased out in 2021. The interest rate under our revolving credit facility is based on LIBOR and future debt we may incur may also be based on LIBOR. We currently expect that the determination of interest under our revolving credit facility would be based on the alternative rates provided under the agreement governing our revolving credit facility, or our credit agreement, or would be revised to provide for an interest rate that approximates the existing interest rate as calculated in accordance with LIBOR. Despite our current expectations, we cannot be sure that, if LIBOR is phased out or transitioned, the changes to the determination of interest under our credit agreement would approximate the current calculation in accordance with LIBOR. An alternative interest rate index that may replace LIBOR may result in our paying increased interest. Interest rate increases may materially and negatively affect us in several ways, including:

• Investors may consider whether to buy or sell our common shares based upon the distribution rate on our common shares relative to the then prevailing market interest rates. If market interest rates go up, investors may expect a higher distribution rate than we are able to pay, which may increase our cost of capital, or they may sell our common shares and seek alternative investments that offer higher distribution rates. Sales of our common shares may cause a decline in the value of our common shares.

• Amounts outstanding under our revolving credit facility require interest to be paid at floating interest rates. When interest rates increase, our interest costs will increase, which could adversely affect our cash flows, our ability to pay principal and interest on our debt, our cost of refinancing our fixed rate debts when they become due and our ability to make or sustain distributions to our shareholders. Additionally, if we choose to hedge our interest rate risk, we cannot be sure that the hedge will be effective or that our hedging counterparty will meet its obligations to us.

• Property values are often determined, in part, based upon a capitalization of rental income formula. When market interest rates increase, property investors often demand higher capitalization rates and that causes property values to decline. Increases in interest rates could lower the value of our properties and cause the value of our securities to decline.

Low market interest rates, particularly if they remain over a sustained period, may increase our use of debt capital to fund property acquisitions, lower capitalization rates for property purchases and increased competition for property purchases, which may reduce our ability to acquire new properties.

Ownership of real estate is subject to environmental risks and liabilities.

Ownership of real estate is subject to risks associated with environmental hazards. Under various laws, owners as well as tenants of real estate may be required to investigate and clean up or remove hazardous substances present at or migrating from properties they own, lease or operate and may be held liable for property damage or personal injuries that result from hazardous substances. These laws also expose us to the possibility that we may become liable to government agencies or third parties for costs and damages they incur in connection with hazardous substances. The costs and damages that may arise from environmental hazards may be substantial and are difficult to assess and estimate for numerous reasons, including uncertainty about the extent of contamination, alternative treatment methods that may be applied, the location of the property which subjects it to differing local laws and regulations and their interpretations, as well as the time it may take to remediate contamination. In addition, these laws also impose various requirements regarding the operation and maintenance of properties and recordkeeping and reporting requirements relating to environmental matters that require us or the tenants of our properties to incur costs to comply with. We may incur substantial liabilities and costs for environmental matters.

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We may incur environmental liabilities at our leased properties and our tenants may not indemnify us for those costs.

Our leases generally require our tenants to operate in compliance with applicable law and to indemnify us against any environmental liabilities arising from their activities on our properties. However, applicable law may make us subject to strict liability by virtue of our ownership interests. Also, our tenants may be unwilling or have insufficient financial resources to satisfy their indemnification obligations under our leases. Furthermore, such liabilities or obligations may affect the ability of some tenants to pay their rents to us. Further, in the Transaction Agreement, we have agreed to indemnify OPI (as successor by merger to SIR) for any liabilities it incurs with respect to any preexisting environmental conditions at the properties SIR contributed to us in connection with our IPO.

As of December 31, 2019, we had reserved approximately $6.9 million for potential environmental liabilities arising at our properties.

Ownership of real estate is subject to risks from adverse weather and climate events.

Severe weather may have an adverse effect on certain properties we own. Rising sea levels could cause flooding at some of our properties, including some of our Hawaii Properties, which may have an adverse effect on individual properties we own. When major weather or climate-related events, such as hurricanes, floods and wildfires, occur at or near our properties, our tenants may need to suspend operations of the impacted property until the event has ended and the property is then ready for operation. We or the tenants of our properties may incur significant costs and losses as a result of these activities, both in terms of operating, preparing and repairing our properties in anticipation of, during and after a severe weather or climate-related event and in terms of potential lost business due to the interruption in operating our properties. Our insurance and our tenants’ insurance may not adequately compensate us or them for these costs and losses.

Also, concerns about climate change have resulted in various treaties, laws and regulations that are intended to limit carbon emissions and address other environmental concerns. These and other laws may cause energy or other costs at our properties to increase. Laws enacted to mitigate climate change may make some of our properties obsolete or cause us to make material investments in our properties, which could materially and adversely affect our financial condition or the financial condition of our tenants and their ability to pay rent to us and cause the value of our securities to decline. In addition, concerns about climate change and increasing storm intensities may increase the cost of insurance for our properties or potentially render it unavailable to obtain.

Real estate ownership creates risks and liabilities.

In addition to the risks discussed above, our business is subject to other risks associated with real estate ownership, including:

• the illiquid nature of real estate markets, which limits our ability to sell our assets rapidly to respond to changing market conditions;

• the subjectivity of real estate valuations and changes in such valuations over time;

• current and future adverse national real estate trends, including increasing vacancy rates, declining rental rates and general deterioration of market conditions;

• costs that may be incurred relating to property maintenance and repair, and the need to make expenditures due to changes in government regulations; and

• liabilities and litigations arising from injuries on our properties or otherwise incidental to the ownership of our properties.

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Insurance may not adequately cover our losses, and the costs of obtaining such insurance may continue to increase.

The tenants at our properties are generally responsible for the costs of insurance, including for casualty, liability, fire, extended coverage and rental or business interruption loss insurance. In the future, we may acquire properties for which we are responsible for the costs of insurance. Recently, the costs of insurance have increased significantly, and these increased costs have had an adverse effect on us and our tenants. Increased insurance costs may adversely affect our tenants' ability to pay us rent or result in downward pressure on rents we can charge under new or renewed leases. Losses of a catastrophic nature, such as those caused by hurricanes, flooding, volcanic eruptions and earthquakes, among other things, or losses from terrorism, may be covered by insurance policies with limitations such as large deductibles or co-payments that we or a responsible tenant may not be able to pay. Insurance proceeds may not be adequate to restore an affected property to its condition prior to a loss or to compensate us for our losses, including the loss of future revenues from an affected property. Similarly, our other insurance, including our general liability insurance, may not provide adequate insurance to cover our losses. In addition, we do not have any insurance to limit losses that we may incur as a result of known or unknown environmental conditions. Further, we cannot be sure that certain types of risks that are currently insurable will continue to be insurable on an economically feasible basis, and we may discontinue, or agree to our tenants discontinuing, certain insurance coverage on some or all of our properties in the future if we determine that the cost of premiums for any of these policies exceeds the value of the coverage. If an uninsured loss or a loss in excess of insured limits occurs and if we are not able to recover amounts from our applicable tenants for those losses, we may have to incur uninsured costs to mitigate such losses or lose all or a portion of the capital invested in a property, as well as the anticipated future revenue from the property. We might also remain obligated for any financial obligations related to the property, even if the property is irreparably damaged. In addition, future changes in the insurance industry's risk assessment approach and pricing structure could further increase the cost of insuring our properties or decrease the scope of insurance coverage, either of which could have an adverse effect on our financial condition, results of operations, liquidity and ability to pay distributions to our shareholders.

We have debt and we may incur additional debt.

As of December 31, 2019, our consolidated indebtedness was $1.4 billion and our ratio of consolidated debt to total gross assets (total assets plus accumulated depreciation) was 54.4%, and we had $440.0 million available for borrowing under our $750.0 million revolving credit facility. Our credit agreement includes a feature under which the maximum borrowing availability may be increased to up to $1.5 billion in certain circumstances.

We are subject to numerous risks associated with our debt, including the risk that our cash flows could be insufficient to meet required payments on our debt. There are no limits in our organizational documents on the amount of debt we may incur, and we may incur substantial debt. Our debt obligations could have important consequences to our securityholders. Our incurrence of debt may increase our vulnerability to adverse economic, market and industry conditions, limit our flexibility in planning for, or reacting to, changes in our business, and place us at a disadvantage in relation to competitors that have lower debt levels. Our incurring debt could also increase the costs to us of incurring additional debt, increase our exposure to floating interest rates or expose us to potential events of default (if not cured or waived) under covenants contained in debt instruments that could have a material adverse effect on our business, financial condition and operating results. Excessive debt could reduce the available cash flow to fund, or limit our ability to obtain financing for, working capital, capital expenditures, acquisitions, construction projects, refinancing, lease obligations or other purposes and hinder our ability to obtain investment grade ratings from nationally recognized credit rating agencies if we seek to obtain a rating or to make or sustain distributions to our shareholders.

If we default under any of our debt obligations, we may be in default under the agreements governing other debt obligations of ours which have cross default provisions, including our credit agreement. In such case, our lenders may demand immediate payment of any outstanding indebtedness and we could be forced to liquidate our assets for less than the values we would receive in a more orderly process.

We may fail to comply with the terms of our credit agreement, which could adversely affect our business and may prevent our making distributions to our shareholders.

Our credit agreement includes various conditions, covenants and events of default. We may not be able to satisfy all of these conditions or may default on some of these covenants for various reasons, including for reasons beyond our control. For example, our credit agreement requires us to maintain certain debt service ratios. Our ability to comply with such covenants will depend upon the net rental income we receive from our properties. If the occupancy at our properties declines or if our rents decline, we may be unable to borrow under our revolving credit facility. Complying with these covenants may limit our ability to take actions that may be beneficial to us and our securityholders.

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If we are unable to borrow under our revolving credit facility, we may be unable to meet our obligations or grow our business by acquiring additional properties. If we default under our revolving credit facility, our lenders may demand immediate payment and may elect not to fund future borrowings. During the continuance of any event of default under our credit agreement, we may be limited or in some cases prohibited from making distributions to our shareholders. Any default under our credit agreement that results in acceleration of our obligations to repay outstanding indebtedness or in our no longer being permitted to borrow under our revolving credit facility would likely have serious adverse consequences to us and would likely cause the value of our securities to decline.

In the future, we may obtain additional debt financing, and the covenants and conditions which apply to any such additional debt may be more restrictive than the covenants and conditions that are contained in our credit agreement.

Covenants in our secured debt agreements may restrict our operating activities and adversely affect our financial condition.

Our secured debt agreements contain financial and/or operating covenants, including, among other things, certain coverage ratios, as well as limitations on the ability to incur secured and unsecured debt. These covenants may limit our operational flexibility and acquisition and disposition activities. Moreover, if any of the covenants in these secured debt agreements are breached and not cured within the applicable cure period, we could be required to repay the debt immediately, even in the absence of a payment default. As a result, covenants which limit our operational flexibility or a default under applicable debt covenants could have an adverse effect on our business, financial condition and results of operations.

Our use of joint ventures may limit our flexibility with jointly owned investments.

As of February 2020, we are party to a joint venture, and we may in the future acquire, develop or recapitalize properties in joint ventures with other persons or entities. Our participation in these joint ventures is subject to risks, including the following:

• we may share approval rights over major decisions affecting the ownership or operation of the joint venture and any property owned by the joint venture;

• we may be required to contribute additional capital if our partners fail to fund their share of any required capital contributions;

• our joint venture partners may have economic or other business interests or goals that are inconsistent with our business interests or goals and that could affect our ability to lease or relet the property, operate the property or maintain our qualification for taxation as a REIT;

• our joint venture partners may be subject to different laws or regulations than us, or may be structured differently than us for tax purposes, which could create conflicts of interest and/or affect our ability to maintain our qualification for taxation as a REIT;

• our ability to sell our interest in the joint venture or the joint venture's ability to sell properties owned by the joint venture on advantageous terms when we so desire may be limited or restricted under the terms of the applicable joint venture agreements; and

• disagreements with our joint venture partners could result in litigation or arbitration that could be expensive and distracting to management and could delay important decisions.

Any of the foregoing risks could have a material adverse effect on our business, financial condition and results of operations.

Real estate construction and redevelopment creates risks.

We may develop new properties or redevelop some of our existing properties as the existing leases expire, as our tenants’ needs change or to pursue any other opportunities that we believe are desirable. The development and redevelopment of new and existing buildings involves significant risks in addition to those involved in the ownership and operation of leased properties, including the risks that construction may not be completed on schedule or within budget, resulting in increased construction costs and delays in leasing such properties and generating cash flows. Development activities are also subject to risks relating to the inability to obtain, or delays in obtaining, all necessary zoning, land use, building, occupancy, and other required government permits and authorizations. Once completed, any new properties may perform below anticipated financial results. The occurrence of one or more of these circumstances in connection with our development or redevelopment activities could have an adverse effect on our financial condition, results of operations and the value of our securities.

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We may incur significant costs complying with the Americans with Disabilities Act and similar laws.

Under the Americans with Disabilities Act and certain similar state statutes, many commercial properties must meet specified requirements related to access and use by disabled persons. In addition, our properties are subject to various laws and regulations relating to fire, safety and other regulations. The tenants of our properties are generally responsible for compliance with these requirements pursuant to our lease agreements. In addition, although our tenants may be responsible for complying with these requirements for our properties, we could be held liable as the owner of the properties for our tenants’ failure to comply. We may be required to make substantial capital expenditures at our properties to comply with these laws. In addition, non-compliance could result in the imposition of fines or an award of damages and costs to private litigants. Further, we may not be able to recoup these amounts from our tenants if they are unable or unwilling to pay.

Our business could be adversely impacted if there are deficiencies in our disclosure controls and procedures or our internal control over financial reporting.

The design and effectiveness of our disclosure controls and procedures and our internal control over financial reporting may not prevent all errors, misstatements or misrepresentations. While management will continue to review the effectiveness of our disclosure controls and procedures and our internal control over financial reporting, we cannot guarantee that our disclosure controls and procedures and internal control over financial reporting will be effective in accomplishing all control objectives all of the time. Deficiencies, including any material weaknesses, in our disclosure controls and procedures or internal control over financial reporting could result in misstatements of our results of operations or our financial statements or could otherwise materially and adversely affect our business, reputation, results of operations, financial condition or liquidity.

RMR LLC relies on information technology and systems in its operations, and any material failure, inadequacy, interruption or security failure of that technology or those systems could materially and adversely affect us.

RMR LLC relies on information technology and systems, including the Internet and cloud-based infrastructures, commercially available software and its internally developed applications, to process, transmit, store and safeguard information and to manage or support a variety of its business processes (including managing our building systems), including financial transactions and maintenance of records, which may include personal identifying information of employees and tenants and lease data. If RMR LLC experiences material security or other failures, inadequacies or interruptions of its information technology, it could incur material costs and losses and our operations could be disrupted as a result. Further, third party vendors could experience similar events with respect to their information technology and systems that impact the products and services they provide to RMR LLC or us. RMR LLC relies on commercially available systems, software, tools and monitoring, as well as its internally developed applications and internal procedures and personnel, to provide security for processing, transmitting, storing and safeguarding confidential tenant, customer and vendor information, such as personally identifiable information related to its employees and others and information regarding its and our financial accounts. RMR LLC takes various actions, and incurs significant costs, to maintain and protect the operation and security of its information technology and systems, including the data maintained in those systems. However, it is possible that these measures will not prevent the systems’ improper functioning or a compromise in security, such as in the event of a cyberattack or the improper disclosure of personally identifiable information.

Security breaches, computer viruses, attacks by hackers, online fraud schemes and similar breaches can create significant system disruptions, shutdowns, fraudulent transfer of assets or unauthorized disclosure of confidential information. The cybersecurity risks to RMR LLC, us and third party vendors are heightened by, among other things, the evolving nature of the threats faced, advances in computer capabilities, new discoveries in the field of cryptography and new and increasingly sophisticated methods used to perpetrate illegal or fraudulent activities against RMR LLC, including cyberattacks, email or wire fraud and other attacks exploiting security vulnerabilities in RMR LLC’s or other third parties’ information technology networks and systems or operations. Any failure to maintain the security, proper function and availability of RMR LLC’s information technology and systems, or certain third party vendors’ failure to similarly protect their information technology and systems that are relevant to RMR LLC’s or our operations, or to safeguard RMR LLC’s or our business processes, assets and information could result in financial losses, interrupt RMR LLC’s operations, damage RMR LLC’s reputation, cause RMR LLC to be in default of material contracts and subject RMR LLC to liability claims or regulatory penalties, any of which could materially and adversely affect our business and the value of our securities.

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Risks Related to Our Relationships with RMR Inc. and RMR LLC

We are dependent upon RMR LLC to manage our business and implement our growth strategy.

We have no employees. Personnel and services that we require are provided to us by RMR LLC pursuant to our management agreements with RMR LLC. Our ability to achieve our business objectives depends on RMR LLC and its ability to effectively manage our properties, to appropriately identify and complete our acquisitions and dispositions and to execute our growth strategy. Accordingly, our business is dependent upon RMR LLC’s business contacts, its ability to successfully hire, train, supervise and manage its personnel and its ability to maintain its operating systems. If we lose the services provided by RMR LLC or its key personnel, our business and growth prospects may decline. We may be unable to duplicate the quality and depth of management available to us by becoming internally managed or by hiring another manager. In the event RMR LLC is unwilling or unable to continue to provide management services to us, our cost of obtaining substitute services may be greater than the fees we pay RMR LLC under our management agreements, and as a result our expenses may increase.

RMR LLC has broad discretion in operating our day to day business.

Our manager, RMR LLC, is authorized to follow broad operating and investment guidelines and, therefore, has discretion in identifying the properties that will be appropriate investments for us, as well as our individual operating and investment decisions. Our Board of Trustees periodically reviews our operating and investment guidelines and our operating activities and investments but it does not review or approve each decision made by RMR LLC on our behalf. In addition, in conducting periodic reviews, our Board of Trustees relies primarily on information provided to it by RMR LLC. RMR LLC may exercise its discretion in a manner that results in investment returns that are substantially below expectations or that results in losses.

Our management structure and agreements and relationships with RMR LLC and RMR LLC’s and its controlling shareholder’s relationships with others may create conflicts of interest, or the perception of such conflicts, and may restrict our investment activities.

RMR LLC is a subsidiary of RMR Inc. The Chair of our Board of Trustees and one of our Managing Trustees, Adam Portnoy, as the sole trustee of ABP Trust, is the controlling shareholder of RMR Inc. and is a managing director and the president and chief executive officer of RMR Inc. and an officer and employee of RMR LLC. RMR LLC or its subsidiary also acts as the manager for four other Nasdaq listed REITs: OPI, which primarily owns office properties leased to single tenants and high credit quality tenants, including government tenants; DHC, which primarily owns medical office, life science, senior living and other healthcare properties; SVC, which owns a diverse portfolio of hotels and net lease service and necessity-based retail properties; and TRMT, which primarily originates and invests in first mortgage loans secured by middle market and transitional commercial real estate. RMR LLC also provides services to other publicly and privately owned companies, including: Five Star, which operates senior living communities; TA, which operates and franchises travel centers, truck repair facilities and restaurants; and Sonesta, which operates, manages and franchises hotels, resorts and cruise boats. A subsidiary of RMR LLC is an investment adviser to the RMR Real Estate Income Fund, or RIF, a closed end investment company listed on the NYSE American, which invests in securities of real estate companies that are not managed by RMR LLC.

John Murray, our other Managing Trustee and our President and Chief Executive Officer, Richard Siedel, Jr., our Chief Financial Officer and Treasurer, and Yael Duffy, our Vice President, are also officers and employees of RMR LLC. Mr. Murray is also a managing trustee, the president and chief executive officer of SVC and Mr. Siedel is also the chief financial officer and treasurer of DHC. Messrs. Murray and Siedel and Ms. Duffy have duties to RMR LLC, Mr. Murray has duties to SVC and Mr. Siedel has duties to DHC, as well as to us, and we do not have their undivided attention. They and other RMR LLC personnel may have conflicts in allocating their time and resources between us and RMR LLC and other companies to which RMR LLC or its subsidiaries provide services. Some of our Independent Trustees also serve as independent directors or independent trustees of other public companies to which RMR LLC or its subsidiaries provide management services.

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In addition, we may in the future enter into additional transactions with RMR LLC, its affiliates or entities managed by it or its subsidiaries. In addition to his investments in RMR Inc. and RMR LLC, Adam Portnoy holds equity investments in other companies to which RMR LLC or its subsidiaries provide management services and some of these companies have significant cross ownership interests, including, for example: as of December 31, 2019, Adam Portnoy beneficially owned, in aggregate, 1.2% of our outstanding common shares, 35.3% of Five Star’s outstanding common stock (6.3% as of January 1, 2020) (including through ABP Trust), 1.5% of OPI’s outstanding common shares, 1.1% of DHC's outstanding common shares, 2.3% of RIF’s outstanding common shares, 1.1% of SVC’s outstanding common shares, 4.0% of TA’s outstanding common shares (including through RMR LLC) and 19.5% of TRMT’s outstanding common shares (including through Tremont Realty Advisors LLC). Our executive officers may also own equity investments in other companies to which RMR LLC or its subsidiaries provide management services. These multiple responsibilities, relationships and cross ownerships could give rise to conflicts of interest or the perception of such conflicts of interest with respect to matters involving us, RMR Inc., RMR LLC, our Managing Trustees, the other companies to which RMR LLC or its subsidiaries provide management services and their related parties. Conflicts of interest or the perception of conflicts of interest could have a material adverse impact on our reputation, business and the market price of our common shares and other securities and we may be subject to increased risk of litigation as a result.

In our management agreements with RMR LLC, we acknowledge that RMR LLC may engage in other activities or businesses and act as the manager to any other person or entity (including other REITs) even though such person or entity has investment policies and objectives similar to our policies and objectives and we are not entitled to preferential treatment in receiving information, recommendations and other services from RMR LLC. Accordingly, we may lose investment opportunities to, and may compete for tenants with, other businesses managed by RMR LLC or its subsidiaries. We cannot be sure that our Code of Conduct or our governance guidelines, or other procedural protections we adopt will be sufficient to enable us to identify, adequately address or mitigate actual or alleged conflicts of interest or ensure that our transactions with related persons are made on terms that are at least as favorable to us as those that would have been obtained with an unrelated person.

Our management agreements were not negotiated on an arm’s length basis and their fee and expense structure may not create proper incentives for RMR LLC, which may increase the risk of an investment in our common shares.

As a result of our relationships with RMR LLC and its current and former controlling shareholder(s), our management agreements were not negotiated on an arm’s length basis between unrelated parties, and therefore, while such agreements were negotiated with the use of a special committee and disinterested Trustees, the terms, including the fees payable to RMR LLC, may not be as favorable to us as they would have been if they were negotiated on an arm’s length basis between unrelated parties. Our property management fees are calculated based on rents we receive and construction supervision fees for construction at our properties overseen and managed by RMR LLC, and our base business management fee is calculated based upon the lower of the historical costs of our real estate investments and our market capitalization. We pay RMR LLC substantial base management fees regardless of our financial results. These fee arrangements could incentivize RMR LLC to pursue acquisitions, capital transactions, tenancies and construction projects or to avoid disposing of our assets in order to increase or maintain its management fees and might reduce RMR LLC’s incentive to devote its time and effort to seeking investments that provide attractive returns for us. If we do not effectively manage our investment, disposition and capital transactions and leasing, construction and other property management activities, we may pay increased management fees without proportional benefits to us. In addition, we are obligated under our management agreements to reimburse RMR LLC for 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 and our share of RMR LLC’s costs for providing our internal audit function. We are also required to pay for third party costs incurred with respect to us. Our obligation to reimburse RMR LLC for certain of its costs and to pay third party costs may reduce RMR LLC’s incentive to efficiently manage those costs, which may increase our costs.

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The termination of our management agreements may require us to pay a substantial termination fee, including in the case of a termination for unsatisfactory performance, which may limit our ability to end our relationship with RMR LLC.

The terms of our management agreements with RMR LLC automatically extend on December 31st of each year so that such terms thereafter end on the 20th anniversary of the date of the extension. We have the right to terminate these agreements: (1) at any time on 60 days’ written notice for convenience, (2) immediately upon written notice for cause, as defined in the agreements, (3) on written notice given within 60 days after the end of any applicable calendar year for a performance reason, as defined in the agreements, and (4) by written notice during the 12 months following a manager change of control, as defined in the agreements. However, if we terminate a management agreement for convenience, or if RMR LLC terminates a management agreement with us for good reason, as defined in such agreement, we are obligated to pay RMR LLC a termination fee in an amount equal to the sum of the present values of the monthly future fees, as defined in the applicable agreement, payable to RMR LLC for the term that was remaining before such termination, which, depending on the time of termination, would be between 19 and 20 years. Additionally, if we terminate a management agreement for a performance reason, as defined in the agreement, we are obligated to pay RMR LLC the termination fee calculated as described above, but assuming a remaining term of 10 years. These provisions substantially increase the cost to us of terminating the management agreements without cause, which may limit our ability to end our relationship with RMR LLC as our manager. The payment of the termination fee could have a material adverse effect on our financial condition, including our ability to pay dividends to our shareholders.

Our management arrangements with RMR LLC may discourage a change of control of us.

Our management agreements with RMR LLC have continuing 20 year terms that renew annually. As noted in the preceding risk factor, if we terminate either of these management agreements other than for cause or upon a change of control of our manager, we are obligated to pay RMR LLC a substantial termination fee. For these reasons, our management agreements with RMR LLC may discourage a change of control of us, including a change of control which might result in payment of a premium for our common shares.

We are party to transactions with related parties that may increase the risk of allegations of conflicts of interest, and such allegations may impair our ability to realize the benefits we expect from these transactions.

We are party to transactions with related parties, including with entities controlled by Adam Portnoy or to which RMR LLC or its subsidiaries provide management services. Our agreements with related parties or in respect of transactions among related parties may not be on terms as favorable to us as they would have been if they had been negotiated among unrelated parties. We are subject to the risk that our shareholders or the shareholders of RMR Inc. or other related parties may challenge any such related party transactions and the agreements entered into as part of them. If such a challenge were to be successful, we might not realize the benefits expected from the transactions being challenged. Moreover, any such challenge could result in substantial costs and a diversion of our management’s attention, could have a material adverse effect on our reputation, business and growth and could adversely affect our ability to realize the benefits expected from the transactions, whether or not the allegations have merit or are substantiated.

We may be at an increased risk for dissident shareholder activities due to perceived conflicts of interest arising from our management structure and relationships.

Companies with business dealings with related persons and entities may more often be the target of dissident shareholder trustee nominations, dissident shareholder proposals and shareholder litigation alleging conflicts of interest in their business dealings. Our relationships with RMR Inc., RMR LLC, the other companies to which RMR LLC or its subsidiaries provide management services, Adam Portnoy and other related persons of RMR LLC may precipitate such activities. Certain proxy advisory firms which have significant influence over the voting by shareholders of public companies have in the past recommended, and in the future may recommend, that shareholders withhold votes for the election of our incumbent Trustees, vote against the election of our incumbent Trustees or other management proposals or vote for shareholder proposals that we oppose. These recommendations by proxy advisory firms have affected the outcomes of past Board of Trustees elections, and similar recommendations in the future would likely affect the outcome of future Board of Trustees elections, which may increase shareholder activism and litigation. These activities, if instituted against us, could result in substantial costs, and diversion of our management’s attention and could have a material adverse impact on our reputation and business.

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Risks Related to Our Organization and Structure

Ownership limitations and certain provisions in our declaration of trust, bylaws and agreements, as well as certain provisions of Maryland law, may deter, delay or prevent a change in our control or unsolicited acquisition proposals.

Our declaration of trust prohibits any shareholder but not RMR LLC and its affiliates (as defined under Maryland law) and certain persons who have been exempted by our Board of Trustees from owning, directly and by attribution, more than 9.8% of the number or value of shares (whichever is more restrictive) of any class or series of our outstanding shares of beneficial interest, including our common shares. This provision of our declaration of trust is intended to, among other purposes, assist with our REIT compliance under the IRC and otherwise promote our orderly governance. However, this provision may also inhibit acquisitions of a significant stake in us and may deter, delay or prevent a change in control of us or unsolicited acquisition proposals that a shareholder may consider favorable. Additionally, provisions contained in our declaration of trust and bylaws or under Maryland law may have a similar impact, including, for example, provisions relating to:

• the division of our Trustees into three classes, with the term of one class expiring each year, which could delay a change of control of us;

• limitations on shareholder voting rights with respect to certain actions that are not approved by our Board of Trustees;

• the authority of our Board of Trustees, and not our shareholders, to adopt, amend or repeal our bylaws and to fill vacancies on our Board of Trustees;

• shareholder voting standards which require a supermajority for approval of certain actions;

• the fact that only our Board of Trustees, or, if there are no Trustees, our officers, may call shareholder meetings and that shareholders are not entitled to act without a meeting;

• required qualifications for an individual to serve as a Trustee and a requirement that certain of our Trustees be “Managing Trustees” and other Trustees be “Independent Trustees,” as defined in our governing documents;

• limitations on the ability of our shareholders to propose nominees for election as Trustees and propose other business to be considered at a meeting of our shareholders;

• limitations on the ability of our shareholders to remove our Trustees;

• the authority of our Board of Trustees to create and issue new classes or series of shares (including shares with voting rights and other rights and privileges that may deter a change in control) and issue additional common shares;

• restrictions on business combinations between us and an interested shareholder that have not first been approved by our Board of Trustees (including a majority of Trustees not related to the interested shareholder); and

• the authority of our Board of Trustees, without shareholder approval, to implement certain takeover defenses.

Our rights and the rights of our shareholders to take action against our Trustees and officers are limited.

Our declaration of trust limits the liability of our Trustees and officers to us and our shareholders for money damages to the maximum extent permitted under Maryland law. Under current Maryland law, our Trustees and officers will not have any liability to us and our shareholders for money damages other than liability resulting from:

• actual receipt of an improper benefit or profit in money, property or services; or

• active and deliberate dishonesty by the Trustee or officer that was established by a final judgment as being material to the cause of action adjudicated.

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Our declaration of trust and indemnification agreements require us to indemnify to the maximum extent permitted by Maryland law, any present or former Trustee or officer who is made or threatened to be made a party to a proceeding by reason of his or her service in these and certain other capacities. In addition, we may be obligated to pay or reimburse the expenses incurred by our present and former Trustees and officers without requiring a preliminary determination of their ultimate entitlement to indemnification. As a result, we and our shareholders may have more limited rights against our present and former Trustees and officers than might otherwise exist absent the provisions in our declaration of trust and indemnification agreements or that might exist with other companies, which could limit our shareholders' recourse in the event of actions not in their best interest.

Disputes with RMR LLC and OPI (as successor by merger to SIR) may be referred to mandatory arbitration proceedings, which follow different procedures than in-court litigation and may be more restrictive to those asserting claims than in-court litigation.

Our agreements with RMR LLC and OPI (as successor by merger to SIR) provide that any dispute arising thereunder will be referred to mandatory, binding and final arbitration proceedings if we, or any other party to such dispute unilaterally so demands. As a result, we and our shareholders would not be able to pursue litigation in state or federal court against RMR LLC or OPI if we or any other parties against whom the claim is made unilaterally demands the matter be resolved by arbitration. In addition, the ability to collect attorneys’ fees or other damages may be limited in the arbitration proceedings, which may discourage attorneys from agreeing to represent parties wishing to bring such litigation.

Our bylaws designate the Circuit Court for Baltimore City, Maryland as the sole and exclusive forum for certain actions and proceedings that may be initiated by our shareholders, which could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us or our Trustees, officers, manager, agents or employees.

Our bylaws currently provide that, unless the dispute has been referred to binding arbitration, the Circuit Court for Baltimore City, Maryland will be the sole and exclusive forum for: (1) any derivative action or proceeding brought on our behalf; (2) any action asserting a claim for breach of a duty owed by any Trustee, officer, manager, agent or employee of ours to us or our shareholders; (3) any action asserting a claim against us or any Trustee, officer, manager, agent or employee of ours arising pursuant to Maryland law, our declaration of trust or bylaws brought by or on behalf of a shareholder, either on his, her or its own behalf, on our behalf or on behalf of any series or class of our shareholders or shareholders against us or any Trustee, officer, manager, agent or employee of ours, including any claims relating to the meaning, interpretation, effect, validity, performance or enforcement of our declaration of trust or bylaws; or (4) any action asserting a claim against us or any Trustee, officer, manager, agent or employee of ours that is governed by the internal affairs doctrine. The exclusive forum provision of our bylaws does not apply to any action for which the Circuit Court for Baltimore City, Maryland does not have jurisdiction. The exclusive forum provision of our bylaws does not establish exclusive jurisdiction in the Circuit Court for Baltimore City, Maryland for claims that arise under the Securities Act, the Exchange Act or other federal securities laws if there is exclusive or concurrent jurisdiction in the federal courts. Any person or entity purchasing or otherwise acquiring or holding any interest in our shares of beneficial interest shall be deemed to have notice of and to have consented to these provisions of our bylaws, as they may be amended from time to time. The exclusive forum provision of our bylaws may limit a shareholder’s ability to bring a claim in a judicial forum that the shareholder believes is favorable for disputes with us or our Trustees, officers, manager, agents or employees, which may discourage lawsuits against us and our Trustees, officers, manager, agents or employees.

We may change our operational, financing and investment policies without shareholder approval and we may become more highly leveraged, which may increase our risk of default under our debt obligations.

Our Board of Trustees determines our operational, financing and investment policies and may amend or revise our policies, including our policies with respect to our intention to remain qualified for taxation as a REIT, acquisitions, dispositions, growth, operations, indebtedness, capitalization and distributions, or approve transactions that deviate from these policies, without a vote of, or notice to, our shareholders. Policy changes could adversely affect the market price of our common shares and our ability to make distributions to our shareholders. Further, our organizational documents do not limit the amount or percentage of indebtedness, funded or otherwise, that we may incur. Our Board of Trustees may alter or eliminate our current policy on borrowing at any time without shareholder approval. If this policy changes, we could become more highly leveraged, which could result in an increase in our debt service costs. Higher leverage also increases the risk of default on our obligations. In addition, a change in our investment policies, including the manner in which we allocate our resources across our portfolio or the types of assets in which we seek to invest, may increase our exposure to interest rate risk, real estate market fluctuations and liquidity risk.

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Risks Related to Our Taxation

Our failure to remain qualified for taxation as a REIT under the IRC could have significant adverse consequences.

As a REIT, we generally do not pay federal or most state income taxes as long as we distribute all of our REIT taxable income and meet other qualifications set forth in the IRC. However, actual qualification for taxation as a REIT under the IRC depends on our satisfying complex statutory requirements, for which there are only limited judicial and administrative interpretations. We believe that we have been organized and have operated, and will continue to be organized and to operate, in a manner that qualified and will continue to qualify us to be taxed as a REIT under the IRC. However, we cannot be sure that the IRS, upon review or audit, will agree with this conclusion. Furthermore, we cannot be sure that the federal government, or any state or other taxation authority, will continue to afford favorable income tax treatment to REITs and their shareholders.

Maintaining our qualification for taxation as a REIT under the IRC will require us to continue to satisfy tests concerning, among other things, the nature of our assets, the sources of our income and the amounts we distribute to our shareholders. In order to meet these requirements, it may be necessary for us to sell or forgo attractive investments.

If we cease to qualify for taxation as a REIT under the IRC, then our ability to raise capital might be adversely affected, we will be in breach under our credit agreement, we may be subject to material amounts of federal and state income taxes, our cash available for distribution to our shareholders could be reduced, and the market price of our common shares could decline. In addition, if we lose or revoke our qualification for taxation as a REIT under the IRC for a taxable year, we will generally be prevented from requalifying for taxation as a REIT for the next four taxable years.

Distributions to shareholders generally will not qualify for reduced tax rates applicable to “qualified dividends.”

Dividends payable by U.S. corporations to noncorporate shareholders, such as individuals, trusts and estates, are generally eligible for reduced federal income tax rates applicable to “qualified dividends.” Distributions paid by REITs generally are not treated as “qualified dividends” under the IRC and the reduced rates applicable to such dividends do not generally apply. However, for tax years beginning before 2026, REIT dividends paid to noncorporate shareholders are generally taxed at an effective tax rate lower than applicable ordinary income tax rates due to the availability of a deduction under the IRC for specified forms of income from passthrough entities. More favorable rates will nevertheless continue to apply to regular corporate “qualified” dividends, which may cause some investors to perceive that an investment in a REIT is less attractive than an investment in a non-REIT entity that pays dividends, thereby reducing the demand and market price of our common shares.

REIT distribution requirements could adversely affect us and our shareholders.

We generally must distribute annually at least 90% of our REIT taxable income, subject to specified adjustments and excluding any net capital gain, in order to maintain our qualification for taxation as a REIT under the IRC. To the extent that we satisfy this distribution requirement, federal corporate income tax will not apply to the earnings that we distribute, but if we distribute less than 100% of our REIT taxable income, then we will be subject to federal corporate income tax on our undistributed taxable income. We intend to make distributions to our shareholders to comply with the REIT requirements of the IRC. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay out to our shareholders in a calendar year is less than a minimum amount specified under federal tax laws.

From time to time, we may generate taxable income greater than our income for financial reporting purposes prepared in accordance with U.S. generally accepted accounting principles, or GAAP, or differences in timing between the recognition of taxable income and the actual receipt of cash may occur. If we do not have other funds available in these situations, among other things, we may borrow funds on unfavorable terms, sell investments at disadvantageous prices or distribute amounts that would otherwise be invested in future acquisitions in order to make distributions sufficient to enable us to pay out enough of our taxable income to satisfy the REIT distribution requirement and to avoid corporate income tax and the 4% excise tax in a particular year. These alternatives could increase our costs or reduce our shareholders’ equity. Thus, compliance with the REIT distribution requirements may hinder our ability to grow, which could cause the market price of our common shares to decline.

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Even if we remain qualified for taxation as a REIT under the IRC, we may face other tax liabilities that reduce our cash flow.

Even if we remain qualified for taxation as a REIT under the IRC, we may be subject to federal, state and local taxes on our income and assets, including taxes on any undistributed income, excise taxes, state or local income, property and transfer taxes, and other taxes. Also, our income tax expense could increase if jurisdictions in which we hold property modified their income tax treatment of REITs, such as by limiting or eliminating favorable income tax deductions (including the dividends paid deduction). In fact, in 2019 the Hawaii state legislature passed a bill that would have eliminated the dividends paid deduction afforded to REITs under Hawaii tax laws and otherwise required REITs to either file a composite tax return or pay withholding tax attributable to distributions to non-Hawaii resident shareholders. While this bill was ultimately vetoed by the governor of Hawaii, similar legislation has been reintroduced in this year’s legislative session.

In addition, in order to meet the requirements for qualification and taxation as a REIT under the IRC, prevent the recognition of particular types of non-cash income, or avert the imposition of a 100% tax that applies to specified gains derived by a REIT from dealer property or inventory, we may hold or dispose of some of our assets and conduct some of our operations through our TRSs or other subsidiary corporations that will be subject to corporate level income tax at regular rates. In addition, while we intend that our transactions with our TRSs will be conducted on arm’s length bases, we may be subject to a 100% excise tax on a transaction that the IRS or a court determines was not conducted at arm’s length. Any of these taxes would decrease cash available for distribution to our shareholders.

Legislative or other actions affecting REITs could materially and adversely affect us and our shareholders.

The rules dealing with U.S. federal, state, and local taxation are constantly under review by persons involved in the legislative process and by the IRS, the U.S. Department of the Treasury, and other taxation authorities. Changes to the tax laws, with or without retroactive application, could materially and adversely affect us and our shareholders. We cannot predict how changes in the tax laws might affect us or our shareholders. New legislation, Treasury regulations, administrative interpretations or court decisions could significantly and negatively affect our ability to remain qualified for taxation as a REIT or the tax consequences of such qualification to us and our shareholders.

Risks Related to Our Securities

Our distributions to our shareholders may decline.

We intend to continue to make regular quarterly distributions to our shareholders. However:

• our ability to make or sustain the rate of distributions will be adversely affected if any of the risks described in this Annual Report on Form 10-K occur;

• our making of distributions is subject to compliance with restrictions contained in our credit agreement and may be subject to restrictions in future debt obligations we may incur; and

• the timing and amount of any distributions will be determined at the discretion of our Board of Trustees and will depend on various factors that our Board of Trustees deems relevant, including our financial condition, our results of operations, our liquidity, our capital requirements, our FFO, our Normalized FFO, restrictive covenants in our financial or other contractual arrangements, general economic conditions in the United States, including Hawaii, our dividend yield, the dividend yields of other industrial REITs, requirements under the IRC to qualify for taxation as a REIT and restrictions under the laws of Maryland.

For these reasons, among others, our distribution rate may decline or we may cease making distributions to our shareholders.

Changes in market conditions could adversely affect the value of our securities.

As with other publicly traded equity securities and REIT securities, the value of our common shares and other securities depends on various market conditions that are subject to change from time to time, including:

• the extent of investor interest in our securities;

• the general reputation of REITs and externally managed companies and the attractiveness of our equity securities in comparison to other equity securities, including securities issued by other real estate based companies or by other issuers less sensitive to rises in interest rates;

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• our underlying asset value;

• investor confidence in the stock and bond markets, generally;

• market interest rates;

• national economic conditions;

• changes in tax laws; and

• general market conditions.

We believe that one of the factors that investors consider important in deciding whether to buy or sell equity securities of a REIT is the distribution rate, considered as a percentage of the price of the equity securities, relative to market interest rates. Interest rates have been at historically low levels for an extended period of time. There is a general market perception that REIT shares outperform in low interest rate environments and underperform in rising interest rate environments when compared to the broader market. The U.S. Federal Reserve steadily increased the targeted federal funds rate over the last several years, but recently took action to decrease the federal funds rate and may continue to make adjustments in the near future. If the U.S. Federal Reserve increases interest rates or if there is a market expectation of such increases, prospective purchasers of REIT equity securities may want to achieve a higher distribution rate. Thus, higher market interest rates, or the expectation of higher interest rates, could cause the value of our securities to decline.

Further issuances of equity securities may be dilutive to current shareholders.

The interests of our existing shareholders could be diluted if we issue additional equity securities to finance future acquisitions, to repay indebtedness or for other reasons. Our ability to execute our business strategy depends on our access to an appropriate blend of debt financing, which may include secured and unsecured debt, and equity financing, which may include common and preferred shares.

Item 1B. Unresolved Staff Comments

None.

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Item 2. Properties

As of December 31, 2019, we owned 300 properties located in 30 states containing approximately 42.9 million rentable square feet, including 226 buildings, leasable land parcels and easements located on the island of Oahu, HI containing approximately 16.8 million rentable square feet and 74 properties located in 29 other states throughout the continental United States containing approximately 26.1 million rentable square feet. Most of our Hawaii Properties are lands leased to industrial and commercial tenants, many of which own buildings and operate their businesses on our lands.

The following table provides certain information about our properties as of December 31, 2019 (dollars in thousands):

		Undepreciated		Depreciated		Annualized
	Number of	Carrying		Carrying		Rental
State	Properties	Value (1)		Value (1)		Revenues
AR	1	$	4,385	$	3,957	$	469
CO	5	41,231		37,936		3,894
CT	2	16,074		13,591		1,847
FL	3	153,344		149,067		11,069
HI	226	633,190		613,368		100,571
IA	4	58,413		49,720		5,789
ID	1	5,023		4,495		400
IL	2	4,584		4,177		649
IN	9	279,574		273,320		24,030
KY	2	48,426		47,284		3,675
LA	2	15,818		14,168		1,269
MD	2	103,647		94,137		8,000
MI	1	43,229		38,238		2,184
MN	2	26,990		26,030		2,738
MO	4	86,492		84,646		5,921
NC	1	2,014		1,828		228
ND	1	3,923		3,527		351
NE	1	10,718		9,671		1,197
NH	1	49,206		48,305		4,913
NJ	2	72,208		64,402		5,858
NV	2	36,495		33,989		2,788
NY	2	21,085		19,523		2,801
OH	11	222,711		208,205		21,870
OK	1	7,400		6,863		788
PA	1	18,872		18,385		1,257
SC	4	121,129		109,147		9,599
SD	1	17,402		17,094		1,519
TN	2	75,798		67,563		6,401
UT	1	8,433		7,583		1,099
VA	3	148,150		134,277		12,432
Total	300	$	2,335,964	$	2,204,496	$	245,606

(1)Excludes the value of real estate intangibles.

At December 31, 2019, 199 of our properties (including 186 properties on the island of Oahu, HI) with an aggregate undepreciated carrying value of $1.2 billion were encumbered by mortgages totaling $1.1 billion.

See Note 4 to the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K for more information regarding our mortgage notes.

Item 3. Legal Proceedings

From time to time, we may become involved in litigation matters incidental to the ordinary course of our business. Although we are unable to predict with certainty the eventual outcome of any litigation, we are currently not a party to any litigation which we expect to have a material adverse effect on our business.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common shares are traded on Nasdaq (symbol: ILPT).

As of February 11, 2020, there were 2,069 shareholders of record of our common shares, although there is a larger number of beneficial owners.

Issuer purchases of equity securities. The following table provides information about our purchases of our equity securities during the quarter ended December 31, 2019:

					Maximum
				Total Number of	Approximate Dollar
				Shares Purchased	Value of Shares that
	Number of	Average		as Part of Publicly	May Yet Be Purchased
	Shares	Price Paid		Announced Plans	Under the Plans or
Calendar Month	Purchased (1)	per Share		or Programs	Programs
December 2019	125	$	21.09	—	$	—
Total	125	$	21.09	—	$	—

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

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Item 6. Selected Financial Data

The following table sets forth selected financial data for the periods and dates indicated. This data should be read in conjunction with, and is qualified in its entirety by reference to, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and accompanying notes included in this Annual Report on Form 10-K. The operating information for the years ended December 31, 2019 and 2018, and the balance sheet information as of December 31, 2019 and 2018, have been derived from our audited consolidated financial statements for the period of time for which we have been a separate public company and from certain financial information of SIR for periods prior to our becoming a separate public company. The operating information for the years ended December 31, 2017, 2016 and 2015 and the balance sheet information as of December 31, 2017, 2016 and 2015 have been derived from the financial statements of SIR, as such information was allocated to us in connection with the preparation of our financial statements included elsewhere in this Annual Report on Form 10-K. The selected financial data below does not necessarily reflect what our results of operations and financial position would have been if we had operated as a stand alone company during all periods presented, and should not be relied upon as an indicator of our future performance. Amounts are in thousands, except for per share data.

	Year Ended December 31,
	2019			2018			2017			2016			2015
Operating information:
Rental income	$	229,234		$	162,530		$	156,506		$	153,310		$	147,891
EXPENSES:
Real estate taxes	30,367			19,342			17,868			17,204			16,316
Other operating expenses	17,643			13,005			10,913			10,593			8,478
Depreciation and amortization	61,927			28,575			27,315			27,074			25,285
Acquisition and transaction related costs	—			—			1,025			35			15,291
General and administrative	17,189			11,307			16,799			9,200			8,745
Total expenses	127,126			72,229			73,920			64,106			74,115
Interest income	743			200			—			—			—
Interest expense	(50,848		)	(16,081		)	(2,439		)	(2,262		)	(2,092		)
Income before income tax expense and equity in earnings of an investee	52,003			74,420			80,147			86,942			71,684
Income tax expense	(171		)	(32		)	(44		)	(44		)	(44		)
Equity in earnings of an investee	666			—			—			—			—
Net income	$	52,498		$	74,388		$	80,103		$	86,898		$	71,640
Weighted average common shares outstanding—basic	65,049			64,139			45,000			45,000			45,000
Weighted average common shares outstanding—diluted	65,055			64,140			45,000			45,000			45,000
Net income per common share—basic and diluted	$0.81			$1.16			$1.78			$1.93			$1.59

	As of December 31,
	2019		2018		2017		2016		2015
Balance sheet information:
Total real estate investments (before depreciation) (1)	$	2,335,964	$	1,462,396	$	1,343,602	$	1,336,728	$	1,335,363
Total assets	$	2,454,901	$	1,534,611	$	1,411,683	$	1,422,335	$	1,443,217
Total indebtedness, net	$	1,406,608	$	462,195	$	799,427	$	64,269	$	64,577
Total shareholders' equity	$	995,690	$	1,028,273	$	562,208	$	1,313,185	$	1,334,170

(1) Excludes the value of real estate intangibles.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following information should be read in conjunction with our consolidated financial statements and accompanying notes included elsewhere in this Annual Report on Form 10-K.

OVERVIEW

We are a REIT organized under Maryland law. As of December 31, 2019, we owned 300 properties with approximately 42.9 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 26.1 million rentable square feet located in 29 other states. As of December 31, 2019, our properties were approximately 99.3% 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.

Property Operations

As of both December 31, 2019 and 2018, 99.3% of our rentable square feet was leased. Occupancy data for our properties as of December 31, 2019 and 2018 is as follows (square feet in thousands):

	All Properties				Comparable Properties (1)
	As of December 31,				As of December 31,
	2019		2018		2019		2018
Total properties	300		270		266		266
Total rentable square feet (2)	42,939		29,535		28,666		28,550
Percent leased (3)	99.3	%	99.3	%	98.9	%	99.2	%

(1) Consists of properties 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 (a) space being fitted out for occupancy pursuant to existing leases as of December 31, 2019, if any, and (b) 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 years ended December 31, 2019 and 2018 are as follows:

	Year Ended December 31,
	2019		2018
Average effective rental rates per square foot leased (1)
All properties	$	5.83	$	5.68
Comparable properties (2)	$	5.83	$	5.67

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

(2) Comparable properties for the years ended December 31, 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 year ended December 31, 2019, we entered lease renewals and new leases for approximately 2.0 million square feet, including a 194,000 square foot expansion at an existing property, at weighted average (by square feet) rental rates that were approximately 17.1% 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). The weighted average (by square feet) lease term for leases that were in effect for the same land area or building area during the prior lease term, was 9.4 years. Commitments for tenant improvements, leasing costs and concessions for leases entered during the year ended December 31, 2019 totaled $2.6 million, or $0.13 per square foot per year of the new weighted average lease term. Also, during the year ended December 31, 2019, we completed rent resets for approximately 588,000 square feet of land at our Hawaii Properties at rental rates that were approximately 30.7% higher than the prior rental rates.

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As shown in the table below, approximately 0.5% of our total rented square feet and approximately 0.7% of our total annualized rental revenues as of December 31, 2019 are included in leases scheduled to expire by December 31, 2020. As of December 31, 2019, our lease expirations by year are as follows (dollars and square feet in thousands):

									% of		Cumulative
			% of Total		Cumulative %				Annualized		% of
		Rented	Rented		of Total Rented		Annualized		Rental		Annualized
	Number of	Square Feet	Square Feet		Square Feet		Rental Revenues		Revenues		Rental Revenues
Period / Year	Tenants	Expiring (1)	Expiring (1)		Expiring (1)		Expiring		Expiring		Expiring
2020	13	230	0.5	%	0.5	%	$	1,611	0.7	%	0.7	%
2021	30	2,740	6.4	%	6.9	%	14,702		6.0	%	6.7	%
2022	65	2,828	6.6	%	13.5	%	20,843		8.5	%	15.2	%
2023	27	2,535	5.9	%	19.4	%	16,110		6.6	%	21.8	%
2024	30	10,277	24.1	%	43.5	%	42,958		17.5	%	39.3	%
2025	15	1,839	4.3	%	47.8	%	9,596		3.9	%	43.2	%
2026	3	949	2.2	%	50.0	%	6,289		2.6	%	45.8	%
2027	10	5,647	13.2	%	63.2	%	27,906		11.4	%	57.2	%
2028	21	2,921	6.9	%	70.1	%	20,607		8.4	%	65.6	%
2029	9	2,715	6.4	%	76.5	%	13,917		5.7	%	71.3	%
Thereafter	80	9,949	23.5	%	100.0	%	71,067		28.7	%	100.0	%
Total	303	42,630	100.0	%			$	245,606	100.0	%
Weighted average remaining lease term (in years)		8.6					9.6

(1) Rented square feet is pursuant to existing leases as of December 31, 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.

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We generally receive rents from our tenants monthly in advance. As of December 31, 2019, tenants representing 1% or more of our total annualized rental revenues were as follows (square feet in thousands):

					% of Total		% of Total
			No. of	Rented	Rented		Annualized Rental
		States	Properties	Sq. Ft. (1)	Sq. Ft. (1)		Revenues
1	Amazon.com Services, Inc.	FL, IN, SC, TN, VA	6	6,119	14.4	%	14.2	%
2	Federal Express Corporation / FedEx Ground Package System, Inc.	AR, CO, HI, IA, ID, IL, MN, MO, NC, ND, NV, OH, OK, UT	17	952	2.2	%	3.8	%
3	The Procter & Gamble Distributing LLC	OH	1	1,791	4.2	%	3.7	%
4	Restoration Hardware, Inc.	MD	1	1,195	2.8	%	2.5	%
5	American Tire Distributors, Inc.	CO, LA, NE, NY, OH	5	722	1.7	%	2.1	%
6	UPS Supply Chain Solutions, Inc.	NH	1	614	1.4	%	2.0	%
7	Par Hawaii Refining, LLC	HI	3	3,148	7.4	%	1.9	%
8	Servco Pacific Inc.	HI	4	537	1.3	%	1.9	%
9	SKF USA Inc.	MO	1	431	1.0	%	1.7	%
10	EF Transit, Inc.	IN	1	535	1.3	%	1.6	%
11	BJ's Wholesale Club, Inc.	NJ	1	634	1.5	%	1.4	%
12	Subaru of America, Inc.	IN	1	963	2.3	%	1.4	%
13	Shurtech Brands, LLC	OH	1	645	1.5	%	1.4	%
14	Safeway Inc.	HI	2	146	0.3	%	1.4	%
15	Manheim Remarketing, Inc.	HI	1	338	0.8	%	1.3	%
16	The Toro Company	IA	1	644	1.5	%	1.2	%
17	Exel Inc.	SC	1	945	2.2	%	1.2	%
18	Trex Company, Inc.	NV, VA	2	646	1.5	%	1.2	%
19	A.L. Kilgo Company, Inc.	HI	5	310	0.7	%	1.2	%
20	Avnet, Inc.	OH	1	581	1.4	%	1.2	%
21	Cummins Inc.	KY	1	604	1.4	%	1.2	%
22	Warehouse Rentals Inc.	HI	5	278	0.7	%	1.1	%
23	Coca-Cola Bottling of Hawaii, LLC	HI	4	351	0.8	%	1.1	%
24	Whirlpool Corporation	IN	1	805	1.9	%	1.0	%
	Total			23,934	56.2	%	52.7	%

(1) Rented square feet is pursuant to existing leases as of December 31, 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.

Mainland Properties. As of December 31, 2019, our Mainland Properties represented approximately 59.1% of our annualized rental revenues. We generally will seek to renew or extend the terms of leases at our Mainland Properties as their expirations approach. Because of the capital many of the tenants in our Mainland Properties have invested in these properties and because many of these properties appear to be of strategic importance to the tenants’ businesses, we believe that it is likely that these tenants will renew or extend their leases prior to their expirations. If we are unable to extend or renew our leases, it may be time consuming and expensive to relet some of these properties.

Hawaii Properties. As of December 31, 2019, our Hawaii Properties represented approximately 40.9% of our annualized rental revenues. As of December 31, 2019, certain of our Hawaii Properties are lands leased for rents that periodically reset based on fair market values, generally every ten years. Revenues from our Hawaii Properties have generally increased under our or our predecessors’ ownership as rents under the leases for those properties have been reset or renewed. Lease renewals, lease extensions, new leases and rental rates for our Hawaii Properties in the future will depend on prevailing market conditions when these lease renewals, lease extensions, new leases and rental rates are set. As rent reset dates or lease expirations approach at our Hawaii Properties, we generally negotiate with existing or new tenants for new lease terms. If we are unable to reach an agreement with a tenant on a rent reset, our Hawaii Properties’ leases typically provide that rent is reset based on an appraisal process. Despite our and our predecessors' prior experience with rent resets, lease extensions and new leases in Hawaii, our ability to increase rents when rents reset, leases are extended, or leases expire depends upon market conditions which are beyond our control. Accordingly, we cannot be sure that the historical increases achieved at our Hawaii Properties will continue in the future.

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The following chart shows the annualized rental revenues as of December 31, 2019 subject to rent reset at our Hawaii Properties:

Scheduled Rent Resets at Hawaii Properties

(dollars in thousands)

	Annualized
	Rental Revenues
	as of December 31, 2019
	Scheduled to Reset
Resets open from prior periods	$	1,901
2020	2,681
2021	2,610
2022	4,209
2023	2,094
2024	2,100
2025 and thereafter	14,841
Total	$	30,436

Rental rates for which available space may be leased in the future will depend on prevailing market conditions when lease extensions, lease renewals or new leases are negotiated. Whenever we extend, renew or enter new leases for our properties, we intend to seek rents that are equal to or higher than our historical rents for the same properties; however, our ability to maintain or increase the rents for our current properties will depend in large part upon market conditions, which are beyond our control.

Since the leases at certain of our Hawaii Properties were originally entered, in some cases as long as 40 or 50 years ago, the characteristics of the neighborhoods in the vicinity of some of those properties have changed. In such circumstances, we and our predecessors have sometimes engaged in redevelopment activities to change the character of certain properties in order to increase rents. Because our Hawaii Properties are currently experiencing strong demand for their current uses, we do not currently expect redevelopment efforts in Hawaii to become a major activity of ours in the near term; however, we may undertake such activities on a selective basis.

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

Investment Activities (dollars in thousands)

During the year ended December 31, 2019, we acquired 30 properties with a combined 13,288,180 rentable square feet for an aggregate purchase price of $936,750, excluding acquisition related costs of $4,800.

In February 2020, we acquired a net leased Class A e-commerce distribution center located in Goodyear, AZ with approximately 820,000 rentable square feet for a purchase price of $72,000, excluding acquisition related costs. This property is 100% leased and has a remaining lease term of approximately six years.

For more information regarding our investment activities, see Note 3 to the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

Financing Activities (dollars in thousands)

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, HI. In October 2019, we obtained a $350,000 mortgage loan secured by 11 of our Mainland Properties containing an aggregate of approximately 8.2 million rentable square feet and are located in eight states. We used the proceeds from these mortgage loans to reduce outstanding borrowings under our $750,000 unsecured revolving

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credit facility and to fund acquisitions. In April 2019, we assumed a $56,980 secured mortgage note in connection with one of our acquisitions.

In February 2020, we entered into agreements related to a joint venture with an Asian institutional investor for up to 12 of our Mainland Properties, including 11 properties secured by our $350,000 mortgage loan we obtained in October 2019. The investor will contribute approximately $108,300, which includes certain costs associated with the formation of the joint venture, for a 39% equity interest in the joint venture and we retained the remaining 61% equity interest in the joint venture. The investment amount is based on an aggregate property valuation of $680,000, less approximately $407,000 of existing mortgage debt on the properties at the time of the investment. We closed the joint venture with 11 of the 12 properties and the investor will initially contribute approximately $82,000 with the balance contributed when the twelfth property is added. We expect to use the net proceeds from this transaction to reduce outstanding borrowings under our revolving credit facility.

For more information regarding our financing activities, see “Liquidity and Capital Resources—Our Investment and Financing Liquidity and Resources” below.

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RESULTS OF OPERATIONS

Year Ended December 31, 2019, Compared to Year Ended December 31, 2018 (dollars and share amounts in thousands, except per share data)

	Comparable Properties Results (1)									Acquired Properties Results (2)						Consolidated Results
	Year Ended December 31,									Year Ended December 31,						Year Ended December 31,
					$			%						$								$			%
	2019		2018		Change			Change		2019		2018		Change		2019			2018			Change			Change
Rental income	$	164,644	$	159,981	$	4,663		2.9	%	$	64,590	$	2,549	$	62,041	$	229,234		$	162,530		$	66,704		41.0	%
Operating expenses:
Real estate taxes	21,835		19,104		2,731			14.3	%	8,532		238		8,294		30,367			19,342			11,025			57.0	%
Other operating expenses	12,524		12,824		(300		)	(2.3	)%	5,119		181		4,938		17,643			13,005			4,638			35.7	%
Total operating expenses	34,359		31,928		2,431			7.6	%	13,651		419		13,232		48,010			32,347			15,663			48.4	%
Net operating income (3)	$	130,285	$	128,053	$	2,232		1.7	%	$	50,939	$	2,130	$	48,809	181,224			130,183			51,041			39.2	%
Other expenses:
Depreciation and amortization																61,927			28,575			33,352			116.7	%
General and administrative																17,189			11,307			5,882			52.0	%
Total other expenses																79,116			39,882			39,234			98.4	%
Interest income																743			200			543			n/m
Interest expense																(50,848		)	(16,081		)	(34,767		)	n/m
Income before income tax expense and equity earnings of an investee																52,003			74,420			(22,417		)	(30.1	)%
Income tax expense																(171		)	(32		)	(139		)	n/m
Equity in earnings of an investee																666			—			666			n/m
Net income																$	52,498		$	74,388		$	(21,890	)	(29.4	)%
Weighted average common shares outstanding - basic																65,049			64,139			910			1.4	%
Weighted average common shares outstanding - diluted																65,055			64,140			915			1.4	%
Net income per common share - basic and diluted																$	0.81		$	1.16		$	(0.35	)	(30.2	)%

n/m - not meaningful

(1) Consists 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.

(2) Consists of 34 properties that we acquired during the period from January 1, 2018 to December 31, 2019.

(3) See our definition of NOI and our reconciliation of net income to NOI below under the heading "Non-GAAP Financial Measures."

References to changes in the income and expense categories below relate to the comparison of results for the year ended December 31, 2019, compared to the year ended December 31, 2018. Our acquisition activity reflects our acquisition of 34 properties during the period from January 1, 2018 to December 31, 2019. For a comparison of consolidated results for the year ended December 31, 2018 compared to the year ended December 31, 2017, see Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

Rental income. The increase in rental income is primarily a result of our acquisition activity as well as leasing activity and rent resets at certain of our comparable properties. Rental income includes non-cash straight line rent adjustments totaling approximately $4,345 for the 2019 period and approximately $4,739 for the 2018 period, and net amortization of acquired real estate leases and assumed real estate lease obligations totaling approximately $1,195 for the 2019 period and approximately $401 for the 2018 period.

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Real estate taxes. The increase in real estate taxes primarily reflects our acquisition activity and higher tax assessments at certain of our comparable properties.

Other operating expenses. Other operating expenses primarily include snow removal, legal and property management fees and prior to January 1, 2019, bad debt expense; beginning January 1, 2019, the applicable accounting standards require bad debts to be recorded as a reduction of revenues rather than as an expense. Other operating expenses also included bad debt expense in the 2018 period. The increase in other operating expenses is primarily due to our acquisition activity, partially offset by a decrease in other operating expenses at our comparable properties. The decrease in other operating expenses at our comparable properties is primarily due to a decrease in bad debts recorded as expense and higher snow removal expenses in the 2018 period, partially offset by increases in insurance expense and repairs and maintenance costs during the 2019 period at certain of our comparable properties.

Depreciation and amortization. The increase in depreciation and amortization primarily reflects our acquisition activity and an increase in depreciation of capital improvements at certain of our properties after January 1, 2018.

General and administrative. General and administrative expenses primarily include fees paid under our business management agreement, legal fees, audit fees, Trustee fees and equity compensation expense. The increase in general and administrative expenses primarily reflects an increase in business management fees as a result of our acquisition activity as well as an increase in our equity compensation expense and increased legal and accounting expenses.

Interest income. Interest income represents interest earned on our cash balances. The increase in interest income is primarily a result of a larger amount of investable cash in the 2019 period compared to the 2018 period.

Interest expense. The increase in interest expense in the 2019 period is primarily due to increased net borrowings used to fund our acquisition activity in the 2019 period.

Equity in earnings of an investee. Equity in earnings of an investee represents our proportionate share of earnings from our investment in AIC, which we acquired in December 2018.

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

Net income. The decrease in net income for the 2019 period compared to the 2018 period reflects the changes noted above.

Weighted average common shares outstanding. The increase in weighted average common shares outstanding primarily reflects common shares granted under our equity compensation plan since our IPO.

Net income per common share - basic and diluted. The decrease in net income per common share reflects the changes to net income and weighted average common shares noted above.

Non-GAAP Financial Measures

We present certain “non-GAAP financial measures” within the meaning of applicable SEC rules, including NOI, FFO and Normalized FFO. These measures do not represent cash generated by operating activities in accordance with GAAP and should not be considered alternatives to net income as indicators of our operating performance or as measures of our liquidity. These measures should be considered in conjunction with net income as presented in our consolidated statements of comprehensive income. We consider these non-GAAP measures to be appropriate supplemental measures of operating performance for a REIT, along with net income. We believe these measures provide useful information to investors because by excluding the effects of certain historical amounts, such as depreciation and amortization expense, they may facilitate a comparison of our operating performance between periods and with other REITs and, in the case of NOI, reflecting only those income and expense items that are generated and incurred at the property level may help both investors and management to understand the operations of our properties.

Net Operating Income

We calculate NOI as shown below. We define NOI as income from our rental of real estate less our property operating expenses. The calculation of NOI excludes certain components of net income in order to provide results that are more closely related to our property level results of operations. NOI excludes amortization of capitalized tenant improvement costs and leasing commissions that we record as depreciation and amortization expense. We use NOI to evaluate individual and company-wide property level performance. Other real estate companies and REITs may calculate NOI differently than we do.

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The following table presents the reconciliation of net income to NOI for the years ended December 31, 2019 and 2018 (dollars in thousands):

	Year Ended December 31,
	2019			2018
Reconciliation of Net Income to NOI:
Net income	$	52,498		$	74,388
Equity in earnings of an investee	(666		)	—
Income tax expense	171			32
Income before income tax expense and equity earnings of an investee	52,003			74,420
Interest expense	50,848			16,081
Interest income	(743		)	(200		)
General and administrative	17,189			11,307
Depreciation and amortization	61,927			28,575
NOI	$	181,224		$	130,183
NOI:
Hawaii Properties	$	74,968		$	73,523
Mainland Properties	106,256			56,660
NOI	$	181,224		$	130,183

Funds From Operations and Normalized Funds From Operations

We calculate FFO and Normalized FFO as shown below. FFO is calculated on the basis defined by The National Association of Real Estate Investment Trusts, which is net income, calculated in accordance with GAAP, plus real estate depreciation and amortization, as well as certain other adjustments currently not applicable to us. In calculating Normalized FFO, we adjust for the items shown below, if any, and include business management incentive fees, if any, only in the fourth quarter versus the quarter when they are recognized as an expense in accordance with GAAP due to their quarterly volatility not necessarily being indicative of our core operating performance and the uncertainty as to whether any such business management incentive fees will be payable when all contingencies for determining such fees are known at the end of the calendar year. FFO and Normalized FFO are among the factors considered by our Board of Trustees when determining the amount of distributions to our shareholders. Other factors include, but are not limited to, requirements to maintain our qualification for taxation as a REIT, limitations in our credit agreement, the availability to us of debt and equity capital, our dividend yield and our dividend yield compared to the dividend yields of other industrial REITs, our expectation of our future capital requirements and operating performance and our expected needs for and availability of cash to pay our obligations. Other real estate companies and REITs may calculate FFO and Normalized FFO differently than we do.

The following table presents our calculation of FFO and Normalized FFO and reconciliations of net income to FFO and Normalized FFO for the year ended December 31, 2019 and 2018 (dollars in thousands, except per share data):

	Year Ended December 31,
	2019		2018
Reconciliation of Net Income to FFO and Normalized FFO:
Net income	$	52,498	$	74,388
Plus: depreciation and amortization	61,927		28,575
FFO and Normalized FFO	$	114,425	$	102,963
FFO and Normalized FFO per common share - basic and diluted	$	1.76	$	1.61

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LIQUIDITY AND CAPITAL RESOURCES

Our Operating Liquidity and Resources (dollars in thousands)

Our principal sources of funds to meet our operating and capital expenses, pay debt service obligations and make distributions to our shareholders are rents from tenants at our properties and borrowings under our revolving credit facility. We believe that these sources of funds will be sufficient to meet our operating and capital expenses, pay debt service obligations and make distributions to our shareholders for the next 12 months and for the foreseeable future thereafter. Our future cash flows from operating activities will depend primarily upon our ability to:

• maintain the occupancy of, and maintain or increase the rental rates at, our properties;

• control our operating cost increases; and

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

Cash flows provided by (used in) operating, investing and financing activities were $116,300, ($893,393) and $802,035, respectively, for the year ended December 31, 2019 and $96,763, ($135,527) and $48,372, respectively, for the year ended December 31, 2018. The increase in net cash provided by operating activities for the year ended December 31, 2019 compared to the prior year is primarily due to increased operating cash flow from our acquisitions of properties after our IPO and changes in our working capital. The increase in net cash used in investing activities for the year ended December 31, 2019 compared to the prior year is primarily due to our acquisition of 30 properties in the 2019 period compared to four properties in the prior year. The increase in cash provided by financing activities was primarily due to an increase in net borrowings to fund our acquisition activities during 2019.

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

Our future acquisition or development activity cannot be accurately projected because such activity depends upon available opportunities that come to our attention and upon our ability to successfully acquire, develop and operate properties, financing available to us, our cost of capital, other commitments we have made and alternative uses for the amounts that would be required for the acquisition or development, the extent of our leverage, and the expected impact of the acquisition or development on our debt covenants and certain other financial metrics. We generally do not intend to purchase ‘‘turn around’’ properties, or properties that do not generate positive cash flows, and, to the extent we conduct construction or redevelopment activities on our properties, we currently intend to conduct those activities primarily to satisfy tenant requirements or on a build to suit basis for existing or new tenants.

As of December 31, 2019, we had cash and cash equivalents of $28,415. To maintain our qualification for taxation as a REIT under the IRC, we generally are required to distribute annually at least 90% of our REIT taxable income, subject to specified adjustments and excluding any net capital gain. This distribution requirement limits our ability to retain earnings and thereby provide capital for our operations or acquisitions. In order to fund cash needs that may result from timing differences between our receipt of rents and our desire or need to make distributions, to pay operating or capital expenses or to fund any future property acquisitions, development or redevelopment efforts, we maintain a $750,000 unsecured revolving credit facility with a group of lenders. The maturity date of our revolving credit facility is December 29, 2021. We have the option to extend the maturity date of our revolving credit facility for two, six month periods, subject to payment of extension fees and satisfaction of other conditions. We pay interest on borrowings under our revolving credit facility at the rate of LIBOR plus a premium that varies based on our leverage ratio. We are required to pay a commitment fee on the unused portion of our revolving credit facility. At December 31, 2019, the interest rate premium on our revolving credit facility was 155 basis points and our commitment fee was 25 basis points. We can borrow, repay and reborrow funds available under our revolving credit facility until maturity, and no principal repayment is due until maturity. As of December 31, 2019, the annual interest rate payable on borrowings under our revolving credit facility was 3.26%. As of December 31, 2019 and February 19, 2020, we had $310,000 and $385,000, respectively, outstanding under our revolving credit facility and $440,000 and $365,000, respectively, available to borrow under our revolving credit facility.

Our credit agreement includes a feature under which the maximum borrowing availability under the facility may be increased to up to $1,500,000 in certain circumstances.

On January 29, 2019, we obtained a $650,000 mortgage loan secured by 186 of our properties (178 land parcels and eight buildings) containing approximately 9.6 million square feet located on the island of Oahu, HI. 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. We used the proceeds from this loan to reduce outstanding borrowings under our revolving credit facility and to fund acquisitions.

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In October 2019, we obtained a $350,000 mortgage loan secured by 11 of our Mainland Properties containing an aggregate of approximately 8.2 million rentable square feet and 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.

In connection with the acquisition of a portfolio of 20 industrial properties in April 2019, 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.

As of December 31, 2019, including the mortgage debt described in the preceding three paragraphs, we had four mortgage notes payable with an aggregate principal amount of $1,105,730, which are scheduled to mature in 2020, 2023 and 2029.

In February 2020, we entered into agreements related to a joint venture with an Asian institutional investor for up to 12 of our Mainland Properties, including 11 properties secured by our $350,000 mortgage loan we obtained in October 2019. The investor will contribute approximately $108,300, which includes certain costs associated with the formation of the joint venture, for a 39% equity interest in the joint venture and we retained the remaining 61% equity interest in the joint venture. The investment amount is based on an aggregate property valuation of $680,000, less approximately $407,000 of existing mortgage debt on the properties at the time of the investment. We closed the joint venture with 11 of the 12 properties and the investor will initially contribute approximately $82,000 with the balance contributed when the twelfth property is added. We expect to use the net proceeds from this transaction to reduce outstanding borrowings under our revolving credit facility.

On January 17, 2018, we completed our IPO, in which we issued 20,000,000 of our common shares for net proceeds of $444,309, after deducting the underwriting discounts and commissions and expenses. For more information regarding our IPO and our application of the net proceeds, see Notes 1, 8 and 10 to the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

We expect to use borrowings under our revolving credit facility and net proceeds from offerings of equity or debt securities to fund any future property acquisitions, development or redevelopment efforts. We may also assume mortgage notes in connection with future acquisitions. When significant amounts are outstanding under our revolving credit facility or the maturities of our revolving credit facility or our other debt approach, we intend to explore refinancing alternatives. Such alternatives may include incurring term debt, obtaining financing secured by mortgages on properties we own, issuing new equity or debt securities, extending the maturity date of our revolving credit facility, participating in joint ventures or selling properties. We currently have an effective shelf registration statement that allows us to issue public securities on an expedited basis, but we cannot be sure that there will be purchasers for such securities. Although we cannot be sure that we will be successful in completing any particular type of financing, we believe that we will have access to financing, such as debt or and equity offerings, to fund capital expenditures, future acquisitions, development, redevelopment and other activities and to pay our obligations.

The completion and the costs of any future financings will depend primarily upon our success in operating our business and upon market conditions. In particular, the feasibility and cost of any future debt financings will depend primarily on our then current credit qualities and on market conditions. We have no control over market conditions. Potential lenders in future debt transactions will evaluate our ability to fund required debt service and repay principal balances when they become due by reviewing our financial condition, results of operations, business practices and plans and our ability to maintain our earnings, to stagger our debt maturities and to balance our use of debt and equity capital so that our financial performance and leverage ratios afford us flexibility to withstand any reasonably anticipated adverse changes. We intend to conduct our business activities in a manner which will afford us reasonable access to capital for investment and financing activities.

During the year ended December 31, 2019, we paid quarterly cash distributions to our shareholders totaling $85,937 using existing cash balances and borrowings under our revolving credit facility. For more information regarding the distributions we paid during 2019, see Note 6 to the Notes to the Consolidated Financial Statements included in Part IV, of this Annual Report on Form 10-K.

On January 16, 2020, we declared a regular quarterly distribution of $0.33 per common share, or $21,509, to shareholders of record on January 27, 2020. We paid this distribution to our shareholders on February 20, 2020 using existing cash balances and borrowings under our revolving credit facility.

We currently expect that our leasing activity and our recent acquisitions may increase our future cash flows and enhance our ability to increase our distributions to shareholders in the future. However, even if we realize future cash flows and an enhancement in our ability to increase our distributions to shareholders, we may elect to utilize that cash for purposes other than increasing our distributions to shareholders, such as to reduce our debt.

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During the years ended December 31, 2019 and 2018, amounts capitalized for tenant improvements, leasing costs, building improvements and development and redevelopment activities were as follows:

	Year Ended
	December 31,
	2019		2018
Tenant improvements (1)	$	197	$	1,431
Leasing costs (2)	1,538		1,723
Building improvements (3)	5,213		1,785
Development, redevelopment and other activities (4)	13,026		1,150
	$	19,974	$	6,089

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

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

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

(4) Development, redevelopment and other activities generally include capital expenditure projects that reposition a property or result in new sources of revenues.

As of December 31, 2019, we had estimated unspent leasing related obligations of $793.

During the year ended December 31, 2019, commitments made for expenditures, such as tenant improvements and leasing costs in connection with leasing space, were as follows:

	New Leases		Renewals		Totals
Square feet leased during the period (in thousands)	450		1,591		2,041
Total leasing costs and concession commitments (1)	$	1,238	$	1,330	$	2,568
Total leasing costs and concession commitments per square foot (1)	$	2.75	$	0.84	$	1.26
Weighted average lease term by square feet (years)	14.5		7.9		9.4
Total leasing costs and concession commitments per square foot per year (1)	$	0.19	$	0.11	$	0.13

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

As of December 31, 2019, our contractual obligations were as follows:

	Payments Due by Period
			Less than		1-3		3-5		More than
Contractual Obligations	Total		1 Year		Years		Years		5 Years
Borrowings under revolving credit facility	$	310,000	$	—	$	310,000	$	—	$	—
Mortgage notes payable	1,105,730		48,750		—		56,980		1,000,000
Tenant related obligations (1)	793		592		201		—		—
Projected interest expense (2)	399,356		53,454		93,520		80,884		171,498
Total	$	1,815,879	$	102,796	$	403,721	$	137,864	$	1,171,498

(1) Committed tenant related obligations include leasing commissions, tenant improvements or other tenant inducements and are based on leases in effect as of December 31, 2019.

(2) Projected interest expense is attributable to only our debt obligations as of December 31, 2019 at existing rates and is not intended to project future interest costs which may result from debt prepayments, discounts, debt issuances or changes in interest rates. Projected interest expense does not include interest which may become payable related to future borrowings under our revolving credit facility.

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Off Balance Sheet Arrangements

As of December 31, 2019, we had no off balance sheet arrangements that have had or that we expect would be reasonably likely to have a material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Debt Covenants (dollars in thousands)

Our principal debt obligations at December 31, 2019 were borrowings outstanding under our revolving credit facility, a $650,000 mortgage loan obtained in January 2019 that is secured by 186 properties, a $350,000 mortgage loan obtained in October 2019 that is secured by 11 of our Mainland Properties, a $56,980 mortgage note assumed in connection with an acquisition of a property in April 2019, and a $48,750 mortgage note assumed in connection with an acquisition of a property by SIR in 2015 that SIR contributed to us in connections with our IPO. Our mortgage notes are non-recourse, subject to certain limitations, except that, with respect to the $650,000 mortgage loan, the applicable loan agreement contains certain exceptions to the general non-recourse provisions that obligate us to indemnify the lenders for certain potential environmental losses relating to hazardous materials and violations of environmental law.

Our credit agreement provides for acceleration of payment of all amounts outstanding upon the occurrence and continuation of certain events of default, such as a change of control of us, which includes RMR LLC ceasing to act as our business and property manager. Our credit agreement contains covenants, including those that restrict our ability to incur debts, including debts secured by mortgages on our properties, in excess of calculated amounts, restrict our ability to make distributions to our shareholders in certain circumstances and generally require us to maintain certain financial ratios. As of December 31, 2019, we believe we were in compliance with all the covenants and other terms under our credit agreement.

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

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

The loan agreements governing our mortgage loans contain customary covenants and provide for acceleration of payment of all amounts due thereunder upon the occurrence and continuation of certain events of default. In addition, pursuant to the loan agreement and related documents governing our $650,000 mortgage loan, we are required to maintain a minimum consolidated net worth of at least $250,000 and liquidity of at least $15,000. As of December 31, 2019, we believe we were in compliance with all the covenants and other terms under the agreements governing our mortgage notes.

Related Person Transactions

We have relationships and historical and continuing transactions with RMR LLC, RMR Inc. and others related to them. For example: we have no employees and the personnel and various services we require to operate our business are provided to us by RMR LLC pursuant to our business and property management agreements with RMR LLC; RMR Inc. is the managing member of RMR LLC; Adam 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 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 also an officer and employee of RMR LLC. We have relationships and historical and continuing transactions with other companies to which RMR LLC or its subsidiaries provide management services and some of which have trustees, directors or officers who are also trustees, directors or officers of us, RMR LLC or RMR Inc., including OPI (successor by merger to SIR).

For more information about these and other such relationships and related person transactions, see Notes 8, 9 and 10 to the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K, which are incorporated herein by reference, our other filings with the SEC, including our definitive Proxy Statement for our 2020 Annual Meeting of Shareholders, or our definitive Proxy Statement, to be filed with the SEC within 120 days after the fiscal year ended December 31, 2019. For more information about the risks that may arise as a result of these and other related person transactions and relationships, see elsewhere in this Annual Report on Form 10-K, including “Warning Concerning Forward Looking Statements,” Part I, Item 1, “Business” and Part I, Item 1A, “Risk Factors.” Our filings with the SEC and copies of certain of our agreements with these related persons, including our business and property management agreements with RMR LLC and the Transaction Agreement, are available as exhibits to our public filings with the SEC and accessible at the SEC’s website,

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www.sec.gov. We may engage in additional transactions with related persons, including businesses to which RMR LLC or its subsidiaries provide management services.

Critical Accounting Policies

Our critical accounting policies are those that will have the most impact on the reporting of our financial condition and results of operations and those requiring significant judgments and estimates. We believe that our judgments and estimates have been and will be consistently applied and produce financial information that fairly presents our results of operations. Our most critical accounting policies involve our investments in real property. These policies affect our:

• allocation of purchase prices between various asset categories, including allocations to above and below market leases and the related impact on the recognition of rental income and depreciation and amortization expenses; and

• assessment of the carrying values and impairments of long lived assets.

We allocate the cost of each property investment to various property components such as land, buildings and improvements and intangibles based on their fair values, and each component generally has a different useful life. For acquired real estate, we record building, land and improvements, and, if applicable, the value of in-place leases, the fair market value of above or below market leases and tenant relationships at their relative fair value. We base purchase price allocations and the determination of useful lives on our estimates and, under some circumstances, studies from independent real estate appraisers to provide market information and evaluations that are relevant to our purchase price allocations and determinations of useful lives; however, our management is ultimately responsible for the purchase price allocations and determination of useful lives.

We compute depreciation expense using the straight line method over estimated useful lives of up to 40 years for buildings and improvements, and up to seven years for personal property. We do not depreciate the allocated cost of land. We amortize capitalized above market lease values as a reduction to rental income over the terms of the respective leases. We amortize capitalized below market lease values as an increase to rental income over the terms of the respective leases. We amortize the value of acquired in place leases exclusive of the value of above market and below market acquired in place leases to depreciation and amortization over the periods of the respective leases. If a lease is terminated prior to its stated expiration, all unamortized amounts relating to that lease are written off. Purchase price allocations require us to make certain assumptions and estimates. Incorrect assumptions and estimates may result in inaccurate charges to rental income and depreciation and amortization over future periods.

We periodically evaluate our properties for impairment. Impairment indicators may include declining tenant occupancy, our concerns about a tenant's financial condition (which may be affected by a rent default or other information which comes to our attention) or our decision to dispose of an asset before the end of its estimated useful life and legislative, as well as market or industry changes that could permanently reduce the value of a property. If indicators of impairment are present, we evaluate the carrying value of the related property by comparing it to the expected future undiscounted cash flows to be generated from that property. If the sum of these expected future cash flows is less than the carrying value, we reduce the net carrying value of the property to its fair value. This analysis requires us to judge whether indicators of impairment exist and to estimate likely future cash flows. The future net undiscounted cash flows are subjective and are based in part on assumptions regarding hold periods, market rents and terminal capitalization rates. If we misjudge or estimate incorrectly or if future tenant operations, market or industry factors differ from our expectations we may record an impairment charge that is inappropriate or fail to record a charge when we should have done so, or the amount of any such charges may be inaccurate.

These accounting policies involve significant judgments made based upon our experience and the experience of our management and our Board of Trustees, including judgments about current valuations, ultimate realizable value, estimated useful lives, salvage or residual value, the ability and willingness of our tenants to perform their obligations to us, current and future economic conditions and competitive factors in the markets in which our properties are located. Competition, economic conditions and other factors may cause occupancy declines in the future. In the future, we may need to revise our carrying value assessments to incorporate information which is not now known, and such revisions could increase or decrease our depreciation expense related to properties we own or decrease the carrying values of our assets.

Impact of Inflation

Inflation in the past several years in the United States has been modest, but recently there have been indications of inflation in the U.S. economy and some market forecasts indicate an expectation of increased inflation in the near to intermediate term. Future inflation might have both positive and negative impacts on our business. Inflation might cause the value of our assets to increase.

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Increases in operating costs as a result of inflation are likely to have modest, if any, impacts on our operating results. This is because most of the operating costs arising in our business are incurred at our properties and our tenants pay most of the property operating cost increases directly or indirectly when we pass through such costs as additional rent under our leases. Increased debt capital costs as a result of inflation are not directly or immediately paid by, or passed through, to our tenants; therefore, such cost increases are more likely to impact our financial results. Over time, however, inflationary debt capital cost increases may be mitigated by rent resets at our Hawaii Properties or as leases at our properties expire and new leases are entered which reflect inflationary increases in market rents.

To mitigate the adverse impact of any increased cost of debt capital in the event of material inflation, we may enter into interest rate hedge arrangements. The decision to enter into these agreements will be based on various factors, including the amount of our floating rate debt outstanding, our belief that material interest rate increases are likely to occur, the costs of, and our expected benefit from, these agreements and upon possible requirements of our borrowing arrangements. In periods of rapid U.S. inflation, our tenants’ operating costs may increase faster than revenues, which may have an adverse impact upon us if our tenants’ operating income becomes insufficient to pay our rent. To mitigate the adverse impact of tenant financial distress upon us, we require some of our tenants to provide guarantees or security for our rent.

Generally, we do not expect inflation to have a material adverse impact on our financial results for the next 12 months or for the currently foreseeable future thereafter.

Impact of Climate Change

Concerns about climate change have resulted in various treaties, laws and regulations that are intended to limit carbon emissions and address other environmental concerns. These and other laws may cause energy or other costs at our properties to increase. We do not expect the direct impact of these increases to be material to our results of operations, because the increased costs either would be the responsibility of our tenants directly or in the longer term, passed through and paid by tenants of our properties. Although we do not believe it is likely in the foreseeable future, laws enacted to mitigate climate change may make some of our properties obsolete or cause us to make material investments in our properties, which could materially and adversely affect our financial condition or the financial condition of our tenants and their ability to pay rent to us.

In an effort to reduce the effects of any increased energy costs in the future, we continuously study ways to improve the energy efficiency at all of our properties. Our property manager, RMR LLC, is a member of the ENERGY STAR program, a joint program of the U.S. Environmental Protection Agency and the U.S. Department of Energy that is focused on promoting energy efficiency at commercial properties through its “ENERGY STAR” partner program, and a member of the U.S. Green Building Council, a nonprofit organization focused on promoting energy efficiency at commercial properties through its leadership in energy and environmental design, or LEED^®, green building program.

Some observers believe severe weather in different parts of the world over the last few years is evidence of global climate change. Severe weather may have an adverse effect on certain properties we own. Rising sea levels could cause flooding at some of our properties, including some of our Hawaii Properties, which may have an adverse effect on individual properties we own. We mitigate these risks by procuring, or requiring our tenants to procure, insurance coverage we believe adequate to protect us from material damages and losses resulting from the consequences of losses caused by climate change. However, we cannot be sure that our mitigation efforts will be sufficient or that future storms, rising sea levels or other changes that may occur due to future climate change could not have a material adverse effect on our financial results.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk (dollars in thousands, except per share data)

We are exposed to risks associated with market changes in interest rates. We manage our exposure to this market risk by monitoring available financing alternatives. Other than as described below, we do not currently expect any significant changes in our exposure to fluctuations in interest rates or in how we manage this exposure in the near future.

Fixed Rate Debt

As of December 31, 2019, our outstanding fixed rate debt consisted of the following mortgage notes:

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			Annual		Annual			Interest
	Principal		Interest		Interest			Payments
Debt	Balance (1)		Rate (1)		Expense (1)		Maturity	Due
Mortgage note (one property in Virginia)	$	48,750	3.99	%	$	1,945	2020	Monthly
Mortgage note (one property in Florida) (2)	56,980		3.60	%	2,051		2023	Monthly
Mortgage notes (186 properties in Hawaii)	650,000		4.31	%	28,015		2029	Monthly
Mortgage notes (11 Mainland Properties) (2)	350,000		3.33	%	11,655		2029	Monthly
	$	1,105,730			$	43,666

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

(2) In February 2020, we entered into agreements for properties encumbered by these mortgages contributed or which we will contribute to a joint venture in which we own a 61% equity interest. The principal amounts listed in the table for these debts have not been adjusted to reflect our partial ownership in the joint venture.

These mortgage notes require interest only payments until maturity. Because our mortgage notes require interest to be paid at a fixed rate, changes in market interest rates during the terms of these mortgage notes will not affect our interest obligations. If these mortgage notes are refinanced at interest rates which are one percentage point higher or lower than shown above, our annual interest cost would increase or decrease by approximately $11,057.

Changes in market interest rates would affect the fair value of our fixed rate debt obligations. Increases in market interest rates decrease the fair value of our fixed rate debt, while decreases in market interest rates increase the fair value of our fixed rate debt. Based on the balances outstanding at December 31, 2019 and discounted cash flow analyses through the maturity dates, and assuming no other changes in factors that may affect the fair value of our fixed rate debt obligations, a hypothetical immediate one percentage point change in the interest rates would change the fair value of these obligations by approximately $80,690.

Floating Rate Debt

At December 31, 2019, our floating rate debt consisted of $310,000 outstanding under our revolving credit facility. Our revolving credit facility matures on December 29, 2021 and, subject to the payment of extension fees and satisfaction of other conditions, we have the option to extend the maturity date for two, six month periods. No principal repayments are required under our revolving credit facility prior to maturity, and prepayments may be made at any time without penalty.

Borrowings under our revolving credit facility are in U.S. dollars and require interest to be paid at LIBOR plus a premium that varies based on our leverage ratio. Accordingly, we are vulnerable to changes in the U.S. dollar based short term rates, specifically LIBOR. In addition, upon renewal or refinancing of this obligation, we are vulnerable to increases in interest rate premiums due to market conditions or our perceived credit risk. Generally, a change in interest rates would not affect the value of our floating rate debt but would affect our operating results. The following table presents the approximate impact a one percentage point increase in interest rates would have on our annual floating rate interest expense at December 31, 2019:

	Impact of an Increase in Interest Rates
					Total Interest		Annual
	Interest Rate		Outstanding		Expense		Earnings Per
	Per Year		Debt		Per Year		Share Impact (1)
At December 31, 2019	3.26	%	$	310,000	$	10,106	$	(0.16	)
One percentage point increase	4.26	%	$	310,000	$	13,206	$	(0.20	)

(1) Based on the diluted weighted average common shares outstanding for the year ended December 31, 2019.

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The following table presents the approximate impact a one percentage point increase in interest rates would have on our annual floating rate interest expense at December 31, 2019 if we were fully drawn on our revolving credit facility:

	Impact of an Increase in Interest Rates
					Total Interest		Annual
	Interest Rate		Outstanding		Expense		Earnings Per
	Per Year		Debt		Per Year		Share Impact (1)
At December 31, 2019	3.26	%	$	750,000	$	24,450	$	(0.38	)
One percentage point increase	4.26	%	$	750,000	$	31,950	$	(0.49	)

(1) Based on the diluted weighted average common shares outstanding for the year ended December 31, 2019.

The foregoing table shows the impact of an immediate one percentage point change in floating interest rates. If interest rates were to change gradually over time, the impact would be spread over time. Our exposure to fluctuations in floating interest rates will increase or decrease in the future with increases or decreases in the outstanding amounts of our revolving credit facility and any other floating rate debt.

LIBOR Phase Out

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

Item 8. Financial Statements and Supplementary Data

The information required by this item is included in Item 15 of this Annual Report on Form 10-K.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

As of the end of the period covered by this Annual Report on Form 10-K, our management carried out an evaluation, under the supervision and with the participation of our President and Chief Executive Officer and our Chief Financial Officer and Treasurer, of the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 under the Exchange Act. Based upon that evaluation, our President and Chief Executive Officer and our Chief Financial Officer and Treasurer concluded that our disclosure controls and procedures are effective.

There have been no changes in our internal control over financial reporting during the quarter ended December 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management Report on Assessment of Internal Control Over Financial Reporting

We are responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control system is designed to provide reasonable assurance to our management and Board of Trustees regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2019. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework (2013 Framework). Based on this assessment, we believe that, as of December 31, 2019, our internal control over financial reporting is effective.

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Ernst & Young LLP, the independent registered public accounting firm that audited our 2019 Consolidated Financial Statements included in this Annual Report on Form 10-K, has issued an attestation report on our internal control over financial reporting. The report appears elsewhere herein.

Item 9B. Other Information

On February 21, 2020, our Board of Trustees, pursuant to a recommendation of the Nominating and Governance Committee of our Board of Trustees, increased its size from five to seven members, with one new Trustee to be in Class III of our Board of Trustees with a term expiring at our 2021 annual meeting of shareholders and the other new Trustee to be in Class I of our Board of Trustees with a term expiring at our 2022 annual meeting of shareholders, and in order to fill the vacancies created by such increase, elected Laura A. Wilkin and Kevin C. Phelan, as Independent Trustees in Class III and Class I of our Board of Trustees, respectively. Ms. Wilkin and Mr. Phelan were also each elected as a member of the Compensation Committee and the Nominating and Governance Committee of our Board of Trustees, and Ms. Wilkin was also elected to the Audit Committee of our Board of Trustees.

Ms. Wilkin, age 55, has been a senior advisor at Boston Consulting Group, Inc., a management consulting firm, since November 2019. Prior to that she served as executive vice president and chief supply chain officer of Petco Animal Supplies, Inc., a retailer of pet food, supplies, services and companion animals in the United States, or Petco, from 2018 to 2019. Prior to joining Petco, Ms. Wilkin served as senior vice president, logistics, from 2016 to 2017, senior vice president, replenishment and flow strategy, from 2013 to 2016, and divisional vice president, supply chain, from 2010 to 2012, of Walmart Inc. Prior to joining Walmart, Ms. Wilkin held various senior supply chain roles at large retailers.

Mr. Phelan, age 75, has been co-chairman of the Boston office of Colliers International Group, Inc. (formerly known as Meredith & Grew, or M&G), a full service commercial real estate firm, since 2010. Prior to that he served as president since 2007 and prior to that as executive vice president of the executive committee, and director and partner of M&G. Mr. Phelan joined M&G in 1978 and established the finance and capital markets group. Prior to joining M&G, Mr. Phelan was a vice president at State Street Bank & Trust Co., where he was responsible for commercial lending. Mr. Phelan serves on a number of non-profit boards of directors and trustees.

There is no arrangement or understanding between Ms. Wilkin or Mr. Phelan and any other person pursuant to which Ms. Wilkin or Mr. Phelan, respectively, was selected as a Trustee. There are no transactions, relationships or agreements between Ms. Wilkin, Mr. Phelan and us that would require disclosure pursuant to Item 404(a) of Regulation S-K promulgated under the Exchange Act.

Our Board of Trustees concluded that each of Ms. Wilkin and Mr. Phelan is qualified to serve as our Independent Trustee in accordance with the requirements of Nasdaq, the SEC and our declaration of trust. For their service as Trustees, Ms. Wilkin and Mr. Phelan will be entitled to the compensation we generally provide to our Independent Trustees, with the annual cash fees prorated. A summary of our currently effective trustee compensation is filed as Exhibit 10.9 to this Annual Report on Form 10-K and is incorporated herein by reference. Consistent with those compensation arrangements, on February 21, 2020 we awarded to each of Ms. Wilkin and Mr. Phelan 3,000 of our common shares in connection with their election, all of which vested on the award date.

In connection with their elections, we entered into an indemnification agreement with each of Ms. Wilkin and Mr. Phelan, effective as of February 21, 2020, on substantially the same terms as the agreements previously entered into between us and each of our other Trustees. The form of indemnification agreement entered into between us and our Trustees is filed as Exhibit 10.8 to this Annual Report on Form 10-K and is incorporated herein by reference.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance

We have a Code of Conduct that applies to our officers and Trustees, RMR Inc. and RMR LLC, senior level officers of RMR LLC, senior level officers and directors of RMR Inc. and certain other officers and employees of RMR LLC. Our Code of Conduct is posted on our website, www.ilptreit.com. A printed copy of our Code of Conduct is also available free of charge to any person who requests a copy by writing to Investor Relations, Industrial Logistics Properties Trust, Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458-1634. We intend to satisfy the requirements under Item 5.05 of Form 8-K regarding disclosure of amendments to, or waivers from, provisions of our Code of Conduct that apply to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, on our website.

The remainder of the information required by Item 10 is incorporated by reference to our definitive Proxy Statement.

Item 11. Executive Compensation

The information required by Item 11 is incorporated by reference to our definitive Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Equity Compensation Plan Information. We may grant common shares to our officers and other employees of RMR LLC under our 2018 Equity Compensation Plan, or the 2018 Plan. In addition, each of our Trustees receives common shares as part of his or her annual compensation for serving as a Trustee and such shares are awarded under the 2018 Plan. The terms of awards made under the 2018 Plan are determined by the Compensation Committee of our Board of Trustees at the time of the awards. The following table is as of December 31, 2019:

			Number of securities
	Number of securities		remaining available for future
	to be issued upon	Weighted-average	issuance under equity
	exercise of	exercise price of	compensation plan (excluding
	outstanding options,	outstanding options,	securities reflected in
	warrants and rights	warrants and rights	column (a))
Plan category	(a)	(b)	(c)
Equity compensation plans approved by securityholders-2018 Plan	None.	None.	3,819,372 (1)
Equity compensation plans not approved by securityholders	None.	None.	None.
Total	None.	None.	3,819,372 (1)

(1) Consists of common shares available for issuance pursuant to the terms of the 2018 Plan. Share awards that are repurchased or forfeited will be added to the common shares available for issuance under the 2018 Plan.

Payments by us to RMR LLC employees are described in Notes 6 and 10 to the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K. The remainder of the information required by Item 12 is incorporated by reference to our definitive Proxy Statement.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by Item 13 is incorporated by reference to our definitive Proxy Statement.

Item 14. Principal Accountant Fees and Services

The information required by Item 14 is incorporated by reference to our definitive Proxy Statement.

61

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a) Index to Financial Statements and Financial Statement Schedules

The following consolidated financial statements and financial statement schedules of Industrial Logistics Properties Trust are included on the pages indicated:

Reports of Independent Registered Public Accounting Firm	F-1
Consolidated Balance Sheets as of December 31, 2019 and 2018	F-4
Consolidated Statements of Comprehensive Income for each of the three years in the period ended December 31, 2019	F-5
Consolidated Statements of Shareholders' Equity for each of the three years in the period ended December 31, 2019	F-6
Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2019	F-7
Notes to Consolidated Financial Statements	F-9
Schedule III—Real Estate and Accumulated Depreciation	S-1

All other schedules for which provision is made in the applicable accounting regulations of the SEC are not required under the related instructions, or are inapplicable, and therefore have been omitted.

(b) Exhibits

Exhibit Number	Description
2.1	Agreement of Purchase and Sale, dated as of February 14, 2019, by and among the Company and certain subsidiaries of GPT Operating Partnership LP. (Incorporated by reference to the Company's Current Report on Form 8-K dated February 14, 2019)
2.2	Agreement of Purchase and Sale, dated as of February 14, 2019 by and among the Company and certain indirect subsidiaries of Cole Office & Industrial REIT (CCIT II), Inc. (Incorporated by reference to the Company's Current Report on Form 8-K dated February 14, 2019.)
2.3	First Amendment to Agreement of Purchase and Sale, dated as of March 18, 2019, by and among the Company and certain indirect subsidiaries of Cole Office & Industrial REIT (CCIT II), Inc. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2019.)
3.1	Composite Copy of Amended and Restated Declaration of Trust of the Company, dated as of January 11, 2018, as amended to date. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019.)
3.2	Amended and Restated Bylaws of the Company, adopted March 25, 2019. (Incorporated by reference to the Company's Current Report on Form 8-K dated March 25, 2019.)
4.1	Form of Common Share Certificate. (Incorporated by reference to Amendment No. 2 to the Company’s Registration Statement on Form S-11, File No. 333-221708.)
4.2	Description of Securities. (Filed herewith.)
8.1	Opinion of Sullivan & Worcester LLP as to certain tax matters. (Filed herewith.)
10.1	Transaction Agreement, dated as of January 17, 2018, between the Company and Office Properties Income Trust (f/k/a Government Properties Income Trust) (as successor to Select Income REIT). (Incorporated by reference to the Company’s Current Report on Form 8-K dated January 11, 2018.)
10.2	Credit Agreement, dated as of December 29, 2017, among the Company, Citibank, N.A., as administrative agent and collateral agent, and each of the other financial institutions initially a signatory thereto. (Incorporated by reference to Select Income REIT’s Current Report on Form 8-K dated December 29, 2017.)
10.3	Business Management Agreement, dated as of January 17, 2018, between the Company and The RMR Group LLC.(+) (Incorporated by reference to the Company’s Current Report on Form 8-K dated January 11, 2018.)

62

10.4	Amendment to Business Management Agreement, dated as of December 31, 2018, between the Company and The RMR Group LLC.(+) (Incorporated by reference to the Company's Current Report on Form 8-K dated December 31, 2018.)
10.5	Property Management Agreement, dated as of January 17, 2018, between the Company and The RMR Group LLC.(+) (Incorporated by reference to the Company’s Current Report on Form 8-K dated January 11, 2018.)
10.6	2018 Equity Compensation Plan.(+) (Incorporated by reference to the Company’s Current Report on Form 8-K dated January 11, 2018.)
10.7	Form of Share Award Agreement.(+) (Incorporated by reference to Amendment No. 3 to the Company’s Registration Statement on Form S-11, File No. 333-221708.)
10.8	Form of Indemnification Agreement.(+) (Filed herewith.)
10.9	Summary of Trustee Compensation.(+) (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 3, 2019.)
10.10	Loan Agreement, dated as of January 29, 2019, among certain of the Company’s subsidiaries, as co-borrowers, and Morgan Stanley Bank, N.A., Citi Real Estate Funding Inc., UBS AG and JPMorgan Chase Bank, National Association. (Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 2018.)
10.11	Loan Agreement, dated as of October 21, 2019, among certain of the Company’s subsidiaries, as co-borrowers, and Morgan Stanley Bank, N.A., UBS AG and Bank of America, N.A. (Incorporated by reference to the Company's Current Report on Form 8-K dated October 21, 2019.)
21.1	Subsidiaries of the Company. (Filed herewith.)
23.1	Consent of Ernst & Young LLP. (Filed herewith.)
23.2	Consent of Sullivan & Worcester LLP. (Contained in Exhibit 8.1.)
31.1	Rule 13a-14(a) Certification. (Filed herewith.)
31.2	Rule 13a-14(a) Certification. (Filed herewith.)
32.1	Section 1350 Certification. (Furnished herewith.)
99.1	Letter Agreement, dated as of January 29, 2019, between the Company and The RMR Group LLC. (Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 2018.)
99.2	Letter Agreement, dated as of February 21, 2020, between the Company and The RMR Group LLC. (Filed herewith.)
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	XBRL Taxonomy Extension Schema Document. (Filed herewith.)
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document. (Filed herewith.)
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document. (Filed herewith.)
101.LAB	XBRL Taxonomy Extension Label Linkbase Document. (Filed herewith.)
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document. (Filed herewith.)
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

(+) Management contract or compensatory plan or arrangement.

Item 16. Form 10-K Summary

None.

63

Report of Independent Registered Public Accounting Firm

To the Trustees and Shareholders of Industrial Logistics Properties Trust

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Industrial Logistics Properties Trust (the Company) as of December 31, 2019 and 2018, the related consolidated statements of comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 2019, and the related notes and the financial statement schedule listed in the Index at item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 24, 2020 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

	Accounting for the Acquisition of Real Estate
Description of the Matter	As described in Note 3 to the consolidated financial statements, during 2019, the Company acquired 30 industrial properties for an aggregate purchase price of $941 million. These acquisitions were accounted for as asset acquisitions.
	Auditing the Company’s accounting for these acquisitions was complex and highly judgmental due to the significant estimation required to determine the fair value of the acquired assets and assumed liabilities. The fair value estimates were sensitive to significant assumptions, such as market rents, costs to execute leases in current market conditions, discount rates, and capitalization rates. These significant assumptions are forward looking and could be affected by future market or economic conditions.

F-1

How We Addressed the Matter in Our Audit	We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls over the accounting for real estate acquisitions. For example, we tested controls over the allocation of the purchase price to the acquired assets and assumed liabilities, including controls over management’s review of the methodologies and the significant assumptions used to determine fair value.
	To test the accounting for real estate acquisitions, our audit procedures included, among other things, evaluating whether intangible assets or liabilities, including above market leases, below market leases and in-place leases, were properly identified, and evaluating the Company’s use of the income and market approach methodologies. We also tested the significant assumptions used to determine the fair value of acquired assets and assumed liabilities. For example, we compared the significant assumptions used to current industry and economic trends. Additionally, we tested the completeness and accuracy of the underlying data supporting the significant assumptions and estimates. We involved our valuation specialists to assist in our evaluation of the methodologies used by the Company and the significant assumptions that were used in determining the fair value estimates.
	Impairment of Real Estate Properties
Description of the Matter	The Company’s net real estate properties totaled $2.2 billion as of December 31, 2019. As discussed in Note 2 to the consolidated financial statements, the Company evaluates their properties for impairment quarterly, or whenever events or changes in circumstances indicate that carrying amounts may not be recoverable.
	Auditing management’s property impairment analysis was complex and involved a high degree of subjectivity due to the significant estimation required in determining the future undiscounted net cash flows expected to be generated from those assets with indicators of impairment. The future net undiscounted cash flows are sensitive to significant assumptions, such as hold periods, market rents, and terminal capitalization rates, which are forward-looking and could be affected by future economic and market conditions.
How We Addressed the Matter in Our Audit	We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls over the process for assessing impairment of real estate properties. For example, we tested controls over management’s review of the future net undiscounted cash flows calculations, including the significant assumptions and data inputs used to develop the undiscounted cash flows.
	Our testing of the Company’s impairment assessment included, among other procedures, evaluating the assumptions used to develop the estimated undiscounted cash flows used to assess the recoverability of real estate properties. Specifically, we evaluated the significant assumptions used to estimate the property cash flows, including market rents and terminal capitalization rates through comparison to current industry and economic trends and tested the completeness and accuracy of the underlying data supporting the significant assumptions. We compared the projected forecasted amounts to past performance of the properties and the Company’s history related to similar properties and other forecasted financial information prepared by the Company. We also held discussions with management about the current status of potential transactions and about management’s judgments to understand the probability of future events that could affect the hold period and other cash flow assumptions for the properties. We searched for and evaluated information that corroborated or contradicted the Company’s assumptions.

/s/ Ernst & Young LLP 

We have served as the Company’s auditor since 2017.

Boston, Massachusetts

February 24, 2020

F-2

Report of Independent Registered Public Accounting Firm

To the Trustees and Shareholders of Industrial Logistics Properties Trust

Opinion on Internal Control Over Financial Reporting

We have audited Industrial Logistics Properties Trust’s internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Industrial Logistics Properties Trust (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2019 and 2018, the related consolidated statements of comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2019, and the related notes and the financial statement schedule listed in the Index at item 15(a), and our report dated February 24, 2020, expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management Report on Assessment of Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Boston, Massachusetts

February 24, 2020

F-3

INDUSTRIAL LOGISTICS PROPERTIES TRUST

CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data)

	December 31,
	2019			2018
ASSETS
Real estate properties:
Land	$	747,794		$	670,501
Buildings and improvements	1,588,170			791,895
Total real estate properties, gross	2,335,964			1,462,396
Accumulated depreciation	(131,468		)	(93,291		)
Total real estate properties, net	2,204,496			1,369,105
Acquired real estate leases, net	138,596			75,803
Cash and cash equivalents	28,415			9,608
Restricted cash	6,135			—
Rents receivable, including straight line rents of $58,336 and $54,916, respectively	62,782			56,940
Deferred leasing costs, net	6,581			6,157
Debt issuance costs, net	2,954			4,430
Due from related persons	1,504			1,390
Other assets, net	3,438			11,178
Total assets	$	2,454,901		$	1,534,611
LIABILITIES AND SHAREHOLDERS' EQUITY
Revolving credit facility	$	310,000		$	413,000
Mortgage notes payable, net	1,096,608			49,195
Assumed real estate lease obligations, net	17,508			18,316
Accounts payable and other liabilities	16,475			12,040
Rents collected in advance	9,442			6,004
Security deposits	6,680			6,130
Due to related persons	2,498			1,653
Total liabilities	1,459,211			506,338
Commitments and contingencies
Shareholders' equity:
Common shares of beneficial interest, $.01 par value: 100,000,000 shares authorized; 65,180,628 and 65,074,791 shares issued and outstanding, respectively	652			651
Additional paid in capital	999,302			998,447
Cumulative net income	142,155			89,657
Cumulative common distributions	(146,419		)	(60,482		)
Total shareholders' equity	995,690			1,028,273
Total liabilities and shareholders' equity	$	2,454,901		$	1,534,611

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

INDUSTRIAL LOGISTICS PROPERTIES TRUST

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(amounts in thousands, except per share data)

	Year Ended December 31,
	2019			2018			2017
Rental income	$	229,234		$	162,530		$	156,506
Expenses:
Real estate taxes	30,367			19,342			17,868
Other operating expenses	17,643			13,005			10,913
Depreciation and amortization	61,927			28,575			27,315
Acquisition and transaction related costs	—			—			1,025
General and administrative	17,189			11,307			16,799
Total expenses	127,126			72,229			73,920
Interest income	743			200			—
Interest expense (including net amortization of debt issuance costs, premiums and discounts of $2,017, $1,244 and ($494), respectively)	(50,848		)	(16,081		)	(2,439		)
Income before income tax expense and equity in earnings of an investee	52,003			74,420			80,147
Income tax expense	(171		)	(32		)	(44		)
Equity in earnings of an investee	666			—			—
Net income	$	52,498		$	74,388		$	80,103
Weighted average common shares outstanding - basic	65,049			64,139			45,000
Weighted average common shares outstanding - diluted	65,055			64,140			45,000
Net income per common share - basic and diluted	$	0.81		$	1.16		$	1.78

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

F-4

INDUSTRIAL LOGISTICS PROPERTIES TRUST

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(dollars in thousands)

	Number of				Additional			Cumulative		Cumulative
	Common		Common		Paid In			Net		Common			Ownership
	Shares		Shares		Capital			Income		Distributions			Interest			Total
Balance at December 31, 2016	—		$	—	$	—		$	—	$	—		$	1,313,185		$	1,313,185
Net income	—		—		—			15,269		—			64,834			80,103
Contributions	—		—		30,244			—		—			42,563			72,807
Distributions	—		—		(37,348		)	—		—			(116,539		)	(153,887		)
Issuance of common shares and reclassification of ownership interest	45,000,000		450		553,593			—		—			(1,304,043		)	(750,000		)
Balance at December 31, 2017	45,000,000		450		546,489			15,269		—			—			562,208
Net income	—		—		—			74,388		—			—			74,388
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	77,400		1		926			—		—			—			927
Share forfeitures	(240	)	—		—			—		—			—			—
Share repurchases	(2,369	)	—		(52		)	—		—			—			(52		)
Distributions to common shareholders	—		—		—			—		(60,482		)	—			(60,482		)
Balance at December 31, 2018	65,074,791		651		998,447			89,657		(60,482		)	—			1,028,273
Net income	—		—		—			52,498		—			—			52,498
Share grants	119,200		1		1,110			—		—			—			1,111
Share repurchases	(11,963	)	—		(253		)	—		—			—			(253		)
Share forfeitures	(1,400	)	—		(2		)	—		—			—			(2		)
Distributions to common shareholders	—		—		—			—		(85,937		)	—			(85,937		)
Balance at December 31, 2019	65,180,628		$	652	$	999,302		$	142,155	$	(146,419	)	$	—		$	995,690

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

F-5

INDUSTRIAL LOGISTICS PROPERTIES TRUST

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

	Year Ended December 31,
	2019			2018			2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	52,498		$	74,388		$	80,103
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	38,177			18,781			17,738
Net amortization of debt issuance costs, premiums and discounts	2,017			1,244			(494		)
Amortization of acquired real estate leases and assumed real estate lease obligations	21,465			8,592			8,434
Amortization of deferred leasing costs	1,113			820			771
Provision for losses on rents receivable	—			1,198			704
Straight line rental income	(4,345		)	(4,739		)	(5,762		)
Other non-cash expenses	1,109			927			—
Equity in earnings of Affiliates Insurance Company	(666		)	—			—
Distributions of earnings from Affiliates Insurance Company	666			—			—
Change in assets and liabilities:
Rents receivable	(1,497		)	(1,727		)	436
Deferred leasing costs	(1,457		)	(1,745		)	(693		)
Other assets	(594		)	3,591			(4,431		)
Due from related persons	(114		)	(1,390		)	—
Accounts payable and other liabilities	3,095			1,618			245
Rents collected in advance	3,438			210			(743		)
Security deposits	550			456			33
Due to related persons	845			(5,461		)	7,114
Net cash provided by operating activities	116,300			96,763			103,455
CASH FLOWS FROM INVESTING ACTIVITIES:
Real estate acquisitions and deposits	(884,570		)	(121,891		)	(281		)
Real estate improvements	(17,157		)	(5,004		)	(6,026		)
Distributions in excess of earnings from Affiliates Insurance Company	8,334			—			—
Investment in Affiliates Insurance Company	—			(8,632		)	—
Net cash used in investing activities	(893,393		)	(135,527		)	(6,307		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common shares, net	—			444,309			—
Proceeds from issuance of mortgage notes payable	1,000,000			—			—
Borrowings under revolving credit facility	744,000			193,000			750,000
Repayments of revolving credit facility	(847,000		)	(530,000		)	—
Repayment of mortgage notes payable	—			—			(14,344		)
Repayment of SIR note	—			—			(750,000		)
Payment of debt issuance costs	(8,775		)	(5,378		)	(1,724		)
Distributions to common shareholders	(85,937		)	(60,482		)	—
Repurchase of common shares	(253		)	(52		)	—
Contributions	—			16,162			72,807
Distributions	—			(9,187		)	(153,887		)
Net cash provided by (used in) financing activities	802,035			48,372			(97,148		)
Increase in cash, cash equivalents and restricted cash	24,942			9,608			—
Cash and cash equivalents at beginning of period	9,608			—			—
Cash, cash equivalents and restricted cash at end of period	$	34,550		$	9,608		$	—

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

F-6

INDUSTRIAL LOGISTICS PROPERTIES TRUST

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(dollars in thousands)

	Year Ended December 31,
	2019			2018		2017
SUPPLEMENTAL DISCLOSURES:
Interest paid	$	46,072		$	14,749	$	2,752
Income taxes paid	$	164		$	—	$	—
Interest capitalized	$	187		$	—	$	—
NON-CASH INVESTING ACTIVITIES:
Real estate acquired by assumption of mortgage notes payable	$	(56,980	)	$	—	$	—
NON-CASH FINANCING ACTIVITIES:
Distribution to SIR of ownership interest	$	—		$	—	$	(1,304,043	)
Issuance of SIR note	$	—		$	—	$	750,000
Issuance of common shares	$	—		$	—	$	554,043
Assumption of mortgage notes payable	$	56,980		$	—	$	—

SUPPLEMENTAL DISCLOSURE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH:

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets to the amounts shown in the consolidated statements of cash flows:

	As of December 31,
	2019		2018		2017
Cash and cash equivalents	$	28,415	$	9,608	$	—
Restricted cash	6,135		—		—
Total cash, cash equivalents and restricted cash shown in the statements of cash flows	$	34,550	$	9,608	$	—

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

F-7

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

Note 1. Organization

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 on September 15, 2017, as a wholly owned subsidiary of Select Income REIT, or SIR, a former publicly traded REIT that merged with a wholly owned subsidiary of Office Properties Income Trust (formerly known as Government Properties Income Trust), or OPI, on December 31, 2018.

Until January 17, 2018, we were a wholly owned subsidiary of SIR and SIR managed and controlled our cash management function through a series of commingled centralized accounts. As a result, the cash receipts collected by SIR on our behalf have been accounted for as distributions and the cash disbursements paid by SIR on our behalf have been accounted for as contributions within ownership interest through September 29, 2017. Subsequent to September 29, 2017, contributions and distributions have been accounted for as an increase or decrease, respectively, in additional paid in capital.

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. At that time, we owned 266 properties with a total of approximately 28,540,000 rentable square feet, or our Initial Properties (all square footage amounts included within these notes are unaudited). Our Initial Properties were contributed to us on September 29, 2017, by SIR. Two hundred twenty six (226) of these properties with a total of approximately 16,834,000 rentable square feet are located on the island of Oahu, HI. The remaining 40 properties have a total of approximately 11,706,000 rentable square feet and are located in 24 other states. In connection with our formation and this contribution of properties, we (1) issued to SIR 45,000,000 of our common shares of beneficial interest, $.01 par value per share, or our common shares, (2) issued to SIR a $750,000 non-interest bearing demand note, or the SIR Note, and (3) assumed three mortgage notes totaling $63,069, excluding premiums, that were secured by three of our Initial Properties.

On December 27, 2018, SIR distributed all 45,000,000 of our common shares that SIR owned to SIR's shareholders of record as of the close of business on December 20, 2018.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation. These consolidated financial statements include the accounts of us and our subsidiaries, all of which are 100% owned directly or indirectly by us. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated.

The accounts of our Initial Properties are presented at SIR’s historical basis and are consolidated for prior periods presented as the transaction described in Note 1 has been accounted for as a reorganization of entities under common control in accordance with the Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, 805-50-30, Business Combinations. Substantially all of the rental income received from our tenants and SIR’s other tenants was deposited in and commingled with SIR’s general funds during the periods prior to January 17, 2018. Prior to January 17, 2018, general and administrative costs of SIR were primarily allocated to us based on the historical cost of our real estate investments as a percentage of SIR’s historical cost of all of its real estate investments. In accordance with applicable accounting guidance, we believe this method for allocating general and administrative expenses is reasonable. However, actual expenses may have been different from allocated expenses if we operated as a standalone company and those differences may be material.

Real Estate Properties. We record properties at our cost and have presented our Initial Properties at their historical cost basis. Our real estate investments in lands are not depreciated. We calculate depreciation on other real estate investments on a straight line basis over estimated useful lives generally ranging from seven to 40 years.

F-8

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

We allocate the purchase prices of our properties to land, building and improvements based on determinations of the fair values of these assets assuming the properties are vacant. We determine the fair value of each property using methods similar to those used by independent appraisers, which may involve estimated cash flows that are based on a number of factors, including capitalization rates and discount rates, among others. In some circumstances, we engage independent real estate appraisal firms to provide market information and evaluations which are relevant to our purchase price allocations and determinations of depreciable useful lives; however, we are ultimately responsible for the purchase price allocations and determinations of useful lives. We allocate a portion of the purchase price to above market and below market leases based on the present value (using an interest rate which reflects the risks associated with acquired in place leases at the time each property was acquired by us) of the difference, if any, between (i) the contractual amounts to be paid pursuant to the acquired in place leases and (ii) our estimates of fair market lease rates for the corresponding leases, measured over a period equal to the terms of the respective leases. The terms of below market leases that include bargain renewal options, if any, are further adjusted if we determine that renewal to be probable. We allocate a portion of the purchase price to acquired in place leases and tenant relationships based upon market estimates to lease up the property based on the leases in place at the time of purchase. In making these allocations, we consider factors such as estimated carrying costs during the expected lease up periods, including real estate taxes, insurance and other operating income and expenses and costs, such as leasing commissions, legal and other related expenses, to execute similar leases in current market conditions at the time a property was acquired by us. We allocate this aggregate value between acquired in place lease values and tenant relationships based on our evaluation of the specific characteristics of each tenant’s lease. However, we have not separated the value of tenant relationships from the value of acquired in place leases because such value and related amortization expense is immaterial to the accompanying consolidated financial statements. If the value of tenant relationships becomes material in the future, we may separately allocate those amounts and amortize the allocated amount over the estimated life of the relationships.

We amortize capitalized above market lease values (included in acquired real estate leases in our consolidated balance sheets) and below market lease values (presented as assumed real estate lease obligations in our consolidated balance sheets) as a reduction or increase, respectively, to rental income over the terms of the associated leases. Such amortization resulted in increases in rental income of $1,195, $401 and $390 during the years ended December 31, 2019, 2018 and 2017, respectively. We amortize the value of acquired in place leases (included in acquired real estate leases in our consolidated balance sheets), exclusive of the value of above market and below market acquired in place leases, or lease origination value, over the terms of the associated leases. Such amortization, which is included in depreciation and amortization expense, totaled $22,661, $8,993 and $8,824 during the years ended December 31, 2019, 2018 and 2017, respectively. If a lease is terminated prior to its stated expiration, we write off the unamortized amounts relating to that lease.

As of December 31, 2019 and 2018, our acquired real estate leases and assumed real estate lease obligations were as follows:

	December 31,
	2019			2018
Acquired real estate leases:
Capitalized above market lease values	$	28,723		$	28,723
Less: accumulated amortization	(18,303		)	(16,726		)
Capitalized above market lease values, net	10,420			11,997
Lease origination value	186,758			99,727
Less: accumulated amortization	(58,582		)	(35,921		)
Lease origination value, net	128,176			63,806
Acquired real estate leases, net	$	138,596		$	75,803
Assumed real estate lease obligations:
Capitalized below market lease values	$	36,278		$	34,313
Less: accumulated amortization	(18,770		)	(15,997		)
Assumed real estate lease obligations, net	$	17,508		$	18,316

F-9

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

As of December 31, 2019, the weighted average amortization periods for capitalized above market lease values, lease origination value and capitalized below market lease values were 10.2 years, 7.1 years, and 12.0 years, respectively. Future amortization of net intangible acquired real estate lease assets and liabilities to be recognized over the current terms of the associated leases as of December 31, 2019 are estimated to be $24,708 in 2020, $21,676 in 2021, $19,136 in 2022, $17,269 in 2023, $11,846 in 2024 and $26,453 thereafter.

We recognize impairment losses on real estate investments when indicators of impairment are present and the estimated undiscounted cash flow from our real estate investments is less than the carrying amount of such real estate investments. Impairment indicators may include declining tenant occupancy, lack of progress releasing vacant space, tenant bankruptcies, low long term prospects for improvement in property performance, weak or declining tenant profitability, cash flow or liquidity, our decision to dispose of an asset before the end of its estimated useful life and legislative, market or industry changes that could permanently reduce the value of a property. We review our properties for impairment quarterly, or whenever events or changes in circumstances indicate that carrying amounts may not be recoverable. If indicators of impairment are present, we evaluate the carrying value of the related property by comparing it to the expected future undiscounted cash flows expected to be generated from that property. The future net undiscounted cash flows are subjective and are based in part on assumptions regarding hold periods, market rents and terminal capitalization rates. If the sum of these expected future undiscounted cash flows is less than the carrying value, we reduce the net carrying value of the property to its estimated fair value. The determination of undiscounted cash flow includes consideration of many factors including income to be earned from the investment, holding costs (exclusive of interest), estimated selling prices, and prevailing economic and market conditions. No impairments exist on any of our properties as of December 31, 2019 and 2018.

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 cleanup. As of both December 31, 2019 and 2018, accrued environmental remediation costs of $6,940, were included in accounts payable and other liabilities in our 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, for example, 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 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 consolidated statements of comprehensive income.

Capitalization Policy. Costs directly related to the development of properties are capitalized. We capitalize development costs, including interest, real estate taxes, insurance, and other project costs, incurred during the period of development. Determinations of when a development project commences and capitalization begins, and when a development project is substantially complete and held available for occupancy and capitalization must cease, involve judgments. We begin the capitalization of costs during the pre-construction period, which we consider to begin when activities that are necessary to the development of the property commence. We consider a development project as substantially completed and held available for occupancy upon the completion of tenant improvements, but no later than one year from cessation of major construction activity.

Cash and Cash Equivalents. We consider highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents.

Restricted Cash. Restricted cash consists of amounts escrowed for future capital expenditures as required by certain of our mortgage notes.

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INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

Deferred Leasing Costs. Deferred leasing costs include capitalized brokerage, legal and other fees associated with the successful negotiation of leases, which are amortized to depreciation and amortization expense on a straight line basis over the terms of the respective leases. Deferred leasing costs totaled $11,383 and $9,845 at December 31, 2019 and 2018, respectively, and accumulated amortization of deferred leasing costs totaled $4,802 and $3,688 at December 31, 2019 and 2018, respectively. Included in deferred leasing costs at December 31, 2019, was $83 of estimated costs associated with leases under negotiation. Future amortization of deferred leasing costs to be recognized during the current terms of our existing leases as of December 31, 2019, are estimated to be $851 in 2020, $786 in 2021, $675 in 2022, $519 in 2023, $480 in 2024 and $3,270 thereafter.

Debt Issuance Costs. Debt issuance costs include capitalized issuance costs related to borrowings, which are amortized to interest expense over the terms of the respective loans. As of both December 31, 2019 and 2018, we had debt issuance costs for our revolving credit facility totaling $5,907, and accumulated amortization of debt issuance costs for our revolving credit facility were $2,953 and $1,477 at December 31, 2019, and 2018, respectively. As of December 31, 2019, we had debt issuance costs, net of accumulated amortization, of $8,194 for certain of our mortgage notes payable obtained during 2019. Future amortization of debt issuance costs to be recognized with respect to our revolving credit facility and mortgage notes payable as of December 31, 2019 are estimated to be $2,353 in 2020, $2,353 in 2021, $876 in 2022, $876 in 2023, $876 in 2024 and $3,814 thereafter.

Other Assets. Other assets consist of our investment in Affiliates Insurance Company, or AIC, prepaid insurance and prepaid real estate taxes. We account for our investment in AIC, until AIC was dissolved as described in Note 10, using the equity method of accounting. Significant influence is present through common representation on the boards of trustees or directors of us and AIC. We acquired shares of common stock of AIC from SIR on December 31, 2018 for $8,632. Until its dissolution on February 13, 2020, we owned a 14.3% ownership interest in AIC. See Note 10 for more information regarding our investment in AIC.

Revenue Recognition. 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.

In February 2016, the 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. We adopted these standards which 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 shareholders' equity 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 consolidated financial statements. Upon adoption, (i) allowances for bad debts are now recognized as a direct reduction of rental income, and (ii) 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 now included in "rental income" in our consolidated financial statements. For periods prior to January 1, 2019, we maintained an allowance for doubtful accounts for estimated losses resulting from the inability or unwillingness of certain tenants to make payments required under their leases. The computation of the allowance was based on the tenants’ payment histories and then current credit profiles, as well as other considerations. Provisions for credit losses prior to January 1, 2019 were previously included in other operating expenses in our consolidated financial statements and prior periods were not reclassified to conform to the current presentation.

F-11

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

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 $40,898 for the year ended December 31, 2019, of which tenant reimbursements totaled $38,755.

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 ASC 842, Leases, to the combined component. Income derived by our leases is recorded in rental income in our 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 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 December 31, 2019:

Year	Amount
2020	$	203,971
2021	202,109
2022	194,209
2023	175,676
2024	152,267
Thereafter	1,185,405
Total	$	2,113,637

For the years ended December 31, 2018 and 2017, rental income from operating leases was recognized on a straight line basis over the lives of lease agreements. We deferred the recognition of contingent rental income, such as percentage rents, until the specific targets that triggered the contingent rental income was achieved. Contingent rental income recognized for the years ended December 31, 2018 and 2017 totaled $941 and $650, respectively. Tenant reimbursements and other income, which included property level operating expenses, capital expenditures reimbursed by our tenants, contingent rental income as well as other incidental revenues, totaled $23,219 and $21,680 for the years ended December 31, 2018 and 2017, respectively.

Income Taxes. Until January 17, 2018, we were a wholly owned subsidiary of SIR, which was 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 income tax purposes. We have qualified for taxation as a REIT under the IRC for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2018 and intend to maintain such qualification. Accordingly, we generally are not, and will not be, subject to U.S. federal income taxes provided we distribute our taxable income and meet certain organization and operating requirements to qualify for taxation as a REIT. We are, however, subject to certain state and local taxes.

F-12

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

Use of Estimates. Preparation of these financial statements in conformity with U.S. generally accepted accounting principles, or GAAP, requires us to make estimates and assumptions that may affect the amounts reported in these consolidated financial statements and related notes. The actual results could differ from these estimates. Significant estimates in the consolidated financial statements include purchase price allocations, useful lives of fixed assets, the assessments of the carrying values and impairments of long lived assets and the allowance for doubtful accounts.

Ownership Interest. For the periods prior to January 17, 2018, our investment activities were financed by SIR. Amounts invested in or advanced to us did not carry interest and had no specific repayment terms.

Net Income Per Common Share. We calculate basic earnings per common share by dividing net income by the weighted average number of common shares outstanding during the period. We calculate diluted net income per share using the more dilutive of the two class method or the treasury stock method. Unvested share awards and other potentially dilutive common shares and the related impact on earnings are considered when calculating diluted earnings per share.

Segment Reporting. We operate in one business segment: ownership and leasing of properties that include industrial and logistics buildings and leased industrial lands.

Reclassifications. Reclassifications have been made to the prior years' consolidated financial statements to conform to the current year's presentation.

New Accounting Pronouncements. 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 expect to adopt the standard using the modified retrospective approach. The implementation of this standard is not expected to have a material impact in our consolidated financial statements.

Note 3. Real Estate Properties

As of December 31, 2019, we owned 300 properties with a total of approximately 42,939,000 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 26,183,000 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 years ended December 31, 2019, 2018 and 2017, approximately 43.9%, 59.7% and 60.2%, respectively, of our rental income were from our Hawaii Properties. In addition, a subsidiary of Amazon.com, Inc., which is a tenant at certain of our Mainland Properties, accounted for $31,623, $16,047 and $15,938 of our rental income for the years ended December 31, 2019, 2018 and 2017, respectively.

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INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

2019 Acquisitions:

During the year ended December 31, 2019, we completed the acquisition of 30 industrial properties containing a combined 13,288,180 rentable square feet for an aggregate purchase price of $941,550, including acquisition related costs of $4,800. These acquisitions were accounted for as acquisitions of assets. 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	628,457		52,546		519,829		56,715		(1,965		)	1,332
August 2019	Columbus, OH	2	392,016	32,300		2,393		27,363		2,544		—			—
		30	13,288,180	$	941,550	$	77,314	$	777,839	$	87,030	$	(1,965	)	$	1,332

In October 2018, we acquired a land parcel adjacent to a property we own located in Ankeny, IA for a purchase price of $450, excluding acquisition related costs. During the year ended December 31, 2019, we completed the development of a 194,000 square foot property expansion for an existing tenant at this property for $13,507.

In February 2020, we acquired a net leased Class A e-commerce distribution center located in Goodyear, AZ with approximately 820,000 rentable square feet for a purchase price of $72,000, excluding acquisition related costs. This property is 100% leased and has a remaining lease term of approximately six years.

In February 2020, we entered into agreements related to a joint venture with an Asian institutional investor for up to 12 of our Mainland Properties, including 11 properties secured by our $350,000 mortgage loan we obtained in October 2019. The investor will contribute approximately $108,300, which includes certain costs associated with the formation of the joint venture, for a 39% equity interest in the joint venture and we retained the remaining 61% equity interest in the joint venture. The investment amount is based on an aggregate property valuation of $680,000, less approximately $407,000 of existing mortgage debt on the properties at the time of the investment. We closed the joint venture with 11 of the 12 properties and the investor will initially contribute approximately $82,000 with the balance contributed when the twelfth property is added. We expect to use the net proceeds from this transaction to reduce outstanding borrowings under our revolving credit facility.

During the year ended December 31, 2019, we committed $2,568 for expenditures related to tenant improvements and leasing costs for leases executed during the period for approximately 2,040,000 square feet. Committed but unspent tenant related obligations based on existing leases as of December 31, 2019 were $793.

2018 Acquisitions:

During the year ended December 31, 2018, we completed the acquisition of four industrial properties containing a combined 985,235 rentable square feet for an aggregate purchase price of $121,385, including acquisition related costs of $1,360. These acquisitions were accounted for as acquisitions of assets. We allocated the purchase prices of these acquisitions based on the estimated fair value of the acquired assets as follows:

		Number	Rentable							Acquired
		of	Square	Purchase				Buildings and		Real Estate
Date	Location	Properties	Feet	Price		Land		Improvements		Leases
June 2018	Doral, FL (1)	1	240,283	$	43,326	$	15,225	$	28,101	$	—
September 2018	Carlisle, PA	1	205,090	20,451		3,299		15,515		1,637
September 2018	Upper Marlboro, MD	1	220,800	29,801		5,296		21,833		2,672
October 2018	Maple Grove, MN	1	319,062	27,807		3,469		21,287		3,051
		4	985,235	$	121,385	$	27,289	$	86,736	$	7,360

⁽¹⁾ This property was acquired and simultaneously leased back to the seller.

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INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

Note 4. Indebtedness

As of December 31, 2019 and 2018, our outstanding indebtedness consisted of the following:

									Net Book
	Principal Balance as of								Value
	December 31,								of Collateral
						Interest			At December 31,
	2019 (1)			2018 (1)		Rate		Maturity	2019
Unsecured revolving credit facility (2)	$	310,000		$	413,000	3.26	%	Dec 2021	$	—
Mortgage note payable (secured by one property in Virginia)	48,750			48,750		3.48	%	Nov 2020	63,213
Mortgage note payable (secured by one property in Florida)	56,980			—		4.22	%	Oct 2023	106,048
Mortgage note payable (secured by 186 properties in Hawaii)	650,000			—		4.31	%	Feb 2029	492,371
Mortgage note payable (secured by 11 Mainland Properties)	350,000			—		3.33	%	Nov 2029	499,572
	1,415,730			461,750					$	1,161,204
Unamortized debt issuance costs, premiums and discounts	(9,122		)	445
	$	1,406,608		$	462,195

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

(2) The maturity date of our revolving credit facility is December 29, 2021 and we have the option to extend the maturity date for two, six month periods through December 29, 2022.

On December 29, 2017, we obtained a $750,000 secured revolving credit facility which initially had a maturity date of March 29, 2018. Upon the completion of our IPO, our secured revolving credit facility became a $750,000 unsecured revolving credit facility and the maturity date was extended to December 29, 2021. Borrowings under our revolving credit facility are available for our general business purposes, including acquisitions. 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. 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 December 31, 2019 and 2018, interest payable on the amount outstanding under our revolving credit facility was LIBOR plus 155 basis points and LIBOR plus 130 basis points, respectively. As of December 31, 2019 and 2018, the interest rate payable on borrowings under our revolving credit facility was 3.26% and 3.81%, respectively. The weighted average interest rate for borrowings under our revolving credit facility was 3.68% and 3.33% for the years ended December 31, 2019 and 2018, respectively. As of December 31, 2019 and February 19, 2020, we had $310,000 and $385,000, respectively, outstanding under our revolving credit facility and $440,000 and $365,000, 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 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 December 31, 2019.

In January 2019, we obtained a $650,000 mortgage loan secured by 186 of our properties located on the island of Oahu, HI containing approximately 9.6 million square feet. 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. We used the proceeds from this loan to reduce outstanding borrowings under our revolving credit facility and to fund acquisitions.

F-15

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

In October 2019, we obtained a $350,000 mortgage loan secured by 11 of our Mainland Properties located in eight states containing an aggregate of approximately 8.2 million rentable square feet. 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.

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 note, which increased its effective interest rate to 4.22% per annum. We recorded this discount as 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.

The required principal payments due during the next five years and thereafter under all our outstanding debt as of December 31, 2019 are as follows:

	Principal
Year	Payment
2020	$	48,750
2021	310,000
2022	—
2023	56,980
2024	—
Thereafter	1,000,000
	$	1,415,730	(1)

(1) Total debt outstanding as of December 31, 2019, including unamortized debt issuance costs, premiums and discounts, was $1,406,608.

Note 5. Fair Value of Assets and Liabilities

Our financial instruments include cash and cash equivalents, restricted cash, rents receivable, our revolving credit facility, mortgage notes payable, accounts payable, security deposits, rents collected in advance and amounts due from or to related persons. At December 31, 2019 and 2018, the fair value of our financial instruments approximated their carrying values in our consolidated financial statements, due to the short term nature or floating interest rates, except as follows:

	At December 31, 2019				At December 31, 2018
	Carrying		Estimated		Carrying		Estimated
	Value (1)		Fair Value		Value (1)		Fair Value
Mortgage notes payable	$	1,096,608	$	1,143,437	$	49,195	$	48,642

(1) Includes unamortized debt issuance costs, premiums and discounts of $9,122 and ($445) as of December 31, 2019 and 2018, respectively.

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.

F-16

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

Note 6. Shareholders’ Equity

Common Share Awards:

We have common shares available for issuance under the terms of our 2018 Equity Compensation Plan, or the 2018 Plan. During the years ended December 31, 2019 and 2018, we awarded to our officers and other employees of RMR LLC annual share awards of 104,200 and 54,400 of our common shares, respectively, valued at $2,260 and $1,269, in aggregate, respectively. In accordance with our Trustee compensation arrangements, we also granted each of our Trustees 3,000 common shares in 2019 with an aggregate value of $281 ($56 per Trustee). During 2018, we granted each of our then Trustees 1,000 of our common shares with an aggregate value of $104 ($21 per Trustee) as compensation for the period from our IPO to May 2018 and granted each of our then Trustees 3,000 common shares with an aggregate value of $314 ($63 per Trustee) as part of their annual compensation. We granted an additional 3,000 common shares in December 2018, with an aggregate value of $61 to one of our Managing Trustees, who was elected as a Managing Trustee in December 2018. The values of the share grants were based upon the closing price of our common shares trading on Nasdaq on the dates of grants. The common shares granted to our Trustees vested immediately. The common shares granted to our officers and certain other employees of RMR LLC vest in five equal annual installments beginning on the date of grant. We include the value of granted shares in general and administrative expenses ratably over the vesting period.

A summary of shares granted, vested and forfeited under the terms of the 2018 Plan for the year ended December 31, 2019 is as follows:

	Year Ended
	December 31, 2019				December 31, 2018
			Weighted				Weighted
			Average				Average
	Number		Grant Date		Number		Grant Date
	of Shares		Fair Value		of Shares		Fair Value
Unvested at beginning of year	43,280		$	23.33	—		$	—
Granted	119,200		21.32		77,400		22.60
Vested	(52,880	)	20.78		(33,880	)	21.64
Forfeited	(1,400	)	22.39		(240	)	23.33
Unvested at end of year	108,200		$	22.08	43,280		$	23.33

The 108,200 unvested shares as of December 31, 2019 are scheduled to vest as follows: 29,220 shares in 2020, 29,220 shares in 2021, 29,220 shares in 2022 and 20,540 in 2023. As of December 31, 2019, the estimated future compensation expense for the unvested shares was approximately $2,197. The weighted average period over which the compensation expense will be recorded is approximately 26 months. During the years ended December 31, 2019 and 2018, we recorded $1,109 and $927, respectively, of compensation expense related to the 2018 Plan.

At December 31, 2019, 3,819,372 common shares remain available for issuance under the 2018 Plan.

Common Share Purchases:

During the years ended December 31, 2019 and 2018, we repurchased our common shares from our current and former officers and employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares, valued at the closing price of our common shares on Nasdaq on the purchase date, as follows:

Date Purchased	Number of Shares	Price per Share
12/18/2019	125	$	21.09
9/25/2019	9,808	$	21.27
7/3/2019	668	$	21.48
4/5/2019	1,362	$	20.49
9/24/2018	2,369	$	22.08

F-17

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

Distributions:

During the years ended December 31, 2019 and 2018, we paid distributions on our common shares as follows:

	Annual Per				Characterization of Distribution
	Share		Total		Return of		Ordinary
Year	Distribution		Distribution		Capital		Income
2019	$	1.32	$	85,937	21.8	%	78.2	%
2018	$	0.93	$	60,482	—	%	100.0	%

On January 16, 2020, we declared a regular quarterly distribution of $0.33 per common share, or $21,509, to shareholders of record on January 27, 2020. We paid this distribution to our shareholders on February 20, 2020.

Note 7. 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):

	Year Ended December 31,
	2019	2018	2017
Weighted average common shares for basic earnings per share	65,049	64,139	45,000
Effect of dilutive securities: unvested share awards	6	1	—
Weighted average common shares for diluted earnings per share	65,055	64,140	45,000

Note 8. Certain Arrangements, Allocations 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, 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 formation and this contribution from SIR, we issued to SIR 45,000,000 of our common shares and 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 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.

We do not have any employees. As a wholly owned subsidiary of SIR, until the completion of our IPO, we received services from RMR LLC under SIR’s management agreements with RMR LLC. In connection with our IPO, we entered two agreements with RMR LLC to provide management services to us that were substantially similar to the terms of the then management agreements between SIR and RMR LLC. See Note 9 for more information regarding our 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 payable by SIR and allocated to us were based on the percentage of the base management fees allocated to us compared to the total base management fees paid by SIR. Base management fees paid by SIR allocated to us by SIR for the period from January 1, 2018 to January 16, 2018 and the year ended December 31, 2017 were $308 and $6,823, respectively. These amounts are included in other operating expenses in our consolidated financial statements. The incentive management fee allocated to us by SIR for the year ended December 31, 2017 and paid by SIR to RMR LLC in January 2018 was $7,660. General and administrative expenses incurred by SIR were allocated to us by SIR for periods prior to our IPO based on the percentage of the base management fees allocated to us compared to the total base management fees paid by SIR.

F-18

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

RMR LLC was paid, by SIR, property management fees equal to 3.0% of gross collected rents and construction supervision fees equal to 5.0% of construction costs. The aggregate property management and construction supervision fees allocated to us by SIR for the period from January 1 to January 16, 2018 and the year ended December 31, 2017 were $230 and $4,244, respectively. These amounts were calculated based upon gross collected rents and construction supervision services provided at or for our Initial Properties. These amounts are included in other operating expenses or have been capitalized, as appropriate, in our consolidated financial statements.

Under SIR’s management agreements with RMR LLC, SIR was generally responsible for all of our operating expenses, including certain expenses incurred by RMR LLC on our behalf, including 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 and as otherwise agreed. Our property level operating costs are generally incorporated into rents charged to our tenants, including certain payroll and related costs incurred by RMR LLC. The total of these property management related reimbursements paid to RMR LLC for costs incurred by RMR LLC related to our Initial Properties for the period from January 1 to January 16, 2018 and the year ended December 31, 2017 were $120 and $2,512 respectively. These amounts are included in other operating expenses in our consolidated financial statements for these periods.

We also paid or reimbursed SIR for our allocated portion of certain insurance policies. The total of these insurance related reimbursements paid to SIR for costs for the period from January 1 to January 16, 2018 was $4. See Note 10 for more information.

See Notes 9 and 10 for more information regarding our relationships, agreements and transactions with RMR LLC and SIR.

Note 9. 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. Upon completion of our IPO on January 17, 2018, we entered two agreements with RMR LLC to provide management services to us: (i) a business management agreement, which relates to our business generally, and (ii) a property management agreement, which relates to our property level operations. See Notes 8 and 10 for more information regarding our relationship, agreements and transactions with RMR LLC prior to our IPO.

Management Agreements with RMR LLC. Our management agreements with RMR LLC provide for an annual base management fee, an annual incentive management fee and property management and construction supervision fees, payable in cash, among other terms:

• Base Management Fee. The annual base management fee payable to RMR LLC by us for each applicable period is equal to the lesser of:

◦ the sum of (i) 0.5% of the average aggregate historical cost of the real estate assets acquired from a REIT to which RMR LLC provided business management or property management services, or the Transferred Assets, which includes our Initial Properties we acquired from SIR, plus (ii) 0.7% of the average aggregate historical cost of our real estate investments excluding the Transferred Assets up to $250,000, plus (iii) 0.5% of the average aggregate historical cost of our real estate investments excluding the Transferred Assets exceeding $250,000; and

◦ the sum of (i) 0.7% of the average closing price per share of our common shares on the stock exchange on which such shares are principally traded during such period, multiplied by the average number of our common shares outstanding during such period, plus the daily weighted average of the aggregate liquidation preference of each class of our preferred shares outstanding during such period, plus the daily weighted average of the aggregate principal amount of our consolidated indebtedness during such period, or, together, our Average Market Capitalization, up to $250,000, plus (ii) 0.5% of our Average Market Capitalization exceeding $250,000.

F-19

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

The average aggregate historical cost of our real estate investments includes our consolidated assets invested, directly or indirectly, in equity interests in or loans secured by real estate and personal property owned in connection with such real estate (including acquisition related costs and costs which may be allocated to intangibles or are unallocated), all before reserves for depreciation, amortization, impairment charges or bad debts or other similar non-cash reserves.

• Incentive Management Fee. The incentive management fee which may be earned by RMR LLC for an annual period is calculated as follows:

◦ An amount, subject to a cap, based on the value of our common shares outstanding, equal to 12.0% of the product of:

– if the relevant measurement period ends on or before December 31, 2020, $1,560,000 (our unadjusted equity market capitalization as calculated at our IPO) or, if the relevant measurement period ends thereafter, our equity market capitalization on the last trading day of the calendar year immediately prior to the relevant measurement period, and

– the amount (expressed as a percentage) by which the total return per share, as defined in the business management agreement and further described below, of our common shareholders (i.e., share price appreciation plus dividends) exceeds the total shareholder return of the applicable market index, or the benchmark return per share, for the relevant measurement period. Effective as of January 1, 2019, we amended our business management agreement with RMR LLC so that the SNL U.S. Industrial REIT Index will be used for periods beginning on and after January 1, 2019, with the SNL U.S. REIT Equity Index used for periods ending on or prior to December 31, 2018.

For purposes of the total return per share of our common shareholders, share price appreciation for a measurement period is determined by subtracting (i) if the measurement period ends on or before December 31, 2020, $24.00 per common share (our unadjusted initial share price, as defined under the business management agreement, based on our IPO price of our common shares) or, if the measurement period ends after December 31, 2020, the closing price of our common shares on Nasdaq on the last trading day of the year immediately before the first year of the applicable measurement period from (ii) the average closing price of our common shares on the 10 consecutive trading days having the highest average closing prices during the final 30 trading days in the last year of the measurement period.

◦ The calculation of the incentive management fee (including the determinations of our equity market capitalization, initial share price and the total return per share of our common shareholders) is subject to adjustments if additional common shares are issued or if we repurchase our common shares during the measurement period.

◦ No incentive management fee is payable by us unless our total return per share during the measurement period is positive.

◦ The measurement periods are generally three year periods ending with the year for which the incentive management fee is being calculated, with shorter periods applicable in the case of the calculation of the incentive fee for 2020 (the period beginning on January 12, 2018, the first day our common shares began trading, and ending on December 31, 2020), 2019 (the period beginning on January 12, 2018 and ending on December 31, 2019) and 2018 (the period beginning on January 12, 2018 and ending on December 31, 2018).

◦ If our total return per share exceeds 12.0% per year in any measurement period, the benchmark return per share is adjusted to be the lesser of the total shareholder return of the applicable market index for such measurement period and 12.0% per year, or the adjusted benchmark return per share. In instances where the adjusted benchmark return per share applies, the incentive management fee will be reduced if our total return per share is between 200 basis points and 500 basis points below the applicable market index, by a low return factor, as defined in the business management agreement, and there will be no incentive management fee paid if, in these instances, our total return per share is more than 500 basis points below the applicable market index.

F-20

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

◦ The incentive management fee is subject to a cap. The cap is equal to the value of the number of our common shares which would, after issuance, represent 1.5% of the number of our common shares then outstanding multiplied by the average closing price of our common shares during the 10 consecutive trading days having the highest average closing prices during the final 30 trading days of the relevant measurement period.

◦ Incentive management fees we paid to RMR LLC for any period may be subject to “clawback” if our financial statements for that period are restated due to material non-compliance with any financial reporting requirements under the securities laws as a result of the bad faith, fraud, willful misconduct or gross negligence of RMR LLC and the amount of the incentive management fee we paid was greater than the amount we would have paid based on the restated financial statements.

Pursuant to our business management agreement with RMR LLC, we recognized net business management fees of $11,897 for the year ended December 31, 2019 and $7,269 for the period from January 17, 2018 through December 31, 2018. The net business management fees we recognized are included in general and administrative expenses in our consolidated statements of comprehensive income for the years ended December 31, 2019 and 2018. We did not incur any incentive management fee pursuant to our business management agreement for the periods ended December 31, 2019 and 2018.

• Property Management and Construction Supervision Fees. The property management fees payable to RMR LLC by us for each applicable period are equal to 3.0% of gross collected rents and the construction supervision fees payable to RMR LLC by us for each applicable period are equal to 5.0% of construction costs. Pursuant to our property management agreement with RMR LLC, we recognized aggregate property management and construction supervision fees of $7,548 and $4,680 for the year ended December 31, 2019 and for the period from January 17, 2018 through December 31, 2018, respectively. These amounts are included in operating expenses in our consolidated statements of comprehensive income, or capitalized, as appropriate.

• Expense Reimbursement. We are generally responsible for all of our operating expenses, including certain expenses incurred or arranged by RMR LLC on our behalf. We are generally not responsible for payment of RMR LLC’s 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 and as otherwise agreed. Our Audit Committee appoints our Director of Internal Audit and our Compensation Committee approves the costs of our internal audit function. Our property level operating expenses are generally incorporated into rents charged to our tenants, including certain payroll and related costs incurred by RMR LLC. We reimbursed RMR LLC $4,269 and $2,908 for these expenses and costs for the year ended December 31, 2019 and for the period from January 17, 2018 through December 31, 2018, respectively. These amounts are included in other operating expenses and general and administrative expenses, as applicable, for these periods.

• Term. Our management agreements with RMR LLC have terms that end on December 31, 2039, and automatically extend on December 31st of each year for an additional year, so that the terms of our management agreements thereafter end on the 20th anniversary of the date of the extension.

• Termination Rights. We have the right to terminate one or both of our management agreements with RMR LLC: (i) at any time on 60 days’ written notice for convenience, (ii) immediately on written notice for cause, as defined therein, (iii) on written notice given within 60 days after the end of an applicable calendar year for a performance reason, as defined therein, and (iv) by written notice during the 12 months following a change of control of RMR LLC, as defined therein. RMR LLC has the right to terminate the management agreements for good reason, as defined therein.

F-21

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

• Termination Fee. If we terminate one or both of our management agreements with RMR LLC for convenience, or if RMR LLC terminates one or both of our management agreements for good reason, we have agreed to pay RMR LLC a termination fee in an amount equal to the sum of the present values of the monthly future fees, as defined therein, for the terminated management agreement(s) for the term that was remaining prior to such termination, which, depending on the time of termination would be between 19 and 20 years. If we terminate one or both of our management agreements with RMR LLC for a performance reason, we have agreed to pay RMR LLC the termination fee calculated as described above, but assuming a 10 year term was remaining prior to the termination. We are not required to pay any termination fee if we terminate our management agreements with RMR LLC for cause or as a result of a change of control of RMR LLC.

• Transition Services. RMR LLC has agreed to provide certain transition services to us for 120 days following an applicable termination by us or notice of termination by RMR LLC, including cooperating with us and using commercially reasonable efforts to facilitate the orderly transfer of the management and real estate investment services provided under our business management agreement and to facilitate the orderly transfer of the management of the managed properties under our property management agreement, as applicable.

• Vendors. Pursuant to our management agreements with RMR LLC, RMR LLC may from time to time negotiate on our behalf with certain third party vendors and suppliers for the procurement of goods and services to us. As part of this arrangement, we may enter agreements with RMR LLC and other companies to which RMR LLC or its subsidiaries provide management services for the purpose of obtaining more favorable terms from such vendors and suppliers.

• Investment Opportunities. Under our business management agreement with RMR LLC, we acknowledge that RMR LLC may engage in other activities or businesses and act as the manager to any other person or entity (including other REITs) even though such person or entity has investment policies and objectives similar to ours and we are not entitled to preferential treatment in receiving information, recommendations and other services from RMR LLC.

Note 10. Related Person Transactions

We have relationships and historical and continuing transactions with RMR LLC, RMR Inc. and others related to them, including other companies to which RMR LLC or its subsidiaries provide management services and some of which have trustees, directors or officers who are also our Trustees or officers. RMR LLC is a majority owned subsidiary of RMR Inc. The Chair of our Board of Trustees and one of our Managing Trustees, Adam Portnoy, as the sole trustee of ABP Trust, is the controlling shareholder of RMR Inc. and is a managing director and the president and chief executive officer of RMR Inc. and an officer and employee of RMR LLC. John Murray, our other Managing Trustee and President and Chief Executive Officer, also serves as an executive officer of RMR LLC, and each of our other officers is also an officer and employee of RMR LLC. Some of our Independent Trustees also serve as independent trustees or independent directors of other public companies to which RMR LLC or its subsidiaries provide management services. Adam Portnoy serves as chair of the boards of trustees or boards of directors of several of these public companies and as a managing director or managing trustee of these public companies. Other officers of RMR LLC serve as managing trustees or managing directors of certain of these companies. In addition, officers of RMR LLC and RMR Inc. serve as our officers and officers of other companies to which RMR LLC or its subsidiaries provide management services, including SIR prior to its merger into OPI’s subsidiary.

Our Manager, RMR LLC. We have two agreements with RMR LLC to provide management services to us: (i) a business management agreement, which relates to our business generally, and (ii) a property management agreement, which relates to our property level operations. See Note 9 for more information regarding our management agreements with RMR LLC.

Share Awards to RMR LLC Employees. As described in Note 6, we award shares to our officers and other employees of RMR LLC annually. Generally, one fifth of these awards vest on the grant date and one fifth vests on each of the next four anniversaries of the grant dates. In certain instances, we may accelerate the vesting of an award, such as in connection with the award holder’s retirement as an officer of us or an officer or employee of RMR LLC. These awards to RMR LLC employees are in addition to the share awards to our Managing Trustees, as Trustee compensation, and the fees we paid to RMR LLC. See Note 6 for information regarding our share awards and activity as well as certain share purchases we made in connection with share award recipients satisfying tax withholding obligation on the vesting of share awards.

F-22

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

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. 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.

OPI and SIR owed to us $1,504 and $865 as of December 31, 2019 and 2018, respectively, for rents that they collected on our behalf from certain of our tenants as a result of SIR having previously owned those properties and being the landlord of those tenants prior to SIR having contributed those properties to us in connection with our IPO, and which were due to us. OPI paid these amounts due to us or collected on our behalf in January 2020 and 2019, respectively.

AIC. Until its dissolution on February 13, 2020, we, ABP Trust and five other companies to which RMR LLC provides management services owned AIC in equal amounts. Certain of our Trustees and certain trustees or directors of the other AIC shareholders served on the board of directors of AIC, until its dissolution.

We (including, prior to our IPO, through SIR, as SIR’s subsidiary) and the other AIC shareholders historically participated in a combined property insurance program arranged and insured or reinsured in part by AIC. SIR allocated to us the portion of the premiums for this insurance program, including taxes and fees, covering our Initial Properties, which allocations were $266, $320 and $351 for the policy years ended June 30, 2019, 2018 and 2017, respectively. 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.

On February 13, 2020, AIC was dissolved and in connection with its dissolution, we and each AIC shareholders received an initial liquidating distribution of $9,000 from AIC in December 2019.

As of December 31, 2019 and 2018, our investment in AIC had a carrying value of $298 and $8,632, respectively. This amount is included in other assets in our consolidated balance sheets. We recognized income related to our investment in AIC of $666 for the year ended December 31, 2019, which is presented as equity in earnings of an investee in our consolidated statement of comprehensive income. We did not recognize any income related to our investment in AIC for the year ended December 31, 2018.

RMR LLC historically provided management and administrative services to AIC for a fee equal to 3.0% of the total premiums paid for insurance arranged by AIC. As a result of the property insurance program having been discontinued as of June 30, 2019, AIC has not incurred fees payable to RMR LLC since that time.

Directors’ and Officers’ Liability Insurance. We, RMR Inc., RMR LLC and certain other companies to which RMR LLC or its subsidiaries provide management services participate in a combined directors’ and officers’ liability insurance policy. The current combined policy expires in September 2020. Prior to SIR’s distribution of our common shares to its shareholders, as a majority owned subsidiary of SIR, we were provided coverage under this policy and SIR allocated a portion of its cost of the policy to us. We paid $160 for the year ended December 31, 2019 for this insurance and the cost of this insurance SIR allocated to us was $90 and $116 for the years ended December 31, 2018, and 2017, respectively.

Note 11. Selected Quarterly Financial Data (Unaudited)

The following is a summary of our unaudited quarterly results of operations for 2019 and 2018:

	2019
	First		Second		Third		Fourth
	Quarter		Quarter		Quarter		Quarter
Total revenues	$	45,987	$	60,090	$	60,958	$	62,199
Net income	$	16,786	$	13,116	$	10,922	$	11,674
Net income per common share—basic and diluted	$	0.26	$	0.20	$	0.17	$	0.18
Common distributions declared	$	0.33	$	0.33	$	0.33	$	0.33

F-23

INDUSTRIAL LOGISTICS PROPERTIES TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

	2018
	First		Second		Third		Fourth
	Quarter		Quarter		Quarter		Quarter
Total revenues	$	40,605	$	39,420	$	40,431	$	42,074
Net income	$	19,232	$	18,726	$	18,142	$	18,288
Net income per common share—basic and diluted	$	0.31	$	0.29	$	0.28	$	0.28
Common distributions declared	$	—	$	0.27	$	0.33	$	0.33

F-24

INDUSTRIAL LOGISTICS PROPERTIES TRUST

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION

December 31, 2019

(dollars in thousands)

						Initial Cost to				Costs		Gross Amount Carried at
						Company				Capitalized		Close of Period(4)										Original
								Buildings and		Subsequent to				Buildings and				Accumulated			Date	Construction
	Property	Location	State	Property Type	Encumbrances(1)	Land		Equipment		Acquisition		Land		Equipment		Total(2)		Depreciation(3)			Acquired	Date
1	4501 Industrial Drive	Fort Smith	AR	Mainland Properties		$	900	$	3,485	$	—	$	900	$	3,485	$	4,385	$	(428	)	1/29/2015	2013
2	955 Aeroplaza Drive	Colorado Springs	CO	Mainland Properties		800		7,412		39		800		7,451		8,251		(913		)	1/29/2015	2012
3/4	13400 East 39th Avenue and 3800 Wheeling Street	Denver	CO	Mainland Properties		3,100		12,955		46		3,100		13,001		16,101		(1,632		)	1/29/2015	1973
5	3870 Ronald Reagan Boulevard	Johnstown	CO	Mainland Properties		2,780		9,722		—		2,780		9,722		12,502		(236		)	4/9/2019	2007
6	150 Greenhorn Drive	Pueblo	CO	Mainland Properties		200		4,177		—		200		4,177		4,377		(514		)	1/29/2015	2013
7	2 Tower Drive	Wallingford	CT	Mainland Properties		1,471		2,165		569		1,471		2,734		4,205		(727		)	10/24/2006	1978
8	235 Great Pond Drive	Windsor	CT	Mainland Properties		2,400		9,469		—		2,400		9,469		11,869		(1,756		)	7/20/2012	2004
9	10450 Doral Boulevard	Doral	FL	Mainland Properties		15,225		28,102		—		15,225		28,102		43,327		(1,406		)	6/27/2018	1996
10	2100 NW 82nd Avenue	Miami	FL	Mainland Properties		144		1,297		454		144		1,751		1,895		(797		)	3/19/1998	1987
11	3350 Laurel Ridge Avenue	Ruskin	FL	Mainland Properties	(A)	8,351		99,771		—		8,351		99,771		108,122		(2,074		)	4/9/2019	2014
12	1000 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	2,252		—		—		2,252		—		2,252		—			12/5/2003	—
13	1001 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	15,155		3,312		92		15,155		3,404		18,559		(1,354		)	12/5/2003	—
14	1024 Kikowaena Place	Honolulu	HI	Hawaii Properties	(B)	1,818		—		—		1,818		—		1,818		—			12/5/2003	—
15	1024 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	1,385		—		—		1,385		—		1,385		—			12/5/2003	—
16	1027 Kikowaena Place	Honolulu	HI	Hawaii Properties	(B)	5,444		—		—		5,444		—		5,444		—			12/5/2003	—
17	1030 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	5,655		—		—		5,655		—		5,655		—			12/5/2003	—
18	1038 Kikowaena Place	Honolulu	HI	Hawaii Properties	(B)	2,576		—		—		2,576		—		2,576		—			12/5/2003	—
19	1045 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	819		—		—		819		—		819		—			12/5/2003	—
20	1050 Kikowaena Place	Honolulu	HI	Hawaii Properties	(B)	1,404		873		—		1,404		873		2,277		(350		)	12/5/2003	—
21	1052 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	1,703		—		240		1,703		240		1,943		(85		)	12/5/2003	—
22	1055 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	1,216		—		—		1,216		—		1,216		—			12/5/2003	—
23	106 Puuhale Road	Honolulu	HI	Hawaii Properties	(B)	1,113		—		275		1,114		274		1,388		(66		)	12/5/2003	1966
24	1062 Kikowaena Place	Honolulu	HI	Hawaii Properties	(B)	1,049		598		—		1,049		598		1,647		(240		)	12/5/2003	—
25	1122 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	5,781		—		—		5,781		—		5,781		—			12/5/2003	—
26	113 Puuhale Road	Honolulu	HI	Hawaii Properties	(B)	3,729		—		—		3,729		—		3,729		—			12/5/2003	—
27	1150 Kikowaena Place	Honolulu	HI	Hawaii Properties	(B)	2,445		—		—		2,445		—		2,445		—			12/5/2003	—
28	120 Mokauea Street	Honolulu	HI	Hawaii Properties	(B)	1,953		—		943		1,953		943		2,896		(127		)	12/5/2003	1970
29	120 Sand Island Access Road	Honolulu	HI	Hawaii Properties	(B)	1,132		11,307		1,423		1,130		12,732		13,862		(4,638		)	11/23/2004	2004
30	120B Mokauea Street	Honolulu	HI	Hawaii Properties	(B)	1,953		—		—		1,953		—		1,953		—			12/5/2003	1970

S-1

						Initial Cost to		Costs	Gross Amount Carried at
						Company		Capitalized	Close of Period(4)						Original
							Buildings and	Subsequent to		Buildings and		Accumulated		Date	Construction
	Property	Location	State	Property Type	Encumbrances(1)	Land	Equipment	Acquisition	Land	Equipment	Total(2)	Depreciation(3)		Acquired	Date
31	125 Puuhale Road	Honolulu	HI	Hawaii Properties	(B)	1,630	—	—	1,630	—	1,630	—		12/5/2003	—
32	125B Puuhale Road	Honolulu	HI	Hawaii Properties	(B)	2,815	—	—	2,815	—	2,815	—		12/5/2003	—
33	1330 Pali Highway	Honolulu	HI	Hawaii Properties	(B)	1,423	—	—	1,423	—	1,423	—		12/5/2003	—
34	1360 Pali Highway	Honolulu	HI	Hawaii Properties	(B)	9,170	—	161	9,170	161	9,331	(114	)	12/5/2003	—
35	140 Puuhale Road	Honolulu	HI	Hawaii Properties	(B)	1,100	—	—	1,100	—	1,100	—		12/5/2003	—
36	142 Mokauea Street	Honolulu	HI	Hawaii Properties	(B)	2,182	—	1,537	2,182	1,537	3,719	(401	)	12/5/2003	1972
37	148 Mokauea Street	Honolulu	HI	Hawaii Properties	(B)	3,476	—	—	3,476	—	3,476	—		12/5/2003	—
38	150 Puuhale Road	Honolulu	HI	Hawaii Properties	(B)	4,887	—	—	4,887	—	4,887	—		12/5/2003	—
39	151 Puuhale Road	Honolulu	HI	Hawaii Properties	(B)	1,956	—	—	1,956	—	1,956	—		12/5/2003	—
40	158 Sand Island Access Road	Honolulu	HI	Hawaii Properties	(B)	2,488	—	—	2,488	—	2,488	—		12/5/2003	—
41	165 Sand Island Access Road	Honolulu	HI	Hawaii Properties	(B)	758	—	—	758	—	758	—		12/5/2003	—
42	179 Sand Island Access Road	Honolulu	HI	Hawaii Properties	(B)	2,480	—	—	2,480	—	2,480	—		12/5/2003	—
43	180 Sand Island Access Road	Honolulu	HI	Hawaii Properties	(B)	1,655	—	—	1,655	—	1,655	—		12/5/2003	—
44	1926 Auiki Street	Honolulu	HI	Hawaii Properties	(B)	2,872	—	1,724	2,874	1,722	4,596	(518	)	12/5/2003	1959
45	1931 Kahai Street	Honolulu	HI	Hawaii Properties	(B)	3,779	—	—	3,779	—	3,779	—		12/5/2003	—
46	197 Sand Island Access Road	Honolulu	HI	Hawaii Properties	(B)	1,238	—	—	1,238	—	1,238	—		12/5/2003	—
47	2001 Kahai Street	Honolulu	HI	Hawaii Properties	(B)	1,091	—	—	1,091	—	1,091	—		12/5/2003	—
48	2019 Kahai Street	Honolulu	HI	Hawaii Properties	(B)	1,377	—	—	1,377	—	1,377	—		12/5/2003	—
49	2020 Auiki Street	Honolulu	HI	Hawaii Properties	(B)	2,385	—	—	2,385	—	2,385	—		12/5/2003	—
50	204 Sand Island Access Road	Honolulu	HI	Hawaii Properties	(B)	1,689	—	—	1,689	—	1,689	—		12/5/2003	—
51	207 Puuhale Road	Honolulu	HI	Hawaii Properties	(B)	2,024	—	—	2,024	—	2,024	—		12/5/2003	—
52	2103 Kaliawa Street	Honolulu	HI	Hawaii Properties	(B)	3,212	—	—	3,212	—	3,212	—		12/5/2003	—
53	2106 Kaliawa Street	Honolulu	HI	Hawaii Properties	(B)	1,568	—	169	1,568	169	1,737	(78	)	12/5/2003	—
54	2110 Auiki Street	Honolulu	HI	Hawaii Properties	(B)	837	—	—	837	—	837	—		12/5/2003	—
55	212 Mohonua Place	Honolulu	HI	Hawaii Properties	(B)	1,067	—	—	1,067	—	1,067	—		12/5/2003	—
56	2122 Kaliawa Street	Honolulu	HI	Hawaii Properties	(B)	1,365	—	—	1,365	—	1,365	—		12/5/2003	—
57	2127 Auiki Street	Honolulu	HI	Hawaii Properties	(B)	2,906	—	97	2,906	97	3,003	(55	)	12/5/2003	—
58	2135 Auiki Street	Honolulu	HI	Hawaii Properties	(B)	825	—	—	825	—	825	—		12/5/2003	—
59	2139 Kaliawa Street	Honolulu	HI	Hawaii Properties	(B)	885	—	—	885	—	885	—		12/5/2003	—

S-2

						Initial Cost to		Costs	Gross Amount Carried at
						Company		Capitalized	Close of Period(4)						Original
							Buildings and	Subsequent to		Buildings and		Accumulated		Date	Construction
	Property	Location	State	Property Type	Encumbrances(1)	Land	Equipment	Acquisition	Land	Equipment	Total(2)	Depreciation(3)		Acquired	Date
60	214 Sand Island Access Road	Honolulu	HI	Hawaii Properties	(B)	1,864	—	540	1,864	540	2,404	(67	)	12/5/2003	1981
61	2140 Kaliawa Street	Honolulu	HI	Hawaii Properties	(B)	931	—	—	931	—	931	—		12/5/2003	—
62	2144 Auiki Street	Honolulu	HI	Hawaii Properties	(B)	2,640	—	7,160	2,640	7,160	9,800	(2,285	)	12/5/2003	1953
63	215 Puuhale Road	Honolulu	HI	Hawaii Properties	(B)	2,117	—	—	2,117	—	2,117	—		12/5/2003	—
64	218 Mohonua Place	Honolulu	HI	Hawaii Properties	(B)	1,741	—	—	1,741	—	1,741	—		12/5/2003	—
65	220 Puuhale Road	Honolulu	HI	Hawaii Properties	(B)	2,619	—	—	2,619	—	2,619	—		12/5/2003	—
66	2250 Pahounui Drive	Honolulu	HI	Hawaii Properties	(B)	3,862	—	—	3,862	—	3,862	—		12/5/2003	—
67	2264 Pahounui Drive	Honolulu	HI	Hawaii Properties	(B)	1,632	—	—	1,632	—	1,632	—		12/5/2003	—
68	2276 Pahounui Drive	Honolulu	HI	Hawaii Properties	(B)	1,619	—	—	1,619	—	1,619	—		12/5/2003	—
69	228 Mohonua Place	Honolulu	HI	Hawaii Properties	(B)	1,865	—	—	1,865	—	1,865	—		12/5/2003	—
70	2308 Pahounui Drive	Honolulu	HI	Hawaii Properties	(B)	3,314	—	—	3,314	—	3,314	—		12/5/2003	—
71	231 Sand Island Access Road	Honolulu	HI	Hawaii Properties	(B)	752	—	—	752	—	752	—		12/5/2003	—
72	231B Sand Island Access Road	Honolulu	HI	Hawaii Properties	(B)	1,539	—	—	1,539	—	1,539	—		12/5/2003	—
73	2344 Pahounui Drive	Honolulu	HI	Hawaii Properties	(B)	6,709	—	—	6,709	—	6,709	—		12/5/2003	—
74	238 Sand Island Access Road	Honolulu	HI	Hawaii Properties	(B)	2,273	—	—	2,273	—	2,273	—		12/5/2003	—
75	2635 Waiwai Loop A	Honolulu	HI	Hawaii Properties	(B)	934	350	683	934	1,033	1,967	(188	)	12/5/2003	—
76	2635 Waiwai Loop B	Honolulu	HI	Hawaii Properties	(B)	1,177	105	683	1,177	788	1,965	(89	)	12/5/2003	—
77	2760 Kam Highway	Honolulu	HI	Hawaii Properties	(B)	703	—	170	703	170	873	—		12/5/2003	—
78	2804 Kilihau Street	Honolulu	HI	Hawaii Properties	(B)	1,775	2	—	1,775	2	1,777	(2	)	12/5/2003	—
79	2806 Kaihikapu Street	Honolulu	HI	Hawaii Properties	(B)	1,801	—	—	1,801	—	1,801	—		12/5/2003	—
80	2808 Kam Highway	Honolulu	HI	Hawaii Properties	(B)	310	—	—	310	—	310	—		12/5/2003	—
81	2809 Kaihikapu Street	Honolulu	HI	Hawaii Properties	(B)	1,837	—	—	1,837	—	1,837	—		12/5/2003	—
82	2810 Paa Street	Honolulu	HI	Hawaii Properties	(B)	3,340	—	—	3,340	—	3,340	—		12/5/2003	—
83	2810 Pukoloa Street	Honolulu	HI	Hawaii Properties	(B)	27,699	—	—	27,699	—	27,699	—		12/5/2003	—
84	2812 Awaawaloa Street	Honolulu	HI	Hawaii Properties	(B)	1,801	3	—	1,801	3	1,804	(2	)	12/5/2003	—
85	2814 Kilihau Street	Honolulu	HI	Hawaii Properties	(B)	1,925	—	—	1,925	—	1,925	—		12/5/2003	—
86	2815 Kaihikapu Street	Honolulu	HI	Hawaii Properties	(B)	1,818	—	5	1,818	5	1,823	(2	)	12/5/2003	—
87	2815 Kilihau Street	Honolulu	HI	Hawaii Properties	(B)	287	—	—	287	—	287	—		12/5/2003	—
88	2816 Awaawaloa Street	Honolulu	HI	Hawaii Properties	(B)	1,009	27	—	1,009	27	1,036	(11	)	12/5/2003	—
89	2819 Mokumoa Street - A	Honolulu	HI	Hawaii Properties	(B)	1,821	—	—	1,821	—	1,821	—		12/5/2003	—
90	2819 Mokumoa Street - B	Honolulu	HI	Hawaii Properties	(B)	1,816	—	—	1,816	—	1,816	—		12/5/2003	—

S-3

						Initial Cost to		Costs	Gross Amount Carried at
						Company		Capitalized	Close of Period(4)						Original
							Buildings and	Subsequent to		Buildings and		Accumulated		Date	Construction
	Property	Location	State	Property Type	Encumbrances(1)	Land	Equipment	Acquisition	Land	Equipment	Total(2)	Depreciation(3)		Acquired	Date
91	2819 Pukoloa Street	Honolulu	HI	Hawaii Properties	(B)	2,090	—	33	2,090	33	2,123	(9	)	12/5/2003	—
92	2821 Kilihau Street	Honolulu	HI	Hawaii Properties	(B)	287	—	—	287	—	287	—		12/5/2003	—
93	2826 Kaihikapu Street	Honolulu	HI	Hawaii Properties	(B)	3,921	—	—	3,921	—	3,921	—		12/5/2003	—
94	2827 Kaihikapu Street	Honolulu	HI	Hawaii Properties	(B)	1,801	—	—	1,801	—	1,801	—		12/5/2003	—
95	2828 Paa Street	Honolulu	HI	Hawaii Properties	(B)	12,448	—	—	12,448	—	12,448	—		12/5/2003	—
96	2829 Awaawaloa Street	Honolulu	HI	Hawaii Properties	(B)	1,720	2	—	1,720	2	1,722	(2	)	12/5/2003	—
97	2829 Kilihau Street	Honolulu	HI	Hawaii Properties	(B)	287	—	—	287	—	287	—		12/5/2003	—
98	2829 Pukoloa Street	Honolulu	HI	Hawaii Properties	(B)	2,088	—	—	2,088	—	2,088	—		12/5/2003	—
99	2830 Mokumoa Street	Honolulu	HI	Hawaii Properties	(B)	2,146	—	—	2,146	—	2,146	—		12/5/2003	—
100	2831 Awaawaloa Street	Honolulu	HI	Hawaii Properties	(B)	860	—	—	860	—	860	—		12/5/2003	—
101	2831 Kaihikapu Street	Honolulu	HI	Hawaii Properties	(B)	1,272	529	56	1,272	585	1,857	(234	)	12/5/2003	—
102	2833 Kilihau Street	Honolulu	HI	Hawaii Properties	(B)	601	—	—	601	—	601	—		12/5/2003	—
103	2833 Paa Street	Honolulu	HI	Hawaii Properties	(B)	1,701	—	—	1,701	—	1,701	—		12/5/2003	—
104	2833 Paa Street #2	Honolulu	HI	Hawaii Properties	(B)	1,675	—	—	1,675	—	1,675	—		12/5/2003	—
105	2836 Awaawaloa Street	Honolulu	HI	Hawaii Properties	(B)	1,353	—	—	1,353	—	1,353	—		12/5/2003	—
106	2838 Kilihau Street	Honolulu	HI	Hawaii Properties	(B)	4,262	—	—	4,262	—	4,262	—		12/5/2003	—
107	2839 Kilihau Street	Honolulu	HI	Hawaii Properties	(B)	627	—	—	627	—	627	—		12/5/2003	—
108	2839 Mokumoa Street	Honolulu	HI	Hawaii Properties	(B)	1,942	—	—	1,942	—	1,942	—		12/5/2003	—
109	2840 Mokumoa Street	Honolulu	HI	Hawaii Properties	(B)	2,149	—	—	2,149	—	2,149	—		12/5/2003	—
110	2841 Pukoloa Street	Honolulu	HI	Hawaii Properties	(B)	2,088	—	—	2,088	—	2,088	—		12/5/2003	—
111	2844 Kaihikapu Street	Honolulu	HI	Hawaii Properties	(B)	1,960	14	—	1,960	14	1,974	(12	)	12/5/2003	—
112	2846-A Awaawaloa Street	Honolulu	HI	Hawaii Properties	(B)	2,181	954	—	2,181	954	3,135	(383	)	12/5/2003	—
113	2847 Awaawaloa Street	Honolulu	HI	Hawaii Properties	(B)	582	303	—	582	303	885	(121	)	12/5/2003	—
114	2849 Kaihikapu Street	Honolulu	HI	Hawaii Properties	(B)	860	—	—	860	—	860	—		12/5/2003	—
115	2850 Awaawaloa Street	Honolulu	HI	Hawaii Properties	(B)	287	172	—	286	173	459	(69	)	12/5/2003	—
116	2850 Mokumoa Street	Honolulu	HI	Hawaii Properties	(B)	2,143	—	—	2,143	—	2,143	—		12/5/2003	—
117	2850 Paa Street	Honolulu	HI	Hawaii Properties	(B)	22,827	—	—	22,827	—	22,827	—		12/5/2003	—
118	2855 Kaihikapu Street	Honolulu	HI	Hawaii Properties	(B)	1,807	—	—	1,807	—	1,807	—		12/5/2003	—
119	2855 Pukoloa Street	Honolulu	HI	Hawaii Properties	(B)	1,934	—	—	1,934	—	1,934	—		12/5/2003	—
120	2857 Awaawaloa Street	Honolulu	HI	Hawaii Properties	(B)	983	—	—	983	—	983	—		12/5/2003	—
121	2858 Kaihikapu Street	Honolulu	HI	Hawaii Properties	(B)	1,801	—	—	1,801	—	1,801	—		12/5/2003	—

S-4

						Initial Cost to		Costs		Gross Amount Carried at
						Company		Capitalized		Close of Period(4)						Original
							Buildings and	Subsequent to			Buildings and		Accumulated		Date	Construction
	Property	Location	State	Property Type	Encumbrances(1)	Land	Equipment	Acquisition		Land	Equipment	Total(2)	Depreciation(3)		Acquired	Date
122	2861 Mokumoa Street	Honolulu	HI	Hawaii Properties	(B)	3,867	—	—		3,867	—	3,867	—		12/5/2003	—
123	2864 Awaawaloa Street	Honolulu	HI	Hawaii Properties	(B)	1,836	—	6		1,836	6	1,842	(4	)	12/5/2003	—
124	2864 Mokumoa Street	Honolulu	HI	Hawaii Properties	(B)	2,092	—	—		2,092	—	2,092	—		12/5/2003	—
125	2865 Pukoloa Street	Honolulu	HI	Hawaii Properties	(B)	1,934	—	—		1,934	—	1,934	—		12/5/2003	—
126	2868 Kaihikapu Street	Honolulu	HI	Hawaii Properties	(B)	1,801	—	—		1,801	—	1,801	—		12/5/2003	—
127	2869 Mokumoa Street	Honolulu	HI	Hawaii Properties	(B)	1,794	—	—		1,794	—	1,794	—		12/5/2003	—
128	2875 Paa Street	Honolulu	HI	Hawaii Properties	(B)	1,330	—	—		1,330	—	1,330	—		12/5/2003	—
129	2879 Mokumoa Street	Honolulu	HI	Hawaii Properties	(B)	1,789	—	—		1,789	—	1,789	—		12/5/2003	—
130	2879 Paa Street	Honolulu	HI	Hawaii Properties	(B)	1,691	—	44		1,691	44	1,735	(12	)	12/5/2003	—
131	2886 Paa Street	Honolulu	HI	Hawaii Properties	(B)	2,205	—	—		2,205	—	2,205	—		12/5/2003	—
132	2889 Mokumoa Street	Honolulu	HI	Hawaii Properties	(B)	1,783	5	(5	)	1,783	—	1,783	—		12/5/2003	—
133	2906 Kaihikapu Street	Honolulu	HI	Hawaii Properties	(B)	1,814	2	—		1,814	2	1,816	(1	)	12/5/2003	—
134	2908 Kaihikapu Street	Honolulu	HI	Hawaii Properties	(B)	1,798	23	(11	)	1,798	12	1,810	(2	)	12/5/2003	—
135	2915 Kaihikapu Street	Honolulu	HI	Hawaii Properties	(B)	2,579	—	—		2,579	—	2,579	—		12/5/2003	—
136	2927 Mokumoa Street	Honolulu	HI	Hawaii Properties	(B)	1,778	—	—		1,778	—	1,778	—		12/5/2003	—
137	2928 Kaihikapu Street - A	Honolulu	HI	Hawaii Properties	(B)	1,801	—	—		1,801	—	1,801	—		12/5/2003	—
138	2928 Kaihikapu Street - B	Honolulu	HI	Hawaii Properties	(B)	1,948	—	—		1,948	—	1,948	—		12/5/2003	—
139	2960 Mokumoa Street	Honolulu	HI	Hawaii Properties	(B)	1,977	—	—		1,977	—	1,977	—		12/5/2003	—
140	2965 Mokumoa Street	Honolulu	HI	Hawaii Properties	(B)	2,140	—	—		2,140	—	2,140	—		12/5/2003	—
141	2969 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	4,038	15	—		4,038	15	4,053	(9	)	12/5/2003	—
142	2970 Mokumoa Street	Honolulu	HI	Hawaii Properties	(B)	1,722	—	—		1,722	—	1,722	—		12/5/2003	—
143	33 S. Vineyard Boulevard	Honolulu	HI	Hawaii Properties	(B)	844	—	—		844	—	844	—		12/5/2003	—
144	525 N. King Street	Honolulu	HI	Hawaii Properties	(B)	1,342	—	—		1,342	—	1,342	—		12/5/2003	—
145	609 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	616	—	8		616	8	624	(8	)	12/5/2003	—
146	619 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	1,401	2	12		1,401	14	1,415	(2	)	12/5/2003	—
147	645 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	882	—	—		882	—	882	—		12/5/2003	—
148	659 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	860	20	—		860	20	880	(17	)	12/5/2003	—
149	659 Puuloa Road	Honolulu	HI	Hawaii Properties	(B)	1,807	—	—		1,807	—	1,807	—		12/5/2003	—
150	660 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	1,783	4	—		1,783	4	1,787	(3	)	12/5/2003	—
151	667 Puuloa Road	Honolulu	HI	Hawaii Properties	(B)	860	2	—		860	2	862	(2	)	12/5/2003	—
152	669 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	1,801	14	62		1,801	76	1,877	(22	)	12/5/2003	—

S-5

						Initial Cost to		Costs	Gross Amount Carried at
						Company		Capitalized	Close of Period(4)						Original
							Buildings and	Subsequent to		Buildings and		Accumulated		Date	Construction
	Property	Location	State	Property Type	Encumbrances(1)	Land	Equipment	Acquisition	Land	Equipment	Total(2)	Depreciation(3)		Acquired	Date
153	673 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	1,801	—	—	1,801	—	1,801	—		12/5/2003	—
154	675 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	1,081	—	—	1,081	—	1,081	—		12/5/2003	—
155	679 Puuloa Road	Honolulu	HI	Hawaii Properties	(B)	1,807	3	—	1,807	3	1,810	(3	)	12/5/2003	—
156	685 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	1,801	—	—	1,801	—	1,801	—		12/5/2003	—
157	673 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	1,801	20	—	1,801	20	1,821	(17	)	12/5/2003	—
158	692 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	1,796	2	—	1,798	—	1,798	—		12/5/2003	—
159	697 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	994	811	—	994	811	1,805	(327	)	12/5/2003	—
160	702 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	1,784	3	—	1,783	4	1,787	(3	)	12/5/2003	—
161	704 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	2,390	685	—	2,390	685	3,075	(275	)	12/5/2003	—
162	709 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	1,801	—	—	1,801	—	1,801	—		12/5/2003	—
163	719 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	1,960	—	—	1,960	—	1,960	—		12/5/2003	—
164	729 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	1,801	—	—	1,801	—	1,801	—		12/5/2003	—
165	733 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	3,403	—	—	3,403	—	3,403	—		12/5/2003	—
166	739 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	1,801	—	—	1,801	—	1,801	—		12/5/2003	—
167	759 Puuloa Road	Honolulu	HI	Hawaii Properties	(B)	1,766	3	—	1,766	3	1,769	(3	)	12/5/2003	—
168	761 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	3,757	2	—	3,757	2	3,759	(1	)	12/5/2003	—
169	766 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	1,801	—	—	1,801	—	1,801	—		12/5/2003	—
170	770 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	1,801	—	—	1,801	—	1,801	—		12/5/2003	—
171	789 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	2,608	3	—	2,608	3	2,611	(3	)	12/5/2003	—
172	80 Sand Island Access Road	Honolulu	HI	Hawaii Properties	(B)	7,972	—	—	7,972	—	7,972	—		12/5/2003	—
173	803 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	3,804	—	—	3,804	—	3,804	—		12/5/2003	—
174	808 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	3,279	—	—	3,279	—	3,279	—		12/5/2003	—
175	812 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	1,960	25	628	2,613	—	2,613	—		12/5/2003	—
176	819 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	4,821	583	30	4,821	613	5,434	(245	)	12/5/2003	—
177	822 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	1,795	15	—	1,795	15	1,810	(13	)	12/5/2003	—
178	830 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	1,801	25	—	1,801	25	1,826	(21	)	12/5/2003	—
179	841 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	3,265	—	—	3,265	—	3,265	—		12/5/2003	—
180	842 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	1,795	14	—	1,795	14	1,809	(12	)	12/5/2003	—
181	846 Ala Lilikoi Boulevard B	Honolulu	HI	Hawaii Properties	(B)	234	—	—	234	—	234	—		12/5/2003	—
182	848 Ala Lilikoi Boulevard A	Honolulu	HI	Hawaii Properties	(B)	9,426	—	—	9,426	—	9,426	—		12/5/2003	—
183	850 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	2,682	2	—	2,682	2	2,684	(2	)	12/5/2003	—

S-6

						Initial Cost to		Costs	Gross Amount Carried at
						Company		Capitalized	Close of Period(4)						Original
							Buildings and	Subsequent to		Buildings and		Accumulated		Date	Construction
	Property	Location	State	Property Type	Encumbrances(1)	Land	Equipment	Acquisition	Land	Equipment	Total(2)	Depreciation(3)		Acquired	Date
184	852 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	1,801	—	—	1,801	—	1,801	—		12/5/2003	—
185	855 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	1,834	—	—	1,834	—	1,834	—		12/5/2003	—
186	865 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	1,846	—	—	1,846	—	1,846	—		12/5/2003	—
187	889 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	5,888	315	—	5,888	315	6,203	(56	)	11/21/2012	—
188	905 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	1,148	—	—	1,148	—	1,148	—		12/5/2003	—
189	918 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	3,820	—	—	3,820	—	3,820	—		12/5/2003	—
190	930 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	3,654	—	—	3,654	—	3,654	—		12/5/2003	—
191	944 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	1,219	—	—	1,219	—	1,219	—		12/5/2003	—
192	949 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	11,568	—	—	11,568	—	11,568	—		12/5/2003	—
193	950 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	1,724	—	—	1,724	—	1,724	—		12/5/2003	—
194	960 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	614	—	—	614	—	614	—		12/5/2003	—
195	960 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	1,933	—	—	1,933	—	1,933	—		12/5/2003	—
196	970 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	817	—	—	817	—	817	—		12/5/2003	—
197	91-027 Kaomi Loop	Kapolei	HI	Hawaii Properties		2,667	—	—	2,667	—	2,667	—		6/15/2005	—
198	91-064 Kaomi Loop	Kapolei	HI	Hawaii Properties		1,826	—	—	1,826	—	1,826	—		6/15/2005	—
199	91-080 Hanua	Kapolei	HI	Hawaii Properties		2,187	—	—	2,187	—	2,187	—		6/15/2005	—
200	91-083 Hanua	Kapolei	HI	Hawaii Properties		716	—	—	716	—	716	—		6/15/2005	—
201	91-086 Kaomi Loop	Kapolei	HI	Hawaii Properties		13,884	—	—	13,884	—	13,884	—		6/15/2005	—
202	91-087 Hanua	Kapolei	HI	Hawaii Properties		381	—	—	381	—	381	—		6/15/2005	—
203	91-091 Hanua	Kapolei	HI	Hawaii Properties		552	—	—	552	—	552	—		6/15/2005	—
204	91-102 Kaomi Loop	Kapolei	HI	Hawaii Properties		1,599	—	—	1,599	—	1,599	—		6/15/2005	—
205	91-110 Kaomi Loop	Kapolei	HI	Hawaii Properties		1,293	—	—	1,293	—	1,293	—		6/15/2005	—
206	91-119 Olai	Kapolei	HI	Hawaii Properties		1,981	—	—	1,981	—	1,981	—		6/15/2005	—
207	91-141 Kalaeloa	Kapolei	HI	Hawaii Properties		11,624	—	—	11,624	—	11,624	—		6/15/2005	—
208	91-150 Kaomi Loop	Kapolei	HI	Hawaii Properties		3,159	—	—	3,159	—	3,159	—		6/15/2005	—
209	91-171 Olai	Kapolei	HI	Hawaii Properties		218	—	47	218	47	265	(35	)	6/15/2005	—
210	91-174 Olai	Kapolei	HI	Hawaii Properties		962	—	47	962	47	1,009	(19	)	6/15/2005	—
211	91-175 Olai	Kapolei	HI	Hawaii Properties		1,243	—	43	1,243	43	1,286	(20	)	6/15/2005	—
212	91-185 Kalaeloa	Kapolei	HI	Hawaii Properties		1,761	—	—	1,761	—	1,761	—		6/15/2005	—
213	91-202 Kalaeloa	Kapolei	HI	Hawaii Properties		1,722	—	326	1,722	326	2,048	(53	)	6/15/2005	1964
214	91-210 Kauhi	Kapolei	HI	Hawaii Properties		567	—	—	567	—	567	—		6/15/2005	—

S-7

						Initial Cost to		Costs		Gross Amount Carried at
						Company		Capitalized		Close of Period(4)						Original
							Buildings and	Subsequent to			Buildings and		Accumulated		Date	Construction
	Property	Location	State	Property Type	Encumbrances(1)	Land	Equipment	Acquisition		Land	Equipment	Total(2)	Depreciation(3)		Acquired	Date
215	91-210 Olai	Kapolei	HI	Hawaii Properties		706	—	—		706	—	706	—		6/15/2005	—
216	91-218 Olai	Kapolei	HI	Hawaii Properties		1,622	—	61		1,622	61	1,683	(22	)	6/15/2005	—
217	91-220 Kalaeloa	Kapolei	HI	Hawaii Properties		242	1,457	172		242	1,629	1,871	(582	)	6/15/2005	1991
218	91-222 Olai	Kapolei	HI	Hawaii Properties		2,035	—	—		2,035	—	2,035	—		6/15/2005	—
219	91-238 Kauhi	Kapolei	HI	Hawaii Properties		1,390	—	9,259		1,390	9,259	10,649	(2,840	)	6/15/2005	1981
220	91-241 Kalaeloa	Kapolei	HI	Hawaii Properties		426	3,983	886		426	4,869	5,295	(1,707	)	6/15/2005	1990
221	91-250 Komohana	Kapolei	HI	Hawaii Properties		1,506	—	—		1,506	—	1,506	—		6/15/2005	—
222	91-252 Kauhi	Kapolei	HI	Hawaii Properties		536	—	—		536	—	536	—		6/15/2005	—
223	91-255 Hanua	Kapolei	HI	Hawaii Properties		1,230	—	16		1,230	16	1,246	(3	)	6/15/2005	—
224	91-259 Olai	Kapolei	HI	Hawaii Properties		2,944	—	—		2,944	—	2,944	—		6/15/2005	—
225	91-265 Hanua	Kapolei	HI	Hawaii Properties		1,569	—	—		1,569	—	1,569	—		6/15/2005	—
226	91-300 Hanua	Kapolei	HI	Hawaii Properties		1,381	—	—		1,381	—	1,381	—		6/15/2005	1994
227	91-329 Kauhi	Kapolei	HI	Hawaii Properties		294	2,297	2,489		294	4,786	5,080	(1,537	)	6/15/2005	1980
228	91-349 Kauhi	Kapolei	HI	Hawaii Properties		649	—	—		649	—	649	—		6/15/2005	—
229	91-399 Kauhi	Kapolei	HI	Hawaii Properties		27,405	—	—		27,405	—	27,405	—		6/15/2005	—
230	91-400 Komohana	Kapolei	HI	Hawaii Properties		1,494	—	—		1,494	—	1,494	—		6/15/2005	—
231	91-410 Komohana	Kapolei	HI	Hawaii Properties		418	—	12		418	12	430	(2	)	6/15/2005	—
232	91-416 Komohana	Kapolei	HI	Hawaii Properties		713	—	11		713	11	724	(2	)	6/15/2005	—
233	AES HI Easement	Kapolei	HI	Hawaii Properties		1,250	—	—		1,250	—	1,250	—		6/15/2005	—
234	Other Easements & Lots	Kapolei	HI	Hawaii Properties		358	—	1,395		358	1,395	1,753	(435	)	6/15/2005	—
235	Tesaro 967 Easement	Kapolei	HI	Hawaii Properties		6,593	—	—		6,593	—	6,593	—		6/15/2005	—
236	Texaco Easement	Kapolei	HI	Hawaii Properties		2,657	—	(4	)	2,653	—	2,653	—		6/15/2005	—
237	94-240 Pupuole Street	Waipahu	HI	Hawaii Properties	(B)	717	—	—		717	—	717	—		12/5/2003	—
238	5500 SE Delaware Avenue	Ankeny	IA	Mainland Properties	(C)	2,707	16,994	13,507		2,707	30,501	33,208	(2,122	)	1/29/2015	2012
239	951 Trails Road	Eldridge	IA	Mainland Properties		470	7,480	1,024		470	8,504	8,974	(2,589	)	4/2/2007	1994
240	3425 Maple Drive	Fort Dodge	IA	Mainland Properties		100	2,000	—		100	2,000	2,100	(41	)	4/9/2019	2014
241	2300 North 33rd Avenue East	Newton	IA	Mainland Properties		500	13,236	395		500	13,631	14,131	(3,941	)	9/29/2008	2008
242	7121 South Fifth Avenue	Pocatello	ID	Mainland Properties		400	4,201	422		400	4,623	5,023	(528	)	1/29/2015	2007
243	1230 West 171st Street	Harvey	IL	Mainland Properties		800	1,673	—		800	1,673	2,473	(206	)	1/29/2015	2004
244	5156 American Road	Rockford	IL	Mainland Properties		400	1,529	182		400	1,711	2,111	(201	)	1/29/2015	1996
245	3201 Bearing Drive	Franklin	IN	Mainland Properties		1,100	15,403	—		1,100	15,403	16,503	(376	)	4/9/2019	1973
246	2482 Century Drive	Goshen	IN	Mainland Properties		840	9,061	—		840	9,061	9,901	(188	)	4/9/2019	2005

S-8

						Initial Cost to		Costs	Gross Amount Carried at
						Company		Capitalized	Close of Period(4)						Original
							Buildings and	Subsequent to		Buildings and		Accumulated		Date	Construction
	Property	Location	State	Property Type	Encumbrances(1)	Land	Equipment	Acquisition	Land	Equipment	Total(2)	Depreciation(3)		Acquired	Date
247	6825 West County Road 400 North	Greenfield	IN	Mainland Properties		918	14,300	168	918	14,468	15,386	(361	)	2/14/2019	2008
248	900 Commerce Parkway West Drive	Greenwood	IN	Mainland Properties		1,483	16,253	—	1,483	16,253	17,736	(409	)	2/14/2019	2007
249	9347 E Pendleton Pike	Lawrence	IN	Mainland Properties		3,763	34,877	—	3,763	34,877	38,640	(876	)	2/14/2019	2009
250	945 Monument Drive	Lebanon	IN	Mainland Properties	(C)	4,210	42,795	—	4,210	42,795	47,005	(890	)	4/9/2019	2014
251	2801 Airwest Boulevard	Plainfield	IN	Mainland Properties	(C)	5,296	35,073	—	5,296	35,073	40,369	(1,029	)	2/14/2019	2001
252	2150 Stanley Road	Plainfield	IN	Mainland Properties	(C)	2,817	24,836	231	2,817	25,067	27,884	(536	)	4/2/2019	2007
253	4237-4255 Anson Boulevard	Whitestown	IN	Mainland Properties	(C)	3,710	61,706	734	3,710	62,440	66,150	(1,589	)	2/14/2019	2006
254	1985 International Way	Hebron	KY	Mainland Properties		1,453	8,546	449	1,453	8,995	10,448	(260	)	2/14/2019	1997
255	20 Logistics Boulevard	Walton	KY	Mainland Properties	(C)	2,916	35,056	6	2,916	35,062	37,978	(882	)	2/14/2019	2006
256	17200 Manchac Park Lane	Baton Rouge	LA	Mainland Properties		1,700	8,860	—	1,700	8,860	10,560	(1,089	)	1/29/2015	2014
257	209 South Bud Street	Lafayette	LA	Mainland Properties		700	4,549	9	700	4,558	5,258	(561	)	1/29/2015	2010
258	4000 Principio Parkway	North East	MD	Mainland Properties		4,200	71,518	800	4,200	72,318	76,518	(8,828	)	1/29/2015	2012
259	16101 Queens Court	Upper Marlboro	MD	Mainland Properties	(C)	5,296	21,833	—	5,296	21,833	27,129	(682	)	9/28/2018	2016
260	3800 Midlink Drive	Kalamazoo	MI	Mainland Properties		2,630	40,599	—	2,630	40,599	43,229	(4,991	)	1/29/2015	2014
261	2401 Cram Avenue SE	Bemidji	MN	Mainland Properties		100	2,137	—	100	2,137	2,237	(263	)	1/29/2015	2013
262	10100 89th Avenue N	Maple Grove	MN	Mainland Properties		3,469	21,284	—	3,469	21,284	24,753	(697	)	10/16/2018	2015
263	110 Stanbury Industrial Drive	Brookfield	MO	Mainland Properties		200	1,859	—	200	1,859	2,059	(229	)	1/29/2015	2012
264	3502 Enterprise Avenue	Joplin	MO	Mainland Properties		1,380	12,121	—	1,380	12,121	13,501	(251	)	4/9/2019	2014
265	5501 Providence Hill Drive	St. Joseph	MO	Mainland Properties		400	3,500	24	400	3,524	3,924	(73	)	4/9/2019	2014
266	5148 North Hanley Road	St. Louis	MO	Mainland Properties	(C)	4,861	62,147	—	4,861	62,147	67,008	(1,293	)	4/9/2019	2015
267	628 Patton Avenue	Asheville	NC	Mainland Properties		500	1,514	—	500	1,514	2,014	(186	)	1/29/2015	1987
268	3900 NE 6th Street	Minot	ND	Mainland Properties		700	3,223	—	700	3,223	3,923	(396	)	1/29/2015	2013
269	1415 West Commerce Way	Lincoln	NE	Mainland Properties		2,200	8,518	—	2,200	8,518	10,718	(1,047	)	1/29/2015	1971
270	52 Pettengill Road	Londonderry	NH	Mainland Properties		5,871	43,335	—	5,871	43,335	49,206	(901	)	4/9/2019	2015
271	309 Dulty's Lane	Burlington	NJ	Mainland Properties		1,600	51,400	—	1,600	51,400	53,000	(6,319	)	1/29/2015	2001
272	725 Darlington Avenue	Mahwah	NJ	Mainland Properties		8,492	9,451	1,265	8,492	10,716	19,208	(1,487	)	4/9/2014	1999
273	2375 East Newlands Road	Fernley	NV	Mainland Properties		1,100	17,314	286	1,100	17,600	18,700	(2,179	)	1/29/2015	2007
274	7000 West Post Road	Las Vegas	NV	Mainland Properties		4,230	13,472	93	4,230	13,565	17,795	(327	)	4/9/2019	2010
275	55 Commerce Avenue	Albany	NY	Mainland Properties		1,000	10,105	179	1,000	10,284	11,284	(1,274	)	1/29/2015	2013
276	158 West Yard Road	Feura Bush	NY	Mainland Properties		1,870	7,931	—	1,870	7,931	9,801	(288	)	4/9/2019	1989
277	32150 Just Imagine Drive	Avon	OH	Mainland Properties		2,200	23,280	—	2,200	23,280	25,480	(6,160	)	5/29/2009	1996
278	1415 Industrial Drive	Chillicothe	OH	Mainland Properties		1,200	3,265	—	1,200	3,265	4,465	(401	)	1/29/2015	2012

S-9

						Initial Cost to				Costs		Gross Amount Carried at
						Company				Capitalized		Close of Period(4)										Original
								Buildings and		Subsequent to				Buildings and				Accumulated			Date	Construction
	Property	Location	State	Property Type	Encumbrances(1)	Land		Equipment		Acquisition		Land		Equipment		Total(2)		Depreciation(3)			Acquired	Date
279/280/281	1580, 1590 & 1600 Williams Road	Columbus	OH	Mainland Properties		2,060		29,143		—		2,058		29,145		31,203		(707		)	4/9/2019	1992
282	5300 Centerpoint Parkway	Groveport	OH	Mainland Properties		2,700		29,863		—		2,700		29,863		32,563		(3,671		)	1/29/2015	2014
283	200 Orange Point Drive	Lewis Center	OH	Mainland Properties		1,300		8,613		162		1,300		8,775		10,075		(1,080		)	1/29/2015	2013
284/285	2353 & 2373 Global Drive	Obetz	OH	Mainland Properties		2,393		27,363		6		2,393		27,369		29,762		(278		)	8/23/2019	2018
286	301 Commerce Drive	South Point	OH	Mainland Properties		600		4,530		—		600		4,530		5,130		(557		)	1/29/2015	2013
287	1800 Union Airpark Boulevard	Union	OH	Mainland Properties	(C)	4,541		79,469		23		4,541		79,492		84,033		(1,652		)	4/9/2019	2014
288	2820 State Highway 31	McAlester	OK	Mainland Properties		581		2,237		4,582		581		6,819		7,400		(537		)	1/29/2015	2012
289	5 Logistics Drive	Carlisle	PA	Mainland Properties	(C)	3,299		15,515		58		3,299		15,573		18,872		(487		)	9/20/2018	2016
290	1990 Hood Road	Greer	SC	Mainland Properties		400		10,702		—		400		10,702		11,102		(223		)	4/9/2019	2015
291	996 Paragon Way	Rock Hill	SC	Mainland Properties		2,600		35,920		—		2,600		35,920		38,520		(4,415		)	1/29/2015	2014
292	700 Marine Drive	Rock Hill	SC	Mainland Properties		820		8,381		661		820		9,042		9,862		(203		)	4/9/2019	1986
293	510 John Dodd Road	Spartanburg	SC	Mainland Properties		3,300		57,998		347		3,300		58,345		61,645		(7,141		)	1/29/2015	2012
294	5001 West Delbridge Street	Sioux Falls	SD	Mainland Properties		2,570		14,832		—		2,570		14,832		17,402		(308		)	4/9/2019	2016
295	4836 Hickory Hill Road	Memphis	TN	Mainland Properties		1,402		10,769		868		1,402		11,637		13,039		(1,443		)	12/23/2014	1984
296	2020 Joe B. Jackson Parkway	Murfreesboro	TN	Mainland Properties		7,500		55,259		—		7,500		55,259		62,759		(6,792		)	1/29/2015	2012
297	1095 South 4800 West	Salt Lake City	UT	Mainland Properties		1,500		6,913		20		1,500		6,933		8,433		(850		)	1/29/2015	2012
298	1901 Meadowville Technology Parkway	Chester	VA	Mainland Properties	(D)	4,000		67,511		—		4,000		67,511		71,511		(8,298		)	1/29/2015	2012
299	5000 Commerce Way	Petersburg	VA	Mainland Properties	(C)	6,161		56,046		55		6,161		56,101		62,262		(1,165		)	4/9/2019	2012
300	181 Battaile Drive	Winchester	VA	Mainland Properties		1,487		12,854		36		1,487		12,890		14,377		(4,410		)	4/20/2006	1964
						$	747,146	$	1,529,593	$	59,225	$	747,794	$	1,588,170	$	2,335,964	$	(131,468	)

(1) Represents mortgage notes and includes the unamortized balance of debt issuance costs, premiums and discounts costs totaling $9,122. Certain of our properties are encumbered as follows:

	Encumbrance		Undepreciated Cost
(A) - 1 property encumbered by one mortgage loan	$	55,848	$	108,122
(B) - 186 properties encumbered by one mortgage loan	645,034		504,933
(C) - 11 properties encumbered by one mortgage loan	346,772		511,898
(D) - 1 property encumbered by one mortgage loan	48,954		71,511
	$	1,096,608	$	1,196,464

(2) Excludes value of real estate intangibles.

(3) Depreciation on buildings and improvements is provided for periods ranging up to 40 years and on equipment up to seven years.

(4) The total aggregate cost for U.S. federal income tax purposes is approximately $2,484,841.

S-10

INDUSTRIAL LOGISTICS PROPERTIES TRUST

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)

December 31, 2019

(dollars in thousands)

Analysis of the carrying amount of real estate properties and accumulated depreciation:

	Real Estate			Accumulated
	Properties			Depreciation
Balance at December 31, 2016	1,336,728			(56,976		)
Additions	6,974			(17,738		)
Disposals	(100		)	100
Balance at December 31, 2017	1,343,602			(74,614		)
Additions	118,898			(18,781		)
Disposals	(104		)	104
Balance at December 31, 2018	$	1,462,396		$	(93,291	)
Additions	873,568			(38,177		)
Balance at December 31, 2019	$	2,335,964		$	(131,468	)

S-11

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

INDUSTRIAL LOGISTICS PROPERTIES TRUST
By:	/s/ John G. Murray
	John G. Murray President and Chief Executive Officer
	Dated: February 24, 2020

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature		Title		Date
/s/ John G. Murray	Managing Trustee, President and Chief Executive Officer		February 24, 2020
John G. Murray
/s/ Richard W. Siedel, Jr.	Chief Financial Officer and Treasurer (principal		February 24, 2020
Richard W. Siedel, Jr.	financial officer and principal accounting officer)
/s/ Adam D. Portnoy	Managing Trustee		February 24, 2020
Adam D. Portnoy
/s/ Bruce M. Gans, M.D.	Independent Trustee		February 24, 2020
Bruce M. Gans, M.D.
/s/ Lisa Harris Jones	Independent Trustee		February 24, 2020
Lisa Harris Jones
/s/ Joseph L. Morea	Independent Trustee		February 24, 2020
Joseph L. Morea

EX-4.2

Exhibit 4.2

DESCRIPTION OF THE REGISTRANT’S SECURITIES

REGISTERED PURSUANT TO SECTION 12

OF THE SECURITIES EXCHANGE ACT OF 1934

As of February 19, 2020, Industrial Logistics Properties Trust (the “Company,” “we,” “us” or “our”) had one class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Common Shares of Beneficial Interest,$.01 par value per share (“common shares”). The common shares are listed on The Nasdaq Stock Market LLC (“Nasdaq”).

DESCRIPTION OF SHARES OF BENEFICIAL INTEREST

The following description of the terms of our shares of beneficial interest is a summary only. This summary is not complete and is qualified in its entirety by reference to the Company’s declaration of trust and bylaws and applicable Maryland law, including but not limited to provisions of Maryland law applicable to Maryland real estate investment trusts (the “Maryland REIT Law”). The Company’s declaration of trust and bylaws are filed as exhibits to this Annual Report on Form 10-K.

General

Our declaration of trust authorizes us to issue up to an aggregate of 100,000,000 shares of beneficial interest, all of which are currently designated as common shares. As of February 19, 2020, we had 65,180,208 common shares issued and outstanding. As of February 19, 2020, no other class or series of shares of beneficial interest has been established and is outstanding.

Our declaration of trust contains a provision permitting our Board of Trustees, without any action by our shareholders, to amend our declaration of trust to increase or decrease the total number of shares of beneficial interest or the number of shares of any class or series that we have authority to issue. Our declaration of trust further authorizes our Board of Trustees to reclassify any unissued shares from time to time by setting the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications or terms or conditions of redemption of our shares of beneficial interest or any new class or series of shares created by our Board of Trustees.

Common Shares

Voting rights.Subject to the provisions of our declaration of trust regarding the restriction on the transfer of shares of beneficial interest, each outstanding common share entitles the holder to one vote on all matters submitted to a vote of shareholders, including the election of Trustees. Holders of our common shares do not have cumulative voting rights in the election of Trustees. Whenever shareholders are required or permitted to take any action by a vote, the action may only be taken by a vote at a shareholders meeting. Under our declaration of trust and bylaws, shareholders do not have the right to take any action by written consent. With respect to matters brought before a meeting of shareholders other than the election of Trustees, except where a different voting standard is required by any applicable law, the listing requirements of the principal securities exchange on which our common shares are listed or a specific provision of our declaration of trust or bylaws, a majority of all the votes cast shall be required to approve the matter.

Under our declaration of trust, subject to the provisions of any class or series of our shares then outstanding, our shareholders are entitled to vote on the following matters: (1) the election of Trustees and the removal of Trustees; (2) any amendment to our declaration of trust, merger or consolidation of us with or into, or sale of all or substantially all our assets to, another entity and our termination, in each case, to the extent a shareholder vote is required under the Maryland REIT Law, provided that such action has first been approved by at least 60% of our Board of Trustees, including 60% of our Independent Trustees (as defined in our declaration of trust); and (3) such other matters with respect to which our Board of Trustees has adopted a resolution declaring that

a proposed action is advisable and directing that the matter be submitted to our shareholders for approval or ratification. Our shareholders will also be entitled to vote on such matters as may be required by our declaration of trust, bylaws or applicable law.

Under the Maryland REIT Law, a Maryland real estate investment trust (“REIT”) generally cannot dissolve, amend its declaration of trust, convert or merge unless these actions are approved by at least two thirds of all shares entitled to be cast on the matter. The Maryland REIT Law allows a trust's declaration of trust to set a lower percentage, so long as the percentage is not less than a majority of the votes entitled to be cast on the matter. Our declaration of trust provides for approval of any of the foregoing actions by a majority of all votes entitled to be cast on these actions provided the action has been approved by 60% of our Board of Trustees, including 60% of our Independent Trustees (as defined in our declaration of trust). Our declaration of trust further provides that if permitted in the future by Maryland law, the majority required to approve any of the foregoing actions which have been approved by 60% of our Board of Trustees, including 60% of our Independent Trustees, will be the affirmative vote of a majority of the votes cast on the matter.

Board of Trustees. Our Board of Trustees is divided into three classes. At each annual meeting, shareholders elect the successors of the class of Trustees whose term expires at that meeting for a term expiring at the annual meeting held in the third year following the year of their election. The classified board provision could have the effect of making the replacement of incumbent Trustees more time consuming and difficult. At least two annual meetings of shareholders will generally be required to effect a change in a majority of our Board of Trustees.

Except as may be mandated by any applicable law or the listing requirements of the principal exchange on which our common shares are listed, and subject to the voting rights of any class or series of our shares of beneficial interest which may be hereafter created, a plurality of all the votes cast at a meeting of our shareholders duly called and at which a quorum is present is required to elect a Trustee.

In case of failure to elect Trustees at an annual meeting of shareholders, the incumbent Trustees will hold over and continue to direct the management of our business and affairs until they resign or their successors are elected and qualify. Any vacancy on our Board of Trustees may be filled only by a majority of the remaining Trustees, even if the remaining Trustees do not constitute a quorum, for the remaining term of the class in which the vacancy exists and until a successor is elected and qualifies. Our declaration of trust provides that a Trustee may be removed (1) only for cause, at a meeting of our shareholders properly called for that purpose, by the affirmative vote of holders of not less than 75% of the votes entitled to be cast in the election of such Trustee, or (2) with or without cause, by the affirmative vote of not less than 75% of the remaining Trustees. This precludes shareholders from removing incumbent Trustees unless cause for removal exists and they can obtain the requisite affirmative vote of our common shares.

Distribution rights.Subject to the preferential rights of any other class or series of shares then outstanding or which may be issued, and to the ownership restrictions described in our declaration of trust, all of our common shares are entitled to receive distributions on our common shares if, as and when authorized by our Board of Trustees and declared by us out of assets legally available for distribution (as determined by our Board of Trustees).

Liquidation rights.Subject to the preferential rights of any other class or series of shares then outstanding or which may be issued, and to the ownership restrictions described in our declaration of trust, all of our common shares are entitled to share ratably in our assets legally available for distribution to our shareholders (as determined by our Board of Trustees) in the event of our liquidation, dissolution or winding up after payment of or adequate provision for all of our known debts and liabilities.

Other rights and preferences.Holders of our common shares have no preference, conversion, exchange, sinking fund, redemption or appraisal rights, or preemptive rights to subscribe for any of our securities.

Preferred Shares

Pursuant to our declaration of trust, our Board of Trustees, without any action by our shareholders, may issue preferred shares of beneficial interest (“preferred shares”) from time to time, in one or more classes or series, with the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other

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distributions, qualifications and terms and conditions of redemption of any preferred shares as determined by our Board of Trustees from time to time. The issuance of preferred shares, the issuance of rights to purchase preferred shares or the possibility of the issuance of preferred shares or such rights could have the effect of delaying or preventing a change in our control. In addition, the rights of holders of common shares will be subject to, and may be adversely affected by, the rights of holders of any preferred shares that we have issued or may issue in the future.

Restrictions on Transfer and Ownership of Shares

Our declaration of trust provides that no person may own, or be deemed to own by virtue of the attribution provisions of the Internal Revenue Code of 1986, as amended (the “Code”), or beneficially own under Rule 13d-3 under the Exchange Act, more than 9.8% in value or number, whichever is more restrictive, of any class or series of our outstanding shares of beneficial interest, including our common shares. Our Board of Trustees may from time to time increase or decrease this ownership limit for one or more persons, subject to limitations contained in our declaration of trust. Our declaration of trust further prohibits any person from beneficially or constructively owning our shares if that ownership would result in our being “closely held” under Section 856(h) of the Code or otherwise cause us to fail to qualify for taxation as a REIT. Any attempted transfer of our shares which, if effective, would result in our shares being owned by fewer than 100 persons shall be void ab initio, and the intended transferee shall acquire no rights in such shares.

Our Board of Trustees, in its sole discretion, may exempt a person, prospectively or retroactively, from the share ownership limitations if (1) such person provides to our Board of Trustees, for our benefit, such representations and undertakings as the Board of Trustees may, in its sole discretion, determine to be necessary or advisable in order for it to make the determination that the ownership of shares by such person in excess of the ownership limitations will not jeopardize our ability to qualify for taxation as a REIT under the Code; (2) such person’s ownership of shares in excess of the ownership limitations would not cause a default under the terms of any contract to which we or any of our subsidiaries are party or reasonably expect to become a party; (3) such person’s ownership of shares in excess of the ownership limits is in our best interests, as determined by our Board of Trustees; and (4) such person agrees that any violation of such representations and undertakings or any attempted violation thereof will give rise to the application of the remedies set forth in our declaration of trust with respect to shares held in excess of the ownership limitations unless our Board of Trustees determines that such agreement is not necessary or advisable.

In determining whether to grant an exemption, our Board of Trustees may consider, among other factors, the following:

• the general reputation and moral character of the person requesting the exemption;

• whether the person’s ownership of shares would be direct or through ownership attribution;

• whether the person’s ownership of shares would interfere with the conduct of our business, including our ability to make additional investments;

• whether granting an exemption would adversely affect any of our existing contractual arrangements or the execution of any of our strategies or business policies;

• whether the person to which the exemption would apply has been approved as an owner of us by all regulatory or other governmental authorities with jurisdiction over us; and

• whether the person to which the exemption would apply is attempting to change control of us or affect our policies in a way that our Board of Trustees, in its sole discretion, considers adverse to our or our shareholders’ best interests.

In addition, our Board of Trustees may require such rulings from the Internal Revenue Service, opinions of counsel, representations, undertakings or agreements it deems advisable in order to make the foregoing decisions.

3

If a person attempts a transfer of our shares in violation of the ownership limitations described above, (1) the number of shares which would cause the violation shall be automatically transferred to a charitable trust for the exclusive benefit of one or more charitable beneficiaries designated by us or (2) such attempted transfer shall be void ab initio. A transfer to the charitable trust will be deemed to be effective as of the close of business on the business day prior to the event that results in the transfer to the charitable trust. The prohibited owner will generally not acquire any rights in these excess shares (except to the extent provided below upon sale of the shares), will not benefit economically from ownership of any excess shares, will have no rights to distributions, will not possess any rights to vote and, to the extent permitted by law, will have no claim, cause of action or other recourse against the purported transferor of such shares. Subject to Maryland law, the trustee of the charitable trust will have the authority to rescind as void any vote cast by the prohibited owner prior to our discovery that the shares have been transferred to the trust and to recast the vote in accordance with the desires of the trustee acting for the benefit of the charitable beneficiary. However, if we have already taken irreversible action, then the trustee will not have the authority to rescind and recast the vote. Any dividend or other distribution paid prior to our discovery that shares have been transferred to the trust for the charitable beneficiary will be paid by the recipient to the trustee. Any dividend or other distribution authorized but unpaid will be paid when due to the trustee. Any dividend or other distribution paid to the trustee will be held in trust for the charitable beneficiary.

Unless otherwise directed by our Board of Trustees, within 20 days of receiving notice from us that our shares have been transferred to a charitable trust, or as soon thereafter as reasonably practicable, the trustee will sell such shares (together with the right to receive distributions with respect to such shares) to a person designated by the trustee, whose ownership of the shares will not violate the ownership limitations set forth in our declaration of trust. Upon such sale, the interest of the charitable beneficiary in the shares sold will terminate, and the trustee will distribute the net proceeds of the sale to the prohibited owner and to the charitable beneficiary as follows:

• the prohibited owner will receive the lesser of:

(1) the price paid by the prohibited owner for the shares or, if the prohibited owner did not give value for the shares in connection with the event causing the shares to be held in the charitable trust, for example, in the case of a gift, devise or other similar transaction, the market price of the shares on the day of the event causing the shares to be transferred to the charitable trust, in each case, reduced by any amounts previously received by the prohibited owner in connection with prior extraordinary dividends or other distributions; and

(2) the proceeds received by the trustee (net of any commissions and other expenses of the trustee) from the sale or other disposition of the shares held in the charitable trust plus any extraordinary dividends or other distributions received by the trustee; and

• the trustee may reduce the amount payable to the prohibited owner by the amount of ordinary dividends or other distributions which have been paid to the prohibited owner and is owed by the prohibited owner to the trustee. Any net sales proceeds in excess of the amount payable to the prohibited owner shall be paid to the charitable beneficiary, less the costs, expenses and compensation of the charitable trust and us. Any extraordinary dividends received by the trustee shall be treated in a similar way as sales proceeds.

If, prior to our discovery that shares have been transferred to the charitable trust, a prohibited owner sells those shares, then:

• those shares will be deemed to have been sold on behalf of the charitable trust; and

• to the extent that the prohibited owner received an amount for those shares that exceeds the amount that the prohibited owner was entitled to receive from a sale by the trustee, the prohibited owner must promptly pay the excess to the trustee upon demand.

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Also, shares held in the charitable trust will be deemed to have been offered for sale to us, or our designee, at a price per share equal to the lesser of:

• the price per share in the transaction that resulted in the transfer to the charitable trust or, if the prohibited owner did not give value for the shares in connection with the event causing the shares to be held in the charitable trust, for example, in the case of a gift, devise or other similar transaction, the market price per share on the day of the event causing the shares to become held by the charitable trust; and

• the market price per share on the date we, or our designee, accept the offer.

In either of the above cases, the price per share will be less our and the trustee’s costs, expenses and compensation described below.

We will have the right to accept the offer until the trustee has sold the shares held in the charitable trust. The net proceeds of the sale to us will be distributed similar to any other sale by the trustee. Our Board of Trustees may retroactively amend, alter or repeal any rights which the charitable trust, the trustee or the beneficiary of the charitable trust may have under our declaration of trust, including retroactively granting an exemption to a prohibited owner, except that our Board of Trustees may not retroactively amend, alter or repeal any obligations to pay amounts incurred prior to such time and owed or payable to the trustee. The trustee will be indemnified by us or from the proceeds from the sale of shares held in the charitable trust for its costs and expenses reasonably incurred in connection with conducting its duties and satisfying its obligations under our declaration of trust and is entitled to receive reasonable compensation for services provided.

Costs, expenses and compensation payable to the trustee may be funded from the charitable trust or by us. Before any sales proceeds may be distributed to a prohibited owner, we will be entitled to reimbursement on a first priority basis (after payment in full of amounts payable to the trustee) from the charitable trust for any such amounts funded by us and for any indemnification provided to the trustee by us.

In addition, costs and expenses incurred by us in the process of enforcing the ownership limitations set forth in our declaration of trust, in addition to reimbursement of costs, expenses and compensation of the trustee which have been funded by us, may be collected from the charitable trust.

The restrictions described above will not preclude the settlement of any transaction entered into through the facilities of any national securities exchange or automated inter-dealer quotation system. Our declaration of trust provides, however, that the fact that the settlement of any transaction occurs will not negate the effect of any of the foregoing limitations and any transferee in such a transaction will be subject to all of the provisions and limitations described above.

Any person who acquires or attempts or intends to acquire beneficial or constructive ownership of any shares that will or may violate the foregoing share ownership limitations, or any person who would have owned shares that resulted in a transfer to a charitable trust, is required to immediately give written notice to us of such event, or in the case of such a proposed or attempted transaction, give at least 15 days’ prior written notice, and to provide to us such other information as we may request.

Every person who owns, is deemed to own by virtue of the attribution rules of the Code or is deemed to beneficially own pursuant to Rule 13d-3 under the Exchange Act 5% or more of any class or series of our shares outstanding at the time of the determination is required to give written notice to us within 30 days after the end of each taxable year, and also within three business days after a request from us, stating the name and address of the owner, the number of shares of each class and series of our shares of beneficial interest which the owner beneficially owns, and a description of the manner in which those shares are held. If the Code or applicable Treasury regulations specify a threshold below 5%, this notice provision will apply to those persons who own our shares of beneficial interest at the lower percentage. In addition, each shareholder is required to provide us upon demand with any

5

additional information that we may request in order to determine our qualification for taxation as a REIT or to comply or determine our compliance with the requirements of any taxing authority or other government authority.

All certificates evidencing our shares and any share statements for our uncertificated shares may bear legends referring to the foregoing restrictions.

The restrictions on transfer and ownership in our declaration of trust are intended to assist with our compliance with the requirements for qualification for taxation as a REIT under the Code and otherwise to promote our orderly governance. These restrictions do not apply to The RMR Group LLC (“RMR LLC”), any other company to which RMR LLC provides management services, The RMR Group Inc. or any of their affiliates, so long as such ownership does not adversely affect our qualification for taxation as a REIT under the Code.

Business Combinations

The Maryland General Corporation Law (“MGCL”) contains a provision which regulates business combinations with interested shareholders. This provision applies to REITs formed under Maryland law like us. Under the MGCL, business combinations such as mergers, consolidations, share exchanges, or, in circumstances specified in the statute, an asset transfer or issuance or reclassification of equity securities between a REIT formed under Maryland law and an interested shareholder or an affiliate of an interested shareholder are prohibited for five years after the most recent date on which the interested shareholder becomes an interested shareholder. Under the MGCL the following persons are deemed to be interested shareholders:

• any person who beneficially owns, directly or indirectly, 10% or more of the voting power of the trust’s outstanding voting shares; or

• an affiliate or associate of the trust who, at any time within the two year period immediately prior to the date in question, was the beneficial owner, directly or indirectly, of 10% or more of the voting power of the then outstanding voting shares of the trust.

After the five year prohibition period has ended, a business combination between a trust and an interested shareholder generally must be recommended by the board of trustees of the trust and must receive the following shareholder approvals:

• the affirmative vote of at least 80% of the votes entitled to be cast by holders of outstanding voting shares of the trust; and

• the affirmative vote of at least two thirds of the votes entitled to be cast by holders of voting shares other than shares held by the interested shareholder with whom or with whose affiliate or associate the business combination is to be effected or held by an affiliate or associate of the interested shareholder.

The shareholder approvals discussed above are not required if the trust’s shareholders receive the minimum price set forth in the MGCL for their shares and the consideration is received in cash or in the same form as previously paid by the interested shareholder for its shares.

The foregoing provisions of the MGCL do not apply, however, to business combinations that are approved or exempted by our Board of Trustees prior to the time that the interested shareholder becomes an interested shareholder. A person is not an interested shareholder under the statute if the board of trustees approves in advance the transaction by which that shareholder otherwise would have become an interested shareholder. The board of trustees may provide that its approval is subject to compliance with any terms and conditions determined by the board of trustees. Our Board of Trustees has adopted a resolution that any business combination between us and any other person is exempted from the provisions of the MGCL described in the preceding paragraphs, provided that the business combination is first approved by our Board of Trustees, including the approval of a majority of the members of our Board of Trustees who are not affiliates or associates of the interested shareholder. This resolution, however, may be altered or repealed in whole or in part at any time.

6

Control Share Acquisitions

The MGCL contains a provision which regulates control share acquisitions. This provision applies to REITs formed under Maryland law like us. The MGCL provides that control shares of a REIT formed under Maryland law acquired in a control share acquisition have no voting rights except to the extent that the acquisition is approved by a vote of two thirds of the votes entitled to be cast on the matter, excluding shares owned by the acquiror, by officers or by trustees who are employees of the trust. Control shares are voting shares, which, if aggregated with all other such shares previously acquired by the acquiror, or in respect of which the acquiror is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquiror to exercise voting power in electing trustees within one of the following ranges of voting power:

• one tenth or more but less than one third;

• one third or more but less than a majority; or

• a majority or more of all voting power.

An acquiror must obtain the necessary shareholder approval each time it acquires control shares in an amount sufficient to cross one of the thresholds noted above.

Control shares do not include shares which the acquiring person is entitled to vote as a result of having previously obtained shareholder approval or shares acquired directly from the company. The MGCL provides for certain exceptions from the definition of control share acquisition.

A person who has made or proposes to make a control share acquisition, upon satisfaction of the conditions set forth in the statute, including an undertaking to pay the expenses of the meeting, may compel the board of trustees of the trust to call a special meeting of shareholders to be held within 50 days of demand to consider the voting rights of the shares. If no request for a meeting is made, the trust may itself present the matter at any shareholders meeting.

If voting rights are not approved at the meeting or if the acquiring person does not deliver an acquiring person statement as required by the MGCL, then the trust may redeem for fair value any or all of the control shares, except those for which voting rights have previously been approved. The right of the trust to redeem control shares is subject to conditions and limitations. Fair value is determined, without regard to the absence of voting rights for the control shares, as of the date of the last control share acquisition by the acquiror or of any meeting of shareholders at which the voting rights of the shares are considered and not approved. If voting rights for control shares are approved at a shareholders meeting and the acquiror becomes entitled to vote a majority of the shares entitled to vote, all other shareholders may exercise appraisal rights. The fair value of the shares as determined for purposes of appraisal rights may not be less than the highest price per share paid by the acquiror in the control share acquisition.

The control share acquisition statute of the MGCL does not apply to the following:

• shares acquired in a merger, consolidation or share exchange if the trust is a party to the transaction; or

• acquisitions approved or exempted by a provision in the declaration of trust or bylaws of the trust adopted before the acquisition of shares.

Our bylaws contain a provision exempting any and all acquisitions by any person of our common shares from the control share acquisition statute. This provision may be amended or eliminated at any time in the future.

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Subtitle 8

Subtitle 8 of Title 3 of the MGCL permits a Maryland REIT with a class of equity securities registered under the Exchange Act and at least three independent trustees to elect to be subject, by provision in its declaration of trust or bylaws or a resolution of its board of trustees and notwithstanding any contrary provision in the declaration of trust or bylaws, to any or all of five provisions:

• a classified board;

• a two thirds vote requirement for removing a trustee;

• a requirement that the number of trustees be fixed only by vote of the trustees;

• a requirement that a vacancy on the board be filled only by the remaining trustees in office and for the replacement trustee to serve for the remainder of the full term of the class of trustees in which the vacancy occurred; and

• a majority requirement for the calling of a shareholder requested special meeting of shareholders.

Through other provisions in our declaration of trust and bylaws unrelated to Subtitle 8, we have a classified board, require the affirmative vote of the holders of not less than 75% of all of the votes entitled to be cast in the election of such Trustee for the removal of any Trustee from our Board of Trustees, which removal will be allowed only for cause, or the affirmative vote of not less than 75% of the remaining Trustees for the removal of any Trustee from our Board of Trustees with or without cause, require that only our Board of Trustees may fill vacancies on our Board of Trustees, vest in our Board of Trustees the exclusive power to call meetings of our shareholders and vest in our Board of Trustees the exclusive power to fix the number of our Trustees. We have made elections pursuant to Subtitle 8 to (1) require that a vacancy on our Board of Trustees be filled only by the remaining Trustees in office and for the remainder of the full term of the class of Trustees in which the vacancy occurred and (2) vest in our Board of Trustees the exclusive power to fix the number of our Trustees.

Anti‑Takeover Effect of Maryland Law and of Our Declaration of Trust and Bylaws

The following provisions in our declaration of trust and bylaws and in Maryland law could delay or prevent a change in our control:

• the prohibition in our declaration of trust of any shareholder other than excepted holders, RMR LLC and its affiliates, from owning more than 9.8% in value or number, whichever is more restrictive, of any class or series of our outstanding shares, including our common shares;

• the division of our Trustees into three classes, with the term of one class expiring each year and, in each case, until a successor is elected and qualifies;

• shareholder voting rights and standards for the election of Trustees and other matters which generally require larger majorities for approval of actions which are not approved by our Trustees than for actions which are approved by our Trustees;

• the authority of our Board of Trustees, and not our shareholders, to adopt, amend or repeal our bylaws and to fill vacancies on our Board of Trustees;

• the fact that only our Board of Trustees, or if there are no Trustees, our officers, may call shareholder meetings and that shareholders are not entitled to act without a meeting;

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• required qualifications for an individual to serve as a Trustee and a requirement that certain of our Trustees be Managing Trustees and other Trustees be Independent Trustees;

• limitations on the ability of, and various requirements that must be satisfied in order for, our shareholders to propose nominees for election to our Board of Trustees and propose other business to be considered at a meeting of our shareholders;

• the requirement that an individual Trustee may be removed by our shareholders, only for cause, by the affirmative vote of holders of not less than 75% of our common shares entitled to vote in the election of such Trustee or, with or without cause, by the affirmative vote of not less than 75% of the remaining Trustees;

• the authority of our Board of Trustees to adopt certain amendments to our declaration of trust without shareholder approval, including the authority to increase or decrease the number of authorized shares, to create new classes or series of shares (including a class or series of shares that could delay or prevent a transaction or a change in our control that might involve a premium for our shares or otherwise be in the best interests of our shareholders), to increase or decrease the number of shares of any class or series, and to classify or reclassify any unissued shares from time to time by setting or changing the preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications or terms or conditions of redemption of our shares or any new class or series of shares created by our Board of Trustees;

• the requirement that amendments to our declaration of trust may be made only if approved by 60% of our Trustees, including 60% of our Independent Trustees;

• the business combination provisions of the MGCL, if the applicable resolution of our Board of Trustees is rescinded or if our Board’s approval of a combination is not obtained; and

• the control share acquisition provisions of the MGCL, if the provision in our bylaws exempting acquisitions of our shares from such provisions is amended or eliminated.

In addition, the agreement governing our revolving credit facility also contains change in control provisions, as further described in that agreement, and our business and property management agreements with RMR LLC contain provisions that allow for termination for convenience and termination for a performance reason but require the payment of a termination fee, as further described in those agreements.

For all of these reasons, among others, our shareholders may be unable to realize a change of control premium for any of our shares they own or otherwise effect a change of our policies.

Transfer Agent and Registrar

The transfer agent and registrar for our common shares is Equiniti Trust Company.

Listing

Our common shares are listed on Nasdaq under the symbol “ILPT.”

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EX-8.1

Exhibit 8.1

February 24, 2020

Industrial Logistics Properties Trust

Two Newton Place

255 Washington Street, Suite 300

Newton, Massachusetts 02458

Ladies and Gentlemen:

The following opinion is furnished to Industrial Logistics Properties Trust, a Maryland real estate investment trust (the “Company”), to be filed with the Securities and Exchange Commission (the “SEC”) as Exhibit 8.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (the “Form 10-K”) under the Securities Exchange Act of 1934, as amended.

We have acted as counsel for the Company in connection with the preparation of the Form 10-K. We have reviewed originals or copies of such corporate records, such certificates and statements of officers of the Company and of public officials, and such other documents as we have considered relevant and necessary in order to furnish the opinion hereinafter set forth. In doing so, we have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as copies, and the authenticity of the originals of such documents. Specifically, and without limiting the generality of the foregoing, we have reviewed: (i) the Company’s amended and restated declaration of trust and its amended and restated bylaws; and (ii) the Form 10-K. For purposes of the opinion set forth below, we have assumed that any documents (other than documents which have been executed, delivered, adopted or filed, as applicable, by the Company prior to the date hereof) that have been provided to us in draft form will be executed, delivered, adopted and filed, as applicable, without material modification.

The opinion set forth below is based upon the Internal Revenue Code of 1986, as amended, the Treasury regulations issued thereunder, published administrative interpretations thereof, and judicial decisions with respect thereto, all as of the date hereof (collectively, “Tax Laws”), and upon the Employee Retirement Income Security Act of 1974, as amended, the Department of Labor regulations issued thereunder, published administrative interpretations thereof, and judicial decisions with respect thereto, all as of the date hereof (collectively, “ERISA Laws”). No assurance can be given that Tax Laws or ERISA Laws will not change. In the discussions with respect to Tax Laws matters and ERISA Laws matters in the sections of Item 1 of the Form 10-K captioned “Material United States Federal Income Tax Considerations” and “ERISA Plans, Keogh Plans and Individual Retirement Accounts”, certain assumptions have been made therein and certain conditions and qualifications have been expressed therein, all of which assumptions, conditions and qualifications are incorporated herein by reference. With respect to all questions of fact on which

Industrial Logistics Properties Trust

February 24, 2020

Page 2

our opinion is based, we have assumed the initial and continuing truth, accuracy and completeness of: (i) the information set forth in the Form 10-K and in the exhibits thereto; and (ii) representations made to us by officers of the Company or contained in the Form 10-K and in the exhibits thereto, in each such instance without regard to qualifications such as “to the best knowledge of” or “in the belief of”. We have not independently verified such information.

We have relied upon, but not independently verified, the foregoing assumptions. If any of the foregoing assumptions are inaccurate or incomplete for any reason, or if the transactions described in the Form 10-K or in the exhibits thereto have been or are consummated in a manner that is inconsistent with the manner contemplated therein, our opinion as expressed below may be adversely affected and may not be relied upon.

Based upon and subject to the foregoing: (i) we are of the opinion that the discussions with respect to Tax Laws matters and ERISA Laws matters in the sections of Item 1 of the Form 10-K captioned “Material United States Federal Income Tax Considerations” and “ERISA Plans, Keogh Plans and Individual Retirement Accounts” in all material respects are, subject to the limitations set forth therein, the material Tax Laws considerations and the material ERISA Laws considerations relevant to holders of the securities of the Company discussed therein (the “Securities”); and (ii) we hereby confirm that the opinions of counsel referred to in said sections represent our opinions on the subject matters thereof.

Our opinion above is limited to the matters specifically covered hereby, and we have not been asked to address, nor have we addressed, any other matters or any other transactions. Further, we disclaim any undertaking to advise you of any subsequent changes of the matters stated, represented or assumed herein or any subsequent changes in Tax Laws or ERISA Laws.

This opinion is rendered to you in connection with the filing of the Form 10-K. Purchasers and holders of the Securities are urged to consult their own tax advisors or counsel, particularly with respect to their particular tax consequences of acquiring, holding and disposing of the Securities, which may vary for investors in different tax situations. We hereby consent to the filing of a copy of this opinion as an exhibit to the Form 10-K, which is incorporated by reference in the Company’s Registration Statement on Form S-3, File No. 333-230992 (the “Registration Statement”), under the Securities Act of 1933, as amended (the “Securities Act”), and to the references to our firm in the Form 10-K and the Registration Statement. In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act or under the rules and regulations of the SEC promulgated thereunder.

Very truly yours,

/s/ Sullivan & Worcester LLP

SULLIVAN & WORCESTER LLP

EX-10.8

Exhibit 10.8

INDUSTRIAL LOGISTICS PROPERTIES TRUST
FORM OF INDEMNIFICATION AGREEMENT

THIS INDEMNIFICATION AGREEMENT (this “Agreement”), effective as of [DATE] (the “Effective Date”), by and between Industrial Logistics Properties Trust, a Maryland real estate investment trust (the “Company”), and [TRUSTEE/OFFICER] (“Indemnitee”).

WHEREAS, Indemnitee currently serves as a trustee and/or executive officer of the Company and may, in connection therewith, be subjected to claims, suits or proceedings arising from such service; and

WHEREAS, as an inducement to Indemnitee to serve as [a/the] [title(s)] of the Company, the Company has agreed to indemnify and to advance expenses and costs incurred by Indemnitee in connection with any such claims, suits or proceedings, to the maximum extent permitted by law as hereinafter provided; and

WHEREAS, the parties by this Agreement desire to set forth their agreement regarding indemnification and advance of expenses;

NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:

Section 1.Definitions.  For purposes of this Agreement:

(a) “Board” means the board of trustees of the Company.

(b)“Bylaws” means the bylaws of the Company, as they may be amended from time to time.

(c)“Change in Control” means a change in control of the Company occurring after the Effective Date of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) promulgated under the Securities Exchange Act of 1934, as amended (the “Act”), whether or not the Company is then subject to such reporting requirement; provided, however, that, without limitation, such a Change in Control shall be deemed to have occurred if after the Effective Date:

(i)any “person” (as such term is used in Sections 13(d) and 14(d) of the Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the Company representing 10% or more of the combined voting power of all the Company’s then-outstanding securities entitled to vote generally in the election of trustees without the prior approval of at least two-thirds of the members of the Board in office immediately prior to such person attaining such percentage interest;

(ii)there occurs a proxy contest, or the Company is a party to a merger, consolidation, sale of assets, plan of liquidation or other reorganization not approved by at least two-thirds of the members of the Board then in office, as a consequence of which members of the Board in office immediately prior to such transaction or event constitute less than a majority of the Board thereafter; or

(iii)during any period of two consecutive years, other than as a result of an event described in clause (a)(ii) of this Section 1, individuals who at the beginning of such period constituted the Board (including for this purpose any new trustee whose election or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds of the trustees then still in office who were trustees at the beginning of such period) cease for any reason to constitute at least a majority of the Board.

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(d)“Company Status” means the status of a Person who is or was a trustee, director, officer, employee, agent or fiduciary of the Company or any of its majority owned subsidiaries and the status of a Person who, while a trustee, director, officer, employee, agent or fiduciary of the Company or any of its majority owned subsidiaries, is or was serving at the request of the Company as a director, trustee, officer, partner, manager or fiduciary of another corporation, real estate investment trust, partnership, limited liability company, joint venture, trust, employee benefit plan or any other Enterprise.

(e)“Control” of an entity, shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such entity, whether through ownership of voting securities, by contract or otherwise.

(f)“Declaration of Trust” means the declaration of trust (as defined in the Maryland REIT Law) of the Company, as it may be in effect from time to time.

(g)“Disinterested Trustee” means a trustee of the Company who is not and was not a party to the Proceeding in respect of which indemnification or advance of Expenses is sought by Indemnitee.

(h)“Enterprise” shall mean the Company and any other corporation, real estate investment trust, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise that Indemnitee is or was serving at the express written request of the Company as a director, trustee, officer, partner, manager or fiduciary.

(i)“Expenses”  means all expenses, including, but not limited to, all attorneys’ fees and costs, retainers, court or arbitration costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, participating, or being or preparing to be a witness in a Proceeding, or responding to, or objecting to, a request to provide discovery in any Proceeding.  Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding, including without limitation the premium, security for, and other costs relating to any cost bond or other appeal bond or its equivalent.

(j)“Independent Counsel” means a law firm, or a member of a law firm, selected by the Company and acceptable to the Indemnitee, that is experienced in matters of business law.  If, within twenty (20) days after submission by Indemnitee of a written demand for indemnification pursuant to Section 7(a) hereof, no Independent Counsel shall have been selected and agreed to by Indemnitee, either the Company or Indemnitee may petition a Chosen Court for the appointment as Independent Counsel of a person selected by the court or by such other person as the court shall designate, and the person so appointed shall act as Independent Counsel hereunder.

(k)“MGCL” means the Maryland General Corporation Law.

(l)“Maryland REIT Law” means Title 8 of the Corporations and Associations Article of the Annotated Code of Maryland.

(m)“Person” means an individual, a corporation, a general or limited partnership, an association, a limited liability company, a governmental entity, a trust, a joint venture, a joint stock company or another entity or organization.

(n)“Proceeding” means any threatened, pending or completed claim, demand, action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other proceeding, whether civil, criminal, administrative or investigative (including on appeal), whether or not by or in the right of the Company, except one initiated by an Indemnitee pursuant to Section 9.

Section 2.Indemnification - General.  The Company shall indemnify, and advance Expenses to, Indemnitee (a) as provided in this Agreement and (b) otherwise to the maximum extent permitted by Maryland law in effect on the Effective Date and as amended from time to time; provided, however, that no change in Maryland law shall

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have the effect of reducing the benefits available to Indemnitee hereunder based on Maryland law as in effect on the Effective Date.  The rights of Indemnitee provided in this Section 2 shall include, without limitation, the rights set forth in the other sections of this Agreement, including any additional indemnification permitted by Section 2-418(g) of the MGCL, as applicable to a Maryland real estate investment trust by virtue of Section 8-301(15) of the Maryland REIT Law.

Section 3.Proceedings Other Than Derivative Proceedings by or in the Right of the Company.  Indemnitee shall be entitled to the rights of indemnification provided in this Section 3 if, by reason of Indemnitee’s Company Status, Indemnitee is, or is threatened to be, made a party to any Proceeding, other than a derivative Proceeding by or in the right of the Company (or, if applicable, such other Enterprise at which Indemnitee is or was serving at the request of the Company).  Pursuant to this Section 3, Indemnitee shall be indemnified against all judgments, penalties, fines and amounts paid in settlement and all Expenses incurred by Indemnitee or on Indemnitee’s behalf in connection with a Proceeding by reason of Indemnitee’s Company Status unless it is finally determined that such indemnification is not permitted by the MGCL.

Section 4.Derivative Proceedings by or in the Right of the Company.  Indemnitee shall be entitled to the rights of indemnification provided in this Section 4 if, by reason of Indemnitee’s Company Status, Indemnitee is, or is threatened to be, made a party to any derivative Proceeding brought by or in the right of the Company (or, if applicable, such other Enterprise at which Indemnitee is or was serving at the request of the Company).  Pursuant to this Section 4, Indemnitee shall be indemnified against all judgments, penalties, fines and amounts paid in settlement and all Expenses incurred by Indemnitee or on Indemnitee’s behalf in connection with such Proceeding unless it is finally determined that such indemnification is not permitted by the MGCL.

Section 5.Indemnification for Expenses of a Party Who is Partly Successful.  Without limitation on Section 3 or Section 4, if Indemnitee is not wholly successful in any Proceeding covered by this Agreement, but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee under this Section 5 for all Expenses incurred by Indemnitee or on Indemnitee’s behalf in connection with each successfully resolved claim, issue or matter, allocated on a reasonable and proportionate basis.  For purposes of this Section 5 and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

Section 6.Advance of Expenses.  The Company, without requiring a preliminary determination of Indemnitee’s ultimate entitlement to indemnification hereunder, shall advance all Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding in which Indemnitee may be involved, or is threatened to be involved, including as a party, a witness or otherwise, by reason of Indemnitee’s Company Status, within ten (10) days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding.  Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall be preceded or accompanied by a written affirmation by Indemnitee of Indemnitee’s good faith belief that the standard of conduct necessary for indemnification by the Company as authorized by the MGCL has been met and a written undertaking by or on behalf of Indemnitee, in substantially the form of Exhibit A hereto or in such other form as may be required under applicable law as in effect at the time of the execution thereof, to reimburse the portion of any Expenses advanced to Indemnitee relating to claims, issues or matters in the Proceeding as to which it shall be finally determined that the standard of conduct has not been met and which have not been successfully resolved as described in Section 5.  For the avoidance of doubt, the Company shall advance Expenses incurred by Indemnitee or on Indemnitee’s behalf in connection with such a Proceeding pursuant to this Section 6 until it is finally determined that the Indemnitee is not entitled to indemnification under law in respect of such Proceeding.  To the extent that Expenses advanced to Indemnitee do not relate to a specific claim, issue or matter in the Proceeding, such Expenses shall be allocated on a reasonable and proportionate basis.  The undertaking required by this Section 6 shall be an unlimited general obligation by or on behalf of Indemnitee and shall be accepted without reference to Indemnitee’s financial ability to repay such advanced Expenses and without any requirement to post security therefor.  At Indemnitee’s request, 

advancement of any such Expense shall be made by the Company’s direct payment of such Expense instead of reimbursement of Indemnitee’s payment of such Expense.

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Section 7.Procedure for Determination of Entitlement to Indemnification.

(a)To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written demand therefor.  The Secretary of the Company shall, promptly upon receipt of such a demand for indemnification, provide copies of the demand to the Board.

(b)Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 7(a), a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall promptly be made in the specific case: (i) if a Change in Control shall have occurred, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee; or (ii) if a Change in Control shall not have occurred or if, after a Change in Control, Indemnitee shall so request, (A) by the Board (or a duly authorized committee thereof) by a majority vote of a quorum consisting of Disinterested Trustees, or (B) if a quorum of the Board consisting of Disinterested Trustees is not obtainable or, even if obtainable, such quorum of Disinterested Trustees so directs, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee, or (C) if so directed by a majority of the members of the Board, by the shareholders of the Company; and, if it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten (10) days after such determination.  Any Independent Counsel, member of the Board or shareholder of the Company shall act reasonably and in good faith in making a determination regarding the Indemnitee’s entitlement to indemnification under this Agreement.

(c)    The Company shall pay the fees and expenses of Independent Counsel, if one is appointed, and shall agree to fully indemnify such Independent Counsel against any and all expenses, claims, liabilities and damages arising out of or relating to this Agreement or the Independent Counsel’s engagement as such pursuant hereto.

Section 8.Presumptions and Effect of Certain Proceedings.

(a)In making a determination with respect to entitlement to indemnification hereunder, the Person or Persons making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement.  Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

(b)It shall be presumed that Indemnitee has at all times acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company.  Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.  Without limitation of the foregoing, Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Enterprise.  In addition, the knowledge or actions, or failure to act, of any trustee, director, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.

(c)Neither the failure to make a determination pursuant to Section 7(b) as to whether indemnification is proper in the circumstances because Indemnitee has met any particular standard of conduct, nor an actual determination by the Company (including by its trustees or Independent Counsel) pursuant to Section 7(b) that Indemnitee has not met such standard of conduct, shall be a defense to Indemnitee’s claim that indemnification is proper in the circumstances or create a presumption that Indemnitee has not met any particular standard of conduct. 

(d)The termination of any Proceeding by judgment, order, settlement, conviction, a plea of nolo contendere or its equivalent, or an entry of an order of probation prior to judgment, shall not in and of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not meet the standard of conduct required for indemnification.  The Company acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to avoid expense, delay, distraction, disruption and uncertainty.  In the event that any Proceeding to which Indemnitee is a party is resolved in any manner other than by adverse judgment against Indemnitee (including, without limitation, settlement of such action, claim or proceeding with

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or without payment of money or other consideration), it shall be presumed that Indemnitee has been successful on the merits or otherwise in such Proceeding.  Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

Section 9.    Remedies of Indemnitee.

(a)If (i) a determination is made pursuant to Section 7(b) that Indemnitee is not entitled to indemnification under this Agreement, (ii) advance of Expenses is not timely made pursuant to Section 6, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 7(b) within thirty (30) days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Section 5 within ten (10) days after receipt by the Company of a written request therefor, or (v) payment of indemnification is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification, Indemnitee shall (A) unless the Company demands arbitration as provided by Section 17, be entitled to an adjudication in a Chosen Court or (B) be entitled to seek an award in arbitration as provided by Section 17, in each case of Indemnitee’s entitlement to such indemnification or advance of Expenses.

(b)In any judicial proceeding or arbitration commenced pursuant to this Section 9, the Company shall have the burden of proving that Indemnitee is not entitled to indemnification or advance of Expenses, as the case may be.  In the event that a determination shall have been made pursuant to Section 7(b) that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 9 shall be conducted in all respects as a de novo trial on the merits, and the Indemnitee shall not be prejudiced by reason of the adverse determination under Section 7(b).

(c)If a determination shall have been made pursuant to Section 7(b) that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 9, absent a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the demand for indemnification.

(d)In the event that Indemnitee, pursuant to this Section 9, seeks a judicial adjudication of or an award in arbitration as provided by Section 17 to enforce Indemnitee’s rights under, or to recover damages for breach of, this Agreement by the Company, or to recover under any directors’ and officers’ liability insurance policies maintained by the Company, the Company shall indemnify Indemnitee against any and all Expenses incurred by Indemnitee in such judicial adjudication or arbitration and, if requested by Indemnitee, the Company shall (within ten (10) days after receipt by the Company of a written demand therefore) advance, to the extent not prohibited by law, any and all such Expenses.

(e)The Company shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 9 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such judicial proceeding or arbitration that the Company is bound by all the provisions of this Agreement.

(f)To the extent requested by Indemnitee and approved by the Board, the Company may at any time and from time to time provide security to Indemnitee for the Company’s obligations hereunder through an irrevocable bank line of credit, funded trust or other collateral.  Any such security, once provided to Indemnitee, may not be revoked or released without the prior written consent of the Indemnitee.

(g)Interest shall be paid by the Company to Indemnitee at the maximum rate allowed to be charged for judgments under the Courts and Judicial Proceedings Article of the Annotated Code of Maryland

for amounts which the Company pays or is obligated to pay for the period (i) commencing with either the tenth (10th) day after the date on which the Company was requested to advance Expenses in accordance with Section 6 of this Agreement or the thirtieth (30th) day after the date on which the Company was requested to make the determination of entitlement to indemnification under Section 7(b) of this Agreement, as applicable, and (ii) ending on the date such payment is made to Indemnitee by the Company.

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Section 10.Defense of the Underlying Proceeding.

(a)Indemnitee shall notify the Company promptly upon being served with or receiving any summons, citation, subpoena, complaint, indictment, information, notice, request or other document relating to any Proceeding which may result in the right to indemnification or the advance of Expenses hereunder; provided, however, that the failure to give any such notice shall not disqualify Indemnitee from the right, or otherwise affect in any manner any right of Indemnitee, to indemnification or the advance of Expenses under this Agreement unless the Company’s ability to defend in such Proceeding or to obtain proceeds under any insurance policy is materially and adversely prejudiced thereby, and then only to the extent the Company is thereby actually so prejudiced.

(b)Subject to the provisions of the last sentence of this Section 10(b) and of Section 10(c) below, the Company shall have the right to defend Indemnitee in any Proceeding which may give rise to indemnification hereunder; provided, however, that the Company shall notify Indemnitee of any such decision to defend within fifteen (15) days following receipt of notice of any such Proceeding under Section 10(a) above, and the counsel selected by the Company shall be reasonably satisfactory to Indemnitee.  The Company shall not, without the prior written consent of Indemnitee, consent to the entry of any judgment against Indemnitee or enter into any settlement or compromise which (i) includes an admission of fault of Indemnitee, (ii) does not include, as an unconditional term thereof, the full release of Indemnitee from all liability in respect of such Proceeding, which release shall be in form and substance reasonably satisfactory to Indemnitee or (iii) has the actual or purported effect of extinguishing, limiting or impairing Indemnitee’s rights hereunder.  This Section 10(b) shall not apply to a Proceeding brought by Indemnitee under Section 9 above or Section 15.

(c)Notwithstanding the provisions of Section 10(b), if in a Proceeding to which Indemnitee is a party by reason of Indemnitee’s Company Status, (i) Indemnitee reasonably concludes, based upon an opinion of counsel approved by the Company, which approval shall not be unreasonably withheld, that Indemnitee may have separate defenses or counterclaims to assert with respect to any issue which may not be consistent with other defendants in such Proceeding, (ii) Indemnitee reasonably concludes, based upon an opinion of counsel approved by the Company, which approval shall not be unreasonably withheld, that an actual or apparent conflict of interest or potential conflict of interest exists between Indemnitee and the Company, or (iii) the Company fails to assume the defense of such Proceeding in a timely manner, Indemnitee shall be entitled to be represented by separate legal counsel of Indemnitee’s choice, subject to the prior approval of the Company, which shall not be unreasonably withheld, at the expense of the Company.  In addition, if the Company fails to comply with any of its obligations under this Agreement or in the event that the Company or any other Person takes any action to declare this Agreement void or unenforceable, or institutes any Proceeding to deny or to recover from Indemnitee the benefits intended to be provided to Indemnitee hereunder, Indemnitee shall have the right to retain counsel of Indemnitee’s choice, at the expense of the Company (subject to Section 9(d)), to represent Indemnitee in connection with any such matter.

Section 11.Liability Insurance.

(a)To the extent the Company maintains an insurance policy or policies providing liability insurance for any of its trustees or officers, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any Company trustee or officer during the Indemnitee’s tenure as a trustee or officer and, following a termination of Indemnitee’s service in connection with a Change in Control, for a period of six (6) years thereafter.

(b)If, at the time of the receipt of a notice of a claim pursuant to the terms hereof, the Company has directors’ and officers’ liability insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective

policies.  The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies.

(c)In the event of any payment by the Company under this Agreement the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee with respect to any insurance policy.  Indemnitee shall take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights in accordance with the terms of

6

such insurance policy. The Company shall pay or reimburse all expenses actually and reasonably incurred by Indemnitee in connection with such subrogation.

Section 12.Non-Exclusivity; Survival of Rights.

(a)The rights of indemnification and advance of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Declaration of Trust or the Bylaws, any agreement or a resolution of the shareholders entitled to vote generally in the election of trustees or of the Board, or otherwise.  No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in Indemnitee’s Company Status prior to such amendment, alteration or repeal.  To the extent that a change in the Maryland REIT Law or the MGCL permits greater indemnification than would be afforded currently under the Declaration of Trust, Bylaws and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change.  No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

(b)The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable or payable or reimbursable as Expenses hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

Section 13.Binding Effect.

(a)The indemnification and advance of Expenses provided by, or granted pursuant to, this Agreement shall be binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), shall continue as to an Indemnitee who has ceased to be a trustee or executive officer of the Company or a director, officer, partner, member, manager or trustee of another Enterprise which such Person is or was serving at the request of the Company, and shall inure to the benefit of Indemnitee and Indemnitee’s spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.

(b)Any successor of the Company (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all or a substantial part, of the business or assets of the Company shall be automatically deemed to have assumed and agreed to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place, provided that no such assumption shall relieve the Company of its obligations hereunder.  To the extent required by applicable law to give effect to the foregoing sentence and to the extent requested by Indemnitee, the Company shall require and cause any such successor to expressly assume and agree to perform this Agreement by written agreement in form and substance satisfactory to Indemnitee.

Section 14.Severability.  If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (b) to the fullest extent possible, the 

provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

Section 15.Limitation and Exception to Right of Indemnification or Advance of Expenses.  Notwithstanding any other provision of this Agreement, (a) any indemnification or advance of Expenses to which Indemnitee is otherwise entitled under the terms of this Agreement shall be made only to the extent such indemnification or advance of Expenses does not conflict with applicable Maryland law and (b) Indemnitee shall not be

7

entitled to indemnification or advance of Expenses under this Agreement with respect to any Proceeding brought by Indemnitee, unless (i) the Proceeding is brought to enforce rights under this Agreement, the Declaration of Trust, the Bylaws, liability insurance policy or policies, if any, or otherwise or (ii) the Declaration of Trust, the Bylaws, a resolution of the shareholders entitled to vote generally in the election of trustees or of the Board or an agreement approved by the Board to which the Company is a party expressly provides otherwise.  Notwithstanding any other provision of this Agreement, a court of appropriate jurisdiction, upon application of Indemnitee and such notice as the court shall require, may order indemnification of Indemnitee by the Company in the following circumstances:  (a) if such court determines that Indemnitee is entitled to reimbursement under Section 2-418(d)(1) of the MGCL, the court shall order indemnification, in which case Indemnitee shall be entitled to recover the Expenses of securing such reimbursement; or (b) if such court determines that Indemnitee is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not Indemnitee (i) has met the standard of conduct set forth in Section 2-418(b) of the MGCL or (ii) has been adjudged liable for receipt of an improper personal benefit under Section 2-418(c) of the MGCL, the court may order such indemnification as the court shall deem proper without regard to any limitation on such court-ordered indemnification contemplated by Section 2-418(d)(2)(ii) of the MGCL.

Section 16.Specific Performance, Etc.  The parties hereto recognize that if any provision of this Agreement is violated by the Company, Indemnitee may be without an adequate remedy at law.  Accordingly, in the event of any such violation, Indemnitee shall be entitled, if Indemnitee so elects, to institute proceedings, either in law or at equity, to obtain damages, to enforce specific performance, to enjoin such violation, or to obtain any relief or any combination of the foregoing as Indemnitee may elect to pursue.

Section 17.Arbitration.

(a)Any disputes, claims or controversies regarding the Indemnitee’s entitlement to indemnification or advancement of Expenses hereunder or otherwise arising out of or relating to this Agreement, including any disputes, claims or controversies brought by or on behalf of a party hereto or any holder of equity interests (which, for purposes of this Section 17, shall mean any holder of record or any beneficial owner of equity interests or any former holder of record or beneficial owner of equity interests) of a party, either on his, her or its own behalf, on behalf of a party or on behalf of any series or class of equity interests of a party or holders of equity interests of a party against a party or any of their respective trustees, directors, members, officers, managers, agents or employees, including any disputes, claims or controversies relating to the meaning, interpretation, effect, validity, performance or enforcement of this Agreement, including this arbitration agreement or the governing documents of a party, (all of which are referred to as “Disputes”) or relating in any way to such a Dispute or Disputes shall, on the demand of any party to such Dispute or Disputes, be resolved through binding and final arbitration in accordance with the Commercial Arbitration Rules (the “Rules”) of the American Arbitration Association (“AAA”) then in effect, except as those Rules may be modified in this Section 17.  For the avoidance of doubt, and not as a limitation, Disputes are intended to include derivative actions against the trustees, directors, officers or managers of a party and class actions by a holder of equity interests against those individuals or entities and a party.  For the avoidance of doubt, a Dispute shall include a Dispute made derivatively on behalf of one party against another party.  For purposes of this Section 17, the term “equity interest” shall mean, in respect of (i) the Company, shares of beneficial interest of the Company, (ii) shares of “membership interests” in an entity that is a limited liability company, (iii) general partnership interests in an entity that is a partnership, (iv) shares of capital stock of an entity that is a corporation and (v) similar equity ownership interests in other entities.

(b)There shall be three (3) arbitrators.  If there are only two (2) parties to the Dispute, each party shall select one (1) arbitrator within fifteen (15) days after receipt by respondent of a copy of the demand for arbitration.  The arbitrators may be affiliated or interested persons of the parties.  If there are more than two (2)

parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, shall each select, by the vote of a majority of the claimants or the respondents, as the case may be, one (1) arbitrator within fifteen (15) days after receipt of the demand for arbitration. The arbitrators may be affiliated or interested persons of the claimants or the respondents, as the case may be.  If either a claimant (or all claimants) or a respondent (or all respondents) fail(s) to timely select an arbitrator then the party (or parties) who has selected an arbitrator may request AAA to provide a list of three (3) proposed arbitrators in accordance with the Rules (each of whom shall be neutral, impartial and unaffiliated with any party) and the party (or parties) that failed to timely appoint an arbitrator shall have ten (10) days from the date AAA provides the list to select one (1) of the three (3) arbitrators proposed by AAA.  If the party (or parties) fail(s) to

8

select the second (2nd) arbitrator by that time, the party (or parties) who have appointed the first (1st) arbitrator shall then have ten (10) days to select one (1) of the three (3) arbitrators proposed by AAA to be the second (2nd) arbitrator; and, if he/they should fail to select the second (2nd) arbitrator by such time, AAA shall select, within fifteen (15) days thereafter, one (1) of the three (3) arbitrators it had proposed as the second (2nd) arbitrator.  The two (2) arbitrators so appointed shall jointly appoint the third (3rd) and presiding arbitrator (who shall be neutral, impartial and unaffiliated with any party) within fifteen (15) days of the appointment of the second (2nd) arbitrator.  If the third (3rd) arbitrator has not been appointed within the time limit specified herein, then AAA shall provide a list of proposed arbitrators in accordance with the Rules, and the arbitrator shall be appointed by AAA in accordance with a listing, striking and ranking procedure, with each party having a limited number of strikes, excluding strikes for cause.

(c)    The place of arbitration shall be Boston, Massachusetts unless otherwise agreed by the parties.

(d)There shall be only limited documentary discovery of documents directly related to the issues in dispute, as may be ordered by the arbitrators.  For the avoidance of doubt, it is intended that there shall be no depositions and no other discovery other than limited documentary discovery as described in the preceding sentence.

(e)In rendering an award or decision (an “Award”), the arbitrators shall be required to follow the laws of the State of Maryland without regard to principles of conflicts of law.  Any arbitration proceedings or award rendered hereunder and the validity, effect and interpretation of this arbitration agreement shall be governed by the Federal Arbitration Act, 9 U.S.C. §1 et seq.  An Award shall be in writing and shall state the findings of fact and conclusions of law on which it is based.  Any monetary Award shall be made and payable in U.S. dollars free of any tax, deduction or offset.  Subject to Section 17(g), each party against which an Award assesses a monetary obligation shall pay that obligation on or before the thirtieth (30th) day following the date of such Award or such other date as the Award may provide.

(f)Except to the extent expressly provided by this Agreement or as otherwise agreed by the parties thereto, each party and each Person acting or seeking to act in a representative capacity (such Person, a “Named Representative”) involved in a Dispute shall bear its own costs and expenses (including attorneys’ fees), and the arbitrators shall not render an Award that would include shifting of any such costs or expenses (including attorneys’ fees) or, in a derivative case or class action, award any portion of a party’s award to its attorneys, a Named Representative or any attorney of a Named Representative.  Each party (or, if there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, respectively) shall bear the costs and expenses of its (or their) selected arbitrator and the parties (or, if there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand) shall equally bear the costs and expenses of the third (3rd) appointed arbitrator.

(g)Notwithstanding any language to the contrary in this Agreement, an Award, including but not limited to any interim Award, may be appealed pursuant to the AAA’s Optional Appellate Arbitration Rules (the “Appellate Rules”).  An Award shall not be considered final until after the time for filing the notice of appeal pursuant to the Appellate Rules has expired.  Appeals must be initiated within thirty (30) days of receipt of an Award by filing a notice of appeal with any AAA office. Following the appeal process, the decision rendered by the appeal tribunal may be entered in any court having jurisdiction thereof.  For the avoidance of doubt, and despite any contrary provision of the Appellate Rules, Section 17(f) shall apply to any appeal pursuant to this Section 17 and the appeal tribunal shall not render an Award that would include shifting of any costs or expenses (including attorneys’ fees) of any party or Named Representative or the payment of such costs and expenses, and all costs and expenses of a party or Named Representative shall be its sole responsibility.

(h)Following the expiration of the time for filing the notice of appeal, or the conclusion of the appeal process set forth in Section 17(g), an Award shall be final and binding upon the parties thereto and shall be the sole and exclusive remedy between those parties relating to the Dispute, including any claims, counterclaims, issues or accounting presented to the arbitrators.  Judgment upon an Award may be entered in any court having jurisdiction.  To the fullest extent permitted by law, no application or appeal to any court of competent jurisdiction may be made in connection with any question of law arising in the course of arbitration or with respect to any award made except for actions relating to enforcement of this agreement to arbitrate or any arbitral award issued hereunder and except for

9

actions seeking interim or other provisional relief in aid of arbitration proceedings in any court of competent jurisdiction.

(i)This Section 17 is intended to benefit and be enforceable by the parties hereto and their respective holders of equity interests, trustees, directors, officers, managers, agents or employees, and their respective successors and assigns, and shall be binding upon all such parties and their respective holders of equity interests, and be in addition to, and not in substitution for, any other rights to indemnification or contribution that such individuals or entities may have by contract or otherwise.

Section 18.Venue.  Each party hereto agrees that it shall bring any Proceeding in respect of any claim arising out of or related to this Agreement exclusively in the courts of the State of Maryland and the Federal courts of the United States, in each case, located in the City of Baltimore (the “Chosen Courts”).  Solely in connection with claims arising under this Agreement, each party irrevocably and unconditionally (i) submits to the exclusive jurisdiction of the Chosen Courts, (ii) agrees not to commence any such Proceeding except in such courts, (iii) waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any such Proceeding in the Chosen Courts, (iv) waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such Proceeding, (v) agrees that service of process upon such party in any such Proceeding shall be effective if notice is given in accordance with Section 24and (vi) agrees to request and/or consent to the assignment of any dispute arising out of this Agreement or the transactions contemplated by this Agreement to the Chosen Courts’ Business and Technology Case Management Program, or similar program.  Nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted by law.  A final judgment in any such Proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  EACH PARTY HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS.  Notwithstanding anything herein to the contrary, if a demand for arbitration of a Dispute is made pursuant to Section 17, this Section 18 shall not preempt resolution of the Dispute pursuant to Section 17.

Section 19.Adverse Settlement.  The Company shall not seek, nor shall it agree to or support, or agree not to contest any settlement or other resolution of any matter that has the actual or purported effect of extinguishing, limiting or impairing Indemnitee’s rights hereunder, including without limitation the entry of any bar order or other order, decree or stipulation, pursuant to 15 U.S.C. § 78u-4 (the Private Securities Litigation Reform Act), or any similar foreign, federal or state statute, regulation, rule or law.

Section 20.Period of Limitations.  To the fullest extent permitted by law, no legal action shall be brought, and no cause of action shall be asserted, by or on behalf of the Company or any controlled affiliate of the Company against Indemnitee, Indemnitee’s spouse, heirs, executors or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Company or its controlled affiliate shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two-year period; provided, however, if any shorter period of limitations is otherwise applicable to any such cause of action, such shorter period shall govern.

Section 21.Counterparts.  This Agreement may be executed in any number of counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the parties hereto and delivered to the other party (including via facsimile or other electronic transmission), it being understood that each party hereto need not sign the same counterpart.

Section 22.Delivery by Electronic Transmission.  This Agreement and any signed agreement or instrument entered into in connection with this Agreement or contemplated hereby, and any amendments hereto or thereto, to the extent signed and delivered by means of an electronic transmission, including by a facsimile machine or via email, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person.  At the request of any party hereto or to any such agreement or instrument, each other party hereto or thereto shall re-execute original forms thereof and deliver them to the other parties.  No party hereto or to any such agreement or instrument shall raise the use of electronic transmission by a facsimile machine or via email to deliver a signature or the fact that any

10

signature or agreement or instrument was transmitted or communicated through electronic transmission as a defense to the formation of a contract and each such party forever waives any such defense.

Section 23.Modification and Waiver.  No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto.  No waiver of any of the provisions of this Agreement shall be deemed to, or shall, constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

Section 24.Notices.  Any notice, report or other communication required or permitted to be given hereunder shall be in writing unless some other method of giving such notice, report or other communication is accepted by the party to whom it is given, and shall be given by being delivered at the following addresses to the parties hereto:

(a) If to Indemnitee, to:  The address set forth on the signature page hereto.

(b) If to the Company to:

Industrial Logistics Properties Trust

Two Newton Place

255 Washington Street, Suite 300

Newton, Massachusetts 02458-1634

Attn: Secretary

or to such other address as may have been furnished to the Indemnitee by the Company or to the Company by Indemnitee, as the case may be.

Section 25.Governing Law.  The provisions of this Agreement and any Dispute, whether in contract, tort or otherwise, shall be governed by and construed in accordance with the laws of the State of Maryland without regard to principles of conflicts of law.

Section 26.Interpretation.

(a)Generally.  Unless the context otherwise requires, as used in this Agreement: (a) words defined in the singular have the parallel meaning in the plural and vice versa; (b)”Articles,” “Sections,” and “Exhibits” refer to Articles, Sections and Exhibits of this Agreement unless otherwise specified; and (c) “hereto” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.

(b)Additional Interpretive Provisions.  The headings in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.  Any capitalized term used in any Exhibit to this Agreement, but not otherwise defined therein, shall have the meaning as defined in this Agreement.  References to any statute shall be deemed to refer to such statute as amended from time to time and to any rules or regulations promulgated thereunder and any successor statute or statutory provision.  References to any agreement are to that agreement as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof.  References to any Person include the successors and permitted assigns of that Person.  Reference to any agreement, document or instrument means the agreement, document or

instrument as amended or otherwise modified from time to time in accordance with the terms thereof, and if applicable hereof.

[Signature Page Follows]

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IN WITNESS WHEREOF, the undersigned have executed or caused to be executed on their behalf this Agreement as of the date first written above.

Inf	INDUSTRIAL LOGISTICS PROPERTIES TRUST
	By:
	Name:
	Title:
	[INDEMNITEE]
	Indemnitee’s Address:
	[ ]

[Signature Page to Indemnification Agreement]

EXHIBIT A

FORM OF AFFIRMATION AND

UNDERTAKING TO REPAY EXPENSES ADVANCED

To the Board of Trustees of Industrial Logistics Properties Trust:

This affirmation and undertaking is being provided pursuant to that certain Indemnification Agreement dated                                 , 20   (the “Indemnification Agreement”), by and between Industrial Logistics Properties Trust, a Maryland real estate investment trust (the “Company”), and the undersigned Indemnitee, pursuant to which I am entitled to advancement of expenses in connection with [Description of Claims/Proceeding] (together, the “Claims”).  Terms used, and not otherwise defined, herein shall have the meanings specified in the Indemnification Agreement.

I am subject to the Claims by reason of my Company Status or by reason of alleged actions or omissions by me in such capacity.

I hereby affirm my good faith belief that the standard of conduct necessary for my indemnification has been met.

In consideration of the advancement of Expenses by the Company for attorneys’ fees and related expenses incurred by me in connection with the Claims (the “Advanced Expenses”), I hereby agree that if, in connection with a proceeding regarding the Claim, it is ultimately determined that I am not entitled to indemnification under law with respect to an act or omission by me, then I shall promptly reimburse the portion of the Advanced Expenses relating to the Claim(s) as to which the foregoing findings have been established and which have not been successfully resolved as described in Section 5 of the Indemnification Agreement.  To the extent that Advanced Expenses do not relate to specific Claims, I agree that such Advanced Expenses may be allocated on a reasonable and proportionate basis.

IN WITNESS WHEREOF, I have executed this affirmation and undertaking on                      ,      .

WITNESS:
Print name of witness	Print name of Indemnitee

Schedule to Exhibit 10.8

The following trustees and executive officers of Industrial Logistics Properties Trust, or ILPT, are parties to Indemnification Agreements with ILPT which are substantially identical in all material respects to the representative Indemnification Agreement filed herewith and are dated as of the respective dates listed below. The other Indemnification Agreements are omitted pursuant to Instruction 2 to Item 601 of Regulation S-K.

Name of Signatory	Date
Bruce M. Gans	January 11, 2018
Lisa Harris Jones	January 11, 2018
Joseph L. Morea	January 11, 2018
John G. Murray	December 1, 2018
Kevin C. Phelan	February 21, 2020
John C. Popeo	January 11, 2018
Adam D. Portnoy	January 11, 2018
Richard W. Siedel, Jr.	January 11, 2018
Laura A. Wilkin	February 21, 2020

EX-21.1

Exhibit 21.1

INDUSTRIAL LOGISTICS PROPERTIES TRUSTSUBSIDIARIES OF THE REGISTRANT

Name	State of Formation,Organization or Incorporation
Alpha BT LLC	Maryland
Hawaii MMGD LLC	Maryland
Hawaii Phoenix Properties LLC	Maryland
Higgins Properties LLC	Delaware
ILPT Albany LLC	Delaware
ILPT Asheville LLC	Delaware
ILPT Avon LLC	Maryland
ILPT Baton Rouge LLC	Delaware
ILPT Bemidji LLC	Delaware
ILPT Burlington LLC	Delaware
ILPT Chesterfield LLC	Delaware
ILPT Chillicothe LLC	Delaware
ILPT Denver LLC	Delaware
ILPT Fernley LLC	Delaware
ILPT Florida LLC	Maryland
ILPT Fort Smith LLC	Delaware
ILPT Fund Member Trust	Maryland
ILPT Harvey LLC	Delaware
ILPT ID Colorado Springs LLC	Delaware
ILPT Joplin LLC	Delaware
ILPT Kalamazoo LLC	Delaware
ILPT KYIN LLC	Maryland
ILPT Lafayette LLC	Delaware
ILPT Lincoln LLC	Delaware
ILPT Mahwah LLC	Maryland
ILPT McAlester LLC	Delaware
ILPT Minot LLC	Delaware
ILPT Murfreesboro LLC	Delaware
ILPT Newton Iowa LLC	Maryland
ILPT North East LLC	Delaware
ILPT Obetz LLC	Delaware
ILPT Orange Township LLC	Delaware
ILPT Orville Properties LLC	Delaware
ILPT Pocatello LLC	Delaware
ILPT Properties LLC	Maryland
ILPT Pueblo LLC	Delaware
ILPT Rock Hill LLC	Delaware
ILPT Rockford (American) LLC	Delaware
ILPT Salt Lake City LLC	Delaware
ILPT South Point LLC	Delaware
ILPT Spartanburg LLC	Delaware
ILPT TN LLC	Maryland
ILPT Tower LLC	Maryland
ILPT Trails Road LLC	Maryland
ILPT TSM Properties LLC	Delaware
ILPT Windsor LLC	Maryland
ILPT Virginia LLC	Maryland
LTMAC Properties LLC	Delaware
Masters Properties LLC	Delaware
RFRI Properties LLC	Delaware
Robin 1 Properties LLC	Delaware
Tanaka Properties LLC	Delaware
TedCal Properties LLC	Delaware
The Industrial Fund Ankeny LLC	Delaware
The Industrial Fund LLC	Delaware
The Industrial Fund Member LLC	Delaware
The Industrial Fund MS LLC	Delaware
The Industrial Fund PA LLC	Delaware
The Industrial Fund REIT Inc.	Maryland
The Industrial Fund Ruskin Holdings REIT	Maryland
The Industrial Fund Ruskin LLC	Delaware
The Industrial Fund St. Louis LLC	Delaware
Z&A Properties LLC	Delaware

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statement (Form S-3 No. 333-230992) of Industrial Logistics Properties Trust, and the Registration Statement (Form S-8 No. 333-223906) pertaining to the 2018 Equity Compensation Plan of Industrial Logistics Properties Trust, of our reports dated February 24, 2020, with respect to the consolidated financial statements and schedule of Industrial Logistics Properties Trust and the effectiveness of internal control over financial reporting of Industrial Logistics Properties Trust included in this Annual Report (Form 10-K) of Industrial Logistics Properties Trust for the year ended December 31, 2019.

/s/ Ernst & Young LLP

Boston, Massachusetts

February 24, 2020

EX-31.1

Exhibit31.1

CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)

I, John G. Murray, certify that:

1. I have reviewed this Annual Report on Form 10-K of Industrial Logistics Properties Trust;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

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Date: February 24, 2020	/s/ John G. Murray
	John G. Murray
	President and Chief Executive Officer

EX-31.2

Exhibit31.2

CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)

I, Richard W. Siedel, Jr., certify that:

1. I have reviewed this Annual Report on Form 10-K of Industrial Logistics Properties Trust;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

5
Date: February 24, 2020	/s/ Richard W. Siedel, Jr.
	Richard W. Siedel, Jr.
	Chief Financial Officer and Treasurer

EX-32.1

Exhibit 32.1

Certification Pursuant to 18 U.S.C. Sec. 1350

_______________________________________________

In connection with the filing by Industrial Logistics Properties Trust (the “Company”) of the Annual Report on Form 10-K for the period ended December 31, 2019 (the “Report”), each of the undersigned hereby certifies, to the best of his knowledge:

1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

9
/s/ John G. Murray	/s/ Richard W. Siedel, Jr.
John G. Murray	Richard W. Siedel, Jr.
President and Chief Executive Officer	Chief Financial Officer and Treasurer
Date: February 24, 2020

EX-99.2

Exhibit 99.2

February 21, 2020

The RMR Group LLC

Two Newton Place

255 Washington Street

Newton, MA 02458

Ladies and Gentlemen:

Reference is made to the Business Management Agreement, dated as of January 17, 2018 (as amended, restated or supplemented from time to time, the “ILPT Business Management Agreement”), by and between Industrial Logistics Properties Trust, a Maryland real estate investment trust (together with its subsidiaries, “ILPT”), and The RMR Group LLC, a Maryland limited liability company (the “Manager”).

The purpose of this letter is to confirm our understanding and agreement as follows:

1.    Notwithstanding anything to the contrary in the Asset Management Agreement dated as of February 21, 2020 (the “REIT Asset Management Agreement”) by and between the Manager and The Industrial Fund REIT Inc., a Maryland corporation and a subsidiary of The Industrial Fund LLC, a Delaware limited liability company (the “JV”), the terms and conditions of the ILPT Business Management Agreement will control the rights and obligations of ILPT and the Manager, as between themselves, including, without limitation, the fees payable, the term of the business or asset management arrangement, the conditions for (and amounts payable upon) termination, and the resolution of disputes.

2.    For so long as the REIT is a consolidated subsidiary of ILPT, any fees paid under the REIT Asset Management Agreement will be credited against amounts due from ILPT under the ILPT Business Management Agreement.

3.    There will be no adjustment to ILPT’s historical cost in any real properties contributed to the JV by ILPT for the purposes of determining “Average Invested Capital” under the ILPT Business Management Agreement; however, “Invested Capital” under the REIT Asset Management Agreement will be adjusted.

[Signature Page Follows]

If the foregoing accurately reflects our understandings and agreements, please confirm your agreement by signing below where indicated and returning a copy of this letter so signed to me.

Very truly yours,

/s/ Richard W. Siedel, Jr.

Richard W. Siedel, Jr.

Chief Financial Officer and Treasurer

Acknowledged and agreed:

The RMR Group LLC

/s/ Matthew P. Jordan            

Matthew P. Jordan

Executive VP, Chief Financial Officer and Treasurer

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Weighted Average Common Shares (Tables)

12 Months Ended

Dec. 31, 2019

Weighted Average Number of Shares Outstanding Reconciliation [Abstract]

Schedule of weighted average common shares, basic and diluted

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):

	Year Ended December 31,
	2019	2018	2017
Weighted average common shares for basic earnings per share	65,049	64,139	45,000
Effect of dilutive securities: unvested share awards	6	1	—
Weighted average common shares for diluted earnings per share	65,055	64,140	45,000

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Real Estate Properties (Tables)

12 Months Ended

Dec. 31, 2019

Real Estate [Abstract]

Schedule of real estate properties

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	628,457		52,546		519,829		56,715		(1,965		)	1,332
August 2019	Columbus, OH	2	392,016	32,300		2,393		27,363		2,544		—			—
		30	13,288,180	$	941,550	$	77,314	$	777,839	$	87,030	$	(1,965	)	$	1,332

We allocated the purchase prices of these acquisitions based on the estimated fair value of the acquired assets as follows:

		Number	Rentable							Acquired
		of	Square	Purchase				Buildings and		Real Estate
Date	Location	Properties	Feet	Price		Land		Improvements		Leases
June 2018	Doral, FL (1)	1	240,283	$	43,326	$	15,225	$	28,101	$	—
September 2018	Carlisle, PA	1	205,090	20,451		3,299		15,515		1,637
September 2018	Upper Marlboro, MD	1	220,800	29,801		5,296		21,833		2,672
October 2018	Maple Grove, MN	1	319,062	27,807		3,469		21,287		3,051
		4	985,235	$	121,385	$	27,289	$	86,736	$	7,360

⁽¹⁾ This property was acquired and simultaneously leased back to the seller.

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Shareholders' Equity - Share Awards (Details) $ in Thousands		1 Months Ended	4 Months Ended	12 Months Ended
	May 23, 2018 USD ($) shares	Dec. 31, 2018 USD ($) shares	May 31, 2018 USD ($) shares	Dec. 31, 2019 USD ($) installment shares	Dec. 31, 2018 USD ($) shares	Dec. 31, 2017 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unvested shares (in shares)		43,280		108,200	43,280	0
2020 (in shares)				29,220
2021 (in shares)				29,220
2022 (in shares)				29,220
2023 (in shares)				20,540
Estimated future compensation expense for the unvested shares | $				$ 2,197
Weighted average period of which compensation expense will be recognized				26 months
Compensation expense | $				$ 1,109	$ 927
Shares available for issuance under the award plan				3,819,372
Trustees
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common shares granted (in shares)	3,000
Common shares granted | $	$ 314	$ 61
Trustees | Common shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common shares granted (in shares)		3,000	1,000	3,000
Common shares granted | $			$ 104	$ 281
Common shares granted per Trustee | $	$ 63		$ 21	$ 56
RMR LLC
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common shares granted (in shares)				104,200	54,400
Common shares granted | $				$ 2,260	$ 1,269
RMR LLC | Officers And Employees
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of equal annual installments | installment				5

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Weighted Average Common Shares (Details) - shares shares in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Weighted Average Number of Shares Outstanding Reconciliation [Abstract]
Weighted average common shares for basic earnings per share (in shares)	65,049	64,139	45,000
Effect of dilutive securities: unvested share awards (in shares)	6	1	0
Weighted average common shares for diluted earnings per share (in shares)	65,055	64,140	45,000

XML

Organization

12 Months Ended

Dec. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization

Organization

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 on September 15, 2017, as a wholly owned subsidiary of Select Income REIT, or SIR, a former publicly traded REIT that merged with a wholly owned subsidiary of Office Properties Income Trust (formerly known as Government Properties Income Trust), or OPI, on December 31, 2018.

Until January 17, 2018, we were a wholly owned subsidiary of SIR and SIR managed and controlled our cash management function through a series of commingled centralized accounts. As a result, the cash receipts collected by SIR on our behalf have been accounted for as distributions and the cash disbursements paid by SIR on our behalf have been accounted for as contributions within ownership interest through September 29, 2017. Subsequent to September 29, 2017, contributions and distributions have been accounted for as an increase or decrease, respectively, in additional paid in capital.

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. At that time, we owned 266 properties with a total of approximately 28,540,000 rentable square feet, or our Initial Properties (all square footage amounts included within these notes are unaudited). Our Initial Properties were contributed to us on September 29, 2017, by SIR. Two hundred twenty six (226) of these properties with a total of approximately 16,834,000 rentable square feet are located on the island of Oahu, HI. The remaining 40 properties have a total of approximately 11,706,000 rentable square feet and are located in 24 other states. In connection with our formation and this contribution of properties, we (1) issued to SIR 45,000,000 of our common shares of beneficial interest, $.01 par value per share, or our common shares, (2) issued to SIR a $750,000 non-interest bearing demand note, or the SIR Note, and (3) assumed three mortgage notes totaling $63,069, excluding premiums, that were secured by three of our Initial Properties.

On December 27, 2018, SIR distributed all 45,000,000 of our common shares that SIR owned to SIR's shareholders of record as of the close of business on December 20, 2018.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income Statement [Abstract]
Rental income	$ 229,234	$ 162,530	$ 156,506
Expenses:
Real estate taxes	30,367	19,342	17,868
Other operating expenses	17,643	13,005	10,913
Depreciation and amortization	61,927	28,575	27,315
Acquisition and transaction related costs	0	0	1,025
General and administrative	17,189	11,307	16,799
Total expenses	127,126	72,229	73,920
Interest income	743	200	0
Interest expense (including net amortization of debt issuance costs, premiums and discounts of $2,017, $1,244 and ($494), respectively)	(50,848)	(16,081)	(2,439)
Income before income tax expense and equity in earnings of an investee	52,003	74,420	80,147
Income tax expense	(171)	(32)	(44)
Equity in earnings of an investee	666	0	0
Net income	$ 52,498	$ 74,388	$ 80,103
Weighted average common shares outstanding - basic (in shares)	65,049	64,139	45,000
Weighted average common shares outstanding - diluted (in shares)	65,055	64,140	45,000
Net income per common share - basic and diluted (in dollars per share)	$ 0.81	$ 1.16	$ 1.78

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SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - Real Estate Properties (Details) $ in Thousands			1 Months Ended	12 Months Ended
	Sep. 30, 2017 property	Sep. 29, 2017 property	Dec. 31, 2017 USD ($) property	Dec. 31, 2019 USD ($) property loan	Dec. 31, 2018 USD ($)	Dec. 31, 2016 USD ($)
Initial Cost to Company
Land				$ 747,146
Buildings and Equipment				1,529,593
Costs Capitalized Subsequent to Acquisition				59,225
Gross Amount Carried at Close of Period
Land				747,794
Buildings and Equipment				1,588,170
Total			$ 1,343,602	2,335,964	$ 1,462,396	$ 1,336,728
Accumulated Depreciation			$ (74,614)	(131,468)	$ (93,291)	$ (56,976)
Liabilities, fair value adjustment				9,122
U.S. federal income tax basis				$ 2,484,841
Building and Building Improvements
Gross Amount Carried at Close of Period
Life used for depreciation				40 years
Equipment
Gross Amount Carried at Close of Period
Life used for depreciation				7 years
4501 Industrial Drive
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				900
Buildings and Equipment				3,485
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				900
Buildings and Equipment				3,485
Total				4,385
Accumulated Depreciation				(428)
955 Aeroplaza Drive
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				800
Buildings and Equipment				7,412
Costs Capitalized Subsequent to Acquisition				39
Gross Amount Carried at Close of Period
Land				800
Buildings and Equipment				7,451
Total				8,251
Accumulated Depreciation				(913)
13400 East 39th Avenue and 3800 Wheeling Street
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				3,100
Buildings and Equipment				12,955
Costs Capitalized Subsequent to Acquisition				46
Gross Amount Carried at Close of Period
Land				3,100
Buildings and Equipment				13,001
Total				16,101
Accumulated Depreciation				(1,632)
3870 Ronald Reagan Boulevard
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				2,780
Buildings and Equipment				9,722
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				2,780
Buildings and Equipment				9,722
Total				12,502
Accumulated Depreciation				(236)
150 Greenhorn Drive
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				200
Buildings and Equipment				4,177
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				200
Buildings and Equipment				4,177
Total				4,377
Accumulated Depreciation				(514)
2 Tower Drive
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				1,471
Buildings and Equipment				2,165
Costs Capitalized Subsequent to Acquisition				569
Gross Amount Carried at Close of Period
Land				1,471
Buildings and Equipment				2,734
Total				4,205
Accumulated Depreciation				(727)
235 Great Pond Drive
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				2,400
Buildings and Equipment				9,469
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				2,400
Buildings and Equipment				9,469
Total				11,869
Accumulated Depreciation				(1,756)
10450 Doral Boulevard
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				15,225
Buildings and Equipment				28,102
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				15,225
Buildings and Equipment				28,102
Total				43,327
Accumulated Depreciation				(1,406)
2100 NW 82nd Avenue
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				144
Buildings and Equipment				1,297
Costs Capitalized Subsequent to Acquisition				454
Gross Amount Carried at Close of Period
Land				144
Buildings and Equipment				1,751
Total				1,895
Accumulated Depreciation				(797)
3350 Laurel Ridge Avenue
Initial Cost to Company
Land				8,351
Buildings and Equipment				99,771
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				8,351
Buildings and Equipment				99,771
Total				108,122
Accumulated Depreciation				(2,074)
1000 Mapunapuna Street
Initial Cost to Company
Land				2,252
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				2,252
Buildings and Equipment				0
Total				2,252
Accumulated Depreciation				0
1001 Ahua Street
Initial Cost to Company
Land				15,155
Buildings and Equipment				3,312
Costs Capitalized Subsequent to Acquisition				92
Gross Amount Carried at Close of Period
Land				15,155
Buildings and Equipment				3,404
Total				18,559
Accumulated Depreciation				(1,354)
1024 Kikowaena Place
Initial Cost to Company
Land				1,818
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,818
Buildings and Equipment				0
Total				1,818
Accumulated Depreciation				0
1024 Mapunapuna Street
Initial Cost to Company
Land				1,385
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,385
Buildings and Equipment				0
Total				1,385
Accumulated Depreciation				0
1027 Kikowaena Place
Initial Cost to Company
Land				5,444
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				5,444
Buildings and Equipment				0
Total				5,444
Accumulated Depreciation				0
1030 Mapunapuna Street
Initial Cost to Company
Land				5,655
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				5,655
Buildings and Equipment				0
Total				5,655
Accumulated Depreciation				0
1038 Kikowaena Place
Initial Cost to Company
Land				2,576
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				2,576
Buildings and Equipment				0
Total				2,576
Accumulated Depreciation				0
1045 Mapunapuna Street
Initial Cost to Company
Land				819
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				819
Buildings and Equipment				0
Total				819
Accumulated Depreciation				0
1050 Kikowaena Place
Initial Cost to Company
Land				1,404
Buildings and Equipment				873
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,404
Buildings and Equipment				873
Total				2,277
Accumulated Depreciation				(350)
1052 Ahua Street
Initial Cost to Company
Land				1,703
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				240
Gross Amount Carried at Close of Period
Land				1,703
Buildings and Equipment				240
Total				1,943
Accumulated Depreciation				(85)
1055 Ahua Street
Initial Cost to Company
Land				1,216
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,216
Buildings and Equipment				0
Total				1,216
Accumulated Depreciation				0
106 Puuhale Road
Initial Cost to Company
Land				1,113
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				275
Gross Amount Carried at Close of Period
Land				1,114
Buildings and Equipment				274
Total				1,388
Accumulated Depreciation				(66)
1062 Kikowaena Place
Initial Cost to Company
Land				1,049
Buildings and Equipment				598
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,049
Buildings and Equipment				598
Total				1,647
Accumulated Depreciation				(240)
1122 Mapunapuna Street
Initial Cost to Company
Land				5,781
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				5,781
Buildings and Equipment				0
Total				5,781
Accumulated Depreciation				0
113 Puuhale Road
Initial Cost to Company
Land				3,729
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				3,729
Buildings and Equipment				0
Total				3,729
Accumulated Depreciation				0
1150 Kikowaena Place
Initial Cost to Company
Land				2,445
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				2,445
Buildings and Equipment				0
Total				2,445
Accumulated Depreciation				0
120 Mokauea Street
Initial Cost to Company
Land				1,953
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				943
Gross Amount Carried at Close of Period
Land				1,953
Buildings and Equipment				943
Total				2,896
Accumulated Depreciation				(127)
120 Sand Island Access Road
Initial Cost to Company
Land				1,132
Buildings and Equipment				11,307
Costs Capitalized Subsequent to Acquisition				1,423
Gross Amount Carried at Close of Period
Land				1,130
Buildings and Equipment				12,732
Total				13,862
Accumulated Depreciation				(4,638)
120B Mokauea Street
Initial Cost to Company
Land				1,953
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,953
Buildings and Equipment				0
Total				1,953
Accumulated Depreciation				0
125 Puuhale Road
Initial Cost to Company
Land				1,630
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,630
Buildings and Equipment				0
Total				1,630
Accumulated Depreciation				0
125B Puuhale Road
Initial Cost to Company
Land				2,815
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				2,815
Buildings and Equipment				0
Total				2,815
Accumulated Depreciation				0
1330 Pali Highway
Initial Cost to Company
Land				1,423
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,423
Buildings and Equipment				0
Total				1,423
Accumulated Depreciation				0
1360 Pali Highway
Initial Cost to Company
Land				9,170
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				161
Gross Amount Carried at Close of Period
Land				9,170
Buildings and Equipment				161
Total				9,331
Accumulated Depreciation				(114)
140 Puuhale Road
Initial Cost to Company
Land				1,100
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,100
Buildings and Equipment				0
Total				1,100
Accumulated Depreciation				0
142 Mokauea Street
Initial Cost to Company
Land				2,182
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				1,537
Gross Amount Carried at Close of Period
Land				2,182
Buildings and Equipment				1,537
Total				3,719
Accumulated Depreciation				(401)
148 Mokauea Street
Initial Cost to Company
Land				3,476
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				3,476
Buildings and Equipment				0
Total				3,476
Accumulated Depreciation				0
150 Puuhale Road
Initial Cost to Company
Land				4,887
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				4,887
Buildings and Equipment				0
Total				4,887
Accumulated Depreciation				0
151 Puuhale Road
Initial Cost to Company
Land				1,956
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,956
Buildings and Equipment				0
Total				1,956
Accumulated Depreciation				0
158 Sand Island Access Road
Initial Cost to Company
Land				2,488
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				2,488
Buildings and Equipment				0
Total				2,488
Accumulated Depreciation				0
165 Sand Island Access Road
Initial Cost to Company
Land				758
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				758
Buildings and Equipment				0
Total				758
Accumulated Depreciation				0
179 Sand Island Access Road
Initial Cost to Company
Land				2,480
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				2,480
Buildings and Equipment				0
Total				2,480
Accumulated Depreciation				0
180 Sand Island Access Road
Initial Cost to Company
Land				1,655
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,655
Buildings and Equipment				0
Total				1,655
Accumulated Depreciation				0
1926 Auiki Street
Initial Cost to Company
Land				2,872
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				1,724
Gross Amount Carried at Close of Period
Land				2,874
Buildings and Equipment				1,722
Total				4,596
Accumulated Depreciation				(518)
1931 Kahai Street
Initial Cost to Company
Land				3,779
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				3,779
Buildings and Equipment				0
Total				3,779
Accumulated Depreciation				0
197 Sand Island Access Road
Initial Cost to Company
Land				1,238
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,238
Buildings and Equipment				0
Total				1,238
Accumulated Depreciation				0
2001 Kahai Street
Initial Cost to Company
Land				1,091
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,091
Buildings and Equipment				0
Total				1,091
Accumulated Depreciation				0
2019 Kahai Street
Initial Cost to Company
Land				1,377
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,377
Buildings and Equipment				0
Total				1,377
Accumulated Depreciation				0
2020 Auiki Street
Initial Cost to Company
Land				2,385
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				2,385
Buildings and Equipment				0
Total				2,385
Accumulated Depreciation				0
204 Sand Island Access Road
Initial Cost to Company
Land				1,689
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,689
Buildings and Equipment				0
Total				1,689
Accumulated Depreciation				0
207 Puuhale Road
Initial Cost to Company
Land				2,024
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				2,024
Buildings and Equipment				0
Total				2,024
Accumulated Depreciation				0
2103 Kaliawa Street
Initial Cost to Company
Land				3,212
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				3,212
Buildings and Equipment				0
Total				3,212
Accumulated Depreciation				0
2106 Kaliawa Street
Initial Cost to Company
Land				1,568
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				169
Gross Amount Carried at Close of Period
Land				1,568
Buildings and Equipment				169
Total				1,737
Accumulated Depreciation				(78)
2110 Auiki Street
Initial Cost to Company
Land				837
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				837
Buildings and Equipment				0
Total				837
Accumulated Depreciation				0
212 Mohonua Place
Initial Cost to Company
Land				1,067
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,067
Buildings and Equipment				0
Total				1,067
Accumulated Depreciation				0
2122 Kaliawa Street
Initial Cost to Company
Land				1,365
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,365
Buildings and Equipment				0
Total				1,365
Accumulated Depreciation				0
2127 Auiki Street
Initial Cost to Company
Land				2,906
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				97
Gross Amount Carried at Close of Period
Land				2,906
Buildings and Equipment				97
Total				3,003
Accumulated Depreciation				(55)
2135 Auiki Street
Initial Cost to Company
Land				825
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				825
Buildings and Equipment				0
Total				825
Accumulated Depreciation				0
2139 Kaliawa Street
Initial Cost to Company
Land				885
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				885
Buildings and Equipment				0
Total				885
Accumulated Depreciation				0
214 Sand Island Access Road
Initial Cost to Company
Land				1,864
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				540
Gross Amount Carried at Close of Period
Land				1,864
Buildings and Equipment				540
Total				2,404
Accumulated Depreciation				(67)
2140 Kaliawa Street
Initial Cost to Company
Land				931
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				931
Buildings and Equipment				0
Total				931
Accumulated Depreciation				0
214 Sand Island Access Road
Initial Cost to Company
Land				2,640
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				7,160
Gross Amount Carried at Close of Period
Land				2,640
Buildings and Equipment				7,160
Total				9,800
Accumulated Depreciation				(2,285)
215 Puuhale Road
Initial Cost to Company
Land				2,117
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				2,117
Buildings and Equipment				0
Total				2,117
Accumulated Depreciation				0
218 Mohonua Place
Initial Cost to Company
Land				1,741
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,741
Buildings and Equipment				0
Total				1,741
Accumulated Depreciation				0
220 Puuhale Road
Initial Cost to Company
Land				2,619
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				2,619
Buildings and Equipment				0
Total				2,619
Accumulated Depreciation				0
2250 Pahounui Drive
Initial Cost to Company
Land				3,862
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				3,862
Buildings and Equipment				0
Total				3,862
Accumulated Depreciation				0
2264 Pahounui Drive
Initial Cost to Company
Land				1,632
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,632
Buildings and Equipment				0
Total				1,632
Accumulated Depreciation				0
2276 Pahounui Drive
Initial Cost to Company
Land				1,619
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,619
Buildings and Equipment				0
Total				1,619
Accumulated Depreciation				0
228 Mohonua Place
Initial Cost to Company
Land				1,865
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,865
Buildings and Equipment				0
Total				1,865
Accumulated Depreciation				0
2308 Pahounui Drive
Initial Cost to Company
Land				3,314
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				3,314
Buildings and Equipment				0
Total				3,314
Accumulated Depreciation				0
231 Sand Island Access Road
Initial Cost to Company
Land				752
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				752
Buildings and Equipment				0
Total				752
Accumulated Depreciation				0
231B Sand Island Access Road
Initial Cost to Company
Land				1,539
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,539
Buildings and Equipment				0
Total				1,539
Accumulated Depreciation				0
2344 Pahounui Drive
Initial Cost to Company
Land				6,709
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				6,709
Buildings and Equipment				0
Total				6,709
Accumulated Depreciation				0
238 Sand Island Access Road
Initial Cost to Company
Land				2,273
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				2,273
Buildings and Equipment				0
Total				2,273
Accumulated Depreciation				0
2635 Waiwai Loop A
Initial Cost to Company
Land				934
Buildings and Equipment				350
Costs Capitalized Subsequent to Acquisition				683
Gross Amount Carried at Close of Period
Land				934
Buildings and Equipment				1,033
Total				1,967
Accumulated Depreciation				(188)
2635 Waiwai Loop B
Initial Cost to Company
Land				1,177
Buildings and Equipment				105
Costs Capitalized Subsequent to Acquisition				683
Gross Amount Carried at Close of Period
Land				1,177
Buildings and Equipment				788
Total				1,965
Accumulated Depreciation				(89)
2760 Kam Highway
Initial Cost to Company
Land				703
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				170
Gross Amount Carried at Close of Period
Land				703
Buildings and Equipment				170
Total				873
Accumulated Depreciation				0
2804 Kilihau Street
Initial Cost to Company
Land				1,775
Buildings and Equipment				2
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,775
Buildings and Equipment				2
Total				1,777
Accumulated Depreciation				(2)
2806 Kaihikapu Street
Initial Cost to Company
Land				1,801
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,801
Buildings and Equipment				0
Total				1,801
Accumulated Depreciation				0
2808 Kam Highway
Initial Cost to Company
Land				310
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				310
Buildings and Equipment				0
Total				310
Accumulated Depreciation				0
2809 Kaihikapu Street
Initial Cost to Company
Land				1,837
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,837
Buildings and Equipment				0
Total				1,837
Accumulated Depreciation				0
2810 Paa Street
Initial Cost to Company
Land				3,340
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				3,340
Buildings and Equipment				0
Total				3,340
Accumulated Depreciation				0
2810 Pukoloa Street
Initial Cost to Company
Land				27,699
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				27,699
Buildings and Equipment				0
Total				27,699
Accumulated Depreciation				0
2812 Awaawaloa Street
Initial Cost to Company
Land				1,801
Buildings and Equipment				3
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,801
Buildings and Equipment				3
Total				1,804
Accumulated Depreciation				(2)
2814 Kilihau Street
Initial Cost to Company
Land				1,925
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,925
Buildings and Equipment				0
Total				1,925
Accumulated Depreciation				0
2815 Kaihikapu Street
Initial Cost to Company
Land				1,818
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				5
Gross Amount Carried at Close of Period
Land				1,818
Buildings and Equipment				5
Total				1,823
Accumulated Depreciation				(2)
2815 Kilihau Street
Initial Cost to Company
Land				287
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				287
Buildings and Equipment				0
Total				287
Accumulated Depreciation				0
2816 Awaawaloa Street
Initial Cost to Company
Land				1,009
Buildings and Equipment				27
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,009
Buildings and Equipment				27
Total				1,036
Accumulated Depreciation				(11)
2819 Mokumoa Street - A
Initial Cost to Company
Land				1,821
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,821
Buildings and Equipment				0
Total				1,821
Accumulated Depreciation				0
2819 Mokumoa Street - B
Initial Cost to Company
Land				1,816
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,816
Buildings and Equipment				0
Total				1,816
Accumulated Depreciation				0
2819 Pukoloa Street
Initial Cost to Company
Land				2,090
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				33
Gross Amount Carried at Close of Period
Land				2,090
Buildings and Equipment				33
Total				2,123
Accumulated Depreciation				(9)
2821 Kilihau Street
Initial Cost to Company
Land				287
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				287
Buildings and Equipment				0
Total				287
Accumulated Depreciation				0
2826 Kaihikapu Street
Initial Cost to Company
Land				3,921
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				3,921
Buildings and Equipment				0
Total				3,921
Accumulated Depreciation				0
2827 Kaihikapu Street
Initial Cost to Company
Land				1,801
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,801
Buildings and Equipment				0
Total				1,801
Accumulated Depreciation				0
2828 Paa Street
Initial Cost to Company
Land				12,448
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				12,448
Buildings and Equipment				0
Total				12,448
Accumulated Depreciation				0
2829 Awaawaloa Street
Initial Cost to Company
Land				1,720
Buildings and Equipment				2
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,720
Buildings and Equipment				2
Total				1,722
Accumulated Depreciation				(2)
2829 Kilihau Street
Initial Cost to Company
Land				287
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				287
Buildings and Equipment				0
Total				287
Accumulated Depreciation				0
2829 Pukoloa Street
Initial Cost to Company
Land				2,088
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				2,088
Buildings and Equipment				0
Total				2,088
Accumulated Depreciation				0
2830 Mokumoa Street
Initial Cost to Company
Land				2,146
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				2,146
Buildings and Equipment				0
Total				2,146
Accumulated Depreciation				0
2831 Awaawaloa Street
Initial Cost to Company
Land				860
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				860
Buildings and Equipment				0
Total				860
Accumulated Depreciation				0
2831 Kaihikapu Street
Initial Cost to Company
Land				1,272
Buildings and Equipment				529
Costs Capitalized Subsequent to Acquisition				56
Gross Amount Carried at Close of Period
Land				1,272
Buildings and Equipment				585
Total				1,857
Accumulated Depreciation				(234)
2833 Kilihau Street
Initial Cost to Company
Land				601
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				601
Buildings and Equipment				0
Total				601
Accumulated Depreciation				0
2833 Paa Street
Initial Cost to Company
Land				1,701
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,701
Buildings and Equipment				0
Total				1,701
Accumulated Depreciation				0
2833 Paa Street 2
Initial Cost to Company
Land				1,675
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,675
Buildings and Equipment				0
Total				1,675
Accumulated Depreciation				0
2836 Awaawaloa Street
Initial Cost to Company
Land				1,353
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,353
Buildings and Equipment				0
Total				1,353
Accumulated Depreciation				0
2838 Kilihau Street
Initial Cost to Company
Land				4,262
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				4,262
Buildings and Equipment				0
Total				4,262
Accumulated Depreciation				0
2839 Kilihau Street
Initial Cost to Company
Land				627
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				627
Buildings and Equipment				0
Total				627
Accumulated Depreciation				0
2839 Mokumoa Street
Initial Cost to Company
Land				1,942
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,942
Buildings and Equipment				0
Total				1,942
Accumulated Depreciation				0
2840 Mokumoa Street
Initial Cost to Company
Land				2,149
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				2,149
Buildings and Equipment				0
Total				2,149
Accumulated Depreciation				0
2841 Pukoloa Street
Initial Cost to Company
Land				2,088
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				2,088
Buildings and Equipment				0
Total				2,088
Accumulated Depreciation				0
2844 Kaihikapu Street
Initial Cost to Company
Land				1,960
Buildings and Equipment				14
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,960
Buildings and Equipment				14
Total				1,974
Accumulated Depreciation				(12)
2846-A Awaawaloa Street
Initial Cost to Company
Land				2,181
Buildings and Equipment				954
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				2,181
Buildings and Equipment				954
Total				3,135
Accumulated Depreciation				(383)
2847 Awaawaloa Street
Initial Cost to Company
Land				582
Buildings and Equipment				303
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				582
Buildings and Equipment				303
Total				885
Accumulated Depreciation				(121)
2849 Kaihikapu Street
Initial Cost to Company
Land				860
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				860
Buildings and Equipment				0
Total				860
Accumulated Depreciation				0
2850 Awaawaloa Street
Initial Cost to Company
Land				287
Buildings and Equipment				172
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				286
Buildings and Equipment				173
Total				459
Accumulated Depreciation				(69)
2850 Mokumoa Street
Initial Cost to Company
Land				2,143
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				2,143
Buildings and Equipment				0
Total				2,143
Accumulated Depreciation				0
2850 Paa Street
Initial Cost to Company
Land				22,827
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				22,827
Buildings and Equipment				0
Total				22,827
Accumulated Depreciation				0
2855 Kaihikapu Street
Initial Cost to Company
Land				1,807
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,807
Buildings and Equipment				0
Total				1,807
Accumulated Depreciation				0
2855 Pukoloa Street
Initial Cost to Company
Land				1,934
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,934
Buildings and Equipment				0
Total				1,934
Accumulated Depreciation				0
2857 Awaawaloa Street
Initial Cost to Company
Land				983
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				983
Buildings and Equipment				0
Total				983
Accumulated Depreciation				0
2858 Kaihikapu Street
Initial Cost to Company
Land				1,801
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,801
Buildings and Equipment				0
Total				1,801
Accumulated Depreciation				0
2861 Mokumoa Street
Initial Cost to Company
Land				3,867
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				3,867
Buildings and Equipment				0
Total				3,867
Accumulated Depreciation				0
2864 Awaawaloa Street
Initial Cost to Company
Land				1,836
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				6
Gross Amount Carried at Close of Period
Land				1,836
Buildings and Equipment				6
Total				1,842
Accumulated Depreciation				(4)
2864 Mokumoa Street
Initial Cost to Company
Land				2,092
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				2,092
Buildings and Equipment				0
Total				2,092
Accumulated Depreciation				0
2865 Pukoloa Street
Initial Cost to Company
Land				1,934
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,934
Buildings and Equipment				0
Total				1,934
Accumulated Depreciation				0
2868 Kaihikapu Street
Initial Cost to Company
Land				1,801
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,801
Buildings and Equipment				0
Total				1,801
Accumulated Depreciation				0
2869 Mokumoa Street
Initial Cost to Company
Land				1,794
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,794
Buildings and Equipment				0
Total				1,794
Accumulated Depreciation				0
2875 Paa Street
Initial Cost to Company
Land				1,330
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,330
Buildings and Equipment				0
Total				1,330
Accumulated Depreciation				0
2879 Mokumoa Street
Initial Cost to Company
Land				1,789
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,789
Buildings and Equipment				0
Total				1,789
Accumulated Depreciation				0
2879 Paa Street
Initial Cost to Company
Land				1,691
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				44
Gross Amount Carried at Close of Period
Land				1,691
Buildings and Equipment				44
Total				1,735
Accumulated Depreciation				(12)
2886 Paa Street
Initial Cost to Company
Land				2,205
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				2,205
Buildings and Equipment				0
Total				2,205
Accumulated Depreciation				0
2889 Mokumoa Street
Initial Cost to Company
Land				1,783
Buildings and Equipment				5
Costs Capitalized Subsequent to Acquisition				(5)
Gross Amount Carried at Close of Period
Land				1,783
Buildings and Equipment				0
Total				1,783
Accumulated Depreciation				0
2906 Kaihikapu Street
Initial Cost to Company
Land				1,814
Buildings and Equipment				2
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,814
Buildings and Equipment				2
Total				1,816
Accumulated Depreciation				(1)
2908 Kaihikapu Street
Initial Cost to Company
Land				1,798
Buildings and Equipment				23
Costs Capitalized Subsequent to Acquisition				(11)
Gross Amount Carried at Close of Period
Land				1,798
Buildings and Equipment				12
Total				1,810
Accumulated Depreciation				(2)
2915 Kaihikapu Street
Initial Cost to Company
Land				1,801
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,801
Buildings and Equipment				0
Total				1,801
Accumulated Depreciation				0
2915 Kaihikapu Street [Member]
Initial Cost to Company
Land				2,579
Gross Amount Carried at Close of Period
Land				2,579
Total				2,579
2927 Mokumoa Street
Initial Cost to Company
Land				1,778
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,778
Buildings and Equipment				0
Total				1,778
Accumulated Depreciation				0
2927 Mokumoa Street
Initial Cost to Company
Land				1,948
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,948
Buildings and Equipment				0
Total				1,948
Accumulated Depreciation				0
2960 Mokumoa Street
Initial Cost to Company
Land				1,977
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,977
Buildings and Equipment				0
Total				1,977
Accumulated Depreciation				0
2965 Mokumoa Street
Initial Cost to Company
Land				2,140
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				2,140
Buildings and Equipment				0
Total				2,140
Accumulated Depreciation				0
2969 Mapunapuna Street
Initial Cost to Company
Land				4,038
Buildings and Equipment				15
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				4,038
Buildings and Equipment				15
Total				4,053
Accumulated Depreciation				(9)
2970 Mokumoa Street
Initial Cost to Company
Land				1,722
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,722
Buildings and Equipment				0
Total				1,722
Accumulated Depreciation				0
33 S. Vineyard Boulevard
Initial Cost to Company
Land				844
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				844
Buildings and Equipment				0
Total				844
Accumulated Depreciation				0
525 N. King Street
Initial Cost to Company
Land				1,342
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,342
Buildings and Equipment				0
Total				1,342
Accumulated Depreciation				0
609 Ahua Street
Initial Cost to Company
Land				616
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				8
Gross Amount Carried at Close of Period
Land				616
Buildings and Equipment				8
Total				624
Accumulated Depreciation				(8)
619 Mapunapuna Street
Initial Cost to Company
Land				1,401
Buildings and Equipment				2
Costs Capitalized Subsequent to Acquisition				12
Gross Amount Carried at Close of Period
Land				1,401
Buildings and Equipment				14
Total				1,415
Accumulated Depreciation				(2)
645 Ahua Street
Initial Cost to Company
Land				882
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				882
Buildings and Equipment				0
Total				882
Accumulated Depreciation				0
659 Ahua Street
Initial Cost to Company
Land				860
Buildings and Equipment				20
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				860
Buildings and Equipment				20
Total				880
Accumulated Depreciation				(17)
659 Puuloa Road
Initial Cost to Company
Land				1,807
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,807
Buildings and Equipment				0
Total				1,807
Accumulated Depreciation				0
660 Ahua Street
Initial Cost to Company
Land				1,783
Buildings and Equipment				4
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,783
Buildings and Equipment				4
Total				1,787
Accumulated Depreciation				(3)
667 Puuloa Road
Initial Cost to Company
Land				860
Buildings and Equipment				2
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				860
Buildings and Equipment				2
Total				862
Accumulated Depreciation				(2)
669 Ahua Street
Initial Cost to Company
Land				1,801
Buildings and Equipment				14
Costs Capitalized Subsequent to Acquisition				62
Gross Amount Carried at Close of Period
Land				1,801
Buildings and Equipment				76
Total				1,877
Accumulated Depreciation				(22)
673 Ahua Street
Initial Cost to Company
Land				1,801
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,801
Buildings and Equipment				0
Total				1,801
Accumulated Depreciation				0
675 Mapunapuna Street
Initial Cost to Company
Land				1,081
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,081
Buildings and Equipment				0
Total				1,081
Accumulated Depreciation				0
679 Puuloa Road
Initial Cost to Company
Land				1,807
Buildings and Equipment				3
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,807
Buildings and Equipment				3
Total				1,810
Accumulated Depreciation				(3)
685 Ahua Street
Initial Cost to Company
Land				1,801
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,801
Buildings and Equipment				0
Total				1,801
Accumulated Depreciation				0
673 Mapunapuna Street
Initial Cost to Company
Land				1,801
Buildings and Equipment				20
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,801
Buildings and Equipment				20
Total				1,821
Accumulated Depreciation				(17)
692 Mapunapuna Street
Initial Cost to Company
Land				1,796
Buildings and Equipment				2
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,798
Buildings and Equipment				0
Total				1,798
Accumulated Depreciation				0
697 Ahua Street
Initial Cost to Company
Land				994
Buildings and Equipment				811
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				994
Buildings and Equipment				811
Total				1,805
Accumulated Depreciation				(327)
702 Ahua Street
Initial Cost to Company
Land				1,784
Buildings and Equipment				3
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,783
Buildings and Equipment				4
Total				1,787
Accumulated Depreciation				(3)
704 Mapunapuna Street
Initial Cost to Company
Land				2,390
Buildings and Equipment				685
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				2,390
Buildings and Equipment				685
Total				3,075
Accumulated Depreciation				(275)
709 Ahua Street
Initial Cost to Company
Land				1,801
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,801
Buildings and Equipment				0
Total				1,801
Accumulated Depreciation				0
719 Ahua Street
Initial Cost to Company
Land				1,960
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,960
Buildings and Equipment				0
Total				1,960
Accumulated Depreciation				0
729 Ahua Street
Initial Cost to Company
Land				1,801
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,801
Buildings and Equipment				0
Total				1,801
Accumulated Depreciation				0
733 Mapunapuna Street
Initial Cost to Company
Land				3,403
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				3,403
Buildings and Equipment				0
Total				3,403
Accumulated Depreciation				0
739 Ahua Street
Initial Cost to Company
Land				1,801
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,801
Buildings and Equipment				0
Total				1,801
Accumulated Depreciation				0
759 Puuloa Road
Initial Cost to Company
Land				1,766
Buildings and Equipment				3
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,766
Buildings and Equipment				3
Total				1,769
Accumulated Depreciation				(3)
761 Ahua Street
Initial Cost to Company
Land				3,757
Buildings and Equipment				2
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				3,757
Buildings and Equipment				2
Total				3,759
Accumulated Depreciation				(1)
766 Mapunapuna Street
Initial Cost to Company
Land				1,801
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,801
Buildings and Equipment				0
Total				1,801
Accumulated Depreciation				0
770 Mapunapuna Street
Initial Cost to Company
Land				1,801
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,801
Buildings and Equipment				0
Total				1,801
Accumulated Depreciation				0
789 Mapunapuna Street
Initial Cost to Company
Land				2,608
Buildings and Equipment				3
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				2,608
Buildings and Equipment				3
Total				2,611
Accumulated Depreciation				(3)
80 Sand Island Access Road
Initial Cost to Company
Land				7,972
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				7,972
Buildings and Equipment				0
Total				7,972
Accumulated Depreciation				0
803 Ahua Street
Initial Cost to Company
Land				3,804
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				3,804
Buildings and Equipment				0
Total				3,804
Accumulated Depreciation				0
808 Ahua Street
Initial Cost to Company
Land				3,279
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				3,279
Buildings and Equipment				0
Total				3,279
Accumulated Depreciation				0
812 Mapunapuna Street
Initial Cost to Company
Land				1,960
Buildings and Equipment				25
Costs Capitalized Subsequent to Acquisition				628
Gross Amount Carried at Close of Period
Land				2,613
Buildings and Equipment				0
Total				2,613
Accumulated Depreciation				0
819 Ahua Street
Initial Cost to Company
Land				4,821
Buildings and Equipment				583
Costs Capitalized Subsequent to Acquisition				30
Gross Amount Carried at Close of Period
Land				4,821
Buildings and Equipment				613
Total				5,434
Accumulated Depreciation				(245)
822 Mapunapuna Street
Initial Cost to Company
Land				1,795
Buildings and Equipment				15
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,795
Buildings and Equipment				15
Total				1,810
Accumulated Depreciation				(13)
830 Mapunapuna Street
Initial Cost to Company
Land				1,801
Buildings and Equipment				25
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,801
Buildings and Equipment				25
Total				1,826
Accumulated Depreciation				(21)
841 Mapunapuna Street
Initial Cost to Company
Land				3,265
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				3,265
Buildings and Equipment				0
Total				3,265
Accumulated Depreciation				0
842 Mapunapuna Street
Initial Cost to Company
Land				1,795
Buildings and Equipment				14
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,795
Buildings and Equipment				14
Total				1,809
Accumulated Depreciation				(12)
846 Ala Lilikoi Boulevard B
Initial Cost to Company
Land				234
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				234
Buildings and Equipment				0
Total				234
Accumulated Depreciation				0
848 Ala Lilikoi Boulevard A
Initial Cost to Company
Land				9,426
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				9,426
Buildings and Equipment				0
Total				9,426
Accumulated Depreciation				0
850 Ahua Street
Initial Cost to Company
Land				2,682
Buildings and Equipment				2
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				2,682
Buildings and Equipment				2
Total				2,684
Accumulated Depreciation				(2)
852 Mapunapuna Street
Initial Cost to Company
Land				1,801
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,801
Buildings and Equipment				0
Total				1,801
Accumulated Depreciation				0
855 Ahua Street
Initial Cost to Company
Land				1,834
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,834
Buildings and Equipment				0
Total				1,834
Accumulated Depreciation				0
865 Ahua Street
Initial Cost to Company
Land				1,846
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,846
Buildings and Equipment				0
Total				1,846
Accumulated Depreciation				0
889 Ahua Street
Initial Cost to Company
Land				5,888
Buildings and Equipment				315
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				5,888
Buildings and Equipment				315
Total				6,203
Accumulated Depreciation				(56)
905 Ahua Street
Initial Cost to Company
Land				1,148
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,148
Buildings and Equipment				0
Total				1,148
Accumulated Depreciation				0
918 Ahua Street
Initial Cost to Company
Land				3,820
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				3,820
Buildings and Equipment				0
Total				3,820
Accumulated Depreciation				0
930 Mapunapuna Street
Initial Cost to Company
Land				3,654
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				3,654
Buildings and Equipment				0
Total				3,654
Accumulated Depreciation				0
944 Ahua Street
Initial Cost to Company
Land				1,219
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,219
Buildings and Equipment				0
Total				1,219
Accumulated Depreciation				0
949 Mapunapuna Street
Initial Cost to Company
Land				11,568
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				11,568
Buildings and Equipment				0
Total				11,568
Accumulated Depreciation				0
950 Mapunapuna Street
Initial Cost to Company
Land				1,724
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,724
Buildings and Equipment				0
Total				1,724
Accumulated Depreciation				0
960 Ahua Street
Initial Cost to Company
Land				614
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				614
Buildings and Equipment				0
Total				614
Accumulated Depreciation				0
960 Mapunapuna Street
Initial Cost to Company
Land				1,933
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,933
Buildings and Equipment				0
Total				1,933
Accumulated Depreciation				0
970 Ahua Street
Initial Cost to Company
Land				817
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				817
Buildings and Equipment				0
Total				817
Accumulated Depreciation				0
91-027 Kaomi Loop
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				2,667
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				2,667
Buildings and Equipment				0
Total				2,667
Accumulated Depreciation				0
91-064 Kaomi Loop
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				1,826
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,826
Buildings and Equipment				0
Total				1,826
Accumulated Depreciation				0
91-080 Hanua
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				2,187
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				2,187
Buildings and Equipment				0
Total				2,187
Accumulated Depreciation				0
91-083 Hanua
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				716
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				716
Buildings and Equipment				0
Total				716
Accumulated Depreciation				0
91-086 Kaomi Loop
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				13,884
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				13,884
Buildings and Equipment				0
Total				13,884
Accumulated Depreciation				0
91-087 Hanua
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				381
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				381
Buildings and Equipment				0
Total				381
Accumulated Depreciation				0
91-091 Hanua
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				552
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				552
Buildings and Equipment				0
Total				552
Accumulated Depreciation				0
91-102 Kaomi Loop
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				1,599
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,599
Buildings and Equipment				0
Total				1,599
Accumulated Depreciation				0
91-110 Kaomi Loop
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				1,293
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,293
Buildings and Equipment				0
Total				1,293
Accumulated Depreciation				0
91-119 Olai
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				1,981
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,981
Buildings and Equipment				0
Total				1,981
Accumulated Depreciation				0
91-141 Kalaeloa
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				11,624
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				11,624
Buildings and Equipment				0
Total				11,624
Accumulated Depreciation				0
91-150 Kaomi Loop
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				3,159
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				3,159
Buildings and Equipment				0
Total				3,159
Accumulated Depreciation				0
91-171 Olai
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				218
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				47
Gross Amount Carried at Close of Period
Land				218
Buildings and Equipment				47
Total				265
Accumulated Depreciation				(35)
91-174 Olai
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				962
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				47
Gross Amount Carried at Close of Period
Land				962
Buildings and Equipment				47
Total				1,009
Accumulated Depreciation				(19)
91-175 Olai
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				1,243
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				43
Gross Amount Carried at Close of Period
Land				1,243
Buildings and Equipment				43
Total				1,286
Accumulated Depreciation				(20)
91-185 Kalaeloa
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				1,761
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,761
Buildings and Equipment				0
Total				1,761
Accumulated Depreciation				0
91-202 Kalaeloa
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				1,722
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				326
Gross Amount Carried at Close of Period
Land				1,722
Buildings and Equipment				326
Total				2,048
Accumulated Depreciation				(53)
91-210 Kauhi
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				567
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				567
Buildings and Equipment				0
Total				567
Accumulated Depreciation				0
91-210 Olai
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				706
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				706
Buildings and Equipment				0
Total				706
Accumulated Depreciation				0
91-218 Olai
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				1,622
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				61
Gross Amount Carried at Close of Period
Land				1,622
Buildings and Equipment				61
Total				1,683
Accumulated Depreciation				(22)
91-220 Kalaeloa
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				242
Buildings and Equipment				1,457
Costs Capitalized Subsequent to Acquisition				172
Gross Amount Carried at Close of Period
Land				242
Buildings and Equipment				1,629
Total				1,871
Accumulated Depreciation				(582)
91-222 Olai
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				2,035
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				2,035
Buildings and Equipment				0
Total				2,035
Accumulated Depreciation				0
91-238 Kauhi
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				1,390
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				9,259
Gross Amount Carried at Close of Period
Land				1,390
Buildings and Equipment				9,259
Total				10,649
Accumulated Depreciation				(2,840)
91-241 Kalaeloa
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				426
Buildings and Equipment				3,983
Costs Capitalized Subsequent to Acquisition				886
Gross Amount Carried at Close of Period
Land				426
Buildings and Equipment				4,869
Total				5,295
Accumulated Depreciation				(1,707)
91-250 Komohana
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				1,506
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,506
Buildings and Equipment				0
Total				1,506
Accumulated Depreciation				0
91-252 Kauhi
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				536
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				536
Buildings and Equipment				0
Total				536
Accumulated Depreciation				0
91-255 Hanua
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				1,230
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				16
Gross Amount Carried at Close of Period
Land				1,230
Buildings and Equipment				16
Total				1,246
Accumulated Depreciation				(3)
91-259 Olai
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				2,944
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				2,944
Buildings and Equipment				0
Total				2,944
Accumulated Depreciation				0
91-265 Hanua
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				1,569
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,569
Buildings and Equipment				0
Total				1,569
Accumulated Depreciation				0
91-300 Hanua
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				1,381
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,381
Buildings and Equipment				0
Total				1,381
Accumulated Depreciation				0
91-329 Kauhi
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				294
Buildings and Equipment				2,297
Costs Capitalized Subsequent to Acquisition				2,489
Gross Amount Carried at Close of Period
Land				294
Buildings and Equipment				4,786
Total				5,080
Accumulated Depreciation				(1,537)
91-349 Kauhi
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				649
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				649
Buildings and Equipment				0
Total				649
Accumulated Depreciation				0
91-399 Kauhi
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				27,405
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				27,405
Buildings and Equipment				0
Total				27,405
Accumulated Depreciation				0
91-400 Komohana
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				1,494
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,494
Buildings and Equipment				0
Total				1,494
Accumulated Depreciation				0
91-410 Komohana
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				418
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				12
Gross Amount Carried at Close of Period
Land				418
Buildings and Equipment				12
Total				430
Accumulated Depreciation				(2)
91-416 Komohana
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				713
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				11
Gross Amount Carried at Close of Period
Land				713
Buildings and Equipment				11
Total				724
Accumulated Depreciation				(2)
AES HI Easement
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				1,250
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,250
Buildings and Equipment				0
Total				1,250
Accumulated Depreciation				0
Other Easements & Lots
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				358
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				1,395
Gross Amount Carried at Close of Period
Land				358
Buildings and Equipment				1,395
Total				1,753
Accumulated Depreciation				(435)
Tesaro 967 Easement
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				6,593
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				6,593
Buildings and Equipment				0
Total				6,593
Accumulated Depreciation				0
Texaco Easement
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				2,657
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				(4)
Gross Amount Carried at Close of Period
Land				2,653
Buildings and Equipment				0
Total				2,653
Accumulated Depreciation				0
94-240 Pupuole Street
Initial Cost to Company
Land				717
Buildings and Equipment				0
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				717
Buildings and Equipment				0
Total				717
Accumulated Depreciation				0
5500 SE Delaware Avenue
Initial Cost to Company
Land				2,707
Buildings and Equipment				16,994
Costs Capitalized Subsequent to Acquisition				13,507
Gross Amount Carried at Close of Period
Land				2,707
Buildings and Equipment				30,501
Total				33,208
Accumulated Depreciation				(2,122)
951 Trails Road
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				470
Buildings and Equipment				7,480
Costs Capitalized Subsequent to Acquisition				1,024
Gross Amount Carried at Close of Period
Land				470
Buildings and Equipment				8,504
Total				8,974
Accumulated Depreciation				(2,589)
3425 Maple Drive
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				100
Buildings and Equipment				2,000
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				100
Buildings and Equipment				2,000
Total				2,100
Accumulated Depreciation				(41)
2300 North 33rd Avenue East
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				500
Buildings and Equipment				13,236
Costs Capitalized Subsequent to Acquisition				395
Gross Amount Carried at Close of Period
Land				500
Buildings and Equipment				13,631
Total				14,131
Accumulated Depreciation				(3,941)
7121 South Fifth Avenue
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				400
Buildings and Equipment				4,201
Costs Capitalized Subsequent to Acquisition				422
Gross Amount Carried at Close of Period
Land				400
Buildings and Equipment				4,623
Total				5,023
Accumulated Depreciation				(528)
1230 West 171st Street
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				800
Buildings and Equipment				1,673
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				800
Buildings and Equipment				1,673
Total				2,473
Accumulated Depreciation				(206)
5156 American Road
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				400
Buildings and Equipment				1,529
Costs Capitalized Subsequent to Acquisition				182
Gross Amount Carried at Close of Period
Land				400
Buildings and Equipment				1,711
Total				2,111
Accumulated Depreciation				(201)
3201 Bearing Drive
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				1,100
Buildings and Equipment				15,403
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,100
Buildings and Equipment				15,403
Total				16,503
Accumulated Depreciation				(376)
2482 Century Drive
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				840
Buildings and Equipment				9,061
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				840
Buildings and Equipment				9,061
Total				9,901
Accumulated Depreciation				(188)
6825 West County Road 400 North
Initial Cost to Company
Land				918
Buildings and Equipment				14,300
Costs Capitalized Subsequent to Acquisition				168
Gross Amount Carried at Close of Period
Land				918
Buildings and Equipment				14,468
Total				15,386
Accumulated Depreciation				(361)
900 Commerce Parkway West Drive
Initial Cost to Company
Land				1,483
Buildings and Equipment				16,253
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,483
Buildings and Equipment				16,253
Total				17,736
Accumulated Depreciation				(409)
9347 E Pendleton Pike
Initial Cost to Company
Land				3,763
Buildings and Equipment				34,877
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				3,763
Buildings and Equipment				34,877
Total				38,640
Accumulated Depreciation				(876)
945 Monument Drive
Initial Cost to Company
Land				4,210
Buildings and Equipment				42,795
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				4,210
Buildings and Equipment				42,795
Total				47,005
Accumulated Depreciation				(890)
2801 Airwest Boulevard
Initial Cost to Company
Land				5,296
Buildings and Equipment				35,073
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				5,296
Buildings and Equipment				35,073
Total				40,369
Accumulated Depreciation				(1,029)
2150 Stanley Road
Initial Cost to Company
Land				2,817
Buildings and Equipment				24,836
Costs Capitalized Subsequent to Acquisition				231
Gross Amount Carried at Close of Period
Land				2,817
Buildings and Equipment				25,067
Total				27,884
Accumulated Depreciation				(536)
4237-4255 Anson Boulevard
Initial Cost to Company
Land				3,710
Buildings and Equipment				61,706
Costs Capitalized Subsequent to Acquisition				734
Gross Amount Carried at Close of Period
Land				3,710
Buildings and Equipment				62,440
Total				66,150
Accumulated Depreciation				(1,589)
1985 International Way
Initial Cost to Company
Land				1,453
Buildings and Equipment				8,546
Costs Capitalized Subsequent to Acquisition				449
Gross Amount Carried at Close of Period
Land				1,453
Buildings and Equipment				8,995
Total				10,448
Accumulated Depreciation				(260)
20 Logistics Boulevard
Initial Cost to Company
Land				2,916
Buildings and Equipment				35,056
Costs Capitalized Subsequent to Acquisition				6
Gross Amount Carried at Close of Period
Land				2,916
Buildings and Equipment				35,062
Total				37,978
Accumulated Depreciation				(882)
17200 Manchac Park Lane
Initial Cost to Company
Land				1,700
Buildings and Equipment				8,860
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,700
Buildings and Equipment				8,860
Total				10,560
Accumulated Depreciation				(1,089)
209 South Bud Street
Initial Cost to Company
Land				700
Buildings and Equipment				4,549
Costs Capitalized Subsequent to Acquisition				9
Gross Amount Carried at Close of Period
Land				700
Buildings and Equipment				4,558
Total				5,258
Accumulated Depreciation				(561)
4000 Principio Parkway
Initial Cost to Company
Land				4,200
Buildings and Equipment				71,518
Costs Capitalized Subsequent to Acquisition				800
Gross Amount Carried at Close of Period
Land				4,200
Buildings and Equipment				72,318
Total				76,518
Accumulated Depreciation				(8,828)
16101 Queens Court
Initial Cost to Company
Land				5,296
Buildings and Equipment				21,833
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				5,296
Buildings and Equipment				21,833
Total				27,129
Accumulated Depreciation				(682)
3800 Midlink Drive
Initial Cost to Company
Land				2,630
Buildings and Equipment				40,599
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				2,630
Buildings and Equipment				40,599
Total				43,229
Accumulated Depreciation				(4,991)
2401 Cram Avenue SE
Initial Cost to Company
Land				100
Buildings and Equipment				2,137
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				100
Buildings and Equipment				2,137
Total				2,237
Accumulated Depreciation				(263)
10100 89th Avenue N
Initial Cost to Company
Land				3,469
Buildings and Equipment				21,284
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				3,469
Buildings and Equipment				21,284
Total				24,753
Accumulated Depreciation				(697)
110 Stanbury Industrial Drive
Initial Cost to Company
Land				200
Buildings and Equipment				1,859
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				200
Buildings and Equipment				1,859
Total				2,059
Accumulated Depreciation				(229)
3502 Enterprise Avenue
Initial Cost to Company
Land				1,380
Buildings and Equipment				12,121
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,380
Buildings and Equipment				12,121
Total				13,501
Accumulated Depreciation				(251)
5501 Providence Hill Drive
Initial Cost to Company
Land				400
Buildings and Equipment				3,500
Costs Capitalized Subsequent to Acquisition				24
Gross Amount Carried at Close of Period
Land				400
Buildings and Equipment				3,524
Total				3,924
Accumulated Depreciation				(73)
5148 North Hanley Road
Initial Cost to Company
Land				4,861
Buildings and Equipment				62,147
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				4,861
Buildings and Equipment				62,147
Total				67,008
Accumulated Depreciation				(1,293)
628 Patton Avenue
Initial Cost to Company
Land				500
Buildings and Equipment				1,514
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				500
Buildings and Equipment				1,514
Total				2,014
Accumulated Depreciation				(186)
3900 NE 6th Street
Initial Cost to Company
Land				700
Buildings and Equipment				3,223
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				700
Buildings and Equipment				3,223
Total				3,923
Accumulated Depreciation				(396)
1415 West Commerce Way
Initial Cost to Company
Land				2,200
Buildings and Equipment				8,518
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				2,200
Buildings and Equipment				8,518
Total				10,718
Accumulated Depreciation				(1,047)
52 Pettengill Road
Initial Cost to Company
Land				5,871
Buildings and Equipment				43,335
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				5,871
Buildings and Equipment				43,335
Total				49,206
Accumulated Depreciation				(901)
309 Dulty's Lane
Initial Cost to Company
Land				1,600
Buildings and Equipment				51,400
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,600
Buildings and Equipment				51,400
Total				53,000
Accumulated Depreciation				(6,319)
725 Darlington Avenue
Initial Cost to Company
Land				8,492
Buildings and Equipment				9,451
Costs Capitalized Subsequent to Acquisition				1,265
Gross Amount Carried at Close of Period
Land				8,492
Buildings and Equipment				10,716
Total				19,208
Accumulated Depreciation				(1,487)
2375 East Newlands Road
Initial Cost to Company
Land				1,100
Buildings and Equipment				17,314
Costs Capitalized Subsequent to Acquisition				286
Gross Amount Carried at Close of Period
Land				1,100
Buildings and Equipment				17,600
Total				18,700
Accumulated Depreciation				(2,179)
7000 West Post Road
Initial Cost to Company
Land				4,230
Buildings and Equipment				13,472
Costs Capitalized Subsequent to Acquisition				93
Gross Amount Carried at Close of Period
Land				4,230
Buildings and Equipment				13,565
Total				17,795
Accumulated Depreciation				(327)
55 Commerce Avenue
Initial Cost to Company
Land				1,000
Buildings and Equipment				10,105
Costs Capitalized Subsequent to Acquisition				179
Gross Amount Carried at Close of Period
Land				1,000
Buildings and Equipment				10,284
Total				11,284
Accumulated Depreciation				(1,274)
158 West Yard Road
Initial Cost to Company
Land				1,870
Buildings and Equipment				7,931
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,870
Buildings and Equipment				7,931
Total				9,801
Accumulated Depreciation				(288)
32150 Just Imagine Drive
Initial Cost to Company
Land				2,200
Buildings and Equipment				23,280
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				2,200
Buildings and Equipment				23,280
Total				25,480
Accumulated Depreciation				(6,160)
1415 Industrial Drive
Initial Cost to Company
Land				1,200
Buildings and Equipment				3,265
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				1,200
Buildings and Equipment				3,265
Total				4,465
Accumulated Depreciation				(401)
1580, 1590 & 1600 Williams Road
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				2,060
Buildings and Equipment				29,143
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				2,058
Buildings and Equipment				29,145
Total				31,203
Accumulated Depreciation				(707)
5001 West Delbridge Street
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				2,700
Buildings and Equipment				29,863
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				2,700
Buildings and Equipment				29,863
Total				32,563
Accumulated Depreciation				(3,671)
4836 Hickory Hill Road
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				1,300
Buildings and Equipment				8,613
Costs Capitalized Subsequent to Acquisition				162
Gross Amount Carried at Close of Period
Land				1,300
Buildings and Equipment				8,775
Total				10,075
Accumulated Depreciation				(1,080)
2353 & 2373 Global Drive
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				2,393
Buildings and Equipment				27,363
Costs Capitalized Subsequent to Acquisition				6
Gross Amount Carried at Close of Period
Land				2,393
Buildings and Equipment				27,369
Total				29,762
Accumulated Depreciation				(278)
2020 Joe B. Jackson Parkway
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				600
Buildings and Equipment				4,530
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				600
Buildings and Equipment				4,530
Total				5,130
Accumulated Depreciation				(557)
1800 Union Airpark Boulevard
Initial Cost to Company
Land				4,541
Buildings and Equipment				79,469
Costs Capitalized Subsequent to Acquisition				23
Gross Amount Carried at Close of Period
Land				4,541
Buildings and Equipment				79,492
Total				84,033
Accumulated Depreciation				(1,652)
1095 South 4800 West
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				581
Buildings and Equipment				2,237
Costs Capitalized Subsequent to Acquisition				4,582
Gross Amount Carried at Close of Period
Land				581
Buildings and Equipment				6,819
Total				7,400
Accumulated Depreciation				(537)
5 Logistics Drive
Initial Cost to Company
Land				3,299
Buildings and Equipment				15,515
Costs Capitalized Subsequent to Acquisition				58
Gross Amount Carried at Close of Period
Land				3,299
Buildings and Equipment				15,573
Total				18,872
Accumulated Depreciation				(487)
1990 Hood Road
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				400
Buildings and Equipment				10,702
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				400
Buildings and Equipment				10,702
Total				11,102
Accumulated Depreciation				(223)
5000 Commerce Way
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				2,600
Buildings and Equipment				35,920
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				2,600
Buildings and Equipment				35,920
Total				38,520
Accumulated Depreciation				(4,415)
700 Marine Drive
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				820
Buildings and Equipment				8,381
Costs Capitalized Subsequent to Acquisition				661
Gross Amount Carried at Close of Period
Land				820
Buildings and Equipment				9,042
Total				9,862
Accumulated Depreciation				(203)
510 John Dodd Road
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				3,300
Buildings and Equipment				57,998
Costs Capitalized Subsequent to Acquisition				347
Gross Amount Carried at Close of Period
Land				3,300
Buildings and Equipment				58,345
Total				61,645
Accumulated Depreciation				(7,141)
5001 West Delbridge Street
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				2,570
Buildings and Equipment				14,832
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				2,570
Buildings and Equipment				14,832
Total				17,402
Accumulated Depreciation				(308)
4836 Hickory Hill Road
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				1,402
Buildings and Equipment				10,769
Costs Capitalized Subsequent to Acquisition				868
Gross Amount Carried at Close of Period
Land				1,402
Buildings and Equipment				11,637
Total				13,039
Accumulated Depreciation				(1,443)
2020 Joe B. Jackson Parkway
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				7,500
Buildings and Equipment				55,259
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				7,500
Buildings and Equipment				55,259
Total				62,759
Accumulated Depreciation				(6,792)
1095 South 4800 West
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				1,500
Buildings and Equipment				6,913
Costs Capitalized Subsequent to Acquisition				20
Gross Amount Carried at Close of Period
Land				1,500
Buildings and Equipment				6,933
Total				8,433
Accumulated Depreciation				(850)
1901 Meadowville Technology Parkway
Initial Cost to Company
Land				4,000
Buildings and Equipment				67,511
Costs Capitalized Subsequent to Acquisition				0
Gross Amount Carried at Close of Period
Land				4,000
Buildings and Equipment				67,511
Total				71,511
Accumulated Depreciation				(8,298)
5000 Commerce Way
Initial Cost to Company
Land				6,161
Buildings and Equipment				56,046
Costs Capitalized Subsequent to Acquisition				55
Gross Amount Carried at Close of Period
Land				6,161
Buildings and Equipment				56,101
Total				62,262
Accumulated Depreciation				(1,165)
181 Battaile Drive
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances
Initial Cost to Company
Land				1,487
Buildings and Equipment				12,854
Costs Capitalized Subsequent to Acquisition				36
Gross Amount Carried at Close of Period
Land				1,487
Buildings and Equipment				12,890
Total				14,377
Accumulated Depreciation				(4,410)
Mortgages
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances				1,096,608
Initial Cost to Company
Buildings and Equipment				1,196,464
Gross Amount Carried at Close of Period
Number of properties used as collateral | property	3	3	2
Mortgages | 1 property encumbered by one mortgage loan
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances				55,848
Initial Cost to Company
Buildings and Equipment				$ 108,122
Gross Amount Carried at Close of Period
Number of properties used as collateral | property				1
Number of debt instruments | loan				1
Mortgages | 186 properties encumbered by one mortgage loan
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances				$ 645,034
Initial Cost to Company
Buildings and Equipment				$ 504,933
Gross Amount Carried at Close of Period
Number of properties used as collateral | property				186
Number of debt instruments | loan				1
Mortgages | 11 properties encumbered by one mortgage loan
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances				$ 346,772
Initial Cost to Company
Buildings and Equipment				$ 511,898
Gross Amount Carried at Close of Period
Number of properties used as collateral | property				11
Number of debt instruments | loan				1
Mortgages | 1 property encumbered by one mortgage loan
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances				$ 48,954
Initial Cost to Company
Buildings and Equipment				$ 71,511
Gross Amount Carried at Close of Period
Number of properties used as collateral | property				1
Number of debt instruments | loan				1

XML

Summary of Significant Accounting Policies - Other Assets (Details) - AIC - USD ($) $ in Thousands	Feb. 13, 2020	Dec. 31, 2019	Dec. 31, 2018
Schedule of Equity Method Investments [Line Items]
Cost to acquire shares		$ 298	$ 8,632
Subsequent Event
Schedule of Equity Method Investments [Line Items]
Ownership interest	14.30%

XML

Real Estate Properties - Narrative (Details)	1 Months Ended		12 Months Ended
	Feb. 24, 2020 USD ($) ft² property	Oct. 31, 2018 USD ($)	Dec. 31, 2019 USD ($) ft² state property segment building	Dec. 31, 2018 USD ($) ft² property	Dec. 31, 2017 USD ($)	Oct. 31, 2019 USD ($) property	Jan. 17, 2018 ft² property	Sep. 29, 2017 ft² state property
Real Estate Properties
Number of properties owned | property			300				266	266
Net rentable area | ft²			42,939,000				28,540,000	28,540,000
Number of business segments | segment			1
Rental income			$ 229,234,000	$ 162,530,000	$ 156,506,000
Number of properties | property			30	4
Commitments related to tenant improvements and leasing costs			$ 2,568,000
Tenant improvements (in sqft) | ft²			2,040,000
Committed but unspent tenant related obligations			$ 793,000
Hawaii
Real Estate Properties
Number of properties owned | property			226					226
Net rentable area | ft²			16,756,000					16,834,000
Mainland Properties
Real Estate Properties
Number of properties owned			74					40
Net rentable area | ft²			26,183,000					11,706,000
Number of states where real estate is located | state			29					24
Ankeny, IA
Real Estate Properties
Net rentable area | ft²			194,000
Purchase price		$ 450,000
Payments for property improvements			$ 13,507,000
Indianapolis and Cincinnati
Real Estate Properties
Net rentable area | ft²				985,235
Geographic Concentration Risk | Sales Revenue, Net | Hawaii
Real Estate Properties
Percentage of revenues			43.90%	59.70%	60.20%
Two Subsidiaries Of Amazon, Inc.
Real Estate Properties
Rental income			$ 31,623,000	$ 16,047,000	$ 15,938,000
Subsequent Event | Goodyear, AZ
Real Estate Properties
Net rentable area | ft²	820,000
Purchase price	$ 72,000
Weighted-average remaining lease term	6 years
Office and Industrial Properties
Real Estate Properties
Net rentable area | ft²			13,288,180	985,235
Number of properties | property			30	4
Purchase price			$ 941,550,000	$ 121,385,000
Real estate, acquisition costs			$ 4,800,000	$ 1,360,000
11 Mainland Properties | Subsequent Event
Real Estate Properties
Number of properties contributed | property	12
Aggregate property valuation	$ 680,000,000
Contributions from investor	$ 108,300,000
Ownership interest	61.00%
Existing mortgage notes	$ 407,000,000
11 Mainland Properties | Subsequent Event | Asian Institutional Investor [Member]
Real Estate Properties
Ownership interest	39.00%
11 Mainland Properties | Mortgages | Mainland Properties
Real Estate Properties
Number of properties that are securing mortgage note | property						11
Debt instrument, face amount						$ 350,000,000
Forecast | 11 Mainland Properties | Subsequent Event
Real Estate Properties
Contributions from investor	$ 82,000,000

XML

Selected Quarterly Financial Data (Unaudited)

12 Months Ended

Dec. 31, 2019

Selected Quarterly Financial Information [Abstract]

Selected Quarterly Financial Data (Unaudited)

Selected Quarterly Financial Data (Unaudited)

The following is a summary of our unaudited quarterly results of operations for 2019 and 2018:

	2019
	First		Second		Third		Fourth
	Quarter		Quarter		Quarter		Quarter
Total revenues	$	45,987	$	60,090	$	60,958	$	62,199
Net income	$	16,786	$	13,116	$	10,922	$	11,674
Net income per common share—basic and diluted	$	0.26	$	0.20	$	0.17	$	0.18
Common distributions declared	$	0.33	$	0.33	$	0.33	$	0.33

	2018
	First		Second		Third		Fourth
	Quarter		Quarter		Quarter		Quarter
Total revenues	$	40,605	$	39,420	$	40,431	$	42,074
Net income	$	19,232	$	18,726	$	18,142	$	18,288
Net income per common share—basic and diluted	$	0.31	$	0.29	$	0.28	$	0.28
Common distributions declared	$	—	$	0.27	$	0.33	$	0.33

XML

Weighted Average Common Shares

12 Months Ended

Dec. 31, 2019

Weighted Average Number of Shares Outstanding Reconciliation [Abstract]

Weighted Average Common Shares

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):

	Year Ended December 31,
	2019	2018	2017
Weighted average common shares for basic earnings per share	65,049	64,139	45,000
Effect of dilutive securities: unvested share awards	6	1	—
Weighted average common shares for diluted earnings per share	65,055	64,140	45,000

XML

Real Estate Properties

12 Months Ended

Dec. 31, 2019

Real Estate [Abstract]

Real Estate Properties

Real Estate Properties

As of December 31, 2019, we owned 300 properties with a total of approximately 42,939,000 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 26,183,000 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 years ended December 31, 2019, 2018 and 2017, approximately 43.9%, 59.7% and 60.2%, respectively, of our rental income were from our Hawaii Properties. In addition, a subsidiary of Amazon.com, Inc., which is a tenant at certain of our Mainland Properties, accounted for $31,623, $16,047 and $15,938 of our rental income for the years ended December 31, 2019, 2018 and 2017, respectively.

2019 Acquisitions:

During the year ended December 31, 2019, we completed the acquisition of 30 industrial properties containing a combined 13,288,180 rentable square feet for an aggregate purchase price of $941,550, including acquisition related costs of $4,800. These acquisitions were accounted for as acquisitions of assets. 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	628,457		52,546		519,829		56,715		(1,965		)	1,332
August 2019	Columbus, OH	2	392,016	32,300		2,393		27,363		2,544		—			—
		30	13,288,180	$	941,550	$	77,314	$	777,839	$	87,030	$	(1,965	)	$	1,332

In October 2018, we acquired a land parcel adjacent to a property we own located in Ankeny, IA for a purchase price of $450, excluding acquisition related costs. During the year ended December 31, 2019, we completed the development of a 194,000 square foot property expansion for an existing tenant at this property for $13,507.

In February 2020, we acquired a net leased Class A e-commerce distribution center located in Goodyear, AZ with approximately 820,000 rentable square feet for a purchase price of $72,000, excluding acquisition related costs. This property is 100% leased and has a remaining lease term of approximately six years.

In February 2020, we entered into agreements related to a joint venture with an Asian institutional investor for up to 12 of our Mainland Properties, including 11 properties secured by our $350,000 mortgage loan we obtained in October 2019. The investor will contribute approximately $108,300, which includes certain costs associated with the formation of the joint venture, for a 39% equity interest in the joint venture and we retained the remaining 61% equity interest in the joint venture. The investment amount is based on an aggregate property valuation of $680,000, less approximately $407,000 of existing mortgage debt on the properties at the time of the investment. We closed the joint venture with 11 of the 12 properties and the investor will initially contribute approximately $82,000 with the balance contributed when the twelfth property is added. We expect to use the net proceeds from this transaction to reduce outstanding borrowings under our revolving credit facility.

During the year ended December 31, 2019, we committed $2,568 for expenditures related to tenant improvements and leasing costs for leases executed during the period for approximately 2,040,000 square feet. Committed but unspent tenant related obligations based on existing leases as of December 31, 2019 were $793.

2018 Acquisitions:

During the year ended December 31, 2018, we completed the acquisition of four industrial properties containing a combined 985,235 rentable square feet for an aggregate purchase price of $121,385, including acquisition related costs of $1,360. These acquisitions were accounted for as acquisitions of assets. We allocated the purchase prices of these acquisitions based on the estimated fair value of the acquired assets as follows:

		Number	Rentable							Acquired
		of	Square	Purchase				Buildings and		Real Estate
Date	Location	Properties	Feet	Price		Land		Improvements		Leases
June 2018	Doral, FL (1)	1	240,283	$	43,326	$	15,225	$	28,101	$	—
September 2018	Carlisle, PA	1	205,090	20,451		3,299		15,515		1,637
September 2018	Upper Marlboro, MD	1	220,800	29,801		5,296		21,833		2,672
October 2018	Maple Grove, MN	1	319,062	27,807		3,469		21,287		3,051
		4	985,235	$	121,385	$	27,289	$	86,736	$	7,360

⁽¹⁾ This property was acquired and simultaneously leased back to the seller.

XML

Cover Page - USD ($)
$ in Billions

12 Months Ended

Dec. 31, 2019

Feb. 19, 2020

Jun. 28, 2019

Cover page.

Document Type

10-K

Document Annual Report

true

Document Period End Date

Dec. 31, 2019

Document Transition Report

false

Entity File Number

001-38342

Entity Registrant Name

INDUSTRIAL LOGISTICS PROPERTIES TRUST

Entity Incorporation, State or Country Code

MD

Entity Tax Identification Number

82-2809631

Entity Address, Address Line One

Two Newton Place

Entity Address, Address Line Two

255 Washington Street

Entity Address, Address Line Three

Suite 300

Entity Address, City or Town

Newton

Entity Address, State or Province

MA

Entity Address, Postal Zip Code

02458

City Area Code

617

Local Phone Number

219-1460

Title of 12(b) Security

Common Shares of Beneficial Interest

Trading Symbol

ILPT

Security Exchange Name

NASDAQ

Entity Well-known Seasoned Issuer

Yes

Entity Voluntary Filers

No

Entity Current Reporting Status

Yes

Entity Interactive Data Current

Yes

Entity Filer Category

Large Accelerated Filer

Entity Small Business

false

Entity Emerging Growth Company

false

Entity Shell Company

false

Entity Public Float

$ 1.3

Entity Common Stock, Shares Outstanding

65,180,208

Documents Incorporated by Reference

Certain information required by Items 10, 11, 12, 13 and 14 of Part III of this Annual Report on Form 10-K is incorporated by reference to our definitive Proxy Statement for the 2020 Annual Meeting of Shareholders, to be filed with the Securities and Exchange Commission within 120 days after the fiscal year ended December 31, 2019.

Entity Central Index Key

0001717307

Current Fiscal Year End Date

--12-31

Document Fiscal Year Focus

2019

Document Fiscal Period Focus (i.e. Q1,Q2,Q3,FY)

FY

Amendment Flag

false

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income Statement [Abstract]
Net amortization of debt issuance costs, premiums and discounts	$ 2,017	$ 1,244	$ (494)

XML

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Basis of Presentation. These consolidated financial statements include the accounts of us and our subsidiaries, all of which are 100% owned directly or indirectly by us. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated.

The accounts of our Initial Properties are presented at SIR’s historical basis and are consolidated for prior periods presented as the transaction described in Note 1 has been accounted for as a reorganization of entities under common control in accordance with the Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, 805-50-30, Business Combinations. Substantially all of the rental income received from our tenants and SIR’s other tenants was deposited in and commingled with SIR’s general funds during the periods prior to January 17, 2018. Prior to January 17, 2018, general and administrative costs of SIR were primarily allocated to us based on the historical cost of our real estate investments as a percentage of SIR’s historical cost of all of its real estate investments. In accordance with applicable accounting guidance, we believe this method for allocating general and administrative expenses is reasonable. However, actual expenses may have been different from allocated expenses if we operated as a standalone company and those differences may be material.

Real Estate Properties. We record properties at our cost and have presented our Initial Properties at their historical cost basis. Our real estate investments in lands are not depreciated. We calculate depreciation on other real estate investments on a straight line basis over estimated useful lives generally ranging from seven to 40 years.

We allocate the purchase prices of our properties to land, building and improvements based on determinations of the fair values of these assets assuming the properties are vacant. We determine the fair value of each property using methods similar to those used by independent appraisers, which may involve estimated cash flows that are based on a number of factors, including capitalization rates and discount rates, among others. In some circumstances, we engage independent real estate appraisal firms to provide market information and evaluations which are relevant to our purchase price allocations and determinations of depreciable useful lives; however, we are ultimately responsible for the purchase price allocations and determinations of useful lives. We allocate a portion of the purchase price to above market and below market leases based on the present value (using an interest rate which reflects the risks associated with acquired in place leases at the time each property was acquired by us) of the difference, if any, between (i) the contractual amounts to be paid pursuant to the acquired in place leases and (ii) our estimates of fair market lease rates for the corresponding leases, measured over a period equal to the terms of the respective leases. The terms of below market leases that include bargain renewal options, if any, are further adjusted if we determine that renewal to be probable. We allocate a portion of the purchase price to acquired in place leases and tenant relationships based upon market estimates to lease up the property based on the leases in place at the time of purchase. In making these allocations, we consider factors such as estimated carrying costs during the expected lease up periods, including real estate taxes, insurance and other operating income and expenses and costs, such as leasing commissions, legal and other related expenses, to execute similar leases in current market conditions at the time a property was acquired by us. We allocate this aggregate value between acquired in place lease values and tenant relationships based on our evaluation of the specific characteristics of each tenant’s lease. However, we have not separated the value of tenant relationships from the value of acquired in place leases because such value and related amortization expense is immaterial to the accompanying consolidated financial statements. If the value of tenant relationships becomes material in the future, we may separately allocate those amounts and amortize the allocated amount over the estimated life of the relationships.

We amortize capitalized above market lease values (included in acquired real estate leases in our consolidated balance sheets) and below market lease values (presented as assumed real estate lease obligations in our consolidated balance sheets) as a reduction or increase, respectively, to rental income over the terms of the associated leases. Such amortization resulted in increases in rental income of $1,195, $401 and $390 during the years ended December 31, 2019, 2018 and 2017, respectively. We amortize the value of acquired in place leases (included in acquired real estate leases in our consolidated balance sheets), exclusive of the value of above market and below market acquired in place leases, or lease origination value, over the terms of the associated leases. Such amortization, which is included in depreciation and amortization expense, totaled $22,661, $8,993 and $8,824 during the years ended December 31, 2019, 2018 and 2017, respectively. If a lease is terminated prior to its stated expiration, we write off the unamortized amounts relating to that lease.

As of December 31, 2019 and 2018, our acquired real estate leases and assumed real estate lease obligations were as follows:

	December 31,
	2019			2018
Acquired real estate leases:
Capitalized above market lease values	$	28,723		$	28,723
Less: accumulated amortization	(18,303		)	(16,726		)
Capitalized above market lease values, net	10,420			11,997
Lease origination value	186,758			99,727
Less: accumulated amortization	(58,582		)	(35,921		)
Lease origination value, net	128,176			63,806
Acquired real estate leases, net	$	138,596		$	75,803
Assumed real estate lease obligations:
Capitalized below market lease values	$	36,278		$	34,313
Less: accumulated amortization	(18,770		)	(15,997		)
Assumed real estate lease obligations, net	$	17,508		$	18,316

As of December 31, 2019, the weighted average amortization periods for capitalized above market lease values, lease origination value and capitalized below market lease values were 10.2 years, 7.1 years, and 12.0 years, respectively. Future amortization of net intangible acquired real estate lease assets and liabilities to be recognized over the current terms of the associated leases as of December 31, 2019 are estimated to be $24,708 in 2020, $21,676 in 2021, $19,136 in 2022, $17,269 in 2023, $11,846 in 2024 and $26,453 thereafter.

We recognize impairment losses on real estate investments when indicators of impairment are present and the estimated undiscounted cash flow from our real estate investments is less than the carrying amount of such real estate investments. Impairment indicators may include declining tenant occupancy, lack of progress releasing vacant space, tenant bankruptcies, low long term prospects for improvement in property performance, weak or declining tenant profitability, cash flow or liquidity, our decision to dispose of an asset before the end of its estimated useful life and legislative, market or industry changes that could permanently reduce the value of a property. We review our properties for impairment quarterly, or whenever events or changes in circumstances indicate that carrying amounts may not be recoverable. If indicators of impairment are present, we evaluate the carrying value of the related property by comparing it to the expected future undiscounted cash flows expected to be generated from that property. The future net undiscounted cash flows are subjective and are based in part on assumptions regarding hold periods, market rents and terminal capitalization rates. If the sum of these expected future undiscounted cash flows is less than the carrying value, we reduce the net carrying value of the property to its estimated fair value. The determination of undiscounted cash flow includes consideration of many factors including income to be earned from the investment, holding costs (exclusive of interest), estimated selling prices, and prevailing economic and market conditions. No impairments exist on any of our properties as of December 31, 2019 and 2018.

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 cleanup. As of both December 31, 2019 and 2018, accrued environmental remediation costs of $6,940, were included in accounts payable and other liabilities in our 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, for example, 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 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 consolidated statements of comprehensive income.

Capitalization Policy. Costs directly related to the development of properties are capitalized. We capitalize development costs, including interest, real estate taxes, insurance, and other project costs, incurred during the period of development. Determinations of when a development project commences and capitalization begins, and when a development project is substantially complete and held available for occupancy and capitalization must cease, involve judgments. We begin the capitalization of costs during the pre-construction period, which we consider to begin when activities that are necessary to the development of the property commence. We consider a development project as substantially completed and held available for occupancy upon the completion of tenant improvements, but no later than one year from cessation of major construction activity.

Cash and Cash Equivalents. We consider highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents.

Restricted Cash. Restricted cash consists of amounts escrowed for future capital expenditures as required by certain of our mortgage notes.

Deferred Leasing Costs. Deferred leasing costs include capitalized brokerage, legal and other fees associated with the successful negotiation of leases, which are amortized to depreciation and amortization expense on a straight line basis over the terms of the respective leases. Deferred leasing costs totaled $11,383 and $9,845 at December 31, 2019 and 2018, respectively, and accumulated amortization of deferred leasing costs totaled $4,802 and $3,688 at December 31, 2019 and 2018, respectively. Included in deferred leasing costs at December 31, 2019, was $83 of estimated costs associated with leases under negotiation. Future amortization of deferred leasing costs to be recognized during the current terms of our existing leases as of December 31, 2019, are estimated to be $851 in 2020, $786 in 2021, $675 in 2022, $519 in 2023, $480 in 2024 and $3,270 thereafter.

Debt Issuance Costs. Debt issuance costs include capitalized issuance costs related to borrowings, which are amortized to interest expense over the terms of the respective loans. As of both December 31, 2019 and 2018, we had debt issuance costs for our revolving credit facility totaling $5,907, and accumulated amortization of debt issuance costs for our revolving credit facility were $2,953 and $1,477 at December 31, 2019, and 2018, respectively. As of December 31, 2019, we had debt issuance costs, net of accumulated amortization, of $8,194 for certain of our mortgage notes payable obtained during 2019. Future amortization of debt issuance costs to be recognized with respect to our revolving credit facility and mortgage notes payable as of December 31, 2019 are estimated to be $2,353 in 2020, $2,353 in 2021, $876 in 2022, $876 in 2023, $876 in 2024 and $3,814 thereafter.

Other Assets. Other assets consist of our investment in Affiliates Insurance Company, or AIC, prepaid insurance and prepaid real estate taxes. We account for our investment in AIC, until AIC was dissolved as described in Note 10, using the equity method of accounting. Significant influence is present through common representation on the boards of trustees or directors of us and AIC. We acquired shares of common stock of AIC from SIR on December 31, 2018 for $8,632. Until its dissolution on February 13, 2020, we owned a 14.3% ownership interest in AIC. See Note 10 for more information regarding our investment in AIC.

Revenue Recognition. 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.

In February 2016, the 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. We adopted these standards which 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 shareholders' equity 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 consolidated financial statements. Upon adoption, (i) allowances for bad debts are now recognized as a direct reduction of rental income, and (ii) 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 now included in "rental income" in our consolidated financial statements. For periods prior to January 1, 2019, we maintained an allowance for doubtful accounts for estimated losses resulting from the inability or unwillingness of certain tenants to make payments required under their leases. The computation of the allowance was based on the tenants’ payment histories and then current credit profiles, as well as other considerations. Provisions for credit losses prior to January 1, 2019 were previously included in other operating expenses in our consolidated financial statements and prior periods were not reclassified to conform to the current presentation.

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 $40,898 for the year ended December 31, 2019, of which tenant reimbursements totaled $38,755.

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 ASC 842, Leases, to the combined component. Income derived by our leases is recorded in rental income in our 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 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 December 31, 2019:

Year	Amount
2020	$	203,971
2021	202,109
2022	194,209
2023	175,676
2024	152,267
Thereafter	1,185,405
Total	$	2,113,637

For the years ended December 31, 2018 and 2017, rental income from operating leases was recognized on a straight line basis over the lives of lease agreements. We deferred the recognition of contingent rental income, such as percentage rents, until the specific targets that triggered the contingent rental income was achieved. Contingent rental income recognized for the years ended December 31, 2018 and 2017 totaled $941 and $650, respectively. Tenant reimbursements and other income, which included property level operating expenses, capital expenditures reimbursed by our tenants, contingent rental income as well as other incidental revenues, totaled $23,219 and $21,680 for the years ended December 31, 2018 and 2017, respectively.

Income Taxes. Until January 17, 2018, we were a wholly owned subsidiary of SIR, which was 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 income tax purposes. We have qualified for taxation as a REIT under the IRC for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2018 and intend to maintain such qualification. Accordingly, we generally are not, and will not be, subject to U.S. federal income taxes provided we distribute our taxable income and meet certain organization and operating requirements to qualify for taxation as a REIT. We are, however, subject to certain state and local taxes.

Use of Estimates. Preparation of these financial statements in conformity with U.S. generally accepted accounting principles, or GAAP, requires us to make estimates and assumptions that may affect the amounts reported in these consolidated financial statements and related notes. The actual results could differ from these estimates. Significant estimates in the consolidated financial statements include purchase price allocations, useful lives of fixed assets, the assessments of the carrying values and impairments of long lived assets and the allowance for doubtful accounts.

Ownership Interest. For the periods prior to January 17, 2018, our investment activities were financed by SIR. Amounts invested in or advanced to us did not carry interest and had no specific repayment terms.

Net Income Per Common Share. We calculate basic earnings per common share by dividing net income by the weighted average number of common shares outstanding during the period. We calculate diluted net income per share using the more dilutive of the two class method or the treasury stock method. Unvested share awards and other potentially dilutive common shares and the related impact on earnings are considered when calculating diluted earnings per share.

Segment Reporting. We operate in one business segment: ownership and leasing of properties that include industrial and logistics buildings and leased industrial lands.

Reclassifications. Reclassifications have been made to the prior years' consolidated financial statements to conform to the current year's presentation.

New Accounting Pronouncements. 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 expect to adopt the standard using the modified retrospective approach. The implementation of this standard is not expected to have a material impact in our consolidated financial statements.

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SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - Analysis of Carrying Amount And Accumulated Depreciation (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Real Estate Properties
Balance at the beginning of the period	$ 1,462,396	$ 1,343,602	$ 1,336,728
Additions	873,568	118,898	6,974
Disposals		(104)	(100)
Balance at the end of the period	2,335,964	1,462,396	1,343,602
Accumulated Depreciation
Balance at the beginning of the period	(93,291)	(74,614)	(56,976)
Additions	(38,177)	(18,781)	(17,738)
Disposals		104	100
Balance at the end of the period	$ (131,468)	$ (93,291)	$ (74,614)

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Summary of Significant Accounting Policies - Debt Issuance Costs (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Debt issuance costs, line of credit	$ 5,907	$ 5,907
Debt issuance costs, accumulated amortization	2,953	$ 1,477
Future amortization expense of debt issuance costs, 2020	2,353
Future amortization expense of debt issuance costs, 2021	2,353
Future amortization expense of debt issuance costs, 2022	876
Future amortization expense of debt issuance costs, 2023	876
Future amortization expense of debt issuance costs, 2024	876
Future amortization expense of debt issuance costs, Thereafter	3,814
Loans Payable | Mortgage Loan 2019
Debt Instrument [Line Items]
Debt issuance cost, mortgage loan	$ 8,194

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Summary of Significant Accounting Policies - Segment (Details)	12 Months Ended
	Dec. 31, 2019 segment
Accounting Policies [Abstract]
Number of business segments	1

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Certain Arrangements, Allocations and Operations Prior to our IPO

12 Months Ended

Dec. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Certain Arrangements, Allocations and Operations Prior to our IPO

Certain Arrangements, Allocations 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, 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 formation and this contribution from SIR, we issued to SIR 45,000,000 of our common shares and 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 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.

We do not have any employees. As a wholly owned subsidiary of SIR, until the completion of our IPO, we received services from RMR LLC under SIR’s management agreements with RMR LLC. In connection with our IPO, we entered two agreements with RMR LLC to provide management services to us that were substantially similar to the terms of the then management agreements between SIR and RMR LLC. See Note 9 for more information regarding our 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 payable by SIR and allocated to us were based on the percentage of the base management fees allocated to us compared to the total base management fees paid by SIR. Base management fees paid by SIR allocated to us by SIR for the period from January 1, 2018 to January 16, 2018 and the year ended December 31, 2017 were $308 and $6,823, respectively. These amounts are included in other operating expenses in our consolidated financial statements. The incentive management fee allocated to us by SIR for the year ended December 31, 2017 and paid by SIR to RMR LLC in January 2018 was $7,660. General and administrative expenses incurred by SIR were allocated to us by SIR for periods prior to our IPO based on the percentage of the base management fees allocated to us compared to the total base management fees paid by SIR.

RMR LLC was paid, by SIR, property management fees equal to 3.0% of gross collected rents and construction supervision fees equal to 5.0% of construction costs. The aggregate property management and construction supervision fees allocated to us by SIR for the period from January 1 to January 16, 2018 and the year ended December 31, 2017 were $230 and $4,244, respectively. These amounts were calculated based upon gross collected rents and construction supervision services provided at or for our Initial Properties. These amounts are included in other operating expenses or have been capitalized, as appropriate, in our consolidated financial statements.

Under SIR’s management agreements with RMR LLC, SIR was generally responsible for all of our operating expenses, including certain expenses incurred by RMR LLC on our behalf, including 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 and as otherwise agreed. Our property level operating costs are generally incorporated into rents charged to our tenants, including certain payroll and related costs incurred by RMR LLC. The total of these property management related reimbursements paid to RMR LLC for costs incurred by RMR LLC related to our Initial Properties for the period from January 1 to January 16, 2018 and the year ended December 31, 2017 were $120 and $2,512 respectively. These amounts are included in other operating expenses in our consolidated financial statements for these periods.

We also paid or reimbursed SIR for our allocated portion of certain insurance policies. The total of these insurance related reimbursements paid to SIR for costs for the period from January 1 to January 16, 2018 was $4. See Note 10 for more information.

See Notes 9 and 10 for more information regarding our relationships, agreements and transactions with RMR LLC and SIR.

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Indebtedness

12 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

Indebtedness

Indebtedness

As of December 31, 2019 and 2018, our outstanding indebtedness consisted of the following:

									Net Book
	Principal Balance as of								Value
	December 31,								of Collateral
						Interest			At December 31,
	2019 (1)			2018 (1)		Rate		Maturity	2019
Unsecured revolving credit facility (2)	$	310,000		$	413,000	3.26	%	Dec 2021	$	—
Mortgage note payable (secured by one property in Virginia)	48,750			48,750		3.48	%	Nov 2020	63,213
Mortgage note payable (secured by one property in Florida)	56,980			—		4.22	%	Oct 2023	106,048
Mortgage note payable (secured by 186 properties in Hawaii)	650,000			—		4.31	%	Feb 2029	492,371
Mortgage note payable (secured by 11 Mainland Properties)	350,000			—		3.33	%	Nov 2029	499,572
	1,415,730			461,750					$	1,161,204
Unamortized debt issuance costs, premiums and discounts	(9,122		)	445
	$	1,406,608		$	462,195

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

(2) The maturity date of our revolving credit facility is December 29, 2021 and we have the option to extend the maturity date for two, six month periods through December 29, 2022.

On December 29, 2017, we obtained a $750,000 secured revolving credit facility which initially had a maturity date of March 29, 2018. Upon the completion of our IPO, our secured revolving credit facility became a $750,000 unsecured revolving credit facility and the maturity date was extended to December 29, 2021. Borrowings under our revolving credit facility are available for our general business purposes, including acquisitions. 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. 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 December 31, 2019 and 2018, interest payable on the amount outstanding under our revolving credit facility was LIBOR plus 155 basis points and LIBOR plus 130 basis points, respectively. As of December 31, 2019 and 2018, the interest rate payable on borrowings under our revolving credit facility was 3.26% and 3.81%, respectively. The weighted average interest rate for borrowings under our revolving credit facility was 3.68% and 3.33% for the years ended December 31, 2019 and 2018, respectively. As of December 31, 2019 and February 19, 2020, we had $310,000 and $385,000, respectively, outstanding under our revolving credit facility and $440,000 and $365,000, 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 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 December 31, 2019.

In January 2019, we obtained a $650,000 mortgage loan secured by 186 of our properties located on the island of Oahu, HI containing approximately 9.6 million square feet. 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. We used the proceeds from this loan to reduce outstanding borrowings under our revolving credit facility and to fund acquisitions.

In October 2019, we obtained a $350,000 mortgage loan secured by 11 of our Mainland Properties located in eight states containing an aggregate of approximately 8.2 million rentable square feet. 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.

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 note, which increased its effective interest rate to 4.22% per annum. We recorded this discount as 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.

The required principal payments due during the next five years and thereafter under all our outstanding debt as of December 31, 2019 are as follows:

	Principal
Year	Payment
2020	$	48,750
2021	310,000
2022	—
2023	56,980
2024	—
Thereafter	1,000,000
	$	1,415,730	(1)

(1)

Total debt outstanding as of December 31, 2019, including unamortized debt issuance costs, premiums and discounts, was $1,406,608.

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SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

12 Months Ended

Dec. 31, 2019

SEC Schedule, 12-28, Real Estate Companies, Investment in Real Estate and Accumulated Depreciation Disclosure [Abstract]

SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION

December 31, 2019

(dollars in thousands)

						Initial Cost to				Costs		Gross Amount Carried at
						Company				Capitalized		Close of Period(4)										Original
								Buildings and		Subsequent to				Buildings and				Accumulated			Date	Construction
	Property	Location	State	Property Type	Encumbrances(1)	Land		Equipment		Acquisition		Land		Equipment		Total(2)		Depreciation(3)			Acquired	Date
1	4501 Industrial Drive	Fort Smith	AR	Mainland Properties		$	900	$	3,485	$	—	$	900	$	3,485	$	4,385	$	(428	)	1/29/2015	2013
2	955 Aeroplaza Drive	Colorado Springs	CO	Mainland Properties		800		7,412		39		800		7,451		8,251		(913		)	1/29/2015	2012
3/4	13400 East 39th Avenue and 3800 Wheeling Street	Denver	CO	Mainland Properties		3,100		12,955		46		3,100		13,001		16,101		(1,632		)	1/29/2015	1973
5	3870 Ronald Reagan Boulevard	Johnstown	CO	Mainland Properties		2,780		9,722		—		2,780		9,722		12,502		(236		)	4/9/2019	2007
6	150 Greenhorn Drive	Pueblo	CO	Mainland Properties		200		4,177		—		200		4,177		4,377		(514		)	1/29/2015	2013
7	2 Tower Drive	Wallingford	CT	Mainland Properties		1,471		2,165		569		1,471		2,734		4,205		(727		)	10/24/2006	1978
8	235 Great Pond Drive	Windsor	CT	Mainland Properties		2,400		9,469		—		2,400		9,469		11,869		(1,756		)	7/20/2012	2004
9	10450 Doral Boulevard	Doral	FL	Mainland Properties		15,225		28,102		—		15,225		28,102		43,327		(1,406		)	6/27/2018	1996
10	2100 NW 82nd Avenue	Miami	FL	Mainland Properties		144		1,297		454		144		1,751		1,895		(797		)	3/19/1998	1987
11	3350 Laurel Ridge Avenue	Ruskin	FL	Mainland Properties	(A)	8,351		99,771		—		8,351		99,771		108,122		(2,074		)	4/9/2019	2014
12	1000 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	2,252		—		—		2,252		—		2,252		—			12/5/2003	—
13	1001 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	15,155		3,312		92		15,155		3,404		18,559		(1,354		)	12/5/2003	—
14	1024 Kikowaena Place	Honolulu	HI	Hawaii Properties	(B)	1,818		—		—		1,818		—		1,818		—			12/5/2003	—
15	1024 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	1,385		—		—		1,385		—		1,385		—			12/5/2003	—
16	1027 Kikowaena Place	Honolulu	HI	Hawaii Properties	(B)	5,444		—		—		5,444		—		5,444		—			12/5/2003	—
17	1030 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	5,655		—		—		5,655		—		5,655		—			12/5/2003	—
18	1038 Kikowaena Place	Honolulu	HI	Hawaii Properties	(B)	2,576		—		—		2,576		—		2,576		—			12/5/2003	—
19	1045 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	819		—		—		819		—		819		—			12/5/2003	—
20	1050 Kikowaena Place	Honolulu	HI	Hawaii Properties	(B)	1,404		873		—		1,404		873		2,277		(350		)	12/5/2003	—
21	1052 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	1,703		—		240		1,703		240		1,943		(85		)	12/5/2003	—
22	1055 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	1,216		—		—		1,216		—		1,216		—			12/5/2003	—
23	106 Puuhale Road	Honolulu	HI	Hawaii Properties	(B)	1,113		—		275		1,114		274		1,388		(66		)	12/5/2003	1966
24	1062 Kikowaena Place	Honolulu	HI	Hawaii Properties	(B)	1,049		598		—		1,049		598		1,647		(240		)	12/5/2003	—
25	1122 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	5,781		—		—		5,781		—		5,781		—			12/5/2003	—
26	113 Puuhale Road	Honolulu	HI	Hawaii Properties	(B)	3,729		—		—		3,729		—		3,729		—			12/5/2003	—
27	1150 Kikowaena Place	Honolulu	HI	Hawaii Properties	(B)	2,445		—		—		2,445		—		2,445		—			12/5/2003	—
28	120 Mokauea Street	Honolulu	HI	Hawaii Properties	(B)	1,953		—		943		1,953		943		2,896		(127		)	12/5/2003	1970
29	120 Sand Island Access Road	Honolulu	HI	Hawaii Properties	(B)	1,132		11,307		1,423		1,130		12,732		13,862		(4,638		)	11/23/2004	2004
30	120B Mokauea Street	Honolulu	HI	Hawaii Properties	(B)	1,953		—		—		1,953		—		1,953		—			12/5/2003	1970

						Initial Cost to		Costs	Gross Amount Carried at
						Company		Capitalized	Close of Period(4)						Original
							Buildings and	Subsequent to		Buildings and		Accumulated		Date	Construction
	Property	Location	State	Property Type	Encumbrances(1)	Land	Equipment	Acquisition	Land	Equipment	Total(2)	Depreciation(3)		Acquired	Date
31	125 Puuhale Road	Honolulu	HI	Hawaii Properties	(B)	1,630	—	—	1,630	—	1,630	—		12/5/2003	—
32	125B Puuhale Road	Honolulu	HI	Hawaii Properties	(B)	2,815	—	—	2,815	—	2,815	—		12/5/2003	—
33	1330 Pali Highway	Honolulu	HI	Hawaii Properties	(B)	1,423	—	—	1,423	—	1,423	—		12/5/2003	—
34	1360 Pali Highway	Honolulu	HI	Hawaii Properties	(B)	9,170	—	161	9,170	161	9,331	(114	)	12/5/2003	—
35	140 Puuhale Road	Honolulu	HI	Hawaii Properties	(B)	1,100	—	—	1,100	—	1,100	—		12/5/2003	—
36	142 Mokauea Street	Honolulu	HI	Hawaii Properties	(B)	2,182	—	1,537	2,182	1,537	3,719	(401	)	12/5/2003	1972
37	148 Mokauea Street	Honolulu	HI	Hawaii Properties	(B)	3,476	—	—	3,476	—	3,476	—		12/5/2003	—
38	150 Puuhale Road	Honolulu	HI	Hawaii Properties	(B)	4,887	—	—	4,887	—	4,887	—		12/5/2003	—
39	151 Puuhale Road	Honolulu	HI	Hawaii Properties	(B)	1,956	—	—	1,956	—	1,956	—		12/5/2003	—
40	158 Sand Island Access Road	Honolulu	HI	Hawaii Properties	(B)	2,488	—	—	2,488	—	2,488	—		12/5/2003	—
41	165 Sand Island Access Road	Honolulu	HI	Hawaii Properties	(B)	758	—	—	758	—	758	—		12/5/2003	—
42	179 Sand Island Access Road	Honolulu	HI	Hawaii Properties	(B)	2,480	—	—	2,480	—	2,480	—		12/5/2003	—
43	180 Sand Island Access Road	Honolulu	HI	Hawaii Properties	(B)	1,655	—	—	1,655	—	1,655	—		12/5/2003	—
44	1926 Auiki Street	Honolulu	HI	Hawaii Properties	(B)	2,872	—	1,724	2,874	1,722	4,596	(518	)	12/5/2003	1959
45	1931 Kahai Street	Honolulu	HI	Hawaii Properties	(B)	3,779	—	—	3,779	—	3,779	—		12/5/2003	—
46	197 Sand Island Access Road	Honolulu	HI	Hawaii Properties	(B)	1,238	—	—	1,238	—	1,238	—		12/5/2003	—
47	2001 Kahai Street	Honolulu	HI	Hawaii Properties	(B)	1,091	—	—	1,091	—	1,091	—		12/5/2003	—
48	2019 Kahai Street	Honolulu	HI	Hawaii Properties	(B)	1,377	—	—	1,377	—	1,377	—		12/5/2003	—
49	2020 Auiki Street	Honolulu	HI	Hawaii Properties	(B)	2,385	—	—	2,385	—	2,385	—		12/5/2003	—
50	204 Sand Island Access Road	Honolulu	HI	Hawaii Properties	(B)	1,689	—	—	1,689	—	1,689	—		12/5/2003	—
51	207 Puuhale Road	Honolulu	HI	Hawaii Properties	(B)	2,024	—	—	2,024	—	2,024	—		12/5/2003	—
52	2103 Kaliawa Street	Honolulu	HI	Hawaii Properties	(B)	3,212	—	—	3,212	—	3,212	—		12/5/2003	—
53	2106 Kaliawa Street	Honolulu	HI	Hawaii Properties	(B)	1,568	—	169	1,568	169	1,737	(78	)	12/5/2003	—
54	2110 Auiki Street	Honolulu	HI	Hawaii Properties	(B)	837	—	—	837	—	837	—		12/5/2003	—
55	212 Mohonua Place	Honolulu	HI	Hawaii Properties	(B)	1,067	—	—	1,067	—	1,067	—		12/5/2003	—
56	2122 Kaliawa Street	Honolulu	HI	Hawaii Properties	(B)	1,365	—	—	1,365	—	1,365	—		12/5/2003	—
57	2127 Auiki Street	Honolulu	HI	Hawaii Properties	(B)	2,906	—	97	2,906	97	3,003	(55	)	12/5/2003	—
58	2135 Auiki Street	Honolulu	HI	Hawaii Properties	(B)	825	—	—	825	—	825	—		12/5/2003	—
59	2139 Kaliawa Street	Honolulu	HI	Hawaii Properties	(B)	885	—	—	885	—	885	—		12/5/2003	—

						Initial Cost to		Costs	Gross Amount Carried at
						Company		Capitalized	Close of Period(4)						Original
							Buildings and	Subsequent to		Buildings and		Accumulated		Date	Construction
	Property	Location	State	Property Type	Encumbrances(1)	Land	Equipment	Acquisition	Land	Equipment	Total(2)	Depreciation(3)		Acquired	Date
60	214 Sand Island Access Road	Honolulu	HI	Hawaii Properties	(B)	1,864	—	540	1,864	540	2,404	(67	)	12/5/2003	1981
61	2140 Kaliawa Street	Honolulu	HI	Hawaii Properties	(B)	931	—	—	931	—	931	—		12/5/2003	—
62	2144 Auiki Street	Honolulu	HI	Hawaii Properties	(B)	2,640	—	7,160	2,640	7,160	9,800	(2,285	)	12/5/2003	1953
63	215 Puuhale Road	Honolulu	HI	Hawaii Properties	(B)	2,117	—	—	2,117	—	2,117	—		12/5/2003	—
64	218 Mohonua Place	Honolulu	HI	Hawaii Properties	(B)	1,741	—	—	1,741	—	1,741	—		12/5/2003	—
65	220 Puuhale Road	Honolulu	HI	Hawaii Properties	(B)	2,619	—	—	2,619	—	2,619	—		12/5/2003	—
66	2250 Pahounui Drive	Honolulu	HI	Hawaii Properties	(B)	3,862	—	—	3,862	—	3,862	—		12/5/2003	—
67	2264 Pahounui Drive	Honolulu	HI	Hawaii Properties	(B)	1,632	—	—	1,632	—	1,632	—		12/5/2003	—
68	2276 Pahounui Drive	Honolulu	HI	Hawaii Properties	(B)	1,619	—	—	1,619	—	1,619	—		12/5/2003	—
69	228 Mohonua Place	Honolulu	HI	Hawaii Properties	(B)	1,865	—	—	1,865	—	1,865	—		12/5/2003	—
70	2308 Pahounui Drive	Honolulu	HI	Hawaii Properties	(B)	3,314	—	—	3,314	—	3,314	—		12/5/2003	—
71	231 Sand Island Access Road	Honolulu	HI	Hawaii Properties	(B)	752	—	—	752	—	752	—		12/5/2003	—
72	231B Sand Island Access Road	Honolulu	HI	Hawaii Properties	(B)	1,539	—	—	1,539	—	1,539	—		12/5/2003	—
73	2344 Pahounui Drive	Honolulu	HI	Hawaii Properties	(B)	6,709	—	—	6,709	—	6,709	—		12/5/2003	—
74	238 Sand Island Access Road	Honolulu	HI	Hawaii Properties	(B)	2,273	—	—	2,273	—	2,273	—		12/5/2003	—
75	2635 Waiwai Loop A	Honolulu	HI	Hawaii Properties	(B)	934	350	683	934	1,033	1,967	(188	)	12/5/2003	—
76	2635 Waiwai Loop B	Honolulu	HI	Hawaii Properties	(B)	1,177	105	683	1,177	788	1,965	(89	)	12/5/2003	—
77	2760 Kam Highway	Honolulu	HI	Hawaii Properties	(B)	703	—	170	703	170	873	—		12/5/2003	—
78	2804 Kilihau Street	Honolulu	HI	Hawaii Properties	(B)	1,775	2	—	1,775	2	1,777	(2	)	12/5/2003	—
79	2806 Kaihikapu Street	Honolulu	HI	Hawaii Properties	(B)	1,801	—	—	1,801	—	1,801	—		12/5/2003	—
80	2808 Kam Highway	Honolulu	HI	Hawaii Properties	(B)	310	—	—	310	—	310	—		12/5/2003	—
81	2809 Kaihikapu Street	Honolulu	HI	Hawaii Properties	(B)	1,837	—	—	1,837	—	1,837	—		12/5/2003	—
82	2810 Paa Street	Honolulu	HI	Hawaii Properties	(B)	3,340	—	—	3,340	—	3,340	—		12/5/2003	—
83	2810 Pukoloa Street	Honolulu	HI	Hawaii Properties	(B)	27,699	—	—	27,699	—	27,699	—		12/5/2003	—
84	2812 Awaawaloa Street	Honolulu	HI	Hawaii Properties	(B)	1,801	3	—	1,801	3	1,804	(2	)	12/5/2003	—
85	2814 Kilihau Street	Honolulu	HI	Hawaii Properties	(B)	1,925	—	—	1,925	—	1,925	—		12/5/2003	—
86	2815 Kaihikapu Street	Honolulu	HI	Hawaii Properties	(B)	1,818	—	5	1,818	5	1,823	(2	)	12/5/2003	—
87	2815 Kilihau Street	Honolulu	HI	Hawaii Properties	(B)	287	—	—	287	—	287	—		12/5/2003	—
88	2816 Awaawaloa Street	Honolulu	HI	Hawaii Properties	(B)	1,009	27	—	1,009	27	1,036	(11	)	12/5/2003	—
89	2819 Mokumoa Street - A	Honolulu	HI	Hawaii Properties	(B)	1,821	—	—	1,821	—	1,821	—		12/5/2003	—
90	2819 Mokumoa Street - B	Honolulu	HI	Hawaii Properties	(B)	1,816	—	—	1,816	—	1,816	—		12/5/2003	—

						Initial Cost to		Costs	Gross Amount Carried at
						Company		Capitalized	Close of Period(4)						Original
							Buildings and	Subsequent to		Buildings and		Accumulated		Date	Construction
	Property	Location	State	Property Type	Encumbrances(1)	Land	Equipment	Acquisition	Land	Equipment	Total(2)	Depreciation(3)		Acquired	Date
91	2819 Pukoloa Street	Honolulu	HI	Hawaii Properties	(B)	2,090	—	33	2,090	33	2,123	(9	)	12/5/2003	—
92	2821 Kilihau Street	Honolulu	HI	Hawaii Properties	(B)	287	—	—	287	—	287	—		12/5/2003	—
93	2826 Kaihikapu Street	Honolulu	HI	Hawaii Properties	(B)	3,921	—	—	3,921	—	3,921	—		12/5/2003	—
94	2827 Kaihikapu Street	Honolulu	HI	Hawaii Properties	(B)	1,801	—	—	1,801	—	1,801	—		12/5/2003	—
95	2828 Paa Street	Honolulu	HI	Hawaii Properties	(B)	12,448	—	—	12,448	—	12,448	—		12/5/2003	—
96	2829 Awaawaloa Street	Honolulu	HI	Hawaii Properties	(B)	1,720	2	—	1,720	2	1,722	(2	)	12/5/2003	—
97	2829 Kilihau Street	Honolulu	HI	Hawaii Properties	(B)	287	—	—	287	—	287	—		12/5/2003	—
98	2829 Pukoloa Street	Honolulu	HI	Hawaii Properties	(B)	2,088	—	—	2,088	—	2,088	—		12/5/2003	—
99	2830 Mokumoa Street	Honolulu	HI	Hawaii Properties	(B)	2,146	—	—	2,146	—	2,146	—		12/5/2003	—
100	2831 Awaawaloa Street	Honolulu	HI	Hawaii Properties	(B)	860	—	—	860	—	860	—		12/5/2003	—
101	2831 Kaihikapu Street	Honolulu	HI	Hawaii Properties	(B)	1,272	529	56	1,272	585	1,857	(234	)	12/5/2003	—
102	2833 Kilihau Street	Honolulu	HI	Hawaii Properties	(B)	601	—	—	601	—	601	—		12/5/2003	—
103	2833 Paa Street	Honolulu	HI	Hawaii Properties	(B)	1,701	—	—	1,701	—	1,701	—		12/5/2003	—
104	2833 Paa Street #2	Honolulu	HI	Hawaii Properties	(B)	1,675	—	—	1,675	—	1,675	—		12/5/2003	—
105	2836 Awaawaloa Street	Honolulu	HI	Hawaii Properties	(B)	1,353	—	—	1,353	—	1,353	—		12/5/2003	—
106	2838 Kilihau Street	Honolulu	HI	Hawaii Properties	(B)	4,262	—	—	4,262	—	4,262	—		12/5/2003	—
107	2839 Kilihau Street	Honolulu	HI	Hawaii Properties	(B)	627	—	—	627	—	627	—		12/5/2003	—
108	2839 Mokumoa Street	Honolulu	HI	Hawaii Properties	(B)	1,942	—	—	1,942	—	1,942	—		12/5/2003	—
109	2840 Mokumoa Street	Honolulu	HI	Hawaii Properties	(B)	2,149	—	—	2,149	—	2,149	—		12/5/2003	—
110	2841 Pukoloa Street	Honolulu	HI	Hawaii Properties	(B)	2,088	—	—	2,088	—	2,088	—		12/5/2003	—
111	2844 Kaihikapu Street	Honolulu	HI	Hawaii Properties	(B)	1,960	14	—	1,960	14	1,974	(12	)	12/5/2003	—
112	2846-A Awaawaloa Street	Honolulu	HI	Hawaii Properties	(B)	2,181	954	—	2,181	954	3,135	(383	)	12/5/2003	—
113	2847 Awaawaloa Street	Honolulu	HI	Hawaii Properties	(B)	582	303	—	582	303	885	(121	)	12/5/2003	—
114	2849 Kaihikapu Street	Honolulu	HI	Hawaii Properties	(B)	860	—	—	860	—	860	—		12/5/2003	—
115	2850 Awaawaloa Street	Honolulu	HI	Hawaii Properties	(B)	287	172	—	286	173	459	(69	)	12/5/2003	—
116	2850 Mokumoa Street	Honolulu	HI	Hawaii Properties	(B)	2,143	—	—	2,143	—	2,143	—		12/5/2003	—
117	2850 Paa Street	Honolulu	HI	Hawaii Properties	(B)	22,827	—	—	22,827	—	22,827	—		12/5/2003	—
118	2855 Kaihikapu Street	Honolulu	HI	Hawaii Properties	(B)	1,807	—	—	1,807	—	1,807	—		12/5/2003	—
119	2855 Pukoloa Street	Honolulu	HI	Hawaii Properties	(B)	1,934	—	—	1,934	—	1,934	—		12/5/2003	—
120	2857 Awaawaloa Street	Honolulu	HI	Hawaii Properties	(B)	983	—	—	983	—	983	—		12/5/2003	—
121	2858 Kaihikapu Street	Honolulu	HI	Hawaii Properties	(B)	1,801	—	—	1,801	—	1,801	—		12/5/2003	—

						Initial Cost to		Costs		Gross Amount Carried at
						Company		Capitalized		Close of Period(4)						Original
							Buildings and	Subsequent to			Buildings and		Accumulated		Date	Construction
	Property	Location	State	Property Type	Encumbrances(1)	Land	Equipment	Acquisition		Land	Equipment	Total(2)	Depreciation(3)		Acquired	Date
122	2861 Mokumoa Street	Honolulu	HI	Hawaii Properties	(B)	3,867	—	—		3,867	—	3,867	—		12/5/2003	—
123	2864 Awaawaloa Street	Honolulu	HI	Hawaii Properties	(B)	1,836	—	6		1,836	6	1,842	(4	)	12/5/2003	—
124	2864 Mokumoa Street	Honolulu	HI	Hawaii Properties	(B)	2,092	—	—		2,092	—	2,092	—		12/5/2003	—
125	2865 Pukoloa Street	Honolulu	HI	Hawaii Properties	(B)	1,934	—	—		1,934	—	1,934	—		12/5/2003	—
126	2868 Kaihikapu Street	Honolulu	HI	Hawaii Properties	(B)	1,801	—	—		1,801	—	1,801	—		12/5/2003	—
127	2869 Mokumoa Street	Honolulu	HI	Hawaii Properties	(B)	1,794	—	—		1,794	—	1,794	—		12/5/2003	—
128	2875 Paa Street	Honolulu	HI	Hawaii Properties	(B)	1,330	—	—		1,330	—	1,330	—		12/5/2003	—
129	2879 Mokumoa Street	Honolulu	HI	Hawaii Properties	(B)	1,789	—	—		1,789	—	1,789	—		12/5/2003	—
130	2879 Paa Street	Honolulu	HI	Hawaii Properties	(B)	1,691	—	44		1,691	44	1,735	(12	)	12/5/2003	—
131	2886 Paa Street	Honolulu	HI	Hawaii Properties	(B)	2,205	—	—		2,205	—	2,205	—		12/5/2003	—
132	2889 Mokumoa Street	Honolulu	HI	Hawaii Properties	(B)	1,783	5	(5	)	1,783	—	1,783	—		12/5/2003	—
133	2906 Kaihikapu Street	Honolulu	HI	Hawaii Properties	(B)	1,814	2	—		1,814	2	1,816	(1	)	12/5/2003	—
134	2908 Kaihikapu Street	Honolulu	HI	Hawaii Properties	(B)	1,798	23	(11	)	1,798	12	1,810	(2	)	12/5/2003	—
135	2915 Kaihikapu Street	Honolulu	HI	Hawaii Properties	(B)	2,579	—	—		2,579	—	2,579	—		12/5/2003	—
136	2927 Mokumoa Street	Honolulu	HI	Hawaii Properties	(B)	1,778	—	—		1,778	—	1,778	—		12/5/2003	—
137	2928 Kaihikapu Street - A	Honolulu	HI	Hawaii Properties	(B)	1,801	—	—		1,801	—	1,801	—		12/5/2003	—
138	2928 Kaihikapu Street - B	Honolulu	HI	Hawaii Properties	(B)	1,948	—	—		1,948	—	1,948	—		12/5/2003	—
139	2960 Mokumoa Street	Honolulu	HI	Hawaii Properties	(B)	1,977	—	—		1,977	—	1,977	—		12/5/2003	—
140	2965 Mokumoa Street	Honolulu	HI	Hawaii Properties	(B)	2,140	—	—		2,140	—	2,140	—		12/5/2003	—
141	2969 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	4,038	15	—		4,038	15	4,053	(9	)	12/5/2003	—
142	2970 Mokumoa Street	Honolulu	HI	Hawaii Properties	(B)	1,722	—	—		1,722	—	1,722	—		12/5/2003	—
143	33 S. Vineyard Boulevard	Honolulu	HI	Hawaii Properties	(B)	844	—	—		844	—	844	—		12/5/2003	—
144	525 N. King Street	Honolulu	HI	Hawaii Properties	(B)	1,342	—	—		1,342	—	1,342	—		12/5/2003	—
145	609 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	616	—	8		616	8	624	(8	)	12/5/2003	—
146	619 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	1,401	2	12		1,401	14	1,415	(2	)	12/5/2003	—
147	645 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	882	—	—		882	—	882	—		12/5/2003	—
148	659 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	860	20	—		860	20	880	(17	)	12/5/2003	—
149	659 Puuloa Road	Honolulu	HI	Hawaii Properties	(B)	1,807	—	—		1,807	—	1,807	—		12/5/2003	—
150	660 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	1,783	4	—		1,783	4	1,787	(3	)	12/5/2003	—
151	667 Puuloa Road	Honolulu	HI	Hawaii Properties	(B)	860	2	—		860	2	862	(2	)	12/5/2003	—
152	669 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	1,801	14	62		1,801	76	1,877	(22	)	12/5/2003	—

						Initial Cost to		Costs	Gross Amount Carried at
						Company		Capitalized	Close of Period(4)						Original
							Buildings and	Subsequent to		Buildings and		Accumulated		Date	Construction
	Property	Location	State	Property Type	Encumbrances(1)	Land	Equipment	Acquisition	Land	Equipment	Total(2)	Depreciation(3)		Acquired	Date
153	673 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	1,801	—	—	1,801	—	1,801	—		12/5/2003	—
154	675 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	1,081	—	—	1,081	—	1,081	—		12/5/2003	—
155	679 Puuloa Road	Honolulu	HI	Hawaii Properties	(B)	1,807	3	—	1,807	3	1,810	(3	)	12/5/2003	—
156	685 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	1,801	—	—	1,801	—	1,801	—		12/5/2003	—
157	673 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	1,801	20	—	1,801	20	1,821	(17	)	12/5/2003	—
158	692 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	1,796	2	—	1,798	—	1,798	—		12/5/2003	—
159	697 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	994	811	—	994	811	1,805	(327	)	12/5/2003	—
160	702 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	1,784	3	—	1,783	4	1,787	(3	)	12/5/2003	—
161	704 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	2,390	685	—	2,390	685	3,075	(275	)	12/5/2003	—
162	709 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	1,801	—	—	1,801	—	1,801	—		12/5/2003	—
163	719 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	1,960	—	—	1,960	—	1,960	—		12/5/2003	—
164	729 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	1,801	—	—	1,801	—	1,801	—		12/5/2003	—
165	733 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	3,403	—	—	3,403	—	3,403	—		12/5/2003	—
166	739 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	1,801	—	—	1,801	—	1,801	—		12/5/2003	—
167	759 Puuloa Road	Honolulu	HI	Hawaii Properties	(B)	1,766	3	—	1,766	3	1,769	(3	)	12/5/2003	—
168	761 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	3,757	2	—	3,757	2	3,759	(1	)	12/5/2003	—
169	766 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	1,801	—	—	1,801	—	1,801	—		12/5/2003	—
170	770 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	1,801	—	—	1,801	—	1,801	—		12/5/2003	—
171	789 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	2,608	3	—	2,608	3	2,611	(3	)	12/5/2003	—
172	80 Sand Island Access Road	Honolulu	HI	Hawaii Properties	(B)	7,972	—	—	7,972	—	7,972	—		12/5/2003	—
173	803 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	3,804	—	—	3,804	—	3,804	—		12/5/2003	—
174	808 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	3,279	—	—	3,279	—	3,279	—		12/5/2003	—
175	812 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	1,960	25	628	2,613	—	2,613	—		12/5/2003	—
176	819 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	4,821	583	30	4,821	613	5,434	(245	)	12/5/2003	—
177	822 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	1,795	15	—	1,795	15	1,810	(13	)	12/5/2003	—
178	830 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	1,801	25	—	1,801	25	1,826	(21	)	12/5/2003	—
179	841 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	3,265	—	—	3,265	—	3,265	—		12/5/2003	—
180	842 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	1,795	14	—	1,795	14	1,809	(12	)	12/5/2003	—
181	846 Ala Lilikoi Boulevard B	Honolulu	HI	Hawaii Properties	(B)	234	—	—	234	—	234	—		12/5/2003	—
182	848 Ala Lilikoi Boulevard A	Honolulu	HI	Hawaii Properties	(B)	9,426	—	—	9,426	—	9,426	—		12/5/2003	—
183	850 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	2,682	2	—	2,682	2	2,684	(2	)	12/5/2003	—

						Initial Cost to		Costs	Gross Amount Carried at
						Company		Capitalized	Close of Period(4)						Original
							Buildings and	Subsequent to		Buildings and		Accumulated		Date	Construction
	Property	Location	State	Property Type	Encumbrances(1)	Land	Equipment	Acquisition	Land	Equipment	Total(2)	Depreciation(3)		Acquired	Date
184	852 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	1,801	—	—	1,801	—	1,801	—		12/5/2003	—
185	855 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	1,834	—	—	1,834	—	1,834	—		12/5/2003	—
186	865 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	1,846	—	—	1,846	—	1,846	—		12/5/2003	—
187	889 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	5,888	315	—	5,888	315	6,203	(56	)	11/21/2012	—
188	905 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	1,148	—	—	1,148	—	1,148	—		12/5/2003	—
189	918 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	3,820	—	—	3,820	—	3,820	—		12/5/2003	—
190	930 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	3,654	—	—	3,654	—	3,654	—		12/5/2003	—
191	944 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	1,219	—	—	1,219	—	1,219	—		12/5/2003	—
192	949 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	11,568	—	—	11,568	—	11,568	—		12/5/2003	—
193	950 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	1,724	—	—	1,724	—	1,724	—		12/5/2003	—
194	960 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	614	—	—	614	—	614	—		12/5/2003	—
195	960 Mapunapuna Street	Honolulu	HI	Hawaii Properties	(B)	1,933	—	—	1,933	—	1,933	—		12/5/2003	—
196	970 Ahua Street	Honolulu	HI	Hawaii Properties	(B)	817	—	—	817	—	817	—		12/5/2003	—
197	91-027 Kaomi Loop	Kapolei	HI	Hawaii Properties		2,667	—	—	2,667	—	2,667	—		6/15/2005	—
198	91-064 Kaomi Loop	Kapolei	HI	Hawaii Properties		1,826	—	—	1,826	—	1,826	—		6/15/2005	—
199	91-080 Hanua	Kapolei	HI	Hawaii Properties		2,187	—	—	2,187	—	2,187	—		6/15/2005	—
200	91-083 Hanua	Kapolei	HI	Hawaii Properties		716	—	—	716	—	716	—		6/15/2005	—
201	91-086 Kaomi Loop	Kapolei	HI	Hawaii Properties		13,884	—	—	13,884	—	13,884	—		6/15/2005	—
202	91-087 Hanua	Kapolei	HI	Hawaii Properties		381	—	—	381	—	381	—		6/15/2005	—
203	91-091 Hanua	Kapolei	HI	Hawaii Properties		552	—	—	552	—	552	—		6/15/2005	—
204	91-102 Kaomi Loop	Kapolei	HI	Hawaii Properties		1,599	—	—	1,599	—	1,599	—		6/15/2005	—
205	91-110 Kaomi Loop	Kapolei	HI	Hawaii Properties		1,293	—	—	1,293	—	1,293	—		6/15/2005	—
206	91-119 Olai	Kapolei	HI	Hawaii Properties		1,981	—	—	1,981	—	1,981	—		6/15/2005	—
207	91-141 Kalaeloa	Kapolei	HI	Hawaii Properties		11,624	—	—	11,624	—	11,624	—		6/15/2005	—
208	91-150 Kaomi Loop	Kapolei	HI	Hawaii Properties		3,159	—	—	3,159	—	3,159	—		6/15/2005	—
209	91-171 Olai	Kapolei	HI	Hawaii Properties		218	—	47	218	47	265	(35	)	6/15/2005	—
210	91-174 Olai	Kapolei	HI	Hawaii Properties		962	—	47	962	47	1,009	(19	)	6/15/2005	—
211	91-175 Olai	Kapolei	HI	Hawaii Properties		1,243	—	43	1,243	43	1,286	(20	)	6/15/2005	—
212	91-185 Kalaeloa	Kapolei	HI	Hawaii Properties		1,761	—	—	1,761	—	1,761	—		6/15/2005	—
213	91-202 Kalaeloa	Kapolei	HI	Hawaii Properties		1,722	—	326	1,722	326	2,048	(53	)	6/15/2005	1964
214	91-210 Kauhi	Kapolei	HI	Hawaii Properties		567	—	—	567	—	567	—		6/15/2005	—

						Initial Cost to		Costs		Gross Amount Carried at
						Company		Capitalized		Close of Period(4)						Original
							Buildings and	Subsequent to			Buildings and		Accumulated		Date	Construction
	Property	Location	State	Property Type	Encumbrances(1)	Land	Equipment	Acquisition		Land	Equipment	Total(2)	Depreciation(3)		Acquired	Date
215	91-210 Olai	Kapolei	HI	Hawaii Properties		706	—	—		706	—	706	—		6/15/2005	—
216	91-218 Olai	Kapolei	HI	Hawaii Properties		1,622	—	61		1,622	61	1,683	(22	)	6/15/2005	—
217	91-220 Kalaeloa	Kapolei	HI	Hawaii Properties		242	1,457	172		242	1,629	1,871	(582	)	6/15/2005	1991
218	91-222 Olai	Kapolei	HI	Hawaii Properties		2,035	—	—		2,035	—	2,035	—		6/15/2005	—
219	91-238 Kauhi	Kapolei	HI	Hawaii Properties		1,390	—	9,259		1,390	9,259	10,649	(2,840	)	6/15/2005	1981
220	91-241 Kalaeloa	Kapolei	HI	Hawaii Properties		426	3,983	886		426	4,869	5,295	(1,707	)	6/15/2005	1990
221	91-250 Komohana	Kapolei	HI	Hawaii Properties		1,506	—	—		1,506	—	1,506	—		6/15/2005	—
222	91-252 Kauhi	Kapolei	HI	Hawaii Properties		536	—	—		536	—	536	—		6/15/2005	—
223	91-255 Hanua	Kapolei	HI	Hawaii Properties		1,230	—	16		1,230	16	1,246	(3	)	6/15/2005	—
224	91-259 Olai	Kapolei	HI	Hawaii Properties		2,944	—	—		2,944	—	2,944	—		6/15/2005	—
225	91-265 Hanua	Kapolei	HI	Hawaii Properties		1,569	—	—		1,569	—	1,569	—		6/15/2005	—
226	91-300 Hanua	Kapolei	HI	Hawaii Properties		1,381	—	—		1,381	—	1,381	—		6/15/2005	1994
227	91-329 Kauhi	Kapolei	HI	Hawaii Properties		294	2,297	2,489		294	4,786	5,080	(1,537	)	6/15/2005	1980
228	91-349 Kauhi	Kapolei	HI	Hawaii Properties		649	—	—		649	—	649	—		6/15/2005	—
229	91-399 Kauhi	Kapolei	HI	Hawaii Properties		27,405	—	—		27,405	—	27,405	—		6/15/2005	—
230	91-400 Komohana	Kapolei	HI	Hawaii Properties		1,494	—	—		1,494	—	1,494	—		6/15/2005	—
231	91-410 Komohana	Kapolei	HI	Hawaii Properties		418	—	12		418	12	430	(2	)	6/15/2005	—
232	91-416 Komohana	Kapolei	HI	Hawaii Properties		713	—	11		713	11	724	(2	)	6/15/2005	—
233	AES HI Easement	Kapolei	HI	Hawaii Properties		1,250	—	—		1,250	—	1,250	—		6/15/2005	—
234	Other Easements & Lots	Kapolei	HI	Hawaii Properties		358	—	1,395		358	1,395	1,753	(435	)	6/15/2005	—
235	Tesaro 967 Easement	Kapolei	HI	Hawaii Properties		6,593	—	—		6,593	—	6,593	—		6/15/2005	—
236	Texaco Easement	Kapolei	HI	Hawaii Properties		2,657	—	(4	)	2,653	—	2,653	—		6/15/2005	—
237	94-240 Pupuole Street	Waipahu	HI	Hawaii Properties	(B)	717	—	—		717	—	717	—		12/5/2003	—
238	5500 SE Delaware Avenue	Ankeny	IA	Mainland Properties	(C)	2,707	16,994	13,507		2,707	30,501	33,208	(2,122	)	1/29/2015	2012
239	951 Trails Road	Eldridge	IA	Mainland Properties		470	7,480	1,024		470	8,504	8,974	(2,589	)	4/2/2007	1994
240	3425 Maple Drive	Fort Dodge	IA	Mainland Properties		100	2,000	—		100	2,000	2,100	(41	)	4/9/2019	2014
241	2300 North 33rd Avenue East	Newton	IA	Mainland Properties		500	13,236	395		500	13,631	14,131	(3,941	)	9/29/2008	2008
242	7121 South Fifth Avenue	Pocatello	ID	Mainland Properties		400	4,201	422		400	4,623	5,023	(528	)	1/29/2015	2007
243	1230 West 171st Street	Harvey	IL	Mainland Properties		800	1,673	—		800	1,673	2,473	(206	)	1/29/2015	2004
244	5156 American Road	Rockford	IL	Mainland Properties		400	1,529	182		400	1,711	2,111	(201	)	1/29/2015	1996
245	3201 Bearing Drive	Franklin	IN	Mainland Properties		1,100	15,403	—		1,100	15,403	16,503	(376	)	4/9/2019	1973
246	2482 Century Drive	Goshen	IN	Mainland Properties		840	9,061	—		840	9,061	9,901	(188	)	4/9/2019	2005

						Initial Cost to		Costs	Gross Amount Carried at
						Company		Capitalized	Close of Period(4)						Original
							Buildings and	Subsequent to		Buildings and		Accumulated		Date	Construction
	Property	Location	State	Property Type	Encumbrances(1)	Land	Equipment	Acquisition	Land	Equipment	Total(2)	Depreciation(3)		Acquired	Date
247	6825 West County Road 400 North	Greenfield	IN	Mainland Properties		918	14,300	168	918	14,468	15,386	(361	)	2/14/2019	2008
248	900 Commerce Parkway West Drive	Greenwood	IN	Mainland Properties		1,483	16,253	—	1,483	16,253	17,736	(409	)	2/14/2019	2007
249	9347 E Pendleton Pike	Lawrence	IN	Mainland Properties		3,763	34,877	—	3,763	34,877	38,640	(876	)	2/14/2019	2009
250	945 Monument Drive	Lebanon	IN	Mainland Properties	(C)	4,210	42,795	—	4,210	42,795	47,005	(890	)	4/9/2019	2014
251	2801 Airwest Boulevard	Plainfield	IN	Mainland Properties	(C)	5,296	35,073	—	5,296	35,073	40,369	(1,029	)	2/14/2019	2001
252	2150 Stanley Road	Plainfield	IN	Mainland Properties	(C)	2,817	24,836	231	2,817	25,067	27,884	(536	)	4/2/2019	2007
253	4237-4255 Anson Boulevard	Whitestown	IN	Mainland Properties	(C)	3,710	61,706	734	3,710	62,440	66,150	(1,589	)	2/14/2019	2006
254	1985 International Way	Hebron	KY	Mainland Properties		1,453	8,546	449	1,453	8,995	10,448	(260	)	2/14/2019	1997
255	20 Logistics Boulevard	Walton	KY	Mainland Properties	(C)	2,916	35,056	6	2,916	35,062	37,978	(882	)	2/14/2019	2006
256	17200 Manchac Park Lane	Baton Rouge	LA	Mainland Properties		1,700	8,860	—	1,700	8,860	10,560	(1,089	)	1/29/2015	2014
257	209 South Bud Street	Lafayette	LA	Mainland Properties		700	4,549	9	700	4,558	5,258	(561	)	1/29/2015	2010
258	4000 Principio Parkway	North East	MD	Mainland Properties		4,200	71,518	800	4,200	72,318	76,518	(8,828	)	1/29/2015	2012
259	16101 Queens Court	Upper Marlboro	MD	Mainland Properties	(C)	5,296	21,833	—	5,296	21,833	27,129	(682	)	9/28/2018	2016
260	3800 Midlink Drive	Kalamazoo	MI	Mainland Properties		2,630	40,599	—	2,630	40,599	43,229	(4,991	)	1/29/2015	2014
261	2401 Cram Avenue SE	Bemidji	MN	Mainland Properties		100	2,137	—	100	2,137	2,237	(263	)	1/29/2015	2013
262	10100 89th Avenue N	Maple Grove	MN	Mainland Properties		3,469	21,284	—	3,469	21,284	24,753	(697	)	10/16/2018	2015
263	110 Stanbury Industrial Drive	Brookfield	MO	Mainland Properties		200	1,859	—	200	1,859	2,059	(229	)	1/29/2015	2012
264	3502 Enterprise Avenue	Joplin	MO	Mainland Properties		1,380	12,121	—	1,380	12,121	13,501	(251	)	4/9/2019	2014
265	5501 Providence Hill Drive	St. Joseph	MO	Mainland Properties		400	3,500	24	400	3,524	3,924	(73	)	4/9/2019	2014
266	5148 North Hanley Road	St. Louis	MO	Mainland Properties	(C)	4,861	62,147	—	4,861	62,147	67,008	(1,293	)	4/9/2019	2015
267	628 Patton Avenue	Asheville	NC	Mainland Properties		500	1,514	—	500	1,514	2,014	(186	)	1/29/2015	1987
268	3900 NE 6th Street	Minot	ND	Mainland Properties		700	3,223	—	700	3,223	3,923	(396	)	1/29/2015	2013
269	1415 West Commerce Way	Lincoln	NE	Mainland Properties		2,200	8,518	—	2,200	8,518	10,718	(1,047	)	1/29/2015	1971
270	52 Pettengill Road	Londonderry	NH	Mainland Properties		5,871	43,335	—	5,871	43,335	49,206	(901	)	4/9/2019	2015
271	309 Dulty's Lane	Burlington	NJ	Mainland Properties		1,600	51,400	—	1,600	51,400	53,000	(6,319	)	1/29/2015	2001
272	725 Darlington Avenue	Mahwah	NJ	Mainland Properties		8,492	9,451	1,265	8,492	10,716	19,208	(1,487	)	4/9/2014	1999
273	2375 East Newlands Road	Fernley	NV	Mainland Properties		1,100	17,314	286	1,100	17,600	18,700	(2,179	)	1/29/2015	2007
274	7000 West Post Road	Las Vegas	NV	Mainland Properties		4,230	13,472	93	4,230	13,565	17,795	(327	)	4/9/2019	2010
275	55 Commerce Avenue	Albany	NY	Mainland Properties		1,000	10,105	179	1,000	10,284	11,284	(1,274	)	1/29/2015	2013
276	158 West Yard Road	Feura Bush	NY	Mainland Properties		1,870	7,931	—	1,870	7,931	9,801	(288	)	4/9/2019	1989
277	32150 Just Imagine Drive	Avon	OH	Mainland Properties		2,200	23,280	—	2,200	23,280	25,480	(6,160	)	5/29/2009	1996
278	1415 Industrial Drive	Chillicothe	OH	Mainland Properties		1,200	3,265	—	1,200	3,265	4,465	(401	)	1/29/2015	2012

						Initial Cost to				Costs		Gross Amount Carried at
						Company				Capitalized		Close of Period(4)										Original
								Buildings and		Subsequent to				Buildings and				Accumulated			Date	Construction
	Property	Location	State	Property Type	Encumbrances(1)	Land		Equipment		Acquisition		Land		Equipment		Total(2)		Depreciation(3)			Acquired	Date
279/280/281	1580, 1590 & 1600 Williams Road	Columbus	OH	Mainland Properties		2,060		29,143		—		2,058		29,145		31,203		(707		)	4/9/2019	1992
282	5300 Centerpoint Parkway	Groveport	OH	Mainland Properties		2,700		29,863		—		2,700		29,863		32,563		(3,671		)	1/29/2015	2014
283	200 Orange Point Drive	Lewis Center	OH	Mainland Properties		1,300		8,613		162		1,300		8,775		10,075		(1,080		)	1/29/2015	2013
284/285	2353 & 2373 Global Drive	Obetz	OH	Mainland Properties		2,393		27,363		6		2,393		27,369		29,762		(278		)	8/23/2019	2018
286	301 Commerce Drive	South Point	OH	Mainland Properties		600		4,530		—		600		4,530		5,130		(557		)	1/29/2015	2013
287	1800 Union Airpark Boulevard	Union	OH	Mainland Properties	(C)	4,541		79,469		23		4,541		79,492		84,033		(1,652		)	4/9/2019	2014
288	2820 State Highway 31	McAlester	OK	Mainland Properties		581		2,237		4,582		581		6,819		7,400		(537		)	1/29/2015	2012
289	5 Logistics Drive	Carlisle	PA	Mainland Properties	(C)	3,299		15,515		58		3,299		15,573		18,872		(487		)	9/20/2018	2016
290	1990 Hood Road	Greer	SC	Mainland Properties		400		10,702		—		400		10,702		11,102		(223		)	4/9/2019	2015
291	996 Paragon Way	Rock Hill	SC	Mainland Properties		2,600		35,920		—		2,600		35,920		38,520		(4,415		)	1/29/2015	2014
292	700 Marine Drive	Rock Hill	SC	Mainland Properties		820		8,381		661		820		9,042		9,862		(203		)	4/9/2019	1986
293	510 John Dodd Road	Spartanburg	SC	Mainland Properties		3,300		57,998		347		3,300		58,345		61,645		(7,141		)	1/29/2015	2012
294	5001 West Delbridge Street	Sioux Falls	SD	Mainland Properties		2,570		14,832		—		2,570		14,832		17,402		(308		)	4/9/2019	2016
295	4836 Hickory Hill Road	Memphis	TN	Mainland Properties		1,402		10,769		868		1,402		11,637		13,039		(1,443		)	12/23/2014	1984
296	2020 Joe B. Jackson Parkway	Murfreesboro	TN	Mainland Properties		7,500		55,259		—		7,500		55,259		62,759		(6,792		)	1/29/2015	2012
297	1095 South 4800 West	Salt Lake City	UT	Mainland Properties		1,500		6,913		20		1,500		6,933		8,433		(850		)	1/29/2015	2012
298	1901 Meadowville Technology Parkway	Chester	VA	Mainland Properties	(D)	4,000		67,511		—		4,000		67,511		71,511		(8,298		)	1/29/2015	2012
299	5000 Commerce Way	Petersburg	VA	Mainland Properties	(C)	6,161		56,046		55		6,161		56,101		62,262		(1,165		)	4/9/2019	2012
300	181 Battaile Drive	Winchester	VA	Mainland Properties		1,487		12,854		36		1,487		12,890		14,377		(4,410		)	4/20/2006	1964
						$	747,146	$	1,529,593	$	59,225	$	747,794	$	1,588,170	$	2,335,964	$	(131,468	)

(1) Represents mortgage notes and includes the unamortized balance of debt issuance costs, premiums and discounts costs totaling $9,122. Certain of our properties are encumbered as follows:

	Encumbrance		Undepreciated Cost
(A) - 1 property encumbered by one mortgage loan	$	55,848	$	108,122
(B) - 186 properties encumbered by one mortgage loan	645,034		504,933
(C) - 11 properties encumbered by one mortgage loan	346,772		511,898
(D) - 1 property encumbered by one mortgage loan	48,954		71,511
	$	1,096,608	$	1,196,464

(2) Excludes value of real estate intangibles.

(3) Depreciation on buildings and improvements is provided for periods ranging up to 40 years and on equipment up to seven years.

(4) The total aggregate cost for U.S. federal income tax purposes is approximately $2,484,841.

INDUSTRIAL LOGISTICS PROPERTIES TRUST

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)

December 31, 2019

(dollars in thousands)

Analysis of the carrying amount of real estate properties and accumulated depreciation:

	Real Estate			Accumulated
	Properties			Depreciation
Balance at December 31, 2016	1,336,728			(56,976		)
Additions	6,974			(17,738		)
Disposals	(100		)	100
Balance at December 31, 2017	1,343,602			(74,614		)
Additions	118,898			(18,781		)
Disposals	(104		)	104
Balance at December 31, 2018	$	1,462,396		$	(93,291	)
Additions	873,568			(38,177		)
Balance at December 31, 2019	$	2,335,964		$	(131,468	)

XML

Selected Quarterly Financial Data (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2019

Selected Quarterly Financial Information [Abstract]

Summary of unaudited quarterly results of operations

The following is a summary of our unaudited quarterly results of operations for 2019 and 2018:

	2019
	First		Second		Third		Fourth
	Quarter		Quarter		Quarter		Quarter
Total revenues	$	45,987	$	60,090	$	60,958	$	62,199
Net income	$	16,786	$	13,116	$	10,922	$	11,674
Net income per common share—basic and diluted	$	0.26	$	0.20	$	0.17	$	0.18
Common distributions declared	$	0.33	$	0.33	$	0.33	$	0.33

	2018
	First		Second		Third		Fourth
	Quarter		Quarter		Quarter		Quarter
Total revenues	$	40,605	$	39,420	$	40,431	$	42,074
Net income	$	19,232	$	18,726	$	18,142	$	18,288
Net income per common share—basic and diluted	$	0.31	$	0.29	$	0.28	$	0.28
Common distributions declared	$	—	$	0.27	$	0.33	$	0.33

XML

Indebtedness (Tables)

12 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

Schedule of outstanding indebtedness

As of December 31, 2019 and 2018, our outstanding indebtedness consisted of the following:

									Net Book
	Principal Balance as of								Value
	December 31,								of Collateral
						Interest			At December 31,
	2019 (1)			2018 (1)		Rate		Maturity	2019
Unsecured revolving credit facility (2)	$	310,000		$	413,000	3.26	%	Dec 2021	$	—
Mortgage note payable (secured by one property in Virginia)	48,750			48,750		3.48	%	Nov 2020	63,213
Mortgage note payable (secured by one property in Florida)	56,980			—		4.22	%	Oct 2023	106,048
Mortgage note payable (secured by 186 properties in Hawaii)	650,000			—		4.31	%	Feb 2029	492,371
Mortgage note payable (secured by 11 Mainland Properties)	350,000			—		3.33	%	Nov 2029	499,572
	1,415,730			461,750					$	1,161,204
Unamortized debt issuance costs, premiums and discounts	(9,122		)	445
	$	1,406,608		$	462,195

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

(2) The maturity date of our revolving credit facility is December 29, 2021 and we have the option to extend the maturity date for two, six month periods through December 29, 2022.

Schedule of the principal payments due under the outstanding debt

The required principal payments due during the next five years and thereafter under all our outstanding debt as of December 31, 2019 are as follows:

	Principal
Year	Payment
2020	$	48,750
2021	310,000
2022	—
2023	56,980
2024	—
Thereafter	1,000,000
	$	1,415,730	(1)

(1) Total debt outstanding as of December 31, 2019, including unamortized debt issuance costs, premiums and discounts, was $1,406,608.

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Fair Value of Assets and Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Fair Value of Financial Instruments
Mortgage notes payable	$ 1,096,608	$ 49,195
Carrying Amount
Fair Value of Financial Instruments
Mortgage notes payable	1,096,608	49,195
Estimated Fair Value
Fair Value of Financial Instruments
Mortgage notes payable	1,143,437	48,642
Mortgages
Fair Value of Financial Instruments
Unamortized premiums	$ 9,122	$ 445

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Shareholders' Equity - Distributions (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended								12 Months Ended
	Jan. 16, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018
Dividends Payable [Line Items]
Distribution per share (in dollars per share)										$ 1.32	$ 0.93
Total Distributions										$ 85,937	$ 60,482
Distributions per share paid (in dollars per share)										21.80%	0.00%
Distribution characterization percentage, ordinary income										78.20%	100.00%
Common distributions declared (in dollars per share)		$ 0.33	$ 0.33	$ 0.33	$ 0.33	$ 0.33	$ 0.33	$ 0.27	$ 0
Subsequent Event
Dividends Payable [Line Items]
Common distributions declared (in dollars per share)	$ 0.33
Dividends payable	$ 21,509

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Selected Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Selected Quarterly Financial Information [Abstract]
Total revenues	$ 62,199	$ 60,958	$ 60,090	$ 45,987	$ 42,074	$ 40,431	$ 39,420	$ 40,605
Net income	$ 11,674	$ 10,922	$ 13,116	$ 16,786	$ 18,288	$ 18,142	$ 18,726	$ 19,232	$ 52,498	$ 74,388	$ 80,103
Net income per common share - basic and diluted (in dollars per share)	$ 0.18	$ 0.17	$ 0.20	$ 0.26	$ 0.28	$ 0.28	$ 0.29	$ 0.31	$ 0.81	$ 1.16	$ 1.78
Common distributions declared (in dollars per share)	$ 0.33	$ 0.33	$ 0.33	$ 0.33	$ 0.33	$ 0.33	$ 0.27	$ 0

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Straight line rents	$ 58,336	$ 54,916
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)	65,180,628	65,074,791
Common shares, shares outstanding (in shares)	65,180,628	65,074,791

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 52,498	$ 74,388	$ 80,103
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	38,177	18,781	17,738
Net amortization of debt issuance costs, premiums and discounts	2,017	1,244	(494)
Amortization of acquired real estate leases and assumed real estate lease obligations	21,465	8,592	8,434
Amortization of deferred leasing costs	1,113	820	771
Provision for losses on rents receivable	0	1,198	704
Straight line rental income	(4,345)	(4,739)	(5,762)
Other non-cash expenses	1,109	927	0
Equity in earnings of Affiliates Insurance Company	(666)	0	0
Distributions of earnings from Affiliates Insurance Company	666	0	0
Change in assets and liabilities:
Rents receivable	(1,497)	(1,727)	436
Deferred leasing costs	(1,457)	(1,745)	(693)
Other assets	(594)	3,591	(4,431)
Due from related persons	(114)	(1,390)	0
Accounts payable and other liabilities	3,095	1,618	245
Rents collected in advance	3,438	210	(743)
Security deposits	550	456	33
Due to related persons	845	(5,461)	7,114
Net cash provided by operating activities	116,300	96,763	103,455
CASH FLOWS FROM INVESTING ACTIVITIES:
Real estate acquisitions and deposits	(884,570)	(121,891)	(281)
Real estate improvements	(17,157)	(5,004)	(6,026)
Distributions in excess of earnings from Affiliates Insurance Company	8,334	0	0
Investment in Affiliates Insurance Company	0	(8,632)	0
Net cash used in investing activities	(893,393)	(135,527)	(6,307)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common shares, net	0	444,309	0
Proceeds from issuance of mortgage notes payable	1,000,000	0	0
Borrowings under revolving credit facility	744,000	193,000	750,000
Repayments of revolving credit facility	(847,000)	(530,000)	0
Repayment of mortgage notes payable	0	0	(14,344)
Repayment of SIR note	0	0	(750,000)
Payment of debt issuance costs	(8,775)	(5,378)	(1,724)
Distributions to common shareholders	(85,937)	(60,482)	0
Repurchase of common shares	(253)	(52)	0
Contributions	0	16,162	72,807
Distributions	0	(9,187)	(153,887)
Net cash provided by (used in) financing activities	802,035	48,372	(97,148)
Increase in cash, cash equivalents and restricted cash	24,942	9,608	0
Cash and cash equivalents at beginning of period	9,608	0	0
Cash, cash equivalents and restricted cash at end of period	34,550	9,608	0
SUPPLEMENTAL DISCLOSURES:
Interest paid	46,072	14,749	2,752
Income taxes paid	164	0	0
Interest capitalized	187	0	0
NON-CASH INVESTING ACTIVITIES:
Real estate acquired by assumption of mortgage notes payable	(56,980)	0	0
NON-CASH FINANCING ACTIVITIES:
Distribution to SIR of ownership interest	0	0	(1,304,043)
Issuance of SIR note	0	0	750,000
Issuance of common shares	0	0	554,043
Assumption of mortgage notes payable	56,980	0	0
SUPPLEMENTAL DISCLOSURE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH [Abstract]
Cash and cash equivalents	9,608	0
Total cash, cash equivalents and restricted cash shown in the statements of cash flows	$ 9,608	$ 0	$ 0

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Related Person Transactions

12 Months Ended

Dec. 31, 2019

Related Party Transactions [Abstract]

Related Person Transactions

Related Person Transactions

We have relationships and historical and continuing transactions with RMR LLC, RMR Inc. and others related to them, including other companies to which RMR LLC or its subsidiaries provide management services and some of which have trustees, directors or officers who are also our Trustees or officers. RMR LLC is a majority owned subsidiary of RMR Inc. The Chair of our Board of Trustees and one of our Managing Trustees, Adam Portnoy, as the sole trustee of ABP Trust, is the controlling shareholder of RMR Inc. and is a managing director and the president and chief executive officer of RMR Inc. and an officer and employee of RMR LLC. John Murray, our other Managing Trustee and President and Chief Executive Officer, also serves as an executive officer of RMR LLC, and each of our other officers is also an officer and employee of RMR LLC. Some of our Independent Trustees also serve as independent trustees or independent directors of other public companies to which RMR LLC or its subsidiaries provide management services. Adam Portnoy serves as chair of the boards of trustees or boards of directors of several of these public companies and as a managing director or managing trustee of these public companies. Other officers of RMR LLC serve as managing trustees or managing directors of certain of these companies. In addition, officers of RMR LLC and RMR Inc. serve as our officers and officers of other companies to which RMR LLC or its subsidiaries provide management services, including SIR prior to its merger into OPI’s subsidiary.

Our Manager, RMR LLC. We have two agreements with RMR LLC to provide management services to us: (i) a business management agreement, which relates to our business generally, and (ii) a property management agreement, which relates to our property level operations. See Note 9 for more information regarding our management agreements with RMR LLC.

Share Awards to RMR LLC Employees. As described in Note 6, we award shares to our officers and other employees of RMR LLC annually. Generally, one fifth of these awards vest on the grant date and one fifth vests on each of the next four anniversaries of the grant dates. In certain instances, we may accelerate the vesting of an award, such as in connection with the award holder’s retirement as an officer of us or an officer or employee of RMR LLC. These awards to RMR LLC employees are in addition to the share awards to our Managing Trustees, as Trustee compensation, and the fees we paid to RMR LLC. See Note 6 for information regarding our share awards and activity as well as certain share purchases we made in connection with share award recipients satisfying tax withholding obligation on the vesting of share awards.

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. 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.

OPI and SIR owed to us $1,504 and $865 as of December 31, 2019 and 2018, respectively, for rents that they collected on our behalf from certain of our tenants as a result of SIR having previously owned those properties and being the landlord of those tenants prior to SIR having contributed those properties to us in connection with our IPO, and which were due to us. OPI paid these amounts due to us or collected on our behalf in January 2020 and 2019, respectively.

AIC. Until its dissolution on February 13, 2020, we, ABP Trust and five other companies to which RMR LLC provides management services owned AIC in equal amounts. Certain of our Trustees and certain trustees or directors of the other AIC shareholders served on the board of directors of AIC, until its dissolution.

We (including, prior to our IPO, through SIR, as SIR’s subsidiary) and the other AIC shareholders historically participated in a combined property insurance program arranged and insured or reinsured in part by AIC. SIR allocated to us the portion of the premiums for this insurance program, including taxes and fees, covering our Initial Properties, which allocations were $266, $320 and $351 for the policy years ended June 30, 2019, 2018 and 2017, respectively. 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.

On February 13, 2020, AIC was dissolved and in connection with its dissolution, we and each AIC shareholders received an initial liquidating distribution of $9,000 from AIC in December 2019.

As of December 31, 2019 and 2018, our investment in AIC had a carrying value of $298 and $8,632, respectively. This amount is included in other assets in our consolidated balance sheets. We recognized income related to our investment in AIC of $666 for the year ended December 31, 2019, which is presented as equity in earnings of an investee in our consolidated statement of comprehensive income. We did not recognize any income related to our investment in AIC for the year ended December 31, 2018.

RMR LLC historically provided management and administrative services to AIC for a fee equal to 3.0% of the total premiums paid for insurance arranged by AIC. As a result of the property insurance program having been discontinued as of June 30, 2019, AIC has not incurred fees payable to RMR LLC since that time.

Directors’ and Officers’ Liability Insurance. We, RMR Inc., RMR LLC and certain other companies to which RMR LLC or its subsidiaries provide management services participate in a combined directors’ and officers’ liability insurance policy. The current combined policy expires in September 2020. Prior to SIR’s distribution of our common shares to its shareholders, as a majority owned subsidiary of SIR, we were provided coverage under this policy and SIR allocated a portion of its cost of the policy to us. We paid $160 for the year ended December 31, 2019 for this insurance and the cost of this insurance SIR allocated to us was $90 and $116 for the years ended December 31, 2018, and 2017, respectively.

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Shareholders' Equity

12 Months Ended

Dec. 31, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Shareholders' Equity

Shareholders’ Equity

Common Share Awards:

We have common shares available for issuance under the terms of our 2018 Equity Compensation Plan, or the 2018 Plan. During the years ended December 31, 2019 and 2018, we awarded to our officers and other employees of RMR LLC annual share awards of 104,200 and 54,400 of our common shares, respectively, valued at $2,260 and $1,269, in aggregate, respectively. In accordance with our Trustee compensation arrangements, we also granted each of our Trustees 3,000 common shares in 2019 with an aggregate value of $281 ($56 per Trustee). During 2018, we granted each of our then Trustees 1,000 of our common shares with an aggregate value of $104 ($21 per Trustee) as compensation for the period from our IPO to May 2018 and granted each of our then Trustees 3,000 common shares with an aggregate value of $314 ($63 per Trustee) as part of their annual compensation. We granted an additional 3,000 common shares in December 2018, with an aggregate value of $61 to one of our Managing Trustees, who was elected as a Managing Trustee in December 2018. The values of the share grants were based upon the closing price of our common shares trading on Nasdaq on the dates of grants. The common shares granted to our Trustees vested immediately. The common shares granted to our officers and certain other employees of RMR LLC vest in five equal annual installments beginning on the date of grant. We include the value of granted shares in general and administrative expenses ratably over the vesting period.

A summary of shares granted, vested and forfeited under the terms of the 2018 Plan for the year ended December 31, 2019 is as follows:

	Year Ended
	December 31, 2019				December 31, 2018
			Weighted				Weighted
			Average				Average
	Number		Grant Date		Number		Grant Date
	of Shares		Fair Value		of Shares		Fair Value
Unvested at beginning of year	43,280		$	23.33	—		$	—
Granted	119,200		21.32		77,400		22.60
Vested	(52,880	)	20.78		(33,880	)	21.64
Forfeited	(1,400	)	22.39		(240	)	23.33
Unvested at end of year	108,200		$	22.08	43,280		$	23.33

The 108,200 unvested shares as of December 31, 2019 are scheduled to vest as follows: 29,220 shares in 2020, 29,220 shares in 2021, 29,220 shares in 2022 and 20,540 in 2023. As of December 31, 2019, the estimated future compensation expense for the unvested shares was approximately $2,197. The weighted average period over which the compensation expense will be recorded is approximately 26 months. During the years ended December 31, 2019 and 2018, we recorded $1,109 and $927, respectively, of compensation expense related to the 2018 Plan.

At December 31, 2019, 3,819,372 common shares remain available for issuance under the 2018 Plan.

Common Share Purchases:

During the years ended December 31, 2019 and 2018, we repurchased our common shares from our current and former officers and employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares, valued at the closing price of our common shares on Nasdaq on the purchase date, as follows:

Date Purchased	Number of Shares	Price per Share
12/18/2019	125	$	21.09
9/25/2019	9,808	$	21.27
7/3/2019	668	$	21.48
4/5/2019	1,362	$	20.49
9/24/2018	2,369	$	22.08

Distributions:

During the years ended December 31, 2019 and 2018, we paid distributions on our common shares as follows:

	Annual Per				Characterization of Distribution
	Share		Total		Return of		Ordinary
Year	Distribution		Distribution		Capital		Income
2019	$	1.32	$	85,937	21.8	%	78.2	%
2018	$	0.93	$	60,482	—	%	100.0	%

On January 16, 2020, we declared a regular quarterly distribution of $0.33 per common share, or $21,509, to shareholders of record on January 27, 2020. We paid this distribution to our shareholders on February 20, 2020.

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Summary of Significant Accounting Policies - Summary of Acquired Real Estate Leases and Assumed Real Estate Lease Obligations (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Acquired real estate leases:
Acquired real estate leases, net	$ 138,596	$ 75,803
Assumed real estate lease obligations:
Capitalized below market lease values	36,278	34,313
Less: accumulated amortization	(18,770)	(15,997)
Assumed real estate lease obligations, net	17,508	18,316
Above market lease
Acquired real estate leases:
Acquired real estate leases, gross	28,723	28,723
Less: accumulated amortization	(18,303)	(16,726)
Acquired real estate leases, net	10,420	11,997
Acquired Real Estate Leases
Acquired real estate leases:
Acquired real estate leases, gross	186,758	99,727
Less: accumulated amortization	(58,582)	(35,921)
Acquired real estate leases, net	$ 128,176	$ 63,806

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Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Accounting Policies [Abstract]
Variable lease income	$ 40,898
Tenant reimbursements	$ 38,755	$ 23,219	$ 21,680
Contingent rental income recognized		$ 941	$ 650

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Real Estate Properties - Property Acquisitions (Details) $ in Thousands	1 Months Ended						12 Months Ended
	Aug. 31, 2019 USD ($) ft² property	Apr. 30, 2019 USD ($) ft² property	Feb. 28, 2019 USD ($) ft² property	Oct. 31, 2018 USD ($) ft² property	Sep. 30, 2018 USD ($) ft² property	Jun. 30, 2018 USD ($) ft² property	Dec. 31, 2019 USD ($) ft² property	Dec. 31, 2018 USD ($) ft² property	Jan. 17, 2018 ft²	Sep. 29, 2017 ft²
Real Estate [Line Items]
Number of properties | property							30	4
Net rentable area | ft²							42,939,000		28,540,000	28,540,000
Land							$ 747,794	$ 670,501
Buildings and improvements							1,588,170	791,895
Acquired real estate leases							138,596	75,803
Acquired Real Estate Lease Obligations							$ (17,508)	$ (18,316)
Office and Industrial Properties
Real Estate [Line Items]
Number of properties | property							30	4
Net rentable area | ft²							13,288,180	985,235
Purchase price							$ 941,550	$ 121,385
Land							77,314	27,289
Buildings and improvements							777,839	86,736
Acquired real estate leases							87,030
Acquired Real Estate Lease Obligations							(1,965)
Two Mainland States | Office and Industrial Properties
Real Estate [Line Items]
Number of properties | property			7
Net rentable area | ft²			3,708,343
Purchase price			$ 250,276
Land			19,558
Buildings and improvements			205,811
Indianapolis, IN | Office and Industrial Properties
Real Estate [Line Items]
Number of properties | property		1
Net rentable area | ft²		493,500
Purchase price		$ 30,517
Land		2,817
Buildings and improvements		24,836
Twelve mainland states
Real Estate [Line Items]
Discount on Assumed Debt		$ 56,980
Twelve mainland states | Office and Industrial Properties
Real Estate [Line Items]
Number of properties | property		20
Net rentable area | ft²		8,694,321
Purchase price		$ 628,457
Land		52,546
Buildings and improvements		519,829
Columbus, OH | Office and Industrial Properties
Real Estate [Line Items]
Number of properties | property	2
Net rentable area | ft²	392,016
Purchase price	$ 32,300
Land	2,393
Buildings and improvements	27,363
Doral, FL | Office and Industrial Properties
Real Estate [Line Items]
Number of properties | property						1
Net rentable area | ft²						240,283
Purchase price						$ 43,326
Land						15,225
Buildings and improvements						28,101
Carlisle PA | Office and Industrial Properties
Real Estate [Line Items]
Number of properties | property					1
Net rentable area | ft²					205,090
Purchase price					$ 20,451
Land					3,299
Buildings and improvements					$ 15,515
Upper Marlboro, MD | Office and Industrial Properties
Real Estate [Line Items]
Number of properties | property					1
Net rentable area | ft²					220,800
Purchase price					$ 29,801
Land					5,296
Buildings and improvements					21,833
Maple Grove, MN | Office and Industrial Properties
Real Estate [Line Items]
Number of properties | property				1
Net rentable area | ft²				319,062
Purchase price				$ 27,807
Land				3,469
Buildings and improvements				21,287
Acquired Real Estate Leases
Real Estate [Line Items]
Acquired real estate leases							128,176	63,806
Acquired Real Estate Leases | Office and Industrial Properties
Real Estate [Line Items]
Acquired real estate leases								$ 7,360
Discount on Assumed Debt							$ 1,332
Acquired Real Estate Leases | Two Mainland States | Office and Industrial Properties
Real Estate [Line Items]
Acquired real estate leases			24,907
Acquired Real Estate Lease Obligations			0
Discount on Assumed Debt			$ 0
Acquired Real Estate Leases | Indianapolis, IN | Office and Industrial Properties
Real Estate [Line Items]
Acquired real estate leases		2,864
Acquired Real Estate Lease Obligations		0
Discount on Assumed Debt		0
Acquired Real Estate Leases | Twelve mainland states | Office and Industrial Properties
Real Estate [Line Items]
Acquired real estate leases		56,715
Acquired Real Estate Lease Obligations		(1,965)
Discount on Assumed Debt		$ 1,332
Acquired Real Estate Leases | Columbus, OH | Office and Industrial Properties
Real Estate [Line Items]
Acquired real estate leases	2,544
Acquired Real Estate Lease Obligations	0
Discount on Assumed Debt	$ 0
Acquired Real Estate Leases | Doral, FL | Office and Industrial Properties
Real Estate [Line Items]
Acquired real estate leases						$ 0
Acquired Real Estate Leases | Carlisle PA | Office and Industrial Properties
Real Estate [Line Items]
Acquired real estate leases					1,637
Acquired Real Estate Leases | Upper Marlboro, MD | Office and Industrial Properties
Real Estate [Line Items]
Acquired real estate leases					$ 2,672
Acquired Real Estate Leases | Maple Grove, MN | Office and Industrial Properties
Real Estate [Line Items]
Acquired real estate leases				$ 3,051

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Summary of Significant Accounting Policies - Real Estate Properties (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Property, Plant and Equipment [Line Items]
2020	$ 24,708,000
2021	21,676,000
2022	19,136,000
2023	17,269,000
2024	11,846,000
Thereafter	26,453,000
Real estate impairment	0	$ 0
Accrued environmental remediation cost	$ 6,940,000	6,940,000
Minimum
Property, Plant and Equipment [Line Items]
Estimated useful lives	7 years
Maximum
Property, Plant and Equipment [Line Items]
Estimated useful lives	40 years
Increases in rental income	$ 1,195,000	401,000	$ 390,000
Amortization of the value of acquired in place leases	$ 22,661,000	$ 8,993,000	$ 8,824,000
Weighted Average
Property, Plant and Equipment [Line Items]
Amortization period of capitalized below market lease values	12 years
Above market lease | Weighted Average
Property, Plant and Equipment [Line Items]
Amortization periods for capitalized above market lease and lease origination values	10 years 2 months 12 days
Acquired Real Estate Leases | Weighted Average
Property, Plant and Equipment [Line Items]
Amortization periods for capitalized above market lease and lease origination values	7 years 1 month 6 days

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Shareholders' Equity (Tables)

12 Months Ended

Dec. 31, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of shares granted and vested

A summary of shares granted, vested and forfeited under the terms of the 2018 Plan for the year ended December 31, 2019 is as follows:

	Year Ended
	December 31, 2019				December 31, 2018
			Weighted				Weighted
			Average				Average
	Number		Grant Date		Number		Grant Date
	of Shares		Fair Value		of Shares		Fair Value
Unvested at beginning of year	43,280		$	23.33	—		$	—
Granted	119,200		21.32		77,400		22.60
Vested	(52,880	)	20.78		(33,880	)	21.64
Forfeited	(1,400	)	22.39		(240	)	23.33
Unvested at end of year	108,200		$	22.08	43,280		$	23.33

Schedule of share repurchases

During the years ended December 31, 2019 and 2018, we repurchased our common shares from our current and former officers and employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares, valued at the closing price of our common shares on Nasdaq on the purchase date, as follows:

Date Purchased	Number of Shares	Price per Share
12/18/2019	125	$	21.09
9/25/2019	9,808	$	21.27
7/3/2019	668	$	21.48
4/5/2019	1,362	$	20.49
9/24/2018	2,369	$	22.08

Summary of distributions paid on common shares

During the years ended December 31, 2019 and 2018, we paid distributions on our common shares as follows:

	Annual Per				Characterization of Distribution
	Share		Total		Return of		Ordinary
Year	Distribution		Distribution		Capital		Income
2019	$	1.32	$	85,937	21.8	%	78.2	%
2018	$	0.93	$	60,482	—	%	100.0	%

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Schedule of acquired real estate leases and assumed real estate lease obligations

As of December 31, 2019 and 2018, our acquired real estate leases and assumed real estate lease obligations were as follows:

	December 31,
	2019			2018
Acquired real estate leases:
Capitalized above market lease values	$	28,723		$	28,723
Less: accumulated amortization	(18,303		)	(16,726		)
Capitalized above market lease values, net	10,420			11,997
Lease origination value	186,758			99,727
Less: accumulated amortization	(58,582		)	(35,921		)
Lease origination value, net	128,176			63,806
Acquired real estate leases, net	$	138,596		$	75,803
Assumed real estate lease obligations:
Capitalized below market lease values	$	36,278		$	34,313
Less: accumulated amortization	(18,770		)	(15,997		)
Assumed real estate lease obligations, net	$	17,508		$	18,316

Operating lease maturity

The following table presents our operating lease maturity analysis as of December 31, 2019:

Year	Amount
2020	$	203,971
2021	202,109
2022	194,209
2023	175,676
2024	152,267
Thereafter	1,185,405
Total	$	2,113,637

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Indebtedness - Narrative (Details) ft² in Millions	1 Months Ended			12 Months Ended
	Oct. 31, 2019 USD ($) ft² state property	Apr. 30, 2019 USD ($) ft² property	Jan. 31, 2019 USD ($) ft² property	Dec. 31, 2019 USD ($) option	Dec. 31, 2018 USD ($)	Feb. 19, 2020 USD ($)	Jan. 17, 2018 USD ($)	Dec. 31, 2017 USD ($)	Dec. 29, 2017 USD ($)
Debt Instrument [Line Items]
Amount outstanding on revolving credit facility				$ 310,000,000	$ 413,000,000
Effective interest rate				3.48%
Revolving Credit Facility
Debt Instrument [Line Items]
Maximum borrowing capacity of revolving credit facility							$ 750,000,000	$ 750,000,000	$ 750,000,000
Number of options to extend maturity date | option				2
Extension period				6 months
Line of credit maximum increase capacity				$ 1,500,000,000
Interest rate at period end				3.26%	3.81%
Interest rate during period				3.68%	3.33%
Amount outstanding on revolving credit facility				$ 310,000,000
Remaining borrowing capacity on revolving credit facility				$ 440,000,000
Effective interest rate				3.26%
Revolving Credit Facility | Subsequent Event
Debt Instrument [Line Items]
Amount outstanding on revolving credit facility						$ 385,000,000
Remaining borrowing capacity on revolving credit facility						$ 365,000,000
London Interbank Offered Rate (LIBOR) | Revolving Credit Facility
Debt Instrument [Line Items]
Basis spread on variable rate				155.00%	130.00%
Oahu | Mortgages
Debt Instrument [Line Items]
Debt instrument, face amount			$ 650,000,000
Number of properties that are securing mortgage note | property			186
Amount of square feet of property, securing mortgage note | ft²			9.6
Interest rate (as a percent)			4.31%
Mainland Properties | Mortgages
Debt Instrument [Line Items]
Debt instrument, face amount	$ 350,000,000
Number of properties that are securing mortgage note | property	11
Number of states where real estate is located | state	8
Amount of square feet of property, securing mortgage note | ft²	8.2
Interest rate (as a percent)	3.33%
Twelve mainland states
Debt Instrument [Line Items]
Number of properties that are securing mortgage note | property		20
Liabilities assumed		$ 56,980,000
Unamortized discount		$ 1,332,000
Effective interest rate		4.22%
Ruskin, FL
Debt Instrument [Line Items]
Number of properties that are securing mortgage note | property		1
Amount of square feet of property, securing mortgage note | ft²		1.0
Interest rate (as a percent)		3.60%

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Shareholders' Equity - Summary of Unvested Shares Activity (Details) - $ / shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Unvested shares at the beginning of the period (in shares)	43,280	0
Granted (in shares)	119,200	77,400
Vested (in shares)	(52,880)	(33,880)
Forfeited (in shares)	(1,400)	(240)
Unvested shares at the end of the period (in shares)	108,200	43,280
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Unvested shares at the beginning of the period (in dollars per share)	$ 23.33	$ 0
Granted (in dollars per share)	21.32	22.60
Vested (in dollars per share)	20.78	21.64
Forfeited (in dollars per share)	22.39	23.33
Unvested shares at the end of the period (in dollars per share)	$ 22.08	$ 23.33

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Certain Arrangements, Allocations and Operations Prior to our IPO (Details) ft² in Thousands				1 Months Ended			11 Months Ended	12 Months Ended
	Jan. 17, 2018 USD ($) ft² property agreement	Sep. 30, 2017 USD ($) property note	Sep. 29, 2017 USD ($) ft² state property note shares	Jan. 31, 2018 USD ($)	Jan. 16, 2018 USD ($)	Dec. 31, 2017 USD ($) property note	Dec. 31, 2018 USD ($) shares	Dec. 31, 2019 USD ($) ft² state property agreement building shares	Dec. 31, 2018 USD ($) shares	Dec. 31, 2017 USD ($)	Dec. 27, 2018 shares	Dec. 29, 2017 USD ($)
Line of Credit Facility [Line Items]
Number of properties owned | property	266		266					300
Net rentable area | ft²	28,540		28,540					42,939
Common shares, shares issued (in shares) | shares							65,074,791	65,180,628	65,074,791
Debt assumed on acquisition							$ 461,750,000	$ 1,415,730,000	$ 461,750,000
Repayment of mortgage notes payable								0	0	$ 14,344,000
Business management fees							7,269,000	11,897,000
Incentive fee expense								0	0
Mortgage note payable
Line of Credit Facility [Line Items]
Number of instruments assumed | note		3	3
Debt assumed on acquisition		$ 63,069,000	$ 63,069,000
Number of properties used as collateral | property		3	3			2
Number of debt instruments prepaid | note						2
Repayment of mortgage notes payable						$ 14,319,000
Revolving Credit Facility
Line of Credit Facility [Line Items]
Debt assumed on acquisition							413,000,000	$ 310,000,000	$ 413,000,000
Maximum borrowing capacity of revolving credit facility and term loan	$ 750,000,000					$ 750,000,000				750,000,000		$ 750,000,000
RMR LLC
Line of Credit Facility [Line Items]
Number of management service agreements | agreement								2
Business management fees					$ 308,000					6,823,000
Incentive fee expense				$ 7,660,000
Construction supervision fees					230,000					4,244,000
Related party reimbursement expense					120,000		2,908,000	$ 4,269,000		$ 2,512,000
AIC
Line of Credit Facility [Line Items]
Payments for insurance premiums incurred					$ 4,000
Hawaii
Line of Credit Facility [Line Items]
Number of properties owned | property			226					226
Net rentable area | ft²			16,834					16,756
Number of properties used as collateral | property								186
Mainland Properties
Line of Credit Facility [Line Items]
Number of properties owned			40					74
Net rentable area | ft²			11,706					26,183
Number of states where real estate is located | state			24					29
RMR LLC
Line of Credit Facility [Line Items]
Number of management service agreements | agreement	2
Property management fees as percentage of gross collected rents								3.00%
Construction supervision fees as percentage of construction costs								5.00%
Construction supervision fees							$ 4,680,000	$ 7,548,000
Select Income REIT
Line of Credit Facility [Line Items]
Payments of stock issuance costs	$ 7,271,000
Select Income REIT | Industrial Logistics Properties Trust
Line of Credit Facility [Line Items]
Common shares, shares issued (in shares) | shares			45,000,000								45,000,000

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Fair Value of Assets and Liabilities (Tables)

12 Months Ended

Dec. 31, 2019

Fair Value Disclosures [Abstract]

Schedule of carrying value and the estimated fair market value of mortgage notes payable

At December 31, 2019 and 2018, the fair value of our financial instruments approximated their carrying values in our consolidated financial statements, due to the short term nature or floating interest rates, except as follows:

	At December 31, 2019				At December 31, 2018
	Carrying		Estimated		Carrying		Estimated
	Value (1)		Fair Value		Value (1)		Fair Value
Mortgage notes payable	$	1,096,608	$	1,143,437	$	49,195	$	48,642

(1) Includes unamortized debt issuance costs, premiums and discounts of $9,122 and ($445) as of December 31, 2019 and 2018, respectively.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation. These consolidated financial statements include the accounts of us and our subsidiaries, all of which are 100% owned directly or indirectly by us. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated.

The accounts of our Initial Properties are presented at SIR’s historical basis and are consolidated for prior periods presented as the transaction described in Note 1 has been accounted for as a reorganization of entities under common control in accordance with the Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, 805-50-30, Business Combinations. Substantially all of the rental income received from our tenants and SIR’s other tenants was deposited in and commingled with SIR’s general funds during the periods prior to January 17, 2018. Prior to January 17, 2018, general and administrative costs of SIR were primarily allocated to us based on the historical cost of our real estate investments as a percentage of SIR’s historical cost of all of its real estate investments. In accordance with applicable accounting guidance, we believe this method for allocating general and administrative expenses is reasonable. However, actual expenses may have been different from allocated expenses if we operated as a standalone company and those differences may be material.

Real Estate Properties

We recognize impairment losses on real estate investments when indicators of impairment are present and the estimated undiscounted cash flow from our real estate investments is less than the carrying amount of such real estate investments. Impairment indicators may include declining tenant occupancy, lack of progress releasing vacant space, tenant bankruptcies, low long term prospects for improvement in property performance, weak or declining tenant profitability, cash flow or liquidity, our decision to dispose of an asset before the end of its estimated useful life and legislative, market or industry changes that could permanently reduce the value of a property. We review our properties for impairment quarterly, or whenever events or changes in circumstances indicate that carrying amounts may not be recoverable. If indicators of impairment are present, we evaluate the carrying value of the related property by comparing it to the expected future undiscounted cash flows expected to be generated from that property. The future net undiscounted cash flows are subjective and are based in part on assumptions regarding hold periods, market rents and terminal capitalization rates. If the sum of these expected future undiscounted cash flows is less than the carrying value, we reduce the net carrying value of the property to its estimated fair value. The determination of undiscounted cash flow includes consideration of many factors including income to be earned from the investment, holding costs (exclusive of interest), estimated selling prices, and prevailing economic and market conditions. No impairments exist on any of our properties as of December 31, 2019 and 2018.

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 cleanup. As of both December 31, 2019 and 2018, accrued environmental remediation costs of $6,940, were included in accounts payable and other liabilities in our 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, for example, 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 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 consolidated statements of comprehensive income.

Real Estate Properties. We record properties at our cost and have presented our Initial Properties at their historical cost basis. Our real estate investments in lands are not depreciated. We calculate depreciation on other real estate investments on a straight line basis over estimated useful lives generally ranging from seven to 40 years.

We allocate the purchase prices of our properties to land, building and improvements based on determinations of the fair values of these assets assuming the properties are vacant. We determine the fair value of each property using methods similar to those used by independent appraisers, which may involve estimated cash flows that are based on a number of factors, including capitalization rates and discount rates, among others. In some circumstances, we engage independent real estate appraisal firms to provide market information and evaluations which are relevant to our purchase price allocations and determinations of depreciable useful lives; however, we are ultimately responsible for the purchase price allocations and determinations of useful lives. We allocate a portion of the purchase price to above market and below market leases based on the present value (using an interest rate which reflects the risks associated with acquired in place leases at the time each property was acquired by us) of the difference, if any, between (i) the contractual amounts to be paid pursuant to the acquired in place leases and (ii) our estimates of fair market lease rates for the corresponding leases, measured over a period equal to the terms of the respective leases. The terms of below market leases that include bargain renewal options, if any, are further adjusted if we determine that renewal to be probable. We allocate a portion of the purchase price to acquired in place leases and tenant relationships based upon market estimates to lease up the property based on the leases in place at the time of purchase. In making these allocations, we consider factors such as estimated carrying costs during the expected lease up periods, including real estate taxes, insurance and other operating income and expenses and costs, such as leasing commissions, legal and other related expenses, to execute similar leases in current market conditions at the time a property was acquired by us. We allocate this aggregate value between acquired in place lease values and tenant relationships based on our evaluation of the specific characteristics of each tenant’s lease. However, we have not separated the value of tenant relationships from the value of acquired in place leases because such value and related amortization expense is immaterial to the accompanying consolidated financial statements. If the value of tenant relationships becomes material in the future, we may separately allocate those amounts and amortize the allocated amount over the estimated life of the relationships.

We amortize capitalized above market lease values (included in acquired real estate leases in our consolidated balance sheets) and below market lease values (presented as assumed real estate lease obligations in our consolidated balance sheets) as a reduction or increase, respectively, to rental income over the terms of the associated leases.

Capitalization Policy

Capitalization Policy. Costs directly related to the development of properties are capitalized. We capitalize development costs, including interest, real estate taxes, insurance, and other project costs, incurred during the period of development. Determinations of when a development project commences and capitalization begins, and when a development project is substantially complete and held available for occupancy and capitalization must cease, involve judgments. We begin the capitalization of costs during the pre-construction period, which we consider to begin when activities that are necessary to the development of the property commence. We consider a development project as substantially completed and held available for occupancy upon the completion of tenant improvements, but no later than one year from cessation of major construction activity.

Cash and Cash Equivalents

Cash and Cash Equivalents. We consider highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents.

Restricted Cash

Restricted Cash. Restricted cash consists of amounts escrowed for future capital expenditures as required by certain of our mortgage notes.

Deferred Leasing Costs

Deferred Leasing Costs. Deferred leasing costs include capitalized brokerage, legal and other fees associated with the successful negotiation of leases, which are amortized to depreciation and amortization expense on a straight line basis over the terms of the respective leases.

Debt Issuance Costs

Debt Issuance Costs. Debt issuance costs include capitalized issuance costs related to borrowings, which are amortized to interest expense over the terms of the respective loans.

Other Assets

Other Assets. Other assets consist of our investment in Affiliates Insurance Company, or AIC, prepaid insurance and prepaid real estate taxes. We account for our investment in AIC, until AIC was dissolved as described in Note 10, using the equity method of accounting. Significant influence is present through common representation on the boards of trustees or directors of us and AIC.

Revenue Recognition

Revenue Recognition. 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.

In February 2016, the 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. We adopted these standards which 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 shareholders' equity 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 consolidated financial statements. Upon adoption, (i) allowances for bad debts are now recognized as a direct reduction of rental income, and (ii) 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 now included in "rental income" in our consolidated financial statements. For periods prior to January 1, 2019, we maintained an allowance for doubtful accounts for estimated losses resulting from the inability or unwillingness of certain tenants to make payments required under their leases. The computation of the allowance was based on the tenants’ payment histories and then current credit profiles, as well as other considerations. Provisions for credit losses prior to January 1, 2019 were previously included in other operating expenses in our consolidated financial statements and prior periods were not reclassified to conform to the current presentation.

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 $40,898 for the year ended December 31, 2019, of which tenant reimbursements totaled $38,755.

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 ASC 842, Leases, to the combined component. Income derived by our leases is recorded in rental income in our 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 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.

Income Taxes

Income Taxes. Until January 17, 2018, we were a wholly owned subsidiary of SIR, which was 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 income tax purposes. We have qualified for taxation as a REIT under the IRC for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2018 and intend to maintain such qualification. Accordingly, we generally are not, and will not be, subject to U.S. federal income taxes provided we distribute our taxable income and meet certain organization and operating requirements to qualify for taxation as a REIT. We are, however, subject to certain state and local taxes.

Use of Estimates

Use of Estimates. Preparation of these financial statements in conformity with U.S. generally accepted accounting principles, or GAAP, requires us to make estimates and assumptions that may affect the amounts reported in these consolidated financial statements and related notes. The actual results could differ from these estimates. Significant estimates in the consolidated financial statements include purchase price allocations, useful lives of fixed assets, the assessments of the carrying values and impairments of long lived assets and the allowance for doubtful accounts

Ownership Interest

Ownership Interest. For the periods prior to January 17, 2018, our investment activities were financed by SIR. Amounts invested in or advanced to us did not carry interest and had no specific repayment terms.

Net Income Per Common Share

Net Income Per Common Share. We calculate basic earnings per common share by dividing net income by the weighted average number of common shares outstanding during the period. We calculate diluted net income per share using the more dilutive of the two class method or the treasury stock method.

Segment Reporting

Segment Reporting. We operate in one business segment: ownership and leasing of properties that include industrial and logistics buildings and leased industrial lands.

Reclassifications

Reclassifications. Reclassifications have been made to the prior years' consolidated financial statements to conform to the current year's presentation.

New Accounting Pronouncements

New Accounting Pronouncements. 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 expect to adopt the standard using the modified retrospective approach. The implementation of this standard is not expected to have a material impact in our consolidated financial statements.

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Organization - Narrative (Details) $ / shares in Units, ft² in Thousands				1 Months Ended	12 Months Ended
	Jan. 17, 2018 USD ($) ft² property shares	Sep. 30, 2017 USD ($) property note	Sep. 29, 2017 USD ($) ft² state property note $ / shares shares	Dec. 31, 2017 USD ($) property	Dec. 31, 2019 USD ($) ft² state property building $ / shares shares	Dec. 31, 2018 USD ($) $ / shares shares	Dec. 27, 2018 shares	Dec. 29, 2017 USD ($)
Subsidiary, Sale of Stock [Line Items]
Number of properties owned | property	266		266		300
Net rentable area | ft²	28,540		28,540		42,939
Common shares, shares issued (in shares) | shares					65,180,628	65,074,791
Common shares, par value (in dollars per share) | $ / shares			$ 0.01		$ 0.01	$ 0.01
Debt assumed on acquisition					$ 1,415,730,000	$ 461,750,000
Hawaii
Subsidiary, Sale of Stock [Line Items]
Number of properties owned | property			226		226
Net rentable area | ft²			16,834		16,756
Number of properties used as collateral | property					186
Mainland Properties
Subsidiary, Sale of Stock [Line Items]
Number of properties owned			40		74
Net rentable area | ft²			11,706		26,183
Number of states where real estate is located | state			24		29
Affiliated Entity
Subsidiary, Sale of Stock [Line Items]
Common shares, shares issued (in shares) | shares			45,000,000
Revolving Credit Facility
Subsidiary, Sale of Stock [Line Items]
Maximum borrowing capacity of revolving credit facility	$ 750,000,000			$ 750,000,000				$ 750,000,000
Debt assumed on acquisition					$ 310,000,000	$ 413,000,000
Revolving Credit Facility | Affiliated Entity
Subsidiary, Sale of Stock [Line Items]
Maximum borrowing capacity of revolving credit facility			$ 750,000,000
Mortgages
Subsidiary, Sale of Stock [Line Items]
Number of instruments assumed | note		3	3
Debt assumed on acquisition		$ 63,069,000	$ 63,069,000
Number of properties used as collateral | property		3	3	2
IPO
Subsidiary, Sale of Stock [Line Items]
Common shares issued (in shares) | shares	20,000,000
Industrial Logistics Properties Trust | Select Income REIT
Subsidiary, Sale of Stock [Line Items]
Common shares, shares issued (in shares) | shares			45,000,000				45,000,000

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Business and Property Management Agreements with RMR LLC (Details)	1 Months Ended		11 Months Ended	12 Months Ended
	Jan. 31, 2018 USD ($)	Jan. 16, 2018 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2019 USD ($) employee agreement	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Jan. 18, 2018 $ / shares	Jan. 17, 2018 agreement
Related Party Transaction [Line Items]
Number of employees | employee				0
Equity market capitalization				$ 1,560,000,000
Unadjusted initial share price (usd per share) | $ / shares							$ 24.00
Adjusted benchmark return qualification for management fee reduction minimum				200.00%
Adjusted benchmark return qualification for management fee reduction maximum				500.00%
Business management fees			$ 7,269,000	$ 11,897,000
Incentive management fee				$ 0	$ 0
Term remaining prior to termination used in calculation of termination fee				10 days
Reit Management And Research L L C
Related Party Transaction [Line Items]
Number of management service agreements | agreement								2
Percentage applied on average historical cost of real estate investment properties acquired to calculate base management fee				0.50%
Base management fee payable as percentage of average historical cost of real estate investments excluding transferred assets for investments up to specified amount				0.70%
Base management fee payable threshold amount of other real estate investments				$ 250,000,000
Annual business management fee as percentage of aggregate cost of properties acquired in excess of specified amount				0.50%
Base management fee payable as percentage of average closing stock price on stock exchange				0.70%
Base management fee payable as percentage of average market capitalization exceeding specified amount				0.50%
Percentage for limitation and adjustments of incentive management fee payable				12.00%
Period of consecutive trading days				10 days
Period of trading days of measurement period used in calculation				30 days
Required return per share to adjust the return per share benchmark				12.00%
Incentive management fee, percentage of common shares outstanding used in calculation				1.50%
Property management fees as percentage of gross collected rents				3.00%
Construction supervision fees as percentage of construction costs				5.00%
Construction supervision fees			4,680,000	$ 7,548,000
Number of business days prior written notice for termination of property management agreement				60 days
Window following a change of control				12 months
Period of transition services after termination agreement				120 days
Minimum | Reit Management And Research L L C
Related Party Transaction [Line Items]
Termination fee term				19 years
Maximum | Reit Management And Research L L C
Related Party Transaction [Line Items]
Termination fee term				20 years
Reit Management And Research L L C
Related Party Transaction [Line Items]
Number of management service agreements | agreement				2
Business management fees		$ 308,000				$ 6,823,000
Incentive management fee	$ 7,660,000
Construction supervision fees		230,000				4,244,000
Reimbursement expense		$ 120,000	$ 2,908,000	$ 4,269,000		$ 2,512,000

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Indebtedness - Summary of Future Indebtedness Maturity (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Debt Disclosure [Abstract]
2020	$ 48,750
2021	310,000
2022	0
2023	56,980
2024	0
Thereafter	1,000,000
Long-term debt, gross	1,415,730	$ 461,750
Unamortized debt premiums	$ 1,406,608	$ 462,195

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Shareholders' Equity - Common Share Purchases (Details) - $ / shares						12 Months Ended
	Dec. 18, 2019	Sep. 25, 2019	Sep. 24, 2019	Jul. 03, 2019	Apr. 05, 2019	Dec. 31, 2019	Dec. 31, 2018	Sep. 24, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share repurchases to pay for tax withholding (in shares)							2,369
Common shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share repurchases to pay for tax withholding (in shares)	125	9,808	2,369	668	1,362	11,963
Share price (in dollars per share)	$ 21.09	$ 21.27		$ 21.48	$ 20.49			$ 22.08

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Related Person Transactions Narrative (Details) $ in Thousands	1 Months Ended	12 Months Ended
	Dec. 31, 2019 USD ($) agreement shares	Dec. 31, 2019 USD ($) agreement shares	Jun. 30, 2019 USD ($)	Dec. 31, 2018 USD ($) shares	Jun. 30, 2018 USD ($)	Dec. 31, 2017 USD ($)	Jun. 30, 2017 USD ($)	Dec. 27, 2018 shares	Sep. 29, 2017 shares
Related Party Transaction [Line Items]
Common shares, shares issued (in shares) | shares	65,180,628	65,180,628		65,074,791
Due from related parties	$ 1,504	$ 1,504		$ 1,390
Insurance premium allocation			$ 266		$ 320		$ 351
Distributions in excess of earnings from Affiliates Insurance Company		8,334		0		$ 0
Equity in earnings of an investee		$ 666		0		0
RMR LLC
Related Party Transaction [Line Items]
Number of management service agreements | agreement	2	2
Service fee, percent		3.00%
RMR LLC | Vesting on Grant Date
Related Party Transaction [Line Items]
Award vesting rights		20.00%
RMR LLC | Vesting on each of the next four anniversaries
Related Party Transaction [Line Items]
Award vesting rights		20.00%
Affiliated Entity
Related Party Transaction [Line Items]
Common shares, shares issued (in shares) | shares									45,000,000
Select Income REIT
Related Party Transaction [Line Items]
Due from related parties	$ 1,504	$ 1,504		865
Industrial Logistics Properties Trust | Select Income REIT
Related Party Transaction [Line Items]
Common shares, shares issued (in shares) | shares								45,000,000	45,000,000
AIC
Related Party Transaction [Line Items]
Distributions in excess of earnings from Affiliates Insurance Company	9,000
Cost to acquire shares	$ 298	298		8,632
Equity in earnings of an investee		666
Directors and Officers Liability Insurance | Affiliated Entity
Related Party Transaction [Line Items]
Amounts of transaction		$ 160
Insurance premium allocation cost				$ 90		$ 116

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CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Real estate properties:
Land	$ 747,794	$ 670,501
Buildings and improvements	1,588,170	791,895
Total real estate properties, gross	2,335,964	1,462,396
Accumulated depreciation	(131,468)	(93,291)
Total real estate properties, net	2,204,496	1,369,105
Acquired real estate leases, net	138,596	75,803
Cash and cash equivalents	28,415	9,608
Restricted cash	6,135	0
Rents receivable, including straight line rents of $58,336 and $54,916, respectively	62,782	56,940
Deferred leasing costs, net	6,581	6,157
Debt issuance costs, net	2,954	4,430
Due from related persons	1,504	1,390
Other assets, net	3,438	11,178
Total assets	2,454,901	1,534,611
LIABILITIES AND SHAREHOLDERS' EQUITY
Revolving credit facility	310,000	413,000
Mortgage notes payable, net	1,096,608	49,195
Assumed real estate lease obligations, net	17,508	18,316
Accounts payable and other liabilities	16,475	12,040
Rents collected in advance	9,442	6,004
Security deposits	6,680	6,130
Due to related persons	2,498	1,653
Total liabilities	1,459,211	506,338
Commitments and contingencies
Shareholders' equity:
Common shares of beneficial interest, $.01 par value: 100,000,000 shares authorized; 65,180,628 and 65,074,791 shares issued and outstanding, respectively	652	651
Additional paid in capital	999,302	998,447
Cumulative net income	142,155	89,657
Cumulative common distributions	(146,419)	(60,482)
Ownership interest	995,690	1,028,273
Total liabilities and shareholders' equity	$ 2,454,901	$ 1,534,611

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CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common shares	Additional Paid In Capital	Cumulative Net Income	Cumulative Common Distributions	Ownership Interest
Balance (in shares) at Dec. 31, 2016		0
Balance at beginning of period at Dec. 31, 2016	$ 1,313,185	$ 0	$ 0	$ 0	$ 0	$ 1,313,185
Increase (Decrease) in Stockholders' Equity
Net income	80,103			15,269		64,834
Contributions	72,807		30,244			42,563
Distributions	(153,887)		(37,348)			(116,539)
Issuance of common shares and reclassification of ownership interest (in shares)		45,000,000
Issuance of common shares and reclassification of ownership interest	(750,000)	$ 450	553,593			(1,304,043)
Balance (in shares) at Dec. 31, 2017		45,000,000
Balance at end of period at Dec. 31, 2017	562,208	$ 450	546,489	15,269	0	0
Increase (Decrease) in Stockholders' Equity
Net income	74,388			74,388
Contributions	16,162		16,162
Distributions	(9,187)		(9,187)
Issuance of common shares and reclassification of ownership interest (in shares)		20,000,000
Issuance of common shares and reclassification of ownership interest	444,309	$ 200	444,109
Share grants (in shares)		77,400
Share grants	927	$ 1	926
Share forfeitures (in shares)		(240)
Share forfeitures	$ 0
Share repurchases (in shares)	(2,369)
Share repurchases	$ (52)		(52)
Distributions to common shareholders	(60,482)				(60,482)
Balance (in shares) at Dec. 31, 2018		65,074,791
Balance at end of period at Dec. 31, 2018	1,028,273	$ 651	998,447	89,657	(60,482)	0
Increase (Decrease) in Stockholders' Equity
Net income	52,498			52,498
Share grants (in shares)		119,200
Share grants	1,111	$ 1	1,110
Share forfeitures (in shares)		(1,400)
Share forfeitures	(2)		(2)
Share repurchases (in shares)		(11,963)
Share repurchases	(253)		(253)
Distributions to common shareholders	(85,937)				(85,937)
Balance (in shares) at Dec. 31, 2019		65,180,628
Balance at end of period at Dec. 31, 2019	$ 995,690	$ 652	$ 999,302	$ 142,155	$ (146,419)	$ 0

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Business and Property Management Agreements with RMR LLC

12 Months Ended

Dec. 31, 2019

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. Upon completion of our IPO on January 17, 2018, we entered two agreements with RMR LLC to provide management services to us: (i) a business management agreement, which relates to our business generally, and (ii) a property management agreement, which relates to our property level operations. See Notes 8 and 10 for more information regarding our relationship, agreements and transactions with RMR LLC prior to our IPO.

Management Agreements with RMR LLC. Our management agreements with RMR LLC provide for an annual base management fee, an annual incentive management fee and property management and construction supervision fees, payable in cash, among other terms:

• Base Management Fee. The annual base management fee payable to RMR LLC by us for each applicable period is equal to the lesser of:

◦ the sum of (i) 0.5% of the average aggregate historical cost of the real estate assets acquired from a REIT to which RMR LLC provided business management or property management services, or the Transferred Assets, which includes our Initial Properties we acquired from SIR, plus (ii) 0.7% of the average aggregate historical cost of our real estate investments excluding the Transferred Assets up to $250,000, plus (iii) 0.5% of the average aggregate historical cost of our real estate investments excluding the Transferred Assets exceeding $250,000; and

◦ the sum of (i) 0.7% of the average closing price per share of our common shares on the stock exchange on which such shares are principally traded during such period, multiplied by the average number of our common shares outstanding during such period, plus the daily weighted average of the aggregate liquidation preference of each class of our preferred shares outstanding during such period, plus the daily weighted average of the aggregate principal amount of our consolidated indebtedness during such period, or, together, our Average Market Capitalization, up to $250,000, plus (ii) 0.5% of our Average Market Capitalization exceeding $250,000.

The average aggregate historical cost of our real estate investments includes our consolidated assets invested, directly or indirectly, in equity interests in or loans secured by real estate and personal property owned in connection with such real estate (including acquisition related costs and costs which may be allocated to intangibles or are unallocated), all before reserves for depreciation, amortization, impairment charges or bad debts or other similar non-cash reserves.

• Incentive Management Fee. The incentive management fee which may be earned by RMR LLC for an annual period is calculated as follows:

◦ An amount, subject to a cap, based on the value of our common shares outstanding, equal to 12.0% of the product of:

– if the relevant measurement period ends on or before December 31, 2020, $1,560,000 (our unadjusted equity market capitalization as calculated at our IPO) or, if the relevant measurement period ends thereafter, our equity market capitalization on the last trading day of the calendar year immediately prior to the relevant measurement period, and

– the amount (expressed as a percentage) by which the total return per share, as defined in the business management agreement and further described below, of our common shareholders (i.e., share price appreciation plus dividends) exceeds the total shareholder return of the applicable market index, or the benchmark return per share, for the relevant measurement period. Effective as of January 1, 2019, we amended our business management agreement with RMR LLC so that the SNL U.S. Industrial REIT Index will be used for periods beginning on and after January 1, 2019, with the SNL U.S. REIT Equity Index used for periods ending on or prior to December 31, 2018.

For purposes of the total return per share of our common shareholders, share price appreciation for a measurement period is determined by subtracting (i) if the measurement period ends on or before December 31, 2020, $24.00 per common share (our unadjusted initial share price, as defined under the business management agreement, based on our IPO price of our common shares) or, if the measurement period ends after December 31, 2020, the closing price of our common shares on Nasdaq on the last trading day of the year immediately before the first year of the applicable measurement period from (ii) the average closing price of our common shares on the 10 consecutive trading days having the highest average closing prices during the final 30 trading days in the last year of the measurement period.

◦ The calculation of the incentive management fee (including the determinations of our equity market capitalization, initial share price and the total return per share of our common shareholders) is subject to adjustments if additional common shares are issued or if we repurchase our common shares during the measurement period.

◦ No incentive management fee is payable by us unless our total return per share during the measurement period is positive.

◦ The measurement periods are generally three year periods ending with the year for which the incentive management fee is being calculated, with shorter periods applicable in the case of the calculation of the incentive fee for 2020 (the period beginning on January 12, 2018, the first day our common shares began trading, and ending on December 31, 2020), 2019 (the period beginning on January 12, 2018 and ending on December 31, 2019) and 2018 (the period beginning on January 12, 2018 and ending on December 31, 2018).

◦ If our total return per share exceeds 12.0% per year in any measurement period, the benchmark return per share is adjusted to be the lesser of the total shareholder return of the applicable market index for such measurement period and 12.0% per year, or the adjusted benchmark return per share. In instances where the adjusted benchmark return per share applies, the incentive management fee will be reduced if our total return per share is between 200 basis points and 500 basis points below the applicable market index, by a low return factor, as defined in the business management agreement, and there will be no incentive management fee paid if, in these instances, our total return per share is more than 500 basis points below the applicable market index.

◦ The incentive management fee is subject to a cap. The cap is equal to the value of the number of our common shares which would, after issuance, represent 1.5% of the number of our common shares then outstanding multiplied by the average closing price of our common shares during the 10 consecutive trading days having the highest average closing prices during the final 30 trading days of the relevant measurement period.

◦ Incentive management fees we paid to RMR LLC for any period may be subject to “clawback” if our financial statements for that period are restated due to material non-compliance with any financial reporting requirements under the securities laws as a result of the bad faith, fraud, willful misconduct or gross negligence of RMR LLC and the amount of the incentive management fee we paid was greater than the amount we would have paid based on the restated financial statements.

Pursuant to our business management agreement with RMR LLC, we recognized net business management fees of $11,897 for the year ended December 31, 2019 and $7,269 for the period from January 17, 2018 through December 31, 2018. The net business management fees we recognized are included in general and administrative expenses in our consolidated statements of comprehensive income for the years ended December 31, 2019 and 2018. We did not incur any incentive management fee pursuant to our business management agreement for the periods ended December 31, 2019 and 2018.

• Property Management and Construction Supervision Fees. The property management fees payable to RMR LLC by us for each applicable period are equal to 3.0% of gross collected rents and the construction supervision fees payable to RMR LLC by us for each applicable period are equal to 5.0% of construction costs. Pursuant to our property management agreement with RMR LLC, we recognized aggregate property management and construction supervision fees of $7,548 and $4,680 for the year ended December 31, 2019 and for the period from January 17, 2018 through December 31, 2018, respectively. These amounts are included in operating expenses in our consolidated statements of comprehensive income, or capitalized, as appropriate.

• Expense Reimbursement. We are generally responsible for all of our operating expenses, including certain expenses incurred or arranged by RMR LLC on our behalf. We are generally not responsible for payment of RMR LLC’s 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 and as otherwise agreed. Our Audit Committee appoints our Director of Internal Audit and our Compensation Committee approves the costs of our internal audit function. Our property level operating expenses are generally incorporated into rents charged to our tenants, including certain payroll and related costs incurred by RMR LLC. We reimbursed RMR LLC $4,269 and $2,908 for these expenses and costs for the year ended December 31, 2019 and for the period from January 17, 2018 through December 31, 2018, respectively. These amounts are included in other operating expenses and general and administrative expenses, as applicable, for these periods.

• Term. Our management agreements with RMR LLC have terms that end on December 31, 2039, and automatically extend on December 31st of each year for an additional year, so that the terms of our management agreements thereafter end on the 20th anniversary of the date of the extension.

• Termination Rights. We have the right to terminate one or both of our management agreements with RMR LLC: (i) at any time on 60 days’ written notice for convenience, (ii) immediately on written notice for cause, as defined therein, (iii) on written notice given within 60 days after the end of an applicable calendar year for a performance reason, as defined therein, and (iv) by written notice during the 12 months following a change of control of RMR LLC, as defined therein. RMR LLC has the right to terminate the management agreements for good reason, as defined therein.

• Termination Fee. If we terminate one or both of our management agreements with RMR LLC for convenience, or if RMR LLC terminates one or both of our management agreements for good reason, we have agreed to pay RMR LLC a termination fee in an amount equal to the sum of the present values of the monthly future fees, as defined therein, for the terminated management agreement(s) for the term that was remaining prior to such termination, which, depending on the time of termination would be between 19 and 20 years. If we terminate one or both of our management agreements with RMR LLC for a performance reason, we have agreed to pay RMR LLC the termination fee calculated as described above, but assuming a 10 year term was remaining prior to the termination. We are not required to pay any termination fee if we terminate our management agreements with RMR LLC for cause or as a result of a change of control of RMR LLC.

• Transition Services. RMR LLC has agreed to provide certain transition services to us for 120 days following an applicable termination by us or notice of termination by RMR LLC, including cooperating with us and using commercially reasonable efforts to facilitate the orderly transfer of the management and real estate investment services provided under our business management agreement and to facilitate the orderly transfer of the management of the managed properties under our property management agreement, as applicable.

• Vendors. Pursuant to our management agreements with RMR LLC, RMR LLC may from time to time negotiate on our behalf with certain third party vendors and suppliers for the procurement of goods and services to us. As part of this arrangement, we may enter agreements with RMR LLC and other companies to which RMR LLC or its subsidiaries provide management services for the purpose of obtaining more favorable terms from such vendors and suppliers.

•

Investment Opportunities. Under our business management agreement with RMR LLC, we acknowledge that RMR LLC may engage in other activities or businesses and act as the manager to any other person or entity (including other REITs) even though such person or entity has investment policies and objectives similar to ours and we are not entitled to preferential treatment in receiving information, recommendations and other services from RMR LLC.

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Fair Value of Assets and Liabilities

12 Months Ended

Dec. 31, 2019

Fair Value Disclosures [Abstract]

Fair Value of Assets and Liabilities

Fair Value of Assets and Liabilities

Our financial instruments include cash and cash equivalents, restricted cash, rents receivable, our revolving credit facility, mortgage notes payable, accounts payable, security deposits, rents collected in advance and amounts due from or to related persons. At December 31, 2019 and 2018, the fair value of our financial instruments approximated their carrying values in our consolidated financial statements, due to the short term nature or floating interest rates, except as follows:

	At December 31, 2019				At December 31, 2018
	Carrying		Estimated		Carrying		Estimated
	Value (1)		Fair Value		Value (1)		Fair Value
Mortgage notes payable	$	1,096,608	$	1,143,437	$	49,195	$	48,642

(1) Includes unamortized debt issuance costs, premiums and discounts of $9,122 and ($445) as of December 31, 2019 and 2018, respectively.

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.

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Indebtedness - Summary of Outstanding Indebtedness (Details) $ in Thousands			1 Months Ended	12 Months Ended
	Sep. 30, 2017 USD ($) property	Sep. 29, 2017 USD ($) property	Dec. 31, 2017 property	Dec. 31, 2019 USD ($) property option	Dec. 31, 2018 USD ($)
Debt Instrument [Line Items]
Principal Balance				$ 1,415,730	$ 461,750
Unamortized debt issuance costs, premiums and discounts				(9,122)	445
Carrying value				$ 1,406,608	462,195
Interest rate (as a percent)				3.48%
Net Book Value of Collateral				$ 1,161,204
Virginia
Debt Instrument [Line Items]
Number of properties used as collateral | property				1
Florida
Debt Instrument [Line Items]
Number of properties used as collateral | property				1
Hawaii
Debt Instrument [Line Items]
Number of properties used as collateral | property				186
Mainland Properties
Debt Instrument [Line Items]
Number of properties used as collateral | property				11
Mortgage note payable (secured by one property in Florida)
Debt Instrument [Line Items]
Interest rate (as a percent)				4.22%
Mortgage note payable (secured by 186 properties in Hawaii)
Debt Instrument [Line Items]
Interest rate (as a percent)				4.31%
Mortgage note payable (secured by 11 Mainland Properties)
Debt Instrument [Line Items]
Interest rate (as a percent)				3.33%
Revolving Credit Facility
Debt Instrument [Line Items]
Principal Balance				$ 310,000	413,000
Interest rate (as a percent)				3.26%
Net Book Value of Collateral				$ 0
Number of options to extend maturity date | option				2
Extension period				6 months
Mortgages
Debt Instrument [Line Items]
Number of properties used as collateral | property	3	3	2
Principal Balance	$ 63,069	$ 63,069
Mortgages | Mortgage note payable (secured by one property in Virginia)
Debt Instrument [Line Items]
Number of properties used as collateral | property				1
Principal Balance				$ 48,750	48,750
Net Book Value of Collateral				$ 63,213
Mortgages | Mortgage note payable (secured by one property in Florida)
Debt Instrument [Line Items]
Number of properties used as collateral | property				1
Principal Balance				$ 56,980	0
Net Book Value of Collateral				$ 106,048
Mortgages | Mortgage note payable (secured by 186 properties in Hawaii)
Debt Instrument [Line Items]
Number of properties used as collateral | property				186
Principal Balance				$ 650,000	0
Net Book Value of Collateral				$ 492,371
Mortgages | Mortgage note payable (secured by 11 Mainland Properties)
Debt Instrument [Line Items]
Number of properties used as collateral | property				11
Principal Balance				$ 350,000	$ 0
Net Book Value of Collateral				$ 499,572

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Summary of Significant Accounting Policies - Deferred Leasing Costs (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Accounting Policies [Abstract]
Deferred leasing costs	$ 11,383	$ 9,845
Accumulated amortization of deferred leasing costs	4,802	$ 3,688
Estimated cost of lease under negotiation	83
Future amortization of deferred leasing costs to be recognized during the current terms of the existing leases
2020	851
2021	786
2022	675
2023	519
2024	480
Thereafter	$ 3,270

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Summary of Significant Accounting Policies - Operating Lease Maturity (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Accounting Policies [Abstract]
2020	$ 203,971
2021	202,109
2022	194,209
2023	175,676
2024	152,267
Thereafter	1,185,405
Total	$ 2,113,637