UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

For the quarterly period ended March 31, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

Commission File Number 001-38342 

INDUSTRIAL LOGISTICS PROPERTIES TRUST

(Exact Name of Registrant as Specified in Its Charter)

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

Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458-1634
(Address of Principal Executive Offices)	(Zip Code)

617-219-1460

(Registrant’s Telephone Number, Including Area Code)

Securities Registered Pursuant to Section 12(b) of the Act:

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

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

Number of registrant’s common shares of beneficial interest, $.01 par value per share, outstanding as of April 21, 2023: 65,565,969

INDUSTRIAL LOGISTICS PROPERTIES TRUST

FORM 10-Q

March 31, 2023

INDEX

		Page
PART I	Financial Information	3
Item 1.	Financial Statements (unaudited)	3
	Condensed Consolidated Balance Sheets — March 31, 2023 and December 31, 2022	3
	Condensed Consolidated Statements of Comprehensive Income (Loss) — Three Months Ended March 31, 2023 and 2022	4
	Condensed Consolidated Statements of Shareholders’ Equity — Three Months Ended March 31, 2023 and 2022	5
	Condensed Consolidated Statements of Cash Flows — Three Months Ended March 31, 2023 and 2022	6
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	29
	Warning Concerning Forward-Looking Statements	30
	Statement Concerning Limited Liability	31
PART II	Other Information	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 6.	Exhibits	33
	Signatures	34

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

2

PART I. Financial Information

Item 1. Financial Statements

INDUSTRIAL LOGISTICS PROPERTIES TRUST 

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data)

(unaudited) 

	March 31,		December 31,
	2023		2022
ASSETS
Real estate properties:
Land	$	1,116,561	$	1,117,779
Buildings and improvements	4,061,589		4,058,329
Total real estate properties, gross	5,178,150		5,176,108
Accumulated depreciation	(304,581)		(273,467)
Total real estate properties, net	4,873,569		4,902,641
Investment in unconsolidated joint venture	127,329		124,358
Acquired real estate leases, net	282,947		297,445
Cash and cash equivalents	61,250		48,261
Restricted cash	83,909		92,519
Rents receivable, including straight line rents of $84,472 and $80,710, respectively	111,014		107,011
Other assets, net	94,958		103,931
Total assets	$	5,634,976	$	5,676,166
LIABILITIES AND EQUITY
Mortgages and notes payable, net	$	4,245,651	$	4,244,501
Accounts payable and other liabilities	75,937		73,547
Assumed real estate lease obligations, net	21,439		22,523
Due to related persons	5,774		4,824
Total liabilities	4,348,801		4,345,395
Commitments and contingencies:
Equity:
Equity attributable to common shareholders:
Common shares of beneficial interest, $.01 par value: 100,000,000 shares authorized; 65,565,969 and 65,568,145 shares issued and outstanding, respectively	656		656
Additional paid in capital	1,014,585		1,014,201
Cumulative net income	92,376		117,185
Cumulative other comprehensive income	14,885		21,903
Cumulative common distributions	(363,877)		(363,221)
Total equity attributable to common shareholders	758,625		790,724
Total equity attributable to noncontrolling interest	527,550		540,047
Total equity	1,286,175		1,330,771
Total liabilities and equity	$	5,634,976	$	5,676,166

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

3

INDUSTRIAL LOGISTICS PROPERTIES TRUST 

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(amounts in thousands, except per share data)

(unaudited) 

	Three Months Ended March 31,
	2023		2022
Rental income	$	110,258	$	71,375
Expenses:
Real estate taxes	16,467		9,436
Other operating expenses	9,318		6,772
Depreciation and amortization	45,457		22,878
General and administrative	7,907		6,077
Total expenses	79,149		45,163
Interest and other income	1,146		478
Interest expense (including net amortization of debt issuance costs, premiums and discounts of $6,713 and $20,321, respectively)	(70,771)		(40,999)
Loss on sale of real estate	(974)		—
Realized gain on equity securities	—		1,232
Unrealized gain on equity securities	—		2,460
Loss on early extinguishment of debt	—		(828)
Loss before income tax expense and equity in earnings of unconsolidated joint venture	(39,490)		(11,445)
Income tax expense	(17)		(69)
Equity in earnings of unconsolidated joint venture	3,961		1,727
Net loss	(35,546)		(9,787)
Net loss attributable to noncontrolling interest	10,737		3,273
Net loss attributable to common shareholders	$	(24,809)	$	(6,514)
Other comprehensive income:
Unrealized (loss) gain on derivatives	(8,778)		5,632
Less: unrealized gain (loss) on derivatives attributable to noncontrolling interest	1,760		(1,724)
Other comprehensive (loss) income attributable to common shareholders	(7,018)		3,908
Comprehensive loss attributable to common shareholders	$	(31,827)	$	(2,606)
Weighted average common shares outstanding - basic and diluted	65,309		65,212
Per common share data (basic and diluted):
Net loss attributable to common shareholders	$	(0.38)	$	(0.10)

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

4

INDUSTRIAL LOGISTICS PROPERTIES TRUST

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(dollars in thousands)

(unaudited)

								Cumulative				Total Equity		Total Equity
	Number of			Additional				Other		Cumulative		Attributable to		Attributable to
	Common	Common		Paid In		Cumulative		Comprehensive		Common		Common		Noncontrolling		Total
	Shares	Shares		Capital		Net Income		Income		Distributions		Shareholders		Interest		Equity
Balance at December 31, 2022	65,568,145	$	656	$	1,014,201	$	117,185	$	21,903	$	(363,221)	$	790,724	$	540,047	$	1,330,771
Net loss	—	—		—		(24,809)		—		—		(24,809)		(10,737)		(35,546)
Share grants	—	—		388		—		—		—		388		—		388
Share repurchases	(976)	—		(3)		—		—		—		(3)		—		(3)
Share forfeitures	(1,200)	—		(1)		—		—		—		(1)		—		(1)
Distributions to common shareholders	—	—		—		—		—		(656)		(656)		—		(656)
Net current period other comprehensive loss	—	—		—		—		(7,018)		—		(7,018)		(1,760)		(8,778)
Balance at March 31, 2023	65,565,969	$	656	$	1,014,585	$	92,376	$	14,885	$	(363,877)	$	758,625	$	527,550	$	1,286,175

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

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

5

INDUSTRIAL LOGISTICS PROPERTIES TRUST 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(unaudited)

	Three Months Ended March 31,
	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(35,546)	$	(9,787)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation	31,224		14,992
Net amortization of debt issuance costs, premiums and discounts	6,713		20,320
Amortization of acquired real estate leases and assumed real estate lease obligations	13,414		7,223
Amortization of deferred leasing costs	559		361
Unrealized gain on equity securities	—		(2,460)
Realized gain on sale of equity securities	—		(1,232)
Straight line rental income	(3,762)		(1,156)
Loss on early extinguishment of debt	—		828
Loss on sale of real estate	974		—
Proceeds from settlement of derivatives	(12,976)		—
Other non-cash expenses	6,532		696
Distributions of earnings from unconsolidated joint venture	990		1,320
Equity in earnings of unconsolidated joint venture	(3,961)		(1,727)
Change in assets and liabilities:
Rents receivable	(242)		(1,309)
Deferred leasing costs	(2,401)		(3,226)
Other assets	(5,048)		(15,018)
Accounts payable and other liabilities	366		22,502
Rents collected in advance	3,357		19,646
Security deposits	24		729
Due to related persons	950		3,937
Net cash provided by operating activities	1,167		56,639
CASH FLOWS FROM INVESTING ACTIVITIES:
Real estate acquisitions	—		(3,557,602)
Real estate improvements	(3,784)		(618)
Proceeds from sale of marketable securities	—		115,735
Proceeds from settlement of derivatives	12,976		—
Proceeds from sale of real estate	243		—
Net cash provided by (used in) investing activities	9,435		(3,442,485)

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

6

INDUSTRIAL LOGISTICS PROPERTIES TRUST 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(dollars in thousands)

(unaudited)

	Three Months Ended March 31,
	2023		2022
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of mortgage notes payable	—		2,100,000
Repayment of mortgage notes payable	(5,530)		(1,782)
Proceeds from secured bridge loan facility	—		1,385,158
Borrowings under revolving credit facility	—		3,000
Repayments of revolving credit facility	—		(185,000)
Payment of debt issuance costs	(34)		(89,354)
Distributions to common shareholders	(656)		(21,584)
Proceeds from sale of noncontrolling interest, net	—		587,440
Repurchase of common shares	(3)		—
Net cash (used in) provided by financing activities	(6,223)		3,777,878
Increase in cash, cash equivalents and restricted cash	4,379		392,032
Cash, cash equivalents and restricted cash at beginning of period	140,780		29,397
Cash, cash equivalents and restricted cash at end of period	$	145,159	$	421,429

SUPPLEMENTAL DISCLOSURES:
Interest paid	$	68,600	$	13,021
Income taxes paid	$	—	$	57
Interest capitalized	$	142	$	3
NON-CASH INVESTING ACTIVITIES:
Real estate acquired by assumption of mortgage notes payable	$	—	$	323,432
Real estate improvements accrued not paid	$	2,092	$	821
NON-CASH FINANCING ACTIVITIES:
Assumption of mortgage notes payable	$	—	$	(323,432)
Increase in deferred financing fees	$	—	$	14,537

SUPPLEMENTAL DISCLOSURE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH:
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets to the amounts shown in the condensed consolidated statements of cash flows:
	Three Months Ended March 31,
	2023		2022
Cash and cash equivalents	$	61,250	$	275,075
Restricted cash (1)	83,909		146,354
Total cash, cash equivalents and restricted cash shown in the statements of cash flows	$	145,159	$	421,429

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

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

7

INDUSTRIAL LOGISTICS PROPERTIES TRUST 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

Note 1. Basis of Presentation

The accompanying condensed consolidated financial statements of Industrial Logistics Properties Trust and its consolidated subsidiaries, or the Company, ILPT, we, us or our, are unaudited. Certain information and disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted. We believe the disclosures made are adequate to make the information presented not misleading. However, the accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2022, or our 2022 Annual Report. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of results for the interim period have been included. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Our operating results for interim periods are not necessarily indicative of the results that may be expected for the full year.

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

Note 2. Real Estate Investments

As of March 31, 2023, our portfolio was comprised of 413 consolidated properties containing approximately 59,983,000 rentable square feet, including 226 buildings, leasable land parcels and easements containing approximately 16,729,000 rentable square feet of primarily industrial lands located on the island of Oahu, Hawaii, or our Hawaii Properties, and 187 industrial properties containing approximately 43,254,000 rentable square feet located in 38 other states, or our Mainland Properties, which included 94 properties owned by a consolidated joint venture in which we own a 61% equity interest. As of March 31, 2023, we also owned a 22% equity interest in an unconsolidated joint venture which owns 18 industrial properties located in 12 states totaling approximately 11,726,000 rentable square feet.

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

We incurred capital expenditures and leasing costs at certain of our properties of $4,931 and $3,765 during the three months ended March 31, 2023 and 2022, respectively. During the three months ended March 31, 2023, we committed $1,937 for expenditures related to tenant improvements and leasing costs for leases executed during the period for approximately 1,143,000 square feet. Committed, but unspent, tenant related obligations based on existing leases as of March 31, 2023 were $25,054, of which $8,365 is expected to be spent during the next 12 months.

In March 2023, we received gross proceeds of $270 and recorded a $974 net loss on sale of real estate as a result of a partial eminent domain taking at a property in Everett, Washington.

Joint Venture Activities

As of March 31, 2023, we had equity investments in our joint ventures that consisted of the following:

			ILPT Carrying Value
		ILPT	of Investment		Number of		Square
Joint Venture	Presentation	Ownership	at March 31, 2023		Properties	Location	Feet
Mountain Industrial REIT LLC	Consolidated	61%	N/A		94	Various	20,980,661
The Industrial Fund REIT LLC	Unconsolidated	22%	$	127,329	18	Various	11,726,137

8

INDUSTRIAL LOGISTICS PROPERTIES TRUST 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

Consolidated Joint Venture - Mountain Industrial REIT LLC:

We own a 61% equity interest in Mountain Industrial REIT LLC, or our consolidated joint venture. We control our consolidated joint venture and therefore account for the properties owned by this joint venture on a consolidated basis in our condensed consolidated financial statements. We recognized a 39% noncontrolling interest in our condensed consolidated financial statements for the three months ended March 31, 2023 and for the period from this joint venture’s formation date, February 25, 2022, to March 31, 2022. The portion of this joint venture's net loss not attributable to us, or $10,728 and $3,261, for the three months ended March 31, 2023 and for the period from February 25, 2022 to March 31, 2022, respectively, is reported as net loss attributable to noncontrolling interest in our condensed consolidated statements of comprehensive income (loss). This joint venture made no distributions for the three months ended March 31, 2023 or for the period from February 25, 2022 to March 31, 2022. As of March 31, 2023, this joint venture had total assets of $3,064,043 and total liabilities of $1,721,021.

Unconsolidated Joint Venture - The Industrial Fund REIT LLC:

We own a 22% equity interest in The Industrial Fund REIT LLC, or the unconsolidated joint venture. We account for the unconsolidated joint venture under the equity method of accounting under the fair value option.

We recorded a change in the fair value of our investment in the unconsolidated joint venture of $3,961 and $1,727 for the three months ended March 31, 2023 and 2022, respectively, as equity in earnings of unconsolidated joint venture in our condensed consolidated statements of comprehensive income (loss). In addition, the unconsolidated joint venture made aggregate cash distributions to us of $990 and $1,320 during the three months ended March 31, 2023 and 2022, respectively.

Consolidated Tenancy in Common:

An unrelated third party owns an approximate 33% tenancy in common interest in one property located in Somerset, New Jersey, and we own the remaining 67% tenancy in common interest in this property. The portion of this property’s net loss not attributable to us, or $9 and $12, for the three months ended March 31, 2023 and for the period from February 25, 2022 to March 31, 2022, respectively, is reported as net loss attributable to noncontrolling interest in our condensed consolidated statements of comprehensive income (loss).

See Notes 4, 5, 8, 9 and 10 for more information regarding these joint ventures.

Note 3. Leases

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

We recognize rental income from operating leases on a straight line basis over the lease term when we have determined that the collectability of substantially all of the lease payments is probable. We increased rental income by $3,762 and $1,156 to record revenue on a straight line basis during the three months ended March 31, 2023 and 2022, respectively.

We do not include in our measurement of our lease receivables certain variable payments, including payments determined by changes in the index or market-based indices after the inception of the lease, certain tenant reimbursements and other income until the specific events that trigger the variable payments have occurred. Such payments totaled $21,099 and $12,380 for the three months ended March 31, 2023 and 2022, respectively.

Right of use assets and lease liabilities. Three of our properties are subject to ground leases and we are also the lessee under a lease for one office property, which we assumed as part of our acquisition of Monmouth Real Estate Investment Corporation, or MNR, in February 2022. For these leases under which we are the lessee, we are required to record a right of use asset and lease liability for all leases with a term greater than 12 months. The values of our right of use assets and related liabilities representing our future obligations under the lease arrangements under which we are the lessee were $4,976 and $5,046, respectively, as of March 31, 2023, and $5,084 and $5,149, respectively, as of December 31, 2022. Our right of use assets and related lease liabilities are included in other assets, net and accounts payable and other liabilities, respectively, in our

9

INDUSTRIAL LOGISTICS PROPERTIES TRUST 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

condensed consolidated balance sheets. We have a sublease for a portion of the MNR lease that expires on December 30, 2029. Rent expense incurred under the MNR lease, net of sublease revenue, if any, was $101 for three months ended March 31, 2023 and $87 for the period from February 25, 2022 to March 31, 2022. Rent expense is included in general and administrative expense in our condensed consolidated statements of comprehensive income (loss).

Generally, payments of ground lease obligations are made by our tenants. However, if a tenant does not perform obligations under a ground lease or does not renew any ground lease, we may have to perform obligations under, or renew, the ground lease in order to protect our investment in the affected property.

Tenant Concentration

Subsidiaries of FedEx Corporation, or FedEx, accounted for $34,787, or 31.6% and $13,468, or 18.9% of our rental income for the three months ended March 31, 2023 and 2022, respectively. In addition, subsidiaries of Amazon.com, Inc., or Amazon, accounted for $7,515, or 6.8% and $5,615, or 7.9% of our rental income for the three months ended March 31, 2023 and 2022, respectively.

Geographic Concentration

For the three months ended March 31, 2023 and 2022, approximately 27.4% and 37.4%, respectively, of our rental income was from our Hawaii Properties.

10

INDUSTRIAL LOGISTICS PROPERTIES TRUST 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

Note 4. Indebtedness

As of March 31, 2023, our outstanding indebtedness consisted of the following:

									Net Book
									Value
			Principal Balance as of						of Collateral
			March 31,		December 31,		Interest		At March 31,
Entity	Type	Secured By:	2023 (1)		2022 (1)		Rate	Maturity	2023
ILPT	Floating Rate - Interest only	104 Properties	$	1,235,000	$	1,235,000	6.18%	10/09/24	$	1,064,535
ILPT	Fixed Rate - Interest only	186 Properties	650,000		650,000		4.31%	02/07/29	490,194
ILPT	Fixed Rate - Interest only	17 Properties	700,000		700,000		4.42%	03/09/32	515,084
Mountain JV (2)	Floating Rate - Interest only	82 Properties	1,400,000		1,400,000		6.17%	03/09/24	1,895,603
Mountain JV (2)	Fixed Rate - Amortizing	One Property	13,034		13,556		3.76%	10/01/28	62,799
Mountain JV (2)	Fixed Rate - Amortizing	One Property	4,720		4,865		3.77%	04/01/30	39,447
Mountain JV (2)	Fixed Rate - Amortizing	One Property	4,992		5,145		3.85%	04/01/30	39,447
Mountain JV (2)	Fixed Rate - Amortizing	One Property	13,987		14,392		3.56%	09/01/30	50,554
Mountain JV (2)	Fixed Rate - Amortizing	One Property	12,368		12,691		3.67%	05/01/31	29,419
Mountain JV (2)	Fixed Rate - Amortizing	One Property	13,842		14,144		4.14%	07/01/32	44,460
Mountain JV (2)	Fixed Rate - Amortizing	One Property	30,376		30,949		4.02%	10/01/33	86,555
Mountain JV (2)	Fixed Rate - Amortizing	One Property	42,432		43,219		4.13%	11/01/33	131,092
Mountain JV (2)	Fixed Rate - Amortizing	One Property	25,744		26,175		3.10%	06/01/35	47,387
Mountain JV (2)	Fixed Rate - Amortizing	One Property	41,425		42,087		2.95%	01/01/36	101,199
Mountain JV (2)	Fixed Rate - Amortizing	One Property	45,553		46,109		4.27%	11/01/37	112,286
Mountain JV (2)	Fixed Rate - Amortizing	One Property	51,360		52,031		3.25%	01/01/38	115,824
	Total indebtedness		$	4,284,833	$	4,290,363			$	4,825,885
	Unamortized debt issuance costs		(39,182)		(45,862)
	Total indebtedness, net		$	4,245,651	$	4,244,501

(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)Mountain JV is our consolidated joint venture in which we own a 61% equity interest. See Notes 2, 5, 8, 9 and 10 for more information regarding this joint venture.

Our $1,235,000 interest only floating rate loan, secured by 104 of our properties, or the ILPT Floating Rate Loan, matures in October 2024, subject to three, one year extension options, and requires that interest be paid at an annual rate of secured overnight financing rate, or SOFR, which is capped at an annual rate of 2.25% for the initial term of the ILPT Floating Rate Loan, plus a weighted average premium of 3.93%. The interest rate payable on the ILPT Floating Rate Loan as of March 31, 2023 and the weighted average interest rate for the three months ended March 31, 2023 were both 6.18%. Subject to the satisfaction of certain conditions, we have the option to prepay up to $247,000 of the ILPT Floating Rate Loan at par with no premium, and to prepay the balance of the ILPT Floating Rate Loan in full or in part at any time, subject to a premium, and beginning in October 2023, without a premium.

Our $1,400,000 interest only floating rate loan, secured by 82 properties owned by our consolidated joint venture, or the Floating Rate Loan, matures in March 2024, subject to three, one year extension options, and requires that interest be paid at an annual rate of SOFR, which is capped at an annual rate of 3.40% through the initial term of the Floating Rate Loan, plus a premium of 2.77%. The interest rate payable on the Floating Rate Loan as of March 31, 2023 was 6.17%. The weighted average annual interest rate payable under the Floating Rate Loan was 6.17% for the three months ended March 31, 2023, and was 3.01% for the period from February 25, 2022 to March 31, 2022. Subject to the satisfaction of certain conditions, we have the option to prepay up to $280,000 of the Floating Rate Loan at par with no premium, and to prepay the balance of the Floating Rate Loan at any time, subject to a premium.

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INDUSTRIAL LOGISTICS PROPERTIES TRUST 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

See Note 10 for more information regarding our interest rate caps.

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

				Principal Balance
	Interest			at March 31,
Joint Venture (Unconsolidated)	Rate		Maturity Date	2023 (1)
Mortgage notes payable (secured by one property in Florida)	3.60%	(2)	10/1/2023	$	56,980
Mortgage notes payable (secured by 5 properties in four states)	5.30%		10/1/2027	97,000
Mortgage notes payable (secured by 11 other properties in eight states)	3.33%	(2)	11/7/2029	350,000
Weighted average/total	3.74%	(2)		$	503,980

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

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

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

Note 5. Fair Value of Assets and Liabilities

Our financial instruments include cash and cash equivalents, restricted cash, rents receivable, floating and fixed rate loans, accounts payable, rents collected in advance, interest rate caps, security deposits and amounts due from or to related persons. At March 31, 2023 and December 31, 2022, the fair value of our financial instruments approximated their carrying values in our condensed consolidated financial statements, due to their short term nature or floating interest rates, except as follows:

	At March 31, 2023				At December 31, 2022
	Carrying		Estimated		Carrying		Estimated
	Value (1)		Fair Value		Value (1)		Fair Value
Fixed rate loan, 3.76% interest rate, due in 2028	$	13,034	$	12,461	$	13,556	$	12,784
Fixed rate loan, 4.31% interest rate, due in 2029	646,805		464,814		646,669		592,295
Fixed rate loan, 3.77% interest rate, due in 2030	4,720		4,482		4,865		4,553
Fixed rate loan, 3.85% interest rate, due in 2030	4,992		4,753		5,145		4,829
Fixed rate loan, 3.56% interest rate, due in 2030	13,987		13,140		14,392		13,315
Fixed rate loan, 3.67% interest rate, due in 2031	12,368		11,604		12,691		11,713
Fixed rate loan, 4.42% interest rate, due in 2032	694,847		642,257		694,704		623,133
Fixed rate loan, 4.14% interest rate, due in 2032	13,842		13,163		14,144		13,182
Fixed rate loan, 4.02% interest rate, due in 2033	30,376		28,177		30,949		28,195
Fixed rate loan, 4.13% interest rate, due in 2033	42,432		39,560		43,219		39,573
Fixed rate loan, 3.10% interest rate, due in 2035	25,744		22,489		26,175		22,373
Fixed rate loan, 2.95% interest rate, due in 2036	41,425		35,696		42,087		35,444
Fixed rate loan, 4.27% interest rate, due in 2037	45,553		42,419		46,109		41,880
Fixed rate loan, 3.25% interest rate, due in 2038	51,360		44,453		52,031		43,878
	$	1,641,485	$	1,379,468	$	1,646,736	$	1,487,147

(1)Includes unamortized debt issuance costs, premiums and discounts of $8,348 and $8,627 as of March 31, 2023 and December 31, 2022, respectively.

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

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INDUSTRIAL LOGISTICS PROPERTIES TRUST 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

The table below presents certain of our assets measured on a recurring and non-recurring basis at fair value at March 31, 2023 and December 31, 2022, categorized by the level of inputs as defined in the fair value hierarchy under GAAP, used in the valuation of each asset:

			Quoted Prices in		Significant Other		Significant
			Active Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
At March 31, 2023
Recurring fair value measurements
Investment in unconsolidated joint venture (1)	$	127,329	$	—	$	—	$	127,329
Interest rate cap derivatives (2)	$	58,215	$	—	$	58,215	$	—
At December 31, 2022
Recurring fair value measurements
Investment in unconsolidated joint venture (1)	$	124,358	$	—	$	—	$	124,358
Interest rate cap derivatives (2)	$	73,133	$	—	$	73,133	$	—
Non-recurring fair value measurements
Real estate properties (3)	$	555,123	$	—	$	—	$	555,123

(1)The investment in the unconsolidated joint venture reflected in our condensed consolidated balance sheet is reported at fair value based on significant unobservable inputs (Level 3 inputs). The significant unobservable inputs used in the fair value are discount rates of between 5.25% and 7.00%, exit capitalization rates of between 4.95% and 6.00%, holding periods of approximately 10 years and market rents. Our assumptions are based on the location, type and nature of each property, and current and anticipated market conditions, which are derived from appraisers, industry publications and our experience. See Notes 2, 4, 8 and 9 for more information regarding this joint venture.

(2)Our derivative assets are carried at fair value as required by GAAP. The estimated fair values of the derivative assets are based on current market prices in secondary markets for similar derivative contracts, (Level 2 inputs). See Notes 4 and 11 for more information regarding our derivatives and hedging activities.

(3)We recorded a loss on impairment of real estate of $100,747 during the year ended December 31, 2022 to reduce the carrying value of 25 properties in our condensed consolidated balance sheet to their estimated fair value, based on third party offers (Level 3 inputs as defined in the fair value hierarchy under GAAP), due to a change in plans to sell and the reclassification of those properties from held for sale to held and used.

Note 6. Shareholders’ Equity

Common Share Purchases:

During the three months ended March 31, 2023, we purchased an aggregate of 976 of our common shares, valued at a weighted average price of $3.33 per common share, from certain former officers and employees of The RMR Group LLC, or RMR, in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares.

Distributions:

During the three months ended March 31, 2023, we declared and paid regular quarterly distributions to common shareholders as follows:

Declaration Date	Record Date	Payment Date	Distribution Per Share		Total Distribution
January 12, 2023	January 23, 2023	February 16, 2023	$	0.01	$	656

On April 13, 2023, we declared a regular quarterly distribution to common shareholders of record on April 24, 2023 of $0.01 per share, or approximately $656. We expect to pay this distribution to our shareholders on or about May 18, 2023 using cash balances.

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INDUSTRIAL LOGISTICS PROPERTIES TRUST 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

Note 7. Per Common Share Amounts

We calculate basic earnings per common share by dividing net loss attributable to common shareholders by the weighted average number of our common shares outstanding during the period. We calculate diluted earnings per share using the more dilutive of the two class method or the treasury stock method. Unvested common share awards, and the related impact on earnings, are considered when calculating diluted earnings per share. The calculation of basic and diluted earnings per share is as follows:

	Three Months Ended March 31,
	2023		2022
Numerators:
Net loss attributable to common shareholders	$	(24,809)	$	(6,514)
Loss attributable to unvested participating securities	3		—
Net loss attributable to common shareholder used in calculating earnings per share	$	(24,806)	$	(6,514)
Denominators:
Weighted average common shares for basic earnings per share	65,309		65,212