10-Q

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 June 30, 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 July 21, 2023: 65,696,942

INDUSTRIAL LOGISTICS PROPERTIES TRUST

FORM 10-Q

June 30, 2023

INDEX

		Page
PART I	Financial Information	3
Item 1.	Financial Statements (unaudited)	3
	Condensed Consolidated Balance Sheets — June 30, 2023 and December 31, 2022	3
	Condensed Consolidated Statements of Comprehensive Income (Loss) — Three and Six Months Ended June 30, 2023 and 2022	4
	Condensed Consolidated Statements of Shareholders’ Equity — Three and Six Months Ended June 30, 2023 and 2022	5
	Condensed Consolidated Statements of Cash Flows — Six Months Ended June 30, 2023 and 2022	7
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	35
	Warning Concerning Forward-Looking Statements	36
	Statement Concerning Limited Liability	37
PART II	Other Information	38
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 6.	Exhibits	39
	Signatures	40

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) 

	June 30,		December 31,
	2023		2022
ASSETS
Real estate properties:
Land	$	1,112,598	$	1,117,779
Buildings and improvements	4,031,041		4,058,329
Total real estate properties, gross	5,143,639		5,176,108
Accumulated depreciation	(330,879)		(273,467)
Total real estate properties, net	4,812,760		4,902,641
Assets of properties held for sale	37,261		—
Investment in unconsolidated joint venture	129,082		124,358
Acquired real estate leases, net	267,889		297,445
Cash and cash equivalents	71,695		48,261
Restricted cash	138,673		92,519
Rents receivable, including straight line rents of $87,797 and $80,710, respectively	110,638		107,011
Other assets, net	94,082		103,931
Total assets	$	5,662,080	$	5,676,166
LIABILITIES AND EQUITY
Mortgages and notes payable, net	$	4,301,276	$	4,244,501
Liabilities of properties held for sale	31		—
Accounts payable and other liabilities	73,916		73,547
Assumed real estate lease obligations, net	20,420		22,523
Due to related persons	5,148		4,824
Total liabilities	4,400,791		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; 65,697,959 and 65,568,145 shares issued and outstanding, respectively	657		656
Additional paid in capital	1,015,138		1,014,201
Cumulative net income	66,548		117,185
Cumulative other comprehensive income	26,487		21,903
Cumulative common distributions	(364,533)		(363,221)
Total equity attributable to common shareholders	744,297		790,724
Total equity attributable to noncontrolling interest	516,992		540,047
Total equity	1,261,289		1,330,771
Total liabilities and equity	$	5,662,080	$	5,676,166

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

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INDUSTRIAL LOGISTICS PROPERTIES TRUST 

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(amounts in thousands, except per share data)

(unaudited) 

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Rental income	$	108,043	$	107,222	$	218,301	$	178,597
Expenses:
Real estate taxes	15,100		13,275		31,567		22,711
Other operating expenses	8,519		7,053		17,837		13,825
Depreciation and amortization	44,909		42,699		90,366		65,577
General and administrative	8,131		9,709		16,038		15,786
Loss on impairment of real estate	254		100,747		254		100,747
Total expenses	76,913		173,483		156,062		218,646
Interest and other income	1,797		354		2,943		832
Interest expense (including net amortization of debt issuance costs, premiums and discounts of $6,721, $34,448, $13,434, and $54,769, respectively)	(71,846)		(77,548)		(142,617)		(118,547)
Loss on sale of real estate	—		(10)		(974)		(10)
Loss on equity securities	—		(9,450)		—		(5,758)
Loss on early extinguishment of debt	(359)		—		(359)		(828)
Loss before income tax expense and equity in earnings of unconsolidated joint venture	(39,278)		(152,915)		(78,768)		(164,360)
Income tax expense	(45)		(16)		(62)		(85)
Equity in earnings of unconsolidated joint venture	2,743		1,610		6,704		3,337
Net loss	(36,580)		(151,321)		(72,126)		(161,108)
Net loss attributable to noncontrolling interest	10,752		7,782		21,489		11,055
Net loss attributable to common shareholders	(25,828)		(143,539)		(50,637)		(150,053)
Other comprehensive income:
Unrealized gain on derivatives	12,021		4,438		3,243		10,070
Less: unrealized gain (loss) on derivatives attributable to noncontrolling interest	(419)		(774)		1,341		(2,498)
Other comprehensive (loss) income attributable to common shareholders	11,602		3,664		4,584		7,572
Comprehensive loss attributable to common shareholders	$	(14,226)	$	(139,875)	$	(46,053)	$	(142,481)
Weighted average common shares outstanding - basic and diluted	65,369		65,221		65,339		65,217
Per common share data (basic and diluted):
Net loss attributable to common shareholders	$	(0.40)	$	(2.20)	$	(0.77)	$	(2.30)

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
Net loss	—	—		—		(25,828)		—		—		(25,828)		(10,752)		(36,580)
Share grants	140,000	1		567		—		—		—		568		—		568
Share repurchases	(7,110)	—		(12)		—		—		—		(12)		—		(12)
Share forfeitures	(900)	—		(2)		—		—		—		(2)		—		(2)
Distributions to common shareholders	—	—		—		—		—		(656)		(656)		—		(656)
Net current period other comprehensive loss	—	—		—		—		11,602		—		11,602		419		12,021
Distributions to noncontrolling interest	—	—		—		—		—		—		—		(225)		(225)
Balance at June 30, 2023	65,697,959	$	657	$	1,015,138	$	66,548	$	26,487	$	(364,533)	$	744,297	$	516,992	$	1,261,289

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

5

INDUSTRIAL LOGISTICS PROPERTIES TRUST

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(dollars in thousands)

(unaudited)

								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, 2021	65,404,592	$	654	$	1,012,224	$	343,908	$	—	$	(318,744)	$	1,038,042	$	—	$	1,038,042
Net (loss) income	—	—		—		(6,514)		—		—		(6,514)		(3,273)		(9,787)
Share grants	—	—		407		—		—		—		407		—		407
Share repurchases	(333)	—		(7)		—		—		—		(7)		—		(7)
Share forfeitures	(400)	—		(2)		—		—		—		(2)		—		(2)
Net current period other comprehensive income	—	—		—		—		3,908		—		3,908		1,724		5,632
Contributions from noncontrolling interest	—	—		—		—		—		—		—		591,268		591,268
Distributions to common shareholders	—	—		—		—		—		(21,584)		(21,584)		—		(21,584)
Balance at March 31, 2022	65,403,859	$	654	$	1,012,622	$	337,394	$	3,908	$	(340,328)	$	1,014,250	$	589,719	$	1,603,969
Net (loss) income	—	—		—		(143,539)		—		—		(143,539)		(7,782)		(151,321)
Share grants	24,500	—		800		—		—		—		800		—		800
Share forfeitures	(900)	—		(4)		—		—		—		(4)		—		(4)
Net current period other comprehensive income	—	—		—		—		3,664		—		3,664		774		4,438
Distributions to noncontrolling interest	—	—		—		—		—		—		—		(1,365)		(1,365)
Distributions to common shareholders	—	—		—		—		—		(21,583)		(21,583)		—		(21,583)
Balance at June 30, 2022	65,427,459	$	654	$	1,013,418	$	193,855	$	7,572	$	(361,911)	$	853,588	$	581,346	$	1,434,934

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

6

INDUSTRIAL LOGISTICS PROPERTIES TRUST 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(unaudited)

	Six Months Ended June 30,
	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(72,126)	$	(161,108)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation	62,464		43,375
Loss on impairment of real estate	254		100,747
Net amortization of debt issuance costs, premiums and discounts	13,434		54,769
Amortization of acquired real estate leases and assumed real estate lease obligations	26,308		17,477
Amortization of deferred leasing costs	1,101		735
Loss on equity securities	—		5,758
Straight line rental income	(7,117)		(4,376)
Loss on early extinguishment of debt	359		828
Loss on sale of real estate	974		—
Proceeds from settlement of derivatives	(24,445)		—
Other non-cash expenses	13,244		2,156
Distributions of earnings from unconsolidated joint venture	1,980		2,642
Equity in earnings of unconsolidated joint venture	(6,704)		(3,337)
Change in assets and liabilities:
Rents receivable	3,065		(9,933)
Deferred leasing costs	(4,194)		(4,565)
Other assets	2,332		(4,695)
Accounts payable and other liabilities	310		25,539
Rents collected in advance	(1,238)		9,030
Security deposits	301		672
Due to related persons	329		5,217
Net cash provided by operating activities	10,631		80,931
CASH FLOWS FROM INVESTING ACTIVITIES:
Real estate acquisitions	—		(3,551,509)
Real estate improvements	(7,301)		(5,305)
Proceeds from sale of marketable securities	—		140,792
Proceeds from settlement of derivatives	24,445		—
Proceeds from sale of real estate	243		—
Net cash provided by (used in) investing activities	17,387		(3,416,022)

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

7

INDUSTRIAL LOGISTICS PROPERTIES TRUST 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(dollars in thousands)

(unaudited)

	Six Months Ended June 30,
	2023		2022
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of mortgage notes payable	91,000		2,100,000
Repayment of mortgage notes payable	(46,607)		(7,161)
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	(1,271)		(96,260)
Distributions to common shareholders	(1,312)		(43,167)
Proceeds from sale of noncontrolling interest, net	—		587,440
Repurchase of common shares	(15)		(7)
Distributions to noncontrolling interest	(225)		(1,365)
Net cash provided by financing activities	41,570		3,742,638
Increase in cash, cash equivalents and restricted cash	69,588		407,547
Cash, cash equivalents and restricted cash at beginning of period	140,780		29,397
Cash, cash equivalents and restricted cash at end of period	$	210,368	$	436,944

SUPPLEMENTAL DISCLOSURES:
Interest paid	$	142,095	$	55,065
Income taxes paid	$	545	$	195
Interest capitalized	$	324	$	15
NON-CASH INVESTING ACTIVITIES:
Real estate acquired by assumption of mortgage notes payable	$	—	$	323,432
Real estate improvements accrued not paid	$	4,950	$	4,055
NON-CASH FINANCING ACTIVITIES:
Assumption of mortgage notes payable	$	—	$	(323,432)

SUPPLEMENTAL DISCLOSURE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH:
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets to the amounts shown in the condensed consolidated statements of cash flows:
	As of June 30,
	2023		2022
Cash and cash equivalents	$	71,695	$	291,866
Restricted cash (1)	138,673		145,078
Total cash, cash equivalents and restricted cash shown in the statements of cash flows	$	210,368	$	436,944

(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.

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INDUSTRIAL LOGISTICS PROPERTIES TRUST 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

Note 1. Basis of Presentation

The accompanying condensed consolidated financial statements of Industrial Logistics Properties Trust and its consolidated subsidiaries, or the Company, ILPT, we, us or our, are unaudited. Certain information and disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted. We believe the disclosures made are adequate to make the information presented not misleading. However, the accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2022, 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 June 30, 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 June 30, 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 $7,651 and $10,080 during the three months ended June 30, 2023 and 2022, respectively, and $12,582 and $13,845 for the six months ended June 30, 2023 and 2022, respectively. During the six months ended June 30, 2023, we committed $5,832 for expenditures related to tenant improvements and leasing costs for leases executed during the period for approximately 3,110,000 square feet. Committed, but unspent, tenant related obligations based on existing leases as of June 30, 2023 were $23,876, of which $6,481 is expected to be spent during the next 12 months.

We regularly evaluate whether events or changes in circumstances have occurred that could indicate an impairment in the value of long lived assets. Impairment indicators may include declining tenant occupancy, lack of progress 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. If there is an indication that the carrying value of an asset is not recoverable, we estimate the projected undiscounted cash flows to determine if an impairment loss should be recognized. The future net undiscounted cash flows are subjective and are based in part on assumptions regarding hold periods, market rents and terminal capitalization rates. We determine the amount of any impairment loss by comparing the historical carrying value to estimated fair value. We estimate fair value through an evaluation of recent financial performance and projected discounted cash flows using standard industry valuation techniques. In addition to consideration of impairment upon the events or changes in circumstances described above, we regularly evaluate the remaining useful lives of our long lived assets. If we change our estimate of the remaining useful lives, we allocate the carrying value of the affected assets over their revised remaining useful lives.

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INDUSTRIAL LOGISTICS PROPERTIES TRUST 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

During the three months ended June 30, 2023, we recorded a loss on impairment of real estate of $254 to reduce the carrying value of one of the two properties that were classified as held for sale at June 30, 2023 to its estimated sales price less costs to sell.

As of March 31, 2022, we classified 30 properties we acquired as part of our acquisition of Monmouth Real Estate Investment Corporation, or MNR, on February 25, 2022, as held for sale in our condensed consolidated balance sheet. During the three months ended June 30, 2022, we determined not to sell these properties as a result of market conditions and reclassified those properties to held and used and recorded a $100,747 loss on impairment of real estate to adjust the carrying value of 25 of those 30 properties to their estimated fair value.

Disposition Activities

As of June 30, 2023, we had two Mainland Properties with 551,000 square feet and an aggregate carrying value of $36,864 classified as held for sale. See Note 5 for more information on our properties held for sale.

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.

As of July 25, 2023, we have entered into agreements to sell three properties containing approximately 762,000 rentable square feet for an aggregate sales price of $65,265, excluding closing costs. These pending sales are subject to conditions; accordingly, we cannot be sure that we will complete these sales or that these sales will not be delayed or the terms will not change.

Joint Venture Activities

As of June 30, 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 June 30, 2023		Properties	Location	Feet
Mountain Industrial REIT LLC	Consolidated	61%	N/A		94	Various	20,980,661
The Industrial Fund REIT LLC	Unconsolidated	22%	$	129,082	18	Various	11,726,137

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 June 30, 2023 and 2022, for the six months ended June 30, 2023 and the period from this joint venture’s formation date, February 25, 2022 to June 30, 2022. The portion of this joint venture's net loss not attributable to us, or $10,676 and $7,781, for the three months ended June 30, 2023 and 2022, respectively, and $21,404 and $11,042 for the six months ended June 30, 2023 and for the period from February 25, 2022 to June 30, 2022, respectively, is reported as net loss attributable to noncontrolling interest in our condensed consolidated statements of comprehensive income (loss). As of June 30, 2023, our consolidated joint venture had total assets of $3,092,534 and total liabilities of $1,775,802.

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 $2,743 and $1,610 for the three months ended June 30, 2023 and 2022, respectively, and $6,704 and $3,337 for the six months ended June 30, 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

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INDUSTRIAL LOGISTICS PROPERTIES TRUST 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

$1,322 during the three months ended June 30, 2023 and 2022, respectively, and $1,980 and $2,642 for the six months ended June 30, 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 $76 and $1, for the three months ended June 30, 2023 and 2022, respectively, and $85 and $13 for the six months ended June 30, 2023 and the period from the date we acquired our interest in this property, February 25, 2022 to June 30, 2022, respectively, is reported as net loss attributable to noncontrolling interest in our condensed consolidated statements of comprehensive income (loss). During the three and six months ended June 30, 2023, this tenancy in common made cash distributions of $225 to the unrelated third party investor, which is reflected as a decrease in the total equity attributable to noncontrolling interest in our condensed consolidated balance sheet.

See Notes 4, 5, 7, 8 and 9 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 $3,355 and $3,220 to record revenue on a straight line basis during the three months ended June 30, 2023 and 2022, respectively, and $7,117 and $4,376 for the six months ended June 30, 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 $18,291 and $16,828 for the three months ended June 30, 2023 and 2022, respectively, and $39,390 and $29,407 for the six months ended June 30, 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 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 $4,867 and $4,943, respectively, as of June 30, 2023, and $5,084 and $5,149, respectively, as of December 31, 2022. Our right of use assets and related lease liabilities are included in other assets, net and accounts payable and other liabilities, respectively, in our condensed consolidated balance sheets. We 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 $28 and $91 for three months ended June 30, 2023 and 2022, respectively, and $129 and $179 for the six months ended June 30, 2023 and the period from February 25, 2022 to June 30, 2022, respectively. 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.

11

INDUSTRIAL LOGISTICS PROPERTIES TRUST 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

Tenant Concentration

As of June 30, 2023, we had a concentration of properties leased to tenants, including their applicable subsidiaries, that leased over 5.0% of our total rentable square footage. The following table presents rental income recognized from these tenants for the three and six months ended June 30, 2023 and 2022:

	% of
	Rentable		Rental Income								Rental Income
	Square		Three Months Ended								Six Months Ended
Tenant	Feet		6/30/2023				6/30/2022				6/30/2023				6/30/2022
FedEx Corporation/ FedEx Ground Package System, Inc.	22.0	%	$	32,934	30.5	%	$	31,063	29.0	%	$	67,721	31.0	%	$	44,531	24.9	%
Amazon.com Services, Inc./ Amazon.com Services LLC	7.6	%	7,326		6.8	%	7,236		6.7	%	14,841		6.8	%	12,852		7.2	%
Total	29.6	%	$	40,260	37.3	%	$	38,299	35.7	%	$	82,562	37.8	%	$	57,383	32.1	%

Geographic Concentration

For the three months ended June 30, 2023 and 2022, approximately 28.1% and 29.8%, respectively, of our rental income was from our Hawaii Properties. For the six months ended June 30, 2023 and 2022, approximately 27.8% and 32.8%, respectively, of our rental income was from our Hawaii Properties.

12

INDUSTRIAL LOGISTICS PROPERTIES TRUST 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

Note 4. Indebtedness

As of June 30, 2023, our outstanding indebtedness consisted of the following:

									Net Book
									Value
			Principal Balance as of						of Collateral
			June 30,		December 31,		Interest		At June 30,
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	$	1,056,804
ILPT	Fixed Rate - Interest only	186 Properties	650,000		650,000		4.31%	02/07/29	490,023
ILPT	Fixed Rate - Interest only	17 Properties	700,000		700,000		4.42%	03/09/32	511,664
Mountain JV (2)	Floating Rate - Interest only	82 Properties	1,400,000		1,400,000		6.17%	03/09/24	1,883,377
Mountain JV (2)	Fixed Rate - Interest only	Four Properties	91,000		—		6.25%	06/10/30	190,883
Mountain JV (2)	Fixed Rate - Amortizing	One Property	12,042		12,691		3.67%	05/01/31	29,257
Mountain JV (2)	Fixed Rate - Amortizing	One Property	13,536		14,144		4.14%	07/01/32	44,143
Mountain JV (2)	Fixed Rate - Amortizing	One Property	29,797		30,949		4.02%	10/01/33	85,968
Mountain JV (2)	Fixed Rate - Amortizing	One Property	41,636		43,219		4.13%	11/01/33	130,644
Mountain JV (2)	Fixed Rate - Amortizing	One Property	25,310		26,175		3.10%	06/01/35	47,056
Mountain JV (2)	Fixed Rate - Amortizing	One Property	40,759		42,087		2.95%	01/01/36	100,502
Mountain JV (2)	Fixed Rate - Amortizing	One Property	44,991		46,109		4.27%	11/01/37	111,510
Mountain JV (2)	Fixed Rate - Amortizing	One Property	50,684		52,031		3.25%	01/01/38	115,042
Mountain JV (2)	Fixed Rate - Amortizing	One Property	—		13,556		3.76%	10/01/28	N/A
Mountain JV (2)	Fixed Rate - Amortizing	One Property	—		4,865		3.77%	04/01/30	N/A
Mountain JV (2)	Fixed Rate - Amortizing	One Property	—		5,145		3.85%	04/01/30	N/A
Mountain JV (2)	Fixed Rate - Amortizing	One Property	—		14,392		3.56%	09/01/30	N/A
	Total indebtedness		$	4,334,755	$	4,290,363			$	4,796,873
	Unamortized debt issuance costs		(33,479)		(45,862)
	Total indebtedness, net		$	4,301,276	$	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, 7, 8 and 9 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 June 30, 2023 was 6.18%. The weighted average interest rate payable under the ILPT Floating Rate Loan was 6.18% for both the three and six months ended June 30, 2023. 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 June 30, 2023 was 6.17%. The weighted average annual interest rate payable under the Floating Rate Loan was 6.17% for both the three and six months ended June 30, 2023. The weighted average annual interest rate payable under the Floating Rate Loan was 3.61% and 3.38% for the three months ended June 30, 2022 and the period from the date we obtained the Floating Rate loan, February 25, 2022 to June 30, 2022,

13

INDUSTRIAL LOGISTICS PROPERTIES TRUST 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

respectively. Subject to the satisfaction of certain conditions, we have the option to prepay up to $280,000 of the Floating Rate Loan at par with no premium, and to prepay the balance of the Floating Rate Loan at any time, subject to a premium.

See Note 9 for more information regarding our interest rate caps.

In May 2023, our consolidated joint venture obtained a $91,000 fixed rate, interest only mortgage loan secured by four properties owned by our consolidated joint venture. This mortgage loan matures in June 2030 and requires that interest be paid at an annual rate of 6.25%. A portion of the net proceeds from this mortgage loan was used to repay four outstanding mortgage loans of our consolidated joint venture with an aggregate outstanding principal balance of $35,910 and a weighted average interest rate of 3.70%. We recognized a loss on extinguishment of debt of $359 in conjunction with the repayment of these mortgage loans.

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

				Principal Balance
	Interest			at June 30,
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 six properties in four states)	5.30%		10/1/2027	123,700
Mortgage notes payable (secured by 11 other properties in eight states)	3.33%		11/7/2029	350,000
Weighted average/total	3.82%	(2)		$	530,680

(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.

14

INDUSTRIAL LOGISTICS PROPERTIES TRUST 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

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 June 30, 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 June 30, 2023				At December 31, 2022
	Carrying		Estimated		Carrying		Estimated
	Value (1)		Fair Value		Value (1)		Fair Value
Fixed rate loan, 4.31% interest rate, due in 2029	$	646,941	$	612,132	$	646,669	$	592,295
Fixed rate loan, 6.25% interest rate, due in 2030	89,994		94,568		—		—
Fixed rate loan, 3.67% interest rate, due in 2031	12,042		11,318		12,691		11,713
Fixed rate loan, 4.42% interest rate, due in 2032	694,991		609,028		694,704		623,133
Fixed rate loan, 4.14% interest rate, due in 2032	13,536		12,889		14,144		13,182
Fixed rate loan, 4.02% interest rate, due in 2033	29,797		27,684		30,949		28,195
Fixed rate loan, 4.13% interest rate, due in 2033	41,636		38,875		43,219		39,573
Fixed rate loan, 3.10% interest rate, due in 2035	25,310		22,166		26,175		22,373
Fixed rate loan, 2.95% interest rate, due in 2036	40,759		35,213		42,087		35,444
Fixed rate loan, 4.27% interest rate, due in 2037	44,991		41,946		46,109		41,880
Fixed rate loan, 3.25% interest rate, due in 2038	50,684		43,961		52,031		43,878
Fixed rate loan, 3.76% interest rate, due in 2028 (2)	—		—		13,556		12,784
Fixed rate loan, 3.77% interest rate, due in 2030 (2)	—		—		4,865		4,553
Fixed rate loan, 3.85% interest rate, due in 2030 (2)	—		—		5,145		4,829
Fixed rate loan, 3.56% interest rate, due in 2030 (2)	—		—		14,392		13,315
	$	1,690,681	$	1,549,780	$	1,646,736	$	1,487,147

(1)Includes unamortized debt issuance costs, premiums and discounts of $9,073 and $8,628 as of June 30, 2023 and December 31, 2022, respectively.

(2)This loan was repaid in May 2023.

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.

15

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 June 30, 2023, 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 June 30, 2023
Recurring fair value measurements
Investment in unconsolidated joint venture (1)	$	129,082	$	—	$	—	$	129,082
Interest rate cap derivatives (2)	$	64,097	$	—	$	64,097	$	—
Non-recurring fair value measurements
Real estate properties (3)	$	1,414	$	—	$	—	$	1,414

(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, 7 and 8 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 9 for more information regarding our derivatives and hedging activities.

(3)We recorded a loss on impairment of real estate of $254 to reduce the carrying value of one of the two properties that were classified as held for sale at June 30, 2023 on our condensed consolidated balance sheet to its estimated sales price less costs to sell (Level 3 inputs). See Note 2 for more information on our properties held for sale.

Note 6. Shareholders’ Equity

Common Share Awards:

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

Common Share Purchases:

During the six months ended June 30, 2023, we purchased an aggregate of 8,086 of our common shares, valued at a weighted average price of $2.00 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 six months ended June 30, 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
April 13, 2023	April 24, 2023	May 18, 2023	0.01		656
			$	0.02	$	1,312

On July 13, 2023, we declared a regular quarterly distribution to common shareholders of record on July 24, 2023 of $0.01 per share, or approximately $657. We expect to pay this distribution to our shareholders on or about August 17, 2023 using cash balances.

16

INDUSTRIAL LOGISTICS PROPERTIES TRUST 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

Note 7. Business and Property Management Agreements with RMR

We have no employees. The personnel and various services we require to operate our business are provided to us by RMR. We have two agreements with RMR to provide management services to us: (1) a business management agreement, which relates to our business generally; and (2) a property management agreement, which relates to our property level operations.

Pursuant to our business management agreement with RMR, we recognized net business management fees of $5,656 and $11,382 for the three and six months ended June 30, 2023, respectively, and $6,957 and $11,356 for the three and six months ended June 30, 2022, respectively. Based on our common share total return, as defined in our business management agreement, as of June 30, 2023 and 2022, no incentive fees are included in the net business management fees we recognized for the three and six months ended June 30, 2023 or 2022. The actual amount of annual incentive fees for 2023, if any, will be based on our common share total return, as defined in our business management agreement, for the three-year period ending December 31, 2023, and will be payable in January 2024. We did not incur any incentive fee payable to RMR for the year ended December 31, 2022. We include business management fees in general and administrative expenses in our condensed consolidated statements of comprehensive income (loss).

Pursuant to our property management agreement with RMR, we recognized aggregate property management and construction supervision fees of $3,370 and $6,822 for the three and six months ended June 30, 2023, respectively, and $2,764 and $5,527 for the three and six months ended June 30, 2022, respectively. Of these amounts, for the three and six months ended June 30, 2023, $3,133 and $6,452, respectively, were expensed to other operating expenses in our condensed consolidated financial statements and $237 and $370, respectively, were capitalized as building improvements in our condensed consolidated balance sheets. For the three and six months ended June 30, 2022, $2,396 and $5,128, respectively, were expensed to other operating expenses in our condensed consolidated financial statements and $368 and $399, respectively, were capitalized as building improvements in our condensed consolidated balance sheets. The amounts capitalized are being depreciated over the estimated useful lives of the related capital assets.

We are generally responsible for all our operating expenses, including certain expenses incurred or arranged by RMR on our behalf. We are generally not responsible for payment of RMR’s employment, office or administrative expenses incurred to provide management services to us, except for the employment and related expenses of RMR’s employees assigned to work exclusively or partly at our properties, our share of the wages, benefits and other related costs of RMR’s centralized accounting personnel, our share of RMR’s costs for providing our internal audit function, or as otherwise agreed. Our property level operating expenses are generally incorporated into the rents charged to our tenants, including certain payroll and related costs incurred by RMR. We reimbursed RMR $2,000 and $3,841 for these expenses and costs for the three and six months ended June 30, 2023, respectively, and $1,704 and $3,308 for the three and six months ended June 30, 2022, respectively. These amounts are included in other operating expenses and general and administrative expenses, as applicable, in our condensed consolidated statements of comprehensive income (loss).

Management Agreements Between Our Joint Ventures and RMR. We have two separate joint venture arrangements, our consolidated joint venture and the unconsolidated joint venture. See Notes 2, 4, 5, 8 and 9 for further information about these joint ventures. RMR provides management services to both of these joint ventures. We are not obligated to pay management fees to RMR under our management agreements with RMR for the services it provides to the unconsolidated joint venture. We are obligated to pay management fees to RMR under our management agreements with RMR for the services it provides regarding our consolidated joint venture; however, that joint venture pays management fees directly to RMR, and any such fees paid by our consolidated joint venture are credited against the fees payable by us to RMR.

See Note 8 for further information regarding our relationships, agreements and transactions with RMR.

17

INDUSTRIAL LOGISTICS PROPERTIES TRUST 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

Note 8. Related Person Transactions

We have relationships and historical and continuing transactions with RMR, The RMR Group Inc., or RMR Inc., and others related to them, including other companies to which RMR or its subsidiaries provide management services and some of which have trustees, directors or officers who are also our Trustees or officers. RMR is a majority owned subsidiary of RMR Inc. The Chair of our Board of Trustees and one of our Managing Trustees, Adam D. Portnoy, is the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of RMR Inc., the chair of the board of directors, a managing director and the president and chief executive officer of RMR Inc. and an officer and employee of RMR. Matthew P. Jordan, our other Managing Trustee, is an executive vice president and the chief financial officer and treasurer of RMR Inc., an officer and employee of RMR and an officer of ABP Trust. John G. Murray, one of our Managing Trustees until June 1, 2022 and our President and Chief Executive Officer until March 31, 2022, also serves as an officer and employee of RMR, and each of our current officers is also an officer and employee of RMR. Some of our Independent Trustees also serve as independent trustees of other public companies to which RMR or its subsidiaries provide management services. Adam D. Portnoy serves as chair of the boards and as a managing trustee of those companies. Other officers of RMR, including Messrs. Jordan and Murray and certain of our officers, serve as managing trustees or officers of certain of these companies.

Our Manager, RMR. We have two agreements with RMR to provide management services to us. See Note 7 for further information regarding our management agreements with RMR.

Joint Ventures. We have two separate joint venture arrangements. RMR provides management services to each of these joint ventures. See Notes 2, 4, 5, 7 and 9 for further information regarding our joint ventures and RMR’s management agreements with our joint ventures. As of June 30, 2023 and December 31, 2022, we owed $556 and $616, respectively, to the unconsolidated joint venture for rents that we collected on behalf of that joint venture. These amounts are presented as due to related persons in our condensed consolidated balance sheet. We paid these amounts in January 2023 and July 2023, respectively.

For further information about these and other such relationships and certain other related person transactions, see our 2022 Annual Report.

Note 9. Derivatives and Hedging Activities

Risk Management Objective of Using Derivatives

We are exposed to certain risks relating to our ongoing business operations, including the impact of changes in interest rates. The only risk currently managed by us using derivative instruments is a part of our interest rate risk. We have an interest rate cap agreement to manage our interest rate risk exposure on each of the ILPT Floating Rate Loan and the Floating Rate Loan, both with interest payable at a rate equal to SOFR plus a premium. The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements are not able to perform under the agreements. To mitigate this risk, we only enter into derivative financial instruments with counterparties with high credit ratings and with major financial institutions with which we or our related parties may also have other financial relationships. We do not anticipate that any of the counterparties will fail to meet their obligations.

Cash Flow Hedges of Interest Rate Risk

As required by Accounting Standards Codification 815, Derivatives and Hedging, we record all derivatives on the balance sheet at fair value. The following table summarizes the terms of our outstanding interest rate cap agreements designated as cash flow hedges of interest rate risk as of June 30, 2023:

Interest Rate Derivative	Balance Sheet Line Item	Underlying Instrument	Number of Instruments	Strike Rate	Notional Amount		Fair Value at June 30, 2023
Interest Rate Cap	Other assets	Floating Rate Loan (1)	1	3.40%	$	1,400,000	$	19,022
Interest Rate Cap	Other assets	ILPT Floating Rate Loan	2	2.25%	$	1,235,000	$	45,075
							$	64,097

(1)The Floating Rate Loan was entered into by our consolidated joint venture.

18

INDUSTRIAL LOGISTICS PROPERTIES TRUST 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

Interest rate caps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium. For derivatives designated and qualifying as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive income (loss) and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings. Gains and losses on the derivative representing hedge components excluded from the assessment of effectiveness are recognized over the life of the hedge on a systematic and rational basis, as documented at hedge inception in accordance with our accounting policy election. The earnings recognition of excluded components is presented in interest expense. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on our applicable debt.

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Amount of gain recognized in cumulative other comprehensive income (loss)	$	20,025	$	3,778	$	16,249	$	9,153
Amount reclassified from cumulative other comprehensive income (loss) into interest expense	(8,004)		660		(13,006)		917
Unrealized gain on derivative instrument recognized in cumulative other comprehensive (loss) income, net	$	12,021	$	4,438	$	3,243	$	10,070

19

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following information should be read in conjunction with our condensed consolidated financial statements and accompanying notes included in this Quarterly Report on Form 10-Q and with our 2022 Annual Report.

OVERVIEW (dollars in thousands, except per share and per square foot data)

We are a real estate investment trust, or REIT, organized under Maryland law. As of June 30, 2023, our portfolio was comprised of 413 consolidated properties containing approximately 59,983,000 rentable square feet located in 39 states, including 226 buildings, leasable land parcels and easements containing approximately 16,729,000 rentable square feet located on the island of Oahu, Hawaii, and 187 properties containing approximately 43,254,000 rentable square feet located in 38 other states. As of June 30, 2023, our 413 consolidated properties included 94 properties that we own in a consolidated joint venture in which we own a 61% equity interest, and our consolidated properties were approximately 99.1% leased to 302 different tenants with a weighted average remaining lease term (by annualized rental revenues) of approximately 8.4 years. As of June 30, 2023, we also owned a 22% equity interest in an unconsolidated joint venture, which owns 18 properties located in 12 states in the mainland United States containing approximately 11,726,000 rentable square feet that were 99.4% leased with an average remaining lease term (based on annualized rental revenues) of 6.5 years. We define the term annualized rental revenues as used in this Quarterly Report on Form 10-Q as the annualized contractual rents as of June 30, 2023, 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.

Long term e-commerce trends and supply chain resiliency have resulted in high occupancy and increases in rents. We believe customer service expectations, growth in the number of households and demand for supply chain resiliency will keep demand for industrial properties strong for the foreseeable future. However, inflationary pressures and rising interest rates in the United States and globally have given rise to economic uncertainty and they have caused disruptions in the financial markets. These conditions have increased our cost of capital and negatively impacted our ability to reduce our leverage. An economic recession, or continued or intensified disruptions in the financial markets, could adversely affect our financial condition and that of our tenants, could adversely impact the ability or willingness of our tenants to renew our leases or pay rent to us, may restrict our access to and would likely increase our cost of capital, may impact our ability to sell properties and may cause the values of our properties and of our securities to decline.

Property Operations

Occupancy data for our properties as of June 30, 2023 and 2022 were as follows (square feet in thousands):

	All Properties				Comparable Properties (1)
	As of June 30,				As of June 30,
	2023		2022		2023		2022
Total properties	413		412		285		285
Total rentable square feet (in thousands) (2)	59,983		59,736		33,462		33,440
Percent leased (3)	99.1	%	98.9	%	99.1	%	99.3	%

(1)Consists of properties that we owned continuously since January 1, 2022 and excludes two properties classified as held for sale at June 30, 2023.

(2)Subject to modest adjustments when space is remeasured or reconfigured for new tenants and when land leases are converted to building leases.

(3)Percent leased includes (i) space being fitted out for occupancy pursuant to existing leases as of June 30, 2023, if any, and (ii) space which is leased but is not occupied or is being offered for sublease by tenants, if any.

The average effective rental rates per square foot, as defined below, for our properties for the three and six months ended June 30, 2023 and 2022 were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
Average effective rental rates per square foot leased: (1)	2023		2022		2023		2022
All properties	$	7.30	$	7.26	$	7.38	$	6.95
Comparable properties (2)	$	7.29	$	7.26	$	6.69	$	6.48

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

(2)Consists of properties that we owned continuously since April 1, 2022 and January 1, 2022, respectively.

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During the three and six months ended June 30, 2023, we entered into new and renewal leases as summarized in the following tables:

	Three Months Ended June 30, 2023
	New Leases			Renewals			Totals
Square feet leased during the period (in thousands)	494			1,091			1,585
Weighted average rental rate change (by rentable square feet)	36.5		%	25.5		%	29.5		%
Weighted average lease term by square feet (years)	11.6			7.7			8.9
Total leasing costs and concession commitments (1)	$	2,920		$	975		$	3,895
Total leasing costs and concession commitments per square foot (1)	$	5.91		$	0.89		$	2.46
Total leasing costs and concession commitments per square foot per year (1)	$	0.51		$	0.12		$	0.28

	Six Months Ended June 30, 2023
	New Leases			Renewals			Totals
Square feet leased during the period (in thousands)	530			2,198			2,728
Weighted average rental rate change (by rentable square feet)	37.7		%	18.5		%	22.3		%
Weighted average lease term by square feet (years)	12.0			8.1			8.9
Total leasing costs and concession commitments (1)	$	3,080		$	2,752		$	5,832
Total leasing costs and concession commitments per square foot (1)	$	5.81		$	1.25		$	2.14
Total leasing costs and concession commitments per square foot per year (1)	$	0.48		$	0.15		$	0.24

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

During the three and six months ended June 30, 2023, we completed rent resets for approximately 382 square feet of land at our Hawaii Properties at rental rates that were approximately 29.9% higher than prior rental rates.

As shown in the table below, approximately 2.0% of our total leased square feet and 2.1% of our total annualized rental revenues as of June 30, 2023 are included in leases scheduled to expire by December 31, 2023. As of June 30, 2023, our lease expirations by year were as follows (dollars and square feet in thousands):

									% of Total		Cumulative
			% of Total		Cumulative %		Annualized		Annualized		% of Total
		Leased	Leased		of Total		Rental		Rental		Annualized
	Number of	Square Feet	Square Feet		Square Feet		Revenues		Revenues		Rental Revenues
Period / Year	Tenants	Expiring (1)	Expiring (1)		Expiring (1)		Expiring		Expiring		Expiring
7/1/2023-12/31/2023	19	1,162	2.0	%	2.0	%	$	8,916	2.1	%	2.1	%
2024	43	6,058	10.2	%	12.2	%	30,777		7.2	%	9.3	%
2025	35	4,802	8.1	%	20.3	%	28,423		6.6	%	15.9	%
2026	26	3,853	6.5	%	26.8	%	26,588		6.2	%	22.1	%
2027	37	8,694	14.6	%	41.4	%	52,197		12.2	%	34.3	%
2028	37	5,831	9.8	%	51.2	%	42,076		9.8	%	44.1	%
2029	21	4,194	7.1	%	58.3	%	21,382		5.0	%	49.1	%
2030	16	2,519	4.2	%	62.5	%	20,929		4.9	%	54.0	%
2031	17	3,265	5.5	%	68.0	%	25,366		5.9	%	59.9	%
2032	37	3,615	6.1	%	74.1	%	35,322		8.2	%	68.1	%
Thereafter	109	15,422	25.9	%	100.0	%	137,179		31.9	%	100.0	%
Total	397	59,415	100.0	%			$	429,155	100.0	%
Weighted average remaining lease term (in years)		7.3					8.4

(1)Leased square feet is pursuant to existing leases as of June 30, 2023 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.

As of June 30, 2023, subsidiaries of FedEx Corporation and subsidiaries of Amazon.com Services, Inc. leased 22.0% and 7.6% of our total leased square feet, respectively, and represented 29.6% and 6.8% of our total annualized rental revenues, respectively.

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Mainland Properties. As of June 30, 2023, our Mainland Properties represented approximately 72.0% of our annualized rental revenues. We generally will seek to renew or extend the terms of leases at our Mainland Properties as their expirations approach. Due to the capital that many of the tenants in our Mainland Properties have invested in these properties and because many of these properties appear to be of strategic importance to the tenants’ businesses, we believe that it is likely that these tenants will renew or extend their leases prior to their expirations. If we are unable to extend or renew our leases, it may be time consuming and expensive to relet some of these properties and the terms of any leases we may enter may be less favorable to us than the terms of our existing leases for those properties.

Hawaii Properties. As of June 30, 2023, our Hawaii Properties represented approximately 28.0% of our annualized rental revenues. As of June 30, 2023, 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.

The following chart shows the annualized rental revenues as of June 30, 2023 scheduled to reset at our Hawaii Properties:

Scheduled Rent Resets at Hawaii Properties

(dollars in thousands) 

	Annualized
	Rental Revenues
	as of June 30, 2023
	Scheduled to Reset
7/1/2023-12/31/2023	$	—
2024	1,144
2025	960
2026	1,307
2027	781
2028 and thereafter	17,171
Total	$	21,363

As of June 30, 2023, $22,464, or 5.2%, of our annualized rental revenues are included in leases scheduled to expire by June 30, 2024 and 0.9% of our rentable square feet are currently vacant. Rental rates for which available space may be leased in the future will depend on prevailing market conditions when lease extensions, lease renewals or new leases are negotiated. Whenever we extend, renew or enter new leases for our properties, we intend to seek rents that are equal to or higher than our historical rents for the same properties; however, 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.

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

Disposition Activities

In March 2023, we received gross proceeds of $270 and 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.

As of July 25, 2023, we have entered into agreements to sell three properties containing approximately 762,000 rentable square feet for an aggregate sales price of $65,265, excluding closing costs. We expect to use the net proceeds from these sales

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for the repayment of debt and for general business purposes. These pending sales are subject to conditions; accordingly, we cannot be sure that we will complete these sales or that these sales will not be delayed or the terms will not change.

For further information regarding our disposition activities, see Notes 2 and 5 to our Condensed Consolidated Financial Statements included in Part I, Item 1 and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Our Investing and Financing Liquidity and Resources” of this Quarterly Report on Form 10-Q.

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RESULTS OF OPERATIONS

Three Months Ended June 30, 2023, Compared to Three Months Ended June 30, 2022 (dollars and share amounts in thousands, except per share data)

	Comparable Properties Results (1)							Non-Comparable Properties Results (2)						Consolidated Results
	Three Months Ended June 30,							Three Months Ended June 30,						Three Months Ended June 30,
					$		%					$						$		%
	2023		2022		Change		Change	2023		2022		Change		2023		2022		Change		Change
Rental income	$	106,469	$	106,118	$	351	0.3%	$	1,574	$	1,104	$	470	$	108,043	$	107,222	$	821	0.8%
Operating expenses:
Real estate taxes	14,916		13,077		1,839		14.1%	184		198		(14)		15,100		13,275		1,825		13.7%
Other operating expenses	8,399		6,908		1,491		21.6%	120		145		(25)		8,519		7,053		1,466		20.8%
Total operating expenses	23,315		19,985		3,330		16.7%	304		343		(39)		23,619		20,328		3,291		16.2%
Net operating income (3)	$	83,154	$	86,133	$	(2,979)	(3.5)%	$	1,270	$	761	$	509	84,424		86,894		(2,470)		(2.8)%
Other expenses:
Depreciation and amortization														44,909		42,699		2,210		5.2%
General and administrative														8,131		9,709		(1,578)		(16.3)%
Loss on impairment of real estate														254		100,747		(100,493)		(99.7)%
Total other expenses														53,294		153,155		(99,861)		(65.2)%
Interest and other income														1,797		354		1,443		N/M
Interest expense														(71,846)		(77,548)		5,702		(7.4)%
Loss on sale of real estate														—		(10)		10		(100.0)%
Loss on equity securities														—		(9,450)		9,450		(100.0)%
Loss on early extinguishment of debt														(359)		—		(359)		N/M
Loss before income tax expense and equity in earnings of unconsolidated joint venture														(39,278)		(152,915)		113,637		(74.3)%
Income tax expense														(45)		(16)		(29)		181.3%
Equity in earnings of unconsolidated joint venture														2,743		1,610		1,133		70.4%
Net loss														(36,580)		(151,321)		114,741		(75.8)%
Net loss attributable to noncontrolling interest														10,752		7,782		2,970		38.2%
Net loss attributable to common shareholders														$	(25,828)	$	(143,539)	$	117,711	(82.0)%
Weighted average common shares outstanding - basic and diluted														65,369		65,221		148		0.2%
Per common share data (basic and diluted):
Net loss attributable to common shareholders														$	(0.40)	$	(2.20)	$	1.80	(81.8)%

N/M - not meaningful

(1)Consists of properties that we owned continuously since April 1, 2022.

(2)Consists of four properties, including one property we acquired during the period from April 1, 2022 to June 30, 2023, one property under development and two properties classified as held for sale at June 30, 2023.

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

References to changes in the income and expense categories below relate to the comparison of results for the three months ended June 30, 2023 compared to the three months ended June 30, 2022.

Rental income. The increase in rental income is primarily a result of our acquisition activities. Rental income increased at certain of our comparable properties primarily due to increases from our leasing activity and rent resets. Rental income includes non-cash straight line rent adjustments of $3,355 and $3,220 for the 2023 and 2022 periods, respectively, and net amortization of acquired real estate leases and assumed real estate lease obligations of $242 and $3,695 for the 2023 and 2022 periods, respectively.

Real estate taxes. Real estate taxes at certain of our comparable properties increased due to higher assessed values.

Other operating expenses. Other operating expenses at certain of our comparable properties increased primarily due to increases in insurance expenses and repairs and maintenance at certain of our properties.

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Depreciation and amortization. The increase in depreciation and amortization primarily reflects depreciation and amortization of improvements made to certain of our properties since April 1, 2022.

General and administrative. The decrease in general and administrative expenses is primarily due to a decrease in business management fees.

Loss on impairment of real estate. During the 2023 period, we recorded $254 on impairment of real estate to reduce the value of one property that was classified as held for sale at June 30, 2023 to its estimated fair value. During the 2022 period, we recorded a $100,747 loss on impairment of real estate to reduce the value of 25 properties reclassified from held for sale to held and used to their estimated fair value.

Interest and other income. The increase in interest and other income is primarily due to higher interest earned on cash balances during the 2023 period as compared to the 2022 period.

Interest expense. The decrease in interest expense is due to lower average interest rates and lower average outstanding indebtedness during the 2023 period as compared to the 2022 period.

Loss on sale of real estate. Loss on sale of real estate during the 2022 period represents a final true up adjustment to the sale of properties during the year ended December 31, 2021.

Loss on equity securities. Loss on equity securities represents the realized loss of $9,450 on the sale of certain equity securities we acquired as part of our acquisition of MNR.

Loss on early extinguishment of debt. Loss on early extinguishment of debt primarily relates to prepayment penalties incurred upon the repayment of four mortgage notes aggregating $35,910 in May 2023.

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

Equity in earnings of unconsolidated joint venture. Equity in earnings of unconsolidated joint venture is the change in the fair value of our investment in the unconsolidated joint venture.

Net loss. The net loss for the 2023 period compared to the net loss for the 2022 period reflects the changes noted above.

Net loss attributable to noncontrolling interest. Net loss attributable to noncontrolling interest represents the net loss attributable to the 39% equity interest in our consolidated joint venture that we did not own.

Weighted average common shares outstanding - basic and diluted. The increase in weighted average common shares outstanding primarily reflects common shares awarded under our equity compensation plan since April 1, 2022.

Net loss attributable to common shareholders per common share - basic and diluted. The increase in net loss attributable to common shareholders per common share for the 2023 period compared to the net loss attributable to common shareholders per share for the 2022 period reflects the changes to net income attributable to common shareholders and weighted average common shares noted above.

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Six Months Ended June 30, 2023, Compared to Six Months Ended June 30, 2022 (dollars and share amounts in thousands, except per share data)

	Comparable Properties Results (1)							Non-Comparable Properties Results (2)						Consolidated Results
	Six Months Ended June 30,							Six Months Ended June 30,						Six Months Ended June 30,
					$		%					$						$		%
	2023		2022		Change		Change	2023		2022		Change		2023		2022		Change		Change
Rental income	$	110,729	$	107,732	$	2,997	2.8%	$	107,572	$	70,865	$	36,707	$	218,301	$	178,597	$	39,704	22.2%
Operating expenses:
Real estate taxes	15,172		14,239		933		6.6%	16,395		8,472		7,923		31,567		22,711		8,856		39.0%
Other operating expenses	9,792		9,049		743		8.2%	8,045		4,776		3,269		17,837		13,825		4,012		29.0%
Total operating expenses	24,964		23,288		1,676		7.2%	24,440		13,248		11,192		49,404		36,536		12,868		35.2%
Net operating income (3)	$	85,765	$	84,444	$	1,321	1.6%	$	83,132	$	57,617	$	25,515	168,897		142,061		26,836		18.9%
Other expenses:
Depreciation and amortization														90,366		65,577		24,789		37.8%
General and administrative														16,038		15,786		252		1.6%
Loss on impairment of real estate														254		100,747		(100,493)		(99.7)%
Total other expenses														106,658		182,110		(75,452)		(41.4)%
Interest and other income														2,943		832		2,111		N/M
Interest expense														(142,617)		(118,547)		(24,070)		20.3%
Loss on sale of real estate														(974)		(10)		(964)		N/M
Loss on equity securities														—		(5,758)		5,758		(100.0)%
Loss on early extinguishment of debt														(359)		(828)		469		(56.6)%
Loss before income tax expense and equity in earnings of unconsolidated joint venture														(78,768)		(164,360)		85,592		(52.1)%
Income tax expense														(62)		(85)		23		(27.1)%
Equity in earnings of unconsolidated joint venture														6,704		3,337		3,367		100.9%
Net loss														(72,126)		(161,108)		88,982		(55.2)%
Net loss attributable to noncontrolling interest														21,489		11,055		10,434		94.4%
Net loss attributable to common shareholders														$	(50,637)	$	(150,053)	$	99,416	(66.3)%
Weighted average common shares outstanding - basic and diluted														65,339		65,217		122		0.2%
Per common share data (basic and diluted):
Net loss attributable to common shareholders														$	(0.77)	$	2.30	$	1.53	(66.5)%

N/M - not meaningful

(1)Consists of properties that we owned continuously since January 1, 2022.

(2)Consists of 126 properties, including (i) properties we acquired during the period from January 1, 2022 to June 30, 2023, including 94 properties we contributed to our consolidated joint venture in which we own a 61% equity interest and (ii) two properties classified as held for sale at June 30, 2023.

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

References to changes in the income and expense categories below relate to the comparison of results for the six months ended June 30, 2023 compared to the six months ended June 30, 2022.

Rental income. The increase in rental income is primarily a result of our acquisition activities, which includes our acquisition of MNR in February 2022. Rental income increased at certain of our comparable properties primarily due to increases from our leasing activity and rent resets. Rental income includes non-cash straight line rent adjustments of $7,117 and $4,376 for the 2023 and 2022 periods, respectively, and net amortization of acquired real estate leases and assumed real estate lease obligations of $512 and $4,015 for the 2023 and 2022 periods, respectively.

Real estate taxes. The increase in real estate taxes primarily reflects our acquisition activities. Real estate taxes at certain of our comparable properties increased due to higher assessed values.

Other operating expenses. The increase in other operating expenses is primarily due to our acquisition activities. Other operating expenses at certain of our comparable properties increased primarily due to increases in insurance expenses and

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repairs and maintenance at certain of our properties, partially offset by a decrease in snow removal expenses at certain of our properties, during the 2023 period.

Depreciation and amortization. The increase in depreciation and amortization primarily reflects our acquisition activities during the 2022 period.

General and administrative. The increase in general and administrative expenses is primarily due to an increase in business management fees as a result of our acquisition activities during the 2022 period, partially offset by a decrease in business management fees as a result of a decline in our average market capitalization in the 2023 period, and an increase in professional fees in the 2023 period.

Loss on impairment of real estate. During the 2023 period, we recorded $254 on impairment of real estate to reduce the value of one property that was classified as held for sale at June 30, 2023 to its estimated fair value. During the 2022 period, we recorded a $100,747 loss on impairment of real estate to reduce the value of 25 properties reclassified from held for sale to held and used to their estimated fair value.

Interest and other income. The increase in interest and other income is primarily due to higher interest earned on cash balances during the 2023 period as compared to the 2022 period.

Interest expense. The increase in interest expense is primarily due to higher average outstanding indebtedness during the 2023 period as compared to the 2022 period, partially offset by lower average interest rates on the outstanding debt during the 2023 period as compared to the 2022 period.

Loss on sale of real estate. Loss on sale of real estate was a result of a partial eminent domain taking at one of our properties during the 2023 period and a final true up adjustment to the sale of properties during the year ended December 31, 2021 in the 2022 period.

Loss on equity securities. Loss on equity securities represents the realized loss of $5,758 on the sale of certain equity securities we acquired as part of our acquisition of MNR during the 2022 period.

Loss on early extinguishment of debt. Loss on early extinguishment of debt primarily relates to prepayment penalties incurred upon the repayment of four mortgage loans totaling $35,910 in May 2023 and our write off of unamortized costs related to the termination of our unsecured revolving credit facility in February 2022.

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

Equity in earnings of unconsolidated joint venture. Equity in earnings of unconsolidated joint venture is the change in the fair value of our investment in the unconsolidated joint venture.

Net loss. The net loss for the 2023 period compared to the net loss for the 2022 period reflects the changes noted above.

Net loss attributable to noncontrolling interest. Net loss attributable to noncontrolling interest represents the net loss attributable to the 39% equity interest in our consolidated joint venture that we did not own.

Weighted average common shares outstanding - basic and diluted. The increase in weighted average common shares outstanding primarily reflects common shares awarded under our equity compensation plan since January 1, 2022.

Net loss attributable to common shareholders per common share - basic and diluted. The increase in net loss attributable to common shareholders per common share for the 2023 period compared to the net loss attributable to common shareholders per share for the 2022 period reflects the changes to net income attributable to common shareholders and weighted average common shares noted above.

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Non-GAAP Financial Measures

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

Net Operating Income

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

The following table presents the reconciliation of net loss to NOI for the three and six months ended June 30, 2023 and 2022 (dollars in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Reconciliation of Net Loss to NOI:
Net loss	$	(36,580)	$	(151,321)	$	(72,126)	$	(161,108)
Equity in earnings of unconsolidated joint venture	(2,743)		(1,610)		(6,704)		(3,337)
Income tax expense	45		16		62		85
Loss before income tax expense and equity in earnings of unconsolidated joint venture	(39,278)		(152,915)		(78,768)		(164,360)
Loss on early extinguishment of debt	359		—		359		828
Interest and other income	(1,797)		(354)		(2,943)		(832)
Interest expense	71,846		77,548		142,617		118,547
Loss on sale of real estate	—		10		974		10
Loss on equity securities	—		9,450		—		5,758
General and administrative	8,131		9,709		16,038		15,786
Loss on impairment of real estate	254		100,747		254		100,747
Depreciation and amortization	44,909		42,699		90,366		65,577
NOI	$	84,424	$	86,894	$	168,897	$	142,061
NOI:
Hawaii Properties	$	22,619	$	24,745	$	44,741	$	44,037
Mainland Properties	61,805		62,149		124,156		98,024
NOI	$	84,424	$	86,894	$	168,897	$	142,061

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Funds From Operations Attributable to Common Shareholders and Normalized Funds From Operations Attributable to Common Shareholders

We calculate FFO attributable to common shareholders and Normalized FFO attributable to common shareholders as shown below. FFO attributable to common shareholders is calculated on the basis defined by The National Association of Real Estate Investment Trusts, which is net loss attributable to common shareholders, calculated in accordance with GAAP, excluding loss on impairment of real estate, any gain or loss on sale of real estate, equity in earnings of unconsolidated joint venture and any realized and unrealized gains or losses on equity securities, plus real estate depreciation and amortization of consolidated properties and our proportionate share of FFO of unconsolidated joint venture properties and minus FFO adjustments attributable to noncontrolling interest, as well as certain other adjustments currently not applicable to us. In calculating Normalized FFO attributable to common shareholders, we adjust for the items shown below including similar adjustments for the unconsolidated joint venture, if any. FFO attributable to common shareholders and Normalized FFO attributable to common shareholders are among the factors considered by our Board of Trustees when determining the amount of distributions to our shareholders. Other factors include, but are not limited to, requirements to maintain our qualification for taxation as a REIT, limitations in the agreements governing our debt, the availability to us of debt and equity capital, our distribution rate as a percentage of the trading price of our common shares, or dividend yield, and our dividend yield compared to the dividend yields of other industrial REITs, our expectation of our future capital requirements and operating performance and our expected needs for and availability of cash to pay our obligations. Other real estate companies and REITs may calculate FFO attributable to common shareholders and Normalized FFO attributable to common shareholders differently than we do.

The following table presents our calculation of FFO attributable to common shareholders and Normalized FFO attributable to common shareholders and reconciliations of net loss attributable to common shareholders to FFO attributable to common shareholders and Normalized FFO attributable to common shareholders for the three months ended June 30, 2023 and 2022 (dollars in thousands, except per share data):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Reconciliation of Net Loss Attributable to Common Shareholders to FFO Attributable to Common Shareholders and Normalized FFO Attributable to Common Shareholders:
Net loss attributable to common shareholders	$	(25,828)	$	(143,539)	$	(50,637)	$	(150,053)
Depreciation and amortization	44,909		42,699		90,366		65,577
Equity in earnings of unconsolidated joint venture	(2,743)		(1,610)		(6,704)		(3,337)
Loss on equity securities	—		9,450		—		5,758
Share of FFO from unconsolidated joint venture	1,502		1,676		2,970		3,437
Loss on impairment of real estate	254		100,747		254		100,747
Loss on sale of real estate	—		10		974		10
FFO adjustments attributable to noncontrolling interest	(10,719)		(11,434)		(21,932)		(16,038)
FFO attributable to common shareholders	7,375		(2,001)		15,291		6,101
Loss on early extinguishment of debt	359		—		359		828
Acquisition, transaction related and certain other financing costs (1)	—		30,303		—		48,976
Normalized FFO adjustments attributable to noncontrolling interest	(140)		—		(140)		—
Normalized FFO attributable to common shareholders	$	7,594	$	28,302	$	15,510	$	55,905
Weighted average common shares outstanding - basic and diluted	65,369		65,221		65,339		65,217
Per common share data (basic and diluted):
FFO attributable to common shareholders	$	0.11	$	(0.03)	$	0.23	$	0.09
Normalized FFO attributable to common shareholders	$	0.12	$	0.43	$	0.24	$	0.86

(1)Amounts for the three and six months ended June 30, 2022 primarily include certain debt issuance costs recorded as interest expense related to certain financing and other transaction related costs expensed under GAAP.

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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. As of June 30, 2023, investment grade rated tenants, subsidiaries of investment grade rated parent entities or our Hawaii land leases represented 77.2% of our annualized rental revenues and only 5.2% of our annualized rental revenues were from leases expiring over the next 12 months. We believe that these sources of funds will be sufficient to meet our operating and capital expenses, pay debt service obligations and make distributions to our shareholders for the next 12 months and for the foreseeable future thereafter.

Our future cash flows from operating activities will depend primarily upon our ability to:

•collect rents from our tenants when due;

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

•control our operating cost increases;

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

•develop properties to produce cash flows in excess of our costs of capital.

The following is a summary of our sources and uses of cash flows for the periods presented, as reflected in our condensed consolidated statements of cash flows (dollars in thousands):

	Six Months Ended June 30,
	2023		2022
Cash and cash equivalents and restricted cash at beginning of period	$	140,780	$	29,397
Net cash provided by (used in):
Operating activities	10,631		80,931
Investing activities	17,387		(3,416,022)
Financing activities	41,570		3,742,638
Cash and cash equivalents and restricted cash at end of period	$	210,368	$	436,944

The decrease in net cash provided by operating activities for the three months ended June 30, 2023 compared to the prior year is primarily due to higher interest expense paid in the 2023 period, partially offset by higher cash flows from the properties we acquired pursuant to our acquisition of MNR in February 2022. The change from net cash used in investing activities in the 2022 period compared to net cash provided by investing activities in the 2023 period is primarily due to our acquisition of MNR in February 2022 as compared to no property acquisitions during the 2023 period. The decrease in net cash provided by financing activities in the 2022 period to the 2023 period was primarily due to the net borrowings and sale of joint venture equity interests used to finance our acquisition of MNR in the 2022 period.

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

Our future acquisition or development activity cannot be accurately projected because such activity depends upon available opportunities that come to our attention, our ability to successfully acquire and develop properties, financing available to us, our cost of capital, other commitments we have made and alternative uses for the amounts that would be required for the acquisition or development, the extent of our leverage, and the expected impact of the acquisition or development on certain of our financial metrics and debt covenants. We generally do not intend to purchase “turn around” properties, or properties that do not generate positive cash flows, but we may conduct construction or redevelopment activities on our properties.

As of June 30, 2023, we had cash and cash equivalents of $71,695. To maintain our qualification for taxation as a REIT under the Internal Revenue Code of 1986, as amended, or the IRC, we generally are required to distribute at least 90% of our REIT taxable income annually, subject to specified adjustments and excluding any net capital gain. This distribution requirement limits our ability to retain earnings and thereby provide capital for our operations or acquisitions. We may use our cash and cash equivalents on hand, the cash flow from our operations, net proceeds from any sales of assets and net proceeds of offerings of equity or debt securities to fund our distributions to our shareholders.

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The ILPT Floating Rate Loan secured by 104 of our properties matures in October 2024, subject to three, one year extension options, and requires that interest be paid at an annual rate of SOFR, 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 June 30, 2023 was 6.18%. The weighted average interest rate payable under the ILPT Floating Rate Loan was 6.18% for both the three and six months ended June 30, 2023. 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.

The Floating Rate Loan secured by 82 properties owned by our consolidated joint venture 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 June 30, 2023 was 6.17%. The weighted average annual interest rate payable under the Floating Rate Loan was 6.17% for the three and six months ended June 30, 2023. 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.

In May 2023, our consolidated joint venture obtained a $91,000 fixed rate, interest only mortgage loan secured by four properties owned by our consolidated joint venture. This mortgage loan matures in June 2030 and requires that interest be paid at an annual rate of 6.25%. A portion of the net proceeds from this mortgage loan was used to repay four outstanding mortgage loans of our consolidated joint venture with an aggregate outstanding principal balance of $35,910 and a weighted average interest rate of 3.70%.

As of June 30, 2023, we had an aggregate principal amount of $4,334,755 of debt, including the Floating Rate Loan and the ILPT Floating Rate Loan, scheduled to mature between 2024 and 2038.

For further information regarding our investing and financing activities, see Notes 2 and 4 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Consolidated Joint Venture - 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 June 30, 2023 and 2022, for the six months ended June 30, 2023 and the period from this joint venture’s formation date, February 25, 2022 to June 30, 2022. The portion of this joint venture's net loss not attributable to us, or $10,676 and $7,781, for the three months ended June 30, 2023 and 2022, respectively, and $21,404 and $11,042 for the six months ended June 30, 2023 and the period from this joint venture’s formation date, February 25, 2022 to June 30, 2022, respectively, is reported as net loss attributable to noncontrolling interest in our condensed consolidated statements of comprehensive income (loss). As of June 30, 2023, our consolidated joint venture had total assets of $3,092,534 and total liabilities of $1,775,802.

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 $2,743 and $1,610 for the three months ended June 30, 2023 and 2022, respectively, and $6,704 and $3,337 for the six months ended June 30, 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 $1,322 during the three months ended June 30, 2023 and 2022, respectively, and $1,980 and $2,642 for the six months ended June 30, 2023 and 2022, respectively.

For further information regarding these joint ventures, see Notes 2, 4, 5, 7, 8 and 9 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

We expect to use proceeds we may receive from the other investors in our joint ventures in connection with any additional properties we may sell to our joint ventures, equity contributions from any third party investors in our joint ventures or any future joint ventures and net proceeds from offerings of equity or debt securities to fund any future property acquisitions,

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developments and redevelopments. We may also assume mortgage loans or incur debt in connection with future acquisitions, developments and redevelopments. When the maturities of our debt approach or we desire to reduce our leverage or refinance debt, we intend to explore refinancing alternatives, property sales or sales of equity interests in joint ventures. Such alternatives may include incurring term debt, obtaining financing secured by mortgages on properties we own, issuing new equity or debt securities, obtaining a revolving credit facility, participating or selling equity interests in joint ventures or selling properties. We currently have an effective shelf registration statement that allows us to issue up to $500,000 in aggregate amount of public securities on an expedited basis, but we cannot be sure that there will be purchasers for such securities. Further, any issuances of our equity securities may be dilutive to our existing shareholders. Although we cannot be sure that we will be successful in completing any particular type of financing, we believe that we will have access to financing, such as debt or equity offerings, to fund capital expenditures, future acquisitions, development, redevelopment and other activities and to pay our obligations.

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

During the six months ended June 30, 2023, we paid quarterly cash distributions to our shareholders totaling $1,312 using cash balances.

On July 13, 2023, we declared a regular quarterly distribution to common shareholders of record on July 24, 2023 of $0.01 per share, or approximately $657. We expect to pay this distribution to our shareholders on or about August 17, 2023 using cash balances. For more information regarding these distributions, see Note 6 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

During the three and six months ended June 30, 2023 and 2022, amounts capitalized for tenant improvements, leasing costs, building improvements and development and redevelopment activities were as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Tenant improvements and leasing costs (1)	$	2,498	$	2,627	$	4,538	$	5,988
Building improvements (2)	1,283		376		1,653		486
Development, redevelopment and other activities (3)	3,870		7,077		6,391		7,371
	$	7,651	$	10,080	$	12,582	$	13,845

(1)Tenant improvements and leasing costs include capital expenditures used to improve tenants’ space or amounts paid directly to tenants to improve their space and leasing related costs, such as brokerage commissions and tenant inducements.

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

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

As of June 30, 2023, we had estimated unspent leasing related obligations of $23,876, of which $6,481 is expected to be spent during the next 12 months.

Debt Covenants (dollars in thousands)

Our principal debt obligations as of June 30, 2023 were: (1) $1,235,000 outstanding principal amount of the ILPT Floating Rate Loan secured by 104 of our properties; (2) $1,400,000 outstanding principal amount of the Floating Rate Loan secured by 82 properties owned by our consolidated joint venture; (3) $700,000 outstanding principal amount of a mortgage loan secured by 17 our properties; (4) $650,000 outstanding principal amount of a mortgage loan secured by 186 of our properties; and (5) $349,755 aggregate principal amount of mortgage loans secured by 12 properties owned by our consolidated joint venture in which we own a 61% equity interest. For further information regarding our indebtedness, see Note 4 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

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The agreements and related documents governing the ILPT Floating Rate Loan, the Floating Rate Loan, the $700,000 mortgage loan and the $650,000 mortgage loan contain customary covenants, provide for acceleration of payment of all amounts due thereunder upon the occurrence and continuation of certain events of default and, in the case of the $650,000 mortgage loan, also require us to maintain a minimum consolidated net worth of at least $250,000 and liquidity of at least $15,000. As of June 30, 2023, we believe that we were in compliance with all of the covenants and other terms under the agreements governing these loans.

Certain of the mortgage loans we assumed in connection with our acquisition of MNR are non-recourse, subject to certain limitations, and do not contain any material financial covenants. The agreements governing the ILPT Floating Rate Loan, the Floating Rate Loan, the $700,000 mortgage loan and the $650,000 mortgage loan contain certain exceptions to the general non-recourse provisions, including our obligation to indemnify the lenders for certain potential environmental losses.

Related Person Transactions

We have relationships and historical and continuing transactions with RMR, RMR Inc. and others related to them. For further information about these and other such relationships and related person transactions, see Notes 7 and 8 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, our 2022 Annual Report, our definitive Proxy Statement for our 2023 Annual Meeting of Shareholders and our other filings with the SEC. In addition, see the section captioned “Risk Factors” of our 2022 Annual Report for a description of risks that may arise as a result of these and other related person transactions and relationships. We may engage in additional transactions with related persons, including businesses to which RMR or its subsidiaries provide management services.

Critical Accounting Estimates

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

A discussion of our critical accounting estimates is included in our 2022 Annual Report. There have been no significant changes in our critical accounting estimates since the year ended December 31, 2022.

Item 3. Quantitative and Qualitative Disclosures About Market Risk (dollars in thousands, except per share data)

We are exposed to risks associated with market changes in interest rates. We manage our exposure to this market risk by monitoring available financing alternatives. Our strategy to manage exposure to changes in interest rates is materially unchanged since December 31, 2022. Other than as described below, we do not currently expect any significant changes in our exposure to fluctuations in interest rates or in how we manage this exposure in the near future.

Floating Rate Debt

At June 30, 2023, our outstanding floating rate debt consisted of the following:

			Annual		Annual			Interest
	Principal		Interest		Interest			Payments
Debt	Balance (1)		Rate (1)		Expense (1)		Maturity	Due
ILPT Floating Rate Loan	$	1,235,000	6.18	%	$	76,323	2024	Monthly
Floating Rate Loan	1,400,000		6.17	%	86,380		2024	Monthly
	$	2,635,000			$	162,703

(1)The principal balance, annual interest rate and annual interest expense are the amounts stated in the applicable contract, as adjusted by our interest rate caps as applicable. 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.

At June 30, 2023, our aggregate floating rate debt was $2,635,000, consisting of the $1,235,000 outstanding principal amount of the ILPT Floating Rate Loan, and the $1,400,000 outstanding principal amount of the Floating Rate Loan secured by 82 properties owned by our consolidated joint venture. The ILPT Floating Rate Loan matures on October 9, 2024, subject to three, one year extension options, and requires that interest be paid at an annual rate of SOFR plus a weighted average premium of 3.93%. The Floating Rate Loan matures on March 9, 2024, subject to three, one year extension options, and requires that interest be paid at an annual rate of SOFR plus a premium of 2.77%. We are vulnerable to changes in the U.S. dollar based on

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short term rates, specifically SOFR. In conjunction with these borrowings, to hedge our exposure to risks related to changes in SOFR rates, we purchased interest rate caps with a SOFR strike rate equal to 2.25% for the ILPT Floating Rate Loan and 3.40% for the Floating Rate Loan.

In addition, upon renewal or refinancing of these obligations, we are vulnerable to increases in interest rate premiums due to market conditions and our perceived credit risk. Generally, a change in interest rates would not affect the value of our floating rate debt but would affect our operating results. The following table presents the approximate impact a one percentage point increase in interest rates would have on our annual floating rate interest expense at June 30, 2023, excluding the impact of our interest rate caps:

	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 June 30, 2023	6.17	%	$	2,635,000	$	162,703	$	2.49
One percentage point increase	7.17	%	$	2,635,000	$	188,930	$	2.89

(1)Based on the diluted weighted average common shares outstanding for the six months ended June 30, 2023.

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 any floating rate debt we may incur.

Fixed Rate Debt

At June 30, 2023, our outstanding fixed rate debt consisted of the following mortgage notes:

			Annual		Annual			Interest
	Principal		Interest		Interest			Payments
Debt	Balance (1)		Rate (1)		Expense (1)		Maturity	Due
Mortgage notes (186 Hawaii Properties)	$	650,000	4.31	%	$	28,015	2029	Monthly
Mortgage notes (17 Mainland Properties)	700,000		4.42	%	30,940		2032	Monthly
Mortgage note (2)	91,000		6.25	%	5,688		2030	Monthly
Mortgage note (3)	12,042		3.67	%	442		2031	Monthly
Mortgage note (3)	13,536		4.14	%	560		2032	Monthly
Mortgage note (3)	29,797		4.02	%	1,198		2033	Monthly
Mortgage note (3)	41,636		4.13	%	1,720		2033	Monthly
Mortgage note (3)	25,310		3.10	%	785		2035	Monthly
Mortgage note (3)	40,759		2.95	%	1,202		2036	Monthly
Mortgage note (3)	44,991		4.27	%	1,921		2037	Monthly
Mortgage note (3)	50,684		3.25	%	1,647		2038	Monthly
	$	1,699,755			$	74,118

(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)Our consolidated joint venture, in which we own a 61% equity interest, obtained this mortgage loan, which is secured by four properties.

(3)Our consolidated joint venture, in which we own a 61% equity interest, assumed these former MNR mortgage loans, which are secured by eight properties in aggregate.

Our $650,000, $700,000 and $91,000 mortgage notes require interest only payments until maturity. The remaining fixed rate mortgage notes require amortizing payment of principal and interest until maturity. Because our mortgage notes require interest to be paid at a fixed rate, changes in market interest rates during the terms of these mortgage notes will not affect our interest obligations. If these mortgage notes are refinanced at an interest rate which is one percentage point higher or lower than shown above, our annual interest cost would increase or decrease by approximately $16,998.

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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. The U.S. Federal Reserve has raised interest rates multiple times since the beginning of 2022 in an effort to combat inflation and may continue to do so. Based on the balances outstanding at June 30, 2023 and discounted cash flow analyses through the maturity date, and assuming no other changes in factors that may affect the fair value of our fixed rate debt obligation, a hypothetical immediate one percentage point change in the interest rates would change the fair value of this obligation by approximately $91,876.

Item 4. Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, our management carried out an evaluation, under the supervision and with the participation of our Managing Trustees, our President and Chief Operating Officer and our Chief Financial Officer and Treasurer, of the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, our Managing Trustees, our President and Chief Operating Officer and our Chief Financial Officer and Treasurer concluded that our disclosure controls and procedures are effective.

There have been no changes in our internal control over financial reporting during the quarter ended June 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Warning Concerning Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws that are subject to risks and uncertainties. These statements may include words such as “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”, “will”, “may” and negatives or derivatives of these or similar expressions. These forward-looking statements include, among others, statements about: economic and market conditions; our expectations regarding the demand for industrial properties; our future leasing activity; our leverage levels and possible future financings; our liquidity needs and sources; our capital expenditure plans and commitments; acquisitions and dispositions; our existing and possible future joint venture arrangements; our redevelopment and construction activities and plans; and the amount and timing of future distributions.

Forward-looking statements reflect our current expectations, are based on judgments and assumptions, are inherently uncertain and are subject to risks, uncertainties and other factors, which could cause our actual results, performance or achievements to differ materially from expected future results, performance or achievements expressed or implied in those forward-looking statements. Some of the risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements include, but are not limited to, the following:

•Our ability and the ability of our tenants to operate under unfavorable market and economic conditions, such as rising or sustained high interest rates, high inflation, labor market challenges, dislocation and volatility in the public equity and debt markets, challenges in the commercial real estate industry generally and in the industrial and logistics sector, geopolitical instability and economic recessions or downturns,

•Demand for industrial and logistics properties,

•Our ability to reduce our leverage, generate cash flow and take advantage of mark-to-market leasing opportunities,

•Our ability to cost-effectively raise and balance our use of debt or equity capital,

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

•Our ability to maintain sufficient liquidity,

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

•Our ability to successfully compete for tenancies, the likelihood that the rents we realize will increase when we renew or extend our leases, enter new leases, or our rents reset at our properties in Hawaii,

•Whether our tenants will renew or extend their leases or that we will be able to obtain replacement tenants on terms as favorable to us as the terms of our existing leases,

•The credit qualities of our tenants,

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

•Our ability to maintain high occupancy at our properties,

•Our tenant and geographic concentrations,

•Potential defaults of our leases by our tenants,

•Changes in global supply chain conditions and emerging technologies,

•Whether the industrial and logistics sector and the extent to which our tenants’ businesses are critical to sustaining a resilient supply chain and that our business will benefit as a result,

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

•Our ability to acquire properties that realize our targeted returns,

•Our ability to sell properties at prices we target,

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

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•Our ability to sell additional equity interests in, or contribute additional properties to, our existing joint ventures, or enter into additional, real estate joint ventures or to attract co-venturers and benefit from our existing joint ventures or any real estate joint ventures we may enter into,

•The ability of our manager, RMR, to successfully manage us,

•Our qualification for taxation as a REIT under the IRC,

•Changes in federal or state tax laws,

•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 expected capital expenditures and leasing costs, as well as risks and uncertainties regarding the development, redevelopment or repositioning of our properties, including as a result of inflation, cost overruns, supply chain challenges, labor shortages, construction delays or inability to obtain necessary permits, and our ability to lease space at these properties at targeted returns,

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

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

•Limitations imposed on our 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,

•Non-performance by the counterparties to our interest rate caps and the costs for renewing or replacing the interest rate caps,

•Actual and potential conflicts of interest with our related parties, including our managing trustees, RMR and others affiliated with them,

•Acts of terrorism, outbreaks or continuation of pandemics or other significant adverse public health safety events or conditions, war or other hostilities, supply chain disruptions, climate change or other manmade or natural disasters beyond our control, and

•Other matters.

These risks, uncertainties and other factors are not exhaustive and should be read in conjunction with other cautionary statements that are included in our periodic filings. The information contained elsewhere in our filings with the SEC, including under the caption “Risk Factors” in our periodic reports, or incorporated therein, identifies important factors that could cause differences from our forward-looking statements in this Quarterly Report on Form 10-Q. Our filings with the SEC are available on the SEC’s website at www.sec.gov.

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

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

Statement Concerning Limited Liability

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

PART II. Other Information

37

Item 1A. Risk Factors

There have been no material changes to the risk factors from those we previously provided in our 2022 Annual Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer purchases of equity securities. The following table provides information about our purchases of our equity securities during the quarter ended June 30, 2023:

					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
May 1, 2023 - May 31, 2023	5,762	$	1.82	—	$	—
June 1, 2023 - June 30, 2023	1,348	1.84		—	—
Total	7,110	$	1.82	—	$	—

(1)    These common share withholdings and purchases were made to satisfy tax withholding and payment obligations of certain former officers and employees of RMR in connection with the vesting of prior awards of common shares to them. We withheld and purchased these common shares at their fair market values based upon the trading prices of our common shares at the close of trading on Nasdaq on the purchase dates.

38

Item 6. Exhibits

Exhibit Number	Description
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, 2020.)
3.2	Second Amended and Restated Bylaws of the Company, adopted June 1, 2023. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on June 2, 2023.)
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.)
31.1	Rule 13a-14(a) Certification. (Filed herewith.)
31.2	Rule 13a-14(a) Certification. (Filed herewith.)
31.3	Rule 13a-14(a) Certification. (Filed herewith.)
31.4	Rule 13a-14(a) Certification. (Filed herewith.)
32.1	Section 1350 Certification. (Furnished 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.)

39

SIGNATURES

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

INDUSTRIAL LOGISTICS PROPERTIES TRUST
By:	/s/ Yael Duffy
	Yael Duffy
	President and Chief Operating Officer
	Dated: July 25, 2023
By:	/s/ Brian E. Donley
	Brian E. Donley
	Chief Financial Officer and Treasurer
	(Principal Financial Officer and Principal Accounting Officer)
	Dated: July 25, 2023

40

EX-31.1

Exhibit31.1

CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)

I, Adam D. Portnoy, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q 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: July 25, 2023	/s/ Adam D. Portnoy
	Adam D. Portnoy
	Managing Trustee

EX-31.2

Exhibit31.2

CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)

I, Matthew P. Jordan, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q 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: July 25, 2023	/s/ Matthew P. Jordan
	Matthew P. Jordan
	Managing Trustee

EX-31.3

Exhibit31.3

CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)

I, Yael Duffy, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q 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: July 25, 2023	/s/ Yael Duffy
	Yael Duffy
	President and Chief Operating Officer

EX-31.4

Exhibit31.4

CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)

I, Brian E. Donley, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q 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: July 25, 2023	/s/ Brian E. Donley
	Brian E. Donley
	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 Quarterly Report on Form 10-Q for the period ended June 30, 2023 (the “Report”), each of the undersigned hereby certifies, to the best of his or her 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/ Adam D. Portnoy	/s/ Yael Duffy
Adam D. Portnoy	Yael Duffy
Managing Trustee	President and Chief Operating Officer
/s/ Matthew P. Jordan	/s/ Brian E. Donley
Matthew P. Jordan	Brian E. Donley
Managing Trustee	Chief Financial Officer and Treasurer
Date: July 25, 2023

XML

Cover Page - shares	6 Months Ended
	Jun. 30, 2023	Jul. 21, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
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	02458-1634
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 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 Common Stock, Shares Outstanding		65,696,942
Entity Central Index Key	0001717307
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2023		Dec. 31, 2022
Real estate properties:
Land	$ 1,112,598		$ 1,117,779
Buildings and improvements	4,031,041		4,058,329
Total real estate properties, gross	5,143,639		5,176,108
Accumulated depreciation	(330,879)		(273,467)
Total real estate properties, net	4,812,760		4,902,641
Assets of properties held for sale	37,261		0
Investment in unconsolidated joint venture	129,082		124,358
Acquired real estate leases, net	267,889		297,445
Cash and cash equivalents	71,695		48,261
Restricted cash	138,673	[1]	92,519
Rents receivable, including straight line rents of $87,797 and $80,710, respectively	110,638		107,011
Other assets, net	94,082		103,931
Total assets	5,662,080		5,676,166
LIABILITIES AND EQUITY
Mortgages and notes payable, net	4,301,276		4,244,501
Liabilities of properties held for sale	31		0
Assumed real estate lease obligations, net	20,420		22,523
Total liabilities	4,400,791		4,345,395
Commitments and contingencies
Equity:
Common shares of beneficial interest, $.01 par value: 100,000,000 shares authorized; 65,697,959 and 65,568,145 shares issued and outstanding, respectively	657		656
Additional paid in capital	1,015,138		1,014,201
Cumulative net income	66,548		117,185
Cumulative other comprehensive income	26,487		21,903
Cumulative common distributions	(364,533)		(363,221)
Total equity attributable to common shareholders	744,297		790,724
Total equity attributable to noncontrolling interest	516,992		540,047
Total equity	1,261,289		1,330,771
Total liabilities and equity	5,662,080		5,676,166
Nonrelated Party
LIABILITIES AND EQUITY
Accounts payable and other liabilities	73,916		73,547
Related Party
LIABILITIES AND EQUITY
Accounts payable and other liabilities	$ 5,148		$ 4,824

[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.

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Straight line rents	$ 87,797	$ 80,710
Common stock, par value per share (in usd per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common shares, shares issued (in shares)	65,697,959	65,568,145
Common shares, shares outstanding (in shares)	65,697,959	65,568,145

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Revenues [Abstract]
Rental income	$ 108,043	$ 107,222	$ 218,301	$ 178,597
Expenses:
Real estate taxes	15,100	13,275	31,567	22,711
Other operating expenses	8,519	7,053	17,837	13,825
Depreciation and amortization	44,909	42,699	90,366	65,577
General and administrative	8,131	9,709	16,038	15,786
Loss on impairment of real estate	254	100,747	254	100,747
Total expenses	76,913	173,483	156,062	218,646
Interest and other income	1,797	354	2,943	832
Interest expense (including net amortization of debt issuance costs, premiums and discounts of $6,721, $34,448, $13,434, and $54,769, respectively)	(71,846)	(77,548)	(142,617)	(118,547)
Loss on sale of real estate	0	(10)	(974)	(10)
Loss on equity securities	0	(9,450)	0	(5,758)
Loss on early extinguishment of debt	(359)	0	(359)	(828)
Loss before income tax expense and equity in earnings of unconsolidated joint venture	(39,278)	(152,915)	(78,768)	(164,360)
Income tax expense	(45)	(16)	(62)	(85)
Equity in earnings of unconsolidated joint venture	2,743	1,610	6,704	3,337
Net loss	(36,580)	(151,321)	(72,126)	(161,108)
Net loss attributable to noncontrolling interest	10,752	7,782	21,489	11,055
Net loss attributable to common shareholders	(25,828)	(143,539)	(50,637)	(150,053)
Other comprehensive income:
Unrealized gain on derivatives	12,021	4,438	3,243	10,070
Less: unrealized gain (loss) on derivatives attributable to noncontrolling interest	(419)	(774)	1,341	(2,498)
Other comprehensive (loss) income attributable to common shareholders	11,602	3,664	4,584	7,572
Comprehensive loss attributable to common shareholders	$ (14,226)	$ (139,875)	$ (46,053)	$ (142,481)
Weighted average common shares outstanding - basic (in shares)	65,369	65,221	65,339	65,217
Weighted average common shares outstanding - diluted (in shares)	65,369	65,221	65,339	65,217
Per common share data (basic and diluted):
Net loss attributable to common shareholders, basic (in usd per share)	$ (0.40)	$ (2.20)	$ (0.77)	$ (2.30)
Net loss attributable to common shareholders, diluted (in usd per share)	$ (0.40)	$ (2.20)	$ (0.77)	$ (2.30)

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Statement [Abstract]
Amortization of debt issuance costs and premium	$ 6,721	$ 34,448	$ 13,434	$ 54,769

XML

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Total Equity Attributable to Common Shareholders	Common shares	Additional Paid-in Capital	Cumulative Net Income	Cumulative Other Comprehensive Income	Cumulative Common Distributions	Total Attributable to Noncontrolling Interest
Beginning balance (in shares) at Dec. 31, 2021			65,404,592
Beginning balance at Dec. 31, 2021	$ 1,038,042	$ 1,038,042	$ 654	$ 1,012,224	$ 343,908	$ 0	$ (318,744)	$ 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income	(9,787)	(6,514)			(6,514)			(3,273)
Share grants	407	407		407
Share repurchases (in shares)			(333)
Share repurchases	(7)	(7)		(7)
Shares forfeitures (in shares)			(400)
Share forfeitures	(2)	(2)		(2)
Distributions to common shareholders	(21,584)	(21,584)					(21,584)
Net current period other comprehensive loss	5,632	3,908				3,908		1,724
Contributions from noncontrolling interest	591,268							591,268
Ending balance (in shares) at Mar. 31, 2022			65,403,859
Ending balance at Mar. 31, 2022	1,603,969	1,014,250	$ 654	1,012,622	337,394	3,908	(340,328)	589,719
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income	(151,321)	(143,539)			(143,539)			(7,782)
Shares grants (in shares)			24,500
Share grants	800	800		800
Shares forfeitures (in shares)			(900)
Share forfeitures	(4)	(4)		(4)
Distributions to common shareholders	(21,583)	(21,583)					(21,583)
Net current period other comprehensive loss	4,438	3,664				3,664		774
Distributions to noncontrolling interest	(1,365)							(1,365)
Ending balance (in shares) at Jun. 30, 2022			65,427,459
Ending balance at Jun. 30, 2022	$ 1,434,934	853,588	$ 654	1,013,418	193,855	7,572	(361,911)	581,346
Beginning balance (in shares) at Dec. 31, 2022	65,568,145		65,568,145
Beginning balance at Dec. 31, 2022	$ 1,330,771	790,724	$ 656	1,014,201	117,185	21,903	(363,221)	540,047
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income	(35,546)	(24,809)			(24,809)			(10,737)
Share grants	388	388		388
Share repurchases (in shares)			(976)
Share repurchases	(3)	(3)		(3)
Shares forfeitures (in shares)			(1,200)
Share forfeitures	(1)	(1)		(1)
Distributions to common shareholders	(656)	(656)					(656)
Net current period other comprehensive loss	(8,778)	(7,018)				(7,018)		(1,760)
Ending balance (in shares) at Mar. 31, 2023			65,565,969
Ending balance at Mar. 31, 2023	$ 1,286,175	758,625	$ 656	1,014,585	92,376	14,885	(363,877)	527,550
Beginning balance (in shares) at Dec. 31, 2022	65,568,145		65,568,145
Beginning balance at Dec. 31, 2022	$ 1,330,771	790,724	$ 656	1,014,201	117,185	21,903	(363,221)	540,047
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Share repurchases (in shares)			(8,086)
Distributions to common shareholders	$ (1,312)
Ending balance (in shares) at Jun. 30, 2023	65,697,959		65,697,959
Ending balance at Jun. 30, 2023	$ 1,261,289	744,297	$ 657	1,015,138	66,548	26,487	(364,533)	516,992
Beginning balance (in shares) at Mar. 31, 2023			65,565,969
Beginning balance at Mar. 31, 2023	1,286,175	758,625	$ 656	1,014,585	92,376	14,885	(363,877)	527,550
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income	(36,580)	(25,828)			(25,828)			(10,752)
Shares grants (in shares)			140,000
Share grants	568	568	$ 1	567
Share repurchases (in shares)			(7,110)
Share repurchases	(12)	(12)		(12)
Shares forfeitures (in shares)			(900)
Share forfeitures	(2)	(2)		(2)
Distributions to common shareholders	(656)	(656)					(656)
Net current period other comprehensive loss	12,021	11,602				11,602		419
Distributions to noncontrolling interest	$ (225)							(225)
Ending balance (in shares) at Jun. 30, 2023	65,697,959		65,697,959
Ending balance at Jun. 30, 2023	$ 1,261,289	$ 744,297	$ 657	$ 1,015,138	$ 66,548	$ 26,487	$ (364,533)	$ 516,992

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands		6 Months Ended
		Jun. 30, 2023	Jun. 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$ (72,126)	$ (161,108)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation		62,464	43,375
Loss on impairment of real estate		254	100,747
Net amortization of debt issuance costs, premiums and discounts		13,434	54,769
Amortization of acquired real estate leases and assumed real estate lease obligations		26,308	17,477
Amortization of deferred leasing costs		1,101	735
Loss on equity securities		0	5,758
Straight line rental income		(7,117)	(4,376)
Loss on early extinguishment of debt		359	828
Loss on sale of real estate		974	0
Proceeds from settlement of derivatives		(24,445)	0
Other non-cash expenses		13,244	2,156
Distributions of earnings from unconsolidated joint venture		1,980	2,642
Equity in earnings of unconsolidated joint venture		(6,704)	(3,337)
Change in assets and liabilities:
Rents receivable		3,065	(9,933)
Deferred leasing costs		(4,194)	(4,565)
Other assets		2,332	(4,695)
Accounts payable and other liabilities		310	25,539
Rents collected in advance		(1,238)	9,030
Security deposits		301	672
Due to related persons		329	5,217
Net cash provided by operating activities		10,631	80,931
CASH FLOWS FROM INVESTING ACTIVITIES:
Real estate acquisitions		0	(3,551,509)
Real estate improvements		(7,301)	(5,305)
Proceeds from sale of marketable securities		0	140,792
Proceeds from settlement of derivatives		24,445	0
Proceeds from sale of real estate		243	0
Net cash provided by (used in) investing activities		17,387	(3,416,022)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of mortgage notes payable		91,000	2,100,000
Repayment of mortgage notes payable		(46,607)	(7,161)
Proceeds from secured bridge loan facility		0	1,385,158
Borrowings under revolving credit facility		0	3,000
Repayments of revolving credit facility		0	(185,000)
Payment of debt issuance costs		(1,271)	(96,260)
Distributions to common shareholders		(1,312)	(43,167)
Proceeds from sale of noncontrolling interest, net		0	587,440
Repurchase of common shares		(15)	(7)
Distributions to noncontrolling interest		(225)	(1,365)
Net cash provided by financing activities		41,570	3,742,638
Increase in cash, cash equivalents and restricted cash		69,588	407,547
Cash, cash equivalents and restricted cash at beginning of period		140,780	29,397
Cash, cash equivalents and restricted cash at end of period		210,368	436,944
SUPPLEMENTAL DISCLOSURES:
Interest paid		142,095	55,065
Income taxes paid		545	195
Interest capitalized		324	15
NON-CASH INVESTING ACTIVITIES:
Real estate acquired by assumption of mortgage notes payable		0	323,432
Real estate improvements accrued not paid		4,950	4,055
NON-CASH FINANCING ACTIVITIES:
Assumption of mortgage notes payable		0	(323,432)
SUPPLEMENTAL DISCLOSURE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH:
Cash and cash equivalents		71,695	291,866
Restricted cash	[1]	138,673	145,078
Total cash, cash equivalents and restricted cash shown in the statements of cash flows		$ 210,368	$ 436,944

[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.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical)	Jun. 30, 2023
Mountain Industrial REIT LLC | Consolidated
Ownership interest (as percent)	61.00%

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Basis of Presentation	6 Months Ended
	Jun. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation	Basis of PresentationThe 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.

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Real Estate Investments

6 Months Ended

Jun. 30, 2023

Real Estate [Abstract]

Real Estate Investments

Real Estate Investments

As of June 30, 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 June 30, 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 $7,651 and $10,080 during the three months ended June 30, 2023 and 2022, respectively, and $12,582 and $13,845 for the six months ended June 30, 2023 and 2022, respectively. During the six months ended June 30, 2023, we committed $5,832 for expenditures related to tenant improvements and leasing costs for leases executed during the period for approximately 3,110,000 square feet. Committed, but unspent, tenant related obligations based on existing leases as of June 30, 2023 were $23,876, of which $6,481 is expected to be spent during the next 12 months.

We regularly evaluate whether events or changes in circumstances have occurred that could indicate an impairment in the value of long lived assets. Impairment indicators may include declining tenant occupancy, lack of progress 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. If there is an indication that the carrying value of an asset is not recoverable, we estimate the projected undiscounted cash flows to determine if an impairment loss should be recognized. The future net undiscounted cash flows are subjective and are based in part on assumptions regarding hold periods, market rents and terminal capitalization rates. We determine the amount of any impairment loss by comparing the historical carrying value to estimated fair value. We estimate fair value through an evaluation of recent financial performance and projected discounted cash flows using standard industry valuation techniques. In addition to consideration of impairment upon the events or changes in circumstances described above, we regularly evaluate the remaining useful lives of our long lived assets. If we change our estimate of the remaining useful lives, we allocate the carrying value of the affected assets over their revised remaining useful lives.

During the three months ended June 30, 2023, we recorded a loss on impairment of real estate of $254 to reduce the carrying value of one of the two properties that were classified as held for sale at June 30, 2023 to its estimated sales price less costs to sell.

As of March 31, 2022, we classified 30 properties we acquired as part of our acquisition of Monmouth Real Estate Investment Corporation, or MNR, on February 25, 2022, as held for sale in our condensed consolidated balance sheet. During the three months ended June 30, 2022, we determined not to sell these properties as a result of market conditions and reclassified those properties to held and used and recorded a $100,747 loss on impairment of real estate to adjust the carrying value of 25 of those 30 properties to their estimated fair value.

Disposition Activities

As of June 30, 2023, we had two Mainland Properties with 551,000 square feet and an aggregate carrying value of $36,864 classified as held for sale. See Note 5 for more information on our properties held for sale.

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.

As of July 25, 2023, we have entered into agreements to sell three properties containing approximately 762,000 rentable square feet for an aggregate sales price of $65,265, excluding closing costs. These pending sales are subject to conditions; accordingly, we cannot be sure that we will complete these sales or that these sales will not be delayed or the terms will not change.

Joint Venture Activities

As of June 30, 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 June 30, 2023		Properties	Location	Feet
Mountain Industrial REIT LLC	Consolidated	61%	N/A		94	Various	20,980,661
The Industrial Fund REIT LLC	Unconsolidated	22%	$	129,082	18	Various	11,726,137

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 June 30, 2023 and 2022, for the six months ended June 30, 2023 and the period from this joint venture’s formation date, February 25, 2022 to June 30, 2022. The portion of this joint venture's net loss not attributable to us, or $10,676 and $7,781, for the three months ended June 30, 2023 and 2022, respectively, and $21,404 and $11,042 for the six months ended June 30, 2023 and for the period from February 25, 2022 to June 30, 2022, respectively, is reported as net loss attributable to noncontrolling interest in our condensed consolidated statements of comprehensive income (loss). As of June 30, 2023, our consolidated joint venture had total assets of $3,092,534 and total liabilities of $1,775,802.

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 $2,743 and $1,610 for the three months ended June 30, 2023 and 2022, respectively, and $6,704 and $3,337 for the six months ended June 30, 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

$1,322 during the three months ended June 30, 2023 and 2022, respectively, and $1,980 and $2,642 for the six months ended June 30, 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 $76 and $1, for the three months ended June 30, 2023 and 2022, respectively, and $85 and $13 for the six months ended June 30, 2023 and the period from the date we acquired our interest in this property, February 25, 2022 to June 30, 2022, respectively, is reported as net loss attributable to noncontrolling interest in our condensed consolidated statements of comprehensive income (loss). During the three and six months ended June 30, 2023, this tenancy in common made cash distributions of $225 to the unrelated third party investor, which is reflected as a decrease in the total equity attributable to noncontrolling interest in our condensed consolidated balance sheet.

See Notes 4, 5, 7, 8 and 9 for more information regarding these joint ventures.

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Leases

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

Leases

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 $3,355 and $3,220 to record revenue on a straight line basis during the three months ended June 30, 2023 and 2022, respectively, and $7,117 and $4,376 for the six months ended June 30, 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 $18,291 and $16,828 for the three months ended June 30, 2023 and 2022, respectively, and $39,390 and $29,407 for the six months ended June 30, 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 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 $4,867 and $4,943, respectively, as of June 30, 2023, and $5,084 and $5,149, respectively, as of December 31, 2022. Our right of use assets and related lease liabilities are included in other assets, net and accounts payable and other liabilities, respectively, in our condensed consolidated balance sheets. We 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 $28 and $91 for three months ended June 30, 2023 and 2022, respectively, and $129 and $179 for the six months ended June 30, 2023 and the period from February 25, 2022 to June 30, 2022, respectively. 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

As of June 30, 2023, we had a concentration of properties leased to tenants, including their applicable subsidiaries, that leased over 5.0% of our total rentable square footage. The following table presents rental income recognized from these tenants for the three and six months ended June 30, 2023 and 2022:

	% of
	Rentable		Rental Income								Rental Income
	Square		Three Months Ended								Six Months Ended
Tenant	Feet		6/30/2023				6/30/2022				6/30/2023				6/30/2022
FedEx Corporation/ FedEx Ground Package System, Inc.	22.0	%	$	32,934	30.5	%	$	31,063	29.0	%	$	67,721	31.0	%	$	44,531	24.9	%
Amazon.com Services, Inc./ Amazon.com Services LLC	7.6	%	7,326		6.8	%	7,236		6.7	%	14,841		6.8	%	12,852		7.2	%
Total	29.6	%	$	40,260	37.3	%	$	38,299	35.7	%	$	82,562	37.8	%	$	57,383	32.1	%

Geographic Concentration

For the three months ended June 30, 2023 and 2022, approximately 28.1% and 29.8%, respectively, of our rental income was from our Hawaii Properties. For the six months ended June 30, 2023 and 2022, approximately 27.8% and 32.8%, respectively, of our rental income was from our Hawaii Properties.

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Indebtedness

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Indebtedness

Indebtedness

As of June 30, 2023, our outstanding indebtedness consisted of the following:

									Net Book
									Value
			Principal Balance as of						of Collateral
			June 30,		December 31,		Interest		At June 30,
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	$	1,056,804
ILPT	Fixed Rate - Interest only	186 Properties	650,000		650,000		4.31%	02/07/29	490,023
ILPT	Fixed Rate - Interest only	17 Properties	700,000		700,000		4.42%	03/09/32	511,664
Mountain JV (2)	Floating Rate - Interest only	82 Properties	1,400,000		1,400,000		6.17%	03/09/24	1,883,377
Mountain JV (2)	Fixed Rate - Interest only	Four Properties	91,000		—		6.25%	06/10/30	190,883
Mountain JV (2)	Fixed Rate - Amortizing	One Property	12,042		12,691		3.67%	05/01/31	29,257
Mountain JV (2)	Fixed Rate - Amortizing	One Property	13,536		14,144		4.14%	07/01/32	44,143
Mountain JV (2)	Fixed Rate - Amortizing	One Property	29,797		30,949		4.02%	10/01/33	85,968
Mountain JV (2)	Fixed Rate - Amortizing	One Property	41,636		43,219		4.13%	11/01/33	130,644
Mountain JV (2)	Fixed Rate - Amortizing	One Property	25,310		26,175		3.10%	06/01/35	47,056
Mountain JV (2)	Fixed Rate - Amortizing	One Property	40,759		42,087		2.95%	01/01/36	100,502
Mountain JV (2)	Fixed Rate - Amortizing	One Property	44,991		46,109		4.27%	11/01/37	111,510
Mountain JV (2)	Fixed Rate - Amortizing	One Property	50,684		52,031		3.25%	01/01/38	115,042
Mountain JV (2)	Fixed Rate - Amortizing	One Property	—		13,556		3.76%	10/01/28	N/A
Mountain JV (2)	Fixed Rate - Amortizing	One Property	—		4,865		3.77%	04/01/30	N/A
Mountain JV (2)	Fixed Rate - Amortizing	One Property	—		5,145		3.85%	04/01/30	N/A
Mountain JV (2)	Fixed Rate - Amortizing	One Property	—		14,392		3.56%	09/01/30	N/A
	Total indebtedness		$	4,334,755	$	4,290,363			$	4,796,873
	Unamortized debt issuance costs		(33,479)		(45,862)
	Total indebtedness, net		$	4,301,276	$	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, 7, 8 and 9 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 June 30, 2023 was 6.18%. The weighted average interest rate payable under the ILPT Floating Rate Loan was 6.18% for both the three and six months ended June 30, 2023. 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 June 30, 2023 was 6.17%. The weighted average annual interest rate payable under the Floating Rate Loan was 6.17% for both the three and six months ended June 30, 2023. The weighted average annual interest rate payable under the Floating Rate Loan was 3.61% and 3.38% for the three months ended June 30, 2022 and the period from the date we obtained the Floating Rate loan, February 25, 2022 to June 30, 2022,

respectively. Subject to the satisfaction of certain conditions, we have the option to prepay up to $280,000 of the Floating Rate Loan at par with no premium, and to prepay the balance of the Floating Rate Loan at any time, subject to a premium.

See Note 9 for more information regarding our interest rate caps.

In May 2023, our consolidated joint venture obtained a $91,000 fixed rate, interest only mortgage loan secured by four properties owned by our consolidated joint venture. This mortgage loan matures in June 2030 and requires that interest be paid at an annual rate of 6.25%. A portion of the net proceeds from this mortgage loan was used to repay four outstanding mortgage loans of our consolidated joint venture with an aggregate outstanding principal balance of $35,910 and a weighted average interest rate of 3.70%. We recognized a loss on extinguishment of debt of $359 in conjunction with the repayment of these mortgage loans.

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

				Principal Balance
	Interest			at June 30,
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 six properties in four states)	5.30%		10/1/2027	123,700
Mortgage notes payable (secured by 11 other properties in eight states)	3.33%		11/7/2029	350,000
Weighted average/total	3.82%	(2)		$	530,680

(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.

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Fair Value of Assets and Liabilities

6 Months Ended

Jun. 30, 2023

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, 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 June 30, 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 June 30, 2023				At December 31, 2022
	Carrying		Estimated		Carrying		Estimated
	Value (1)		Fair Value		Value (1)		Fair Value
Fixed rate loan, 4.31% interest rate, due in 2029	$	646,941	$	612,132	$	646,669	$	592,295
Fixed rate loan, 6.25% interest rate, due in 2030	89,994		94,568		—		—
Fixed rate loan, 3.67% interest rate, due in 2031	12,042		11,318		12,691		11,713
Fixed rate loan, 4.42% interest rate, due in 2032	694,991		609,028		694,704		623,133
Fixed rate loan, 4.14% interest rate, due in 2032	13,536		12,889		14,144		13,182
Fixed rate loan, 4.02% interest rate, due in 2033	29,797		27,684		30,949		28,195
Fixed rate loan, 4.13% interest rate, due in 2033	41,636		38,875		43,219		39,573
Fixed rate loan, 3.10% interest rate, due in 2035	25,310		22,166		26,175		22,373
Fixed rate loan, 2.95% interest rate, due in 2036	40,759		35,213		42,087		35,444
Fixed rate loan, 4.27% interest rate, due in 2037	44,991		41,946		46,109		41,880
Fixed rate loan, 3.25% interest rate, due in 2038	50,684		43,961		52,031		43,878
Fixed rate loan, 3.76% interest rate, due in 2028 (2)	—		—		13,556		12,784
Fixed rate loan, 3.77% interest rate, due in 2030 (2)	—		—		4,865		4,553
Fixed rate loan, 3.85% interest rate, due in 2030 (2)	—		—		5,145		4,829
Fixed rate loan, 3.56% interest rate, due in 2030 (2)	—		—		14,392		13,315
	$	1,690,681	$	1,549,780	$	1,646,736	$	1,487,147

(1)Includes unamortized debt issuance costs, premiums and discounts of $9,073 and $8,628 as of June 30, 2023 and December 31, 2022, respectively.

(2)This loan was repaid in May 2023.

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.

The table below presents certain of our assets measured on a recurring and non-recurring basis at fair value at June 30, 2023, 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 June 30, 2023
Recurring fair value measurements
Investment in unconsolidated joint venture (1)	$	129,082	$	—	$	—	$	129,082
Interest rate cap derivatives (2)	$	64,097	$	—	$	64,097	$	—
Non-recurring fair value measurements
Real estate properties (3)	$	1,414	$	—	$	—	$	1,414

(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, 7 and 8 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 9 for more information regarding our derivatives and hedging activities.

(3)We recorded a loss on impairment of real estate of $254 to reduce the carrying value of one of the two properties that were classified as held for sale at June 30, 2023 on our condensed consolidated balance sheet to its estimated sales price less costs to sell (Level 3 inputs). See Note 2 for more information on our properties held for sale.

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Shareholders' Equity

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

Shareholders' Equity

Shareholders’ Equity

Common Share Awards:

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

Common Share Purchases:

During the six months ended June 30, 2023, we purchased an aggregate of 8,086 of our common shares, valued at a weighted average price of $2.00 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 six months ended June 30, 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
April 13, 2023	April 24, 2023	May 18, 2023	0.01		656
			$	0.02	$	1,312

On July 13, 2023, we declared a regular quarterly distribution to common shareholders of record on July 24, 2023 of $0.01 per share, or approximately $657. We expect to pay this distribution to our shareholders on or about August 17, 2023 using cash balances.

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Business and Property Management Agreements with RMR

6 Months Ended

Jun. 30, 2023

Related Party Transactions [Abstract]

Business and Property Management Agreements with RMR

Business and Property Management Agreements with RMR

We have no employees. The personnel and various services we require to operate our business are provided to us by RMR. We have two agreements with RMR to provide management services to us: (1) a business management agreement, which relates to our business generally; and (2) a property management agreement, which relates to our property level operations.

Pursuant to our business management agreement with RMR, we recognized net business management fees of $5,656 and $11,382 for the three and six months ended June 30, 2023, respectively, and $6,957 and $11,356 for the three and six months ended June 30, 2022, respectively. Based on our common share total return, as defined in our business management agreement, as of June 30, 2023 and 2022, no incentive fees are included in the net business management fees we recognized for the three and six months ended June 30, 2023 or 2022. The actual amount of annual incentive fees for 2023, if any, will be based on our common share total return, as defined in our business management agreement, for the three-year period ending December 31, 2023, and will be payable in January 2024. We did not incur any incentive fee payable to RMR for the year ended December 31, 2022. We include business management fees in general and administrative expenses in our condensed consolidated statements of comprehensive income (loss).

Pursuant to our property management agreement with RMR, we recognized aggregate property management and construction supervision fees of $3,370 and $6,822 for the three and six months ended June 30, 2023, respectively, and $2,764 and $5,527 for the three and six months ended June 30, 2022, respectively. Of these amounts, for the three and six months ended June 30, 2023, $3,133 and $6,452, respectively, were expensed to other operating expenses in our condensed consolidated financial statements and $237 and $370, respectively, were capitalized as building improvements in our condensed consolidated balance sheets. For the three and six months ended June 30, 2022, $2,396 and $5,128, respectively, were expensed to other operating expenses in our condensed consolidated financial statements and $368 and $399, respectively, were capitalized as building improvements in our condensed consolidated balance sheets. The amounts capitalized are being depreciated over the estimated useful lives of the related capital assets.

We are generally responsible for all our operating expenses, including certain expenses incurred or arranged by RMR on our behalf. We are generally not responsible for payment of RMR’s employment, office or administrative expenses incurred to provide management services to us, except for the employment and related expenses of RMR’s employees assigned to work exclusively or partly at our properties, our share of the wages, benefits and other related costs of RMR’s centralized accounting personnel, our share of RMR’s costs for providing our internal audit function, or as otherwise agreed. Our property level operating expenses are generally incorporated into the rents charged to our tenants, including certain payroll and related costs incurred by RMR. We reimbursed RMR $2,000 and $3,841 for these expenses and costs for the three and six months ended June 30, 2023, respectively, and $1,704 and $3,308 for the three and six months ended June 30, 2022, respectively. These amounts are included in other operating expenses and general and administrative expenses, as applicable, in our condensed consolidated statements of comprehensive income (loss).

Management Agreements Between Our Joint Ventures and RMR. We have two separate joint venture arrangements, our consolidated joint venture and the unconsolidated joint venture. See Notes 2, 4, 5, 8 and 9 for further information about these joint ventures. RMR provides management services to both of these joint ventures. We are not obligated to pay management fees to RMR under our management agreements with RMR for the services it provides to the unconsolidated joint venture. We are obligated to pay management fees to RMR under our management agreements with RMR for the services it provides regarding our consolidated joint venture; however, that joint venture pays management fees directly to RMR, and any such fees paid by our consolidated joint venture are credited against the fees payable by us to RMR.

See Note 8 for further information regarding our relationships, agreements and transactions with RMR.

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Related Person Transactions

6 Months Ended

Jun. 30, 2023

Related Party Transactions [Abstract]

Related Person Transactions

Related Person Transactions

We have relationships and historical and continuing transactions with RMR, The RMR Group Inc., or RMR Inc., and others related to them, including other companies to which RMR or its subsidiaries provide management services and some of which have trustees, directors or officers who are also our Trustees or officers. RMR is a majority owned subsidiary of RMR Inc. The Chair of our Board of Trustees and one of our Managing Trustees, Adam D. Portnoy, is the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of RMR Inc., the chair of the board of directors, a managing director and the president and chief executive officer of RMR Inc. and an officer and employee of RMR. Matthew P. Jordan, our other Managing Trustee, is an executive vice president and the chief financial officer and treasurer of RMR Inc., an officer and employee of RMR and an officer of ABP Trust. John G. Murray, one of our Managing Trustees until June 1, 2022 and our President and Chief Executive Officer until March 31, 2022, also serves as an officer and employee of RMR, and each of our current officers is also an officer and employee of RMR. Some of our Independent Trustees also serve as independent trustees of other public companies to which RMR or its subsidiaries provide management services. Adam D. Portnoy serves as chair of the boards and as a managing trustee of those companies. Other officers of RMR, including Messrs. Jordan and Murray and certain of our officers, serve as managing trustees or officers of certain of these companies.

Our Manager, RMR. We have two agreements with RMR to provide management services to us. See Note 7 for further information regarding our management agreements with RMR.

Joint Ventures. We have two separate joint venture arrangements. RMR provides management services to each of these joint ventures. See Notes 2, 4, 5, 7 and 9 for further information regarding our joint ventures and RMR’s management agreements with our joint ventures. As of June 30, 2023 and December 31, 2022, we owed $556 and $616, respectively, to the unconsolidated joint venture for rents that we collected on behalf of that joint venture. These amounts are presented as due to related persons in our condensed consolidated balance sheet. We paid these amounts in January 2023 and July 2023, respectively.

For further information about these and other such relationships and certain other related person transactions, see our 2022 Annual Report.

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Derivatives and Hedging Activities

6 Months Ended

Jun. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives and Hedging Activities

Derivatives and Hedging Activities

Risk Management Objective of Using Derivatives

We are exposed to certain risks relating to our ongoing business operations, including the impact of changes in interest rates. The only risk currently managed by us using derivative instruments is a part of our interest rate risk. We have an interest rate cap agreement to manage our interest rate risk exposure on each of the ILPT Floating Rate Loan and the Floating Rate Loan, both with interest payable at a rate equal to SOFR plus a premium. The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements are not able to perform under the agreements. To mitigate this risk, we only enter into derivative financial instruments with counterparties with high credit ratings and with major financial institutions with which we or our related parties may also have other financial relationships. We do not anticipate that any of the counterparties will fail to meet their obligations.

Cash Flow Hedges of Interest Rate Risk

As required by Accounting Standards Codification 815, Derivatives and Hedging, we record all derivatives on the balance sheet at fair value. The following table summarizes the terms of our outstanding interest rate cap agreements designated as cash flow hedges of interest rate risk as of June 30, 2023:

Interest Rate Derivative	Balance Sheet Line Item	Underlying Instrument	Number of Instruments	Strike Rate	Notional Amount		Fair Value at June 30, 2023
Interest Rate Cap	Other assets	Floating Rate Loan (1)	1	3.40%	$	1,400,000	$	19,022
Interest Rate Cap	Other assets	ILPT Floating Rate Loan	2	2.25%	$	1,235,000	$	45,075
							$	64,097

(1)The Floating Rate Loan was entered into by our consolidated joint venture.

Interest rate caps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium. For derivatives designated and qualifying as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive income (loss) and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings. Gains and losses on the derivative representing hedge components excluded from the assessment of effectiveness are recognized over the life of the hedge on a systematic and rational basis, as documented at hedge inception in accordance with our accounting policy election. The earnings recognition of excluded components is presented in interest expense. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on our applicable debt.

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Amount of gain recognized in cumulative other comprehensive income (loss)	$	20,025	$	3,778	$	16,249	$	9,153
Amount reclassified from cumulative other comprehensive income (loss) into interest expense	(8,004)		660		(13,006)		917
Unrealized gain on derivative instrument recognized in cumulative other comprehensive (loss) income, net	$	12,021	$	4,438	$	3,243	$	10,070

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Basis of Presentation (Policies)	6 Months Ended
	Jun. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization and 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.
Use of Estimates	The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in the condensed consolidated financial statements include purchase price allocations, useful lives of fixed assets, and assessment of impairment of real estate and related intangibles.

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Real Estate Investments (Tables)

6 Months Ended

Jun. 30, 2023

Real Estate [Abstract]

Schedule of Investment in Unconsolidated Joint Ventures

As of June 30, 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 June 30, 2023		Properties	Location	Feet
Mountain Industrial REIT LLC	Consolidated	61%	N/A		94	Various	20,980,661
The Industrial Fund REIT LLC	Unconsolidated	22%	$	129,082	18	Various	11,726,137

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Leases (Tables)

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

Schedule of Impact of Tenants Revenue

The following table presents rental income recognized from these tenants for the three and six months ended June 30, 2023 and 2022:

	% of
	Rentable		Rental Income								Rental Income
	Square		Three Months Ended								Six Months Ended
Tenant	Feet		6/30/2023				6/30/2022				6/30/2023				6/30/2022
FedEx Corporation/ FedEx Ground Package System, Inc.	22.0	%	$	32,934	30.5	%	$	31,063	29.0	%	$	67,721	31.0	%	$	44,531	24.9	%
Amazon.com Services, Inc./ Amazon.com Services LLC	7.6	%	7,326		6.8	%	7,236		6.7	%	14,841		6.8	%	12,852		7.2	%
Total	29.6	%	$	40,260	37.3	%	$	38,299	35.7	%	$	82,562	37.8	%	$	57,383	32.1	%

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Indebtedness (Tables)

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Schedule of Outstanding Indebtedness

As of June 30, 2023, our outstanding indebtedness consisted of the following:

									Net Book
									Value
			Principal Balance as of						of Collateral
			June 30,		December 31,		Interest		At June 30,
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	$	1,056,804
ILPT	Fixed Rate - Interest only	186 Properties	650,000		650,000		4.31%	02/07/29	490,023
ILPT	Fixed Rate - Interest only	17 Properties	700,000		700,000		4.42%	03/09/32	511,664
Mountain JV (2)	Floating Rate - Interest only	82 Properties	1,400,000		1,400,000		6.17%	03/09/24	1,883,377
Mountain JV (2)	Fixed Rate - Interest only	Four Properties	91,000		—		6.25%	06/10/30	190,883
Mountain JV (2)	Fixed Rate - Amortizing	One Property	12,042		12,691		3.67%	05/01/31	29,257
Mountain JV (2)	Fixed Rate - Amortizing	One Property	13,536		14,144		4.14%	07/01/32	44,143
Mountain JV (2)	Fixed Rate - Amortizing	One Property	29,797		30,949		4.02%	10/01/33	85,968
Mountain JV (2)	Fixed Rate - Amortizing	One Property	41,636		43,219		4.13%	11/01/33	130,644
Mountain JV (2)	Fixed Rate - Amortizing	One Property	25,310		26,175		3.10%	06/01/35	47,056
Mountain JV (2)	Fixed Rate - Amortizing	One Property	40,759		42,087		2.95%	01/01/36	100,502
Mountain JV (2)	Fixed Rate - Amortizing	One Property	44,991		46,109		4.27%	11/01/37	111,510
Mountain JV (2)	Fixed Rate - Amortizing	One Property	50,684		52,031		3.25%	01/01/38	115,042
Mountain JV (2)	Fixed Rate - Amortizing	One Property	—		13,556		3.76%	10/01/28	N/A
Mountain JV (2)	Fixed Rate - Amortizing	One Property	—		4,865		3.77%	04/01/30	N/A
Mountain JV (2)	Fixed Rate - Amortizing	One Property	—		5,145		3.85%	04/01/30	N/A
Mountain JV (2)	Fixed Rate - Amortizing	One Property	—		14,392		3.56%	09/01/30	N/A
	Total indebtedness		$	4,334,755	$	4,290,363			$	4,796,873
	Unamortized debt issuance costs		(33,479)		(45,862)
	Total indebtedness, net		$	4,301,276	$	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, 7, 8 and 9 for more information regarding this joint venture.

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

				Principal Balance
	Interest			at June 30,
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 six properties in four states)	5.30%		10/1/2027	123,700
Mortgage notes payable (secured by 11 other properties in eight states)	3.33%		11/7/2029	350,000
Weighted average/total	3.82%	(2)		$	530,680

(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.

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Fair Value of Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Schedule of Carrying Value and the Estimated Fair Market Value of Mortgage Notes Payable

At June 30, 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 June 30, 2023				At December 31, 2022
	Carrying		Estimated		Carrying		Estimated
	Value (1)		Fair Value		Value (1)		Fair Value
Fixed rate loan, 4.31% interest rate, due in 2029	$	646,941	$	612,132	$	646,669	$	592,295
Fixed rate loan, 6.25% interest rate, due in 2030	89,994		94,568		—		—
Fixed rate loan, 3.67% interest rate, due in 2031	12,042		11,318		12,691		11,713
Fixed rate loan, 4.42% interest rate, due in 2032	694,991		609,028		694,704		623,133
Fixed rate loan, 4.14% interest rate, due in 2032	13,536		12,889		14,144		13,182
Fixed rate loan, 4.02% interest rate, due in 2033	29,797		27,684		30,949		28,195
Fixed rate loan, 4.13% interest rate, due in 2033	41,636		38,875		43,219		39,573
Fixed rate loan, 3.10% interest rate, due in 2035	25,310		22,166		26,175		22,373
Fixed rate loan, 2.95% interest rate, due in 2036	40,759		35,213		42,087		35,444
Fixed rate loan, 4.27% interest rate, due in 2037	44,991		41,946		46,109		41,880
Fixed rate loan, 3.25% interest rate, due in 2038	50,684		43,961		52,031		43,878
Fixed rate loan, 3.76% interest rate, due in 2028 (2)	—		—		13,556		12,784
Fixed rate loan, 3.77% interest rate, due in 2030 (2)	—		—		4,865		4,553
Fixed rate loan, 3.85% interest rate, due in 2030 (2)	—		—		5,145		4,829
Fixed rate loan, 3.56% interest rate, due in 2030 (2)	—		—		14,392		13,315
	$	1,690,681	$	1,549,780	$	1,646,736	$	1,487,147

(1)Includes unamortized debt issuance costs, premiums and discounts of $9,073 and $8,628 as of June 30, 2023 and December 31, 2022, respectively.

(2)This loan was repaid in May 2023.

Schedule of Fair Value Measurements, Recurring and Nonrecurring

The table below presents certain of our assets measured on a recurring and non-recurring basis at fair value at June 30, 2023, 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 June 30, 2023
Recurring fair value measurements
Investment in unconsolidated joint venture (1)	$	129,082	$	—	$	—	$	129,082
Interest rate cap derivatives (2)	$	64,097	$	—	$	64,097	$	—
Non-recurring fair value measurements
Real estate properties (3)	$	1,414	$	—	$	—	$	1,414

(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, 7 and 8 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 9 for more information regarding our derivatives and hedging activities.

(3)We recorded a loss on impairment of real estate of $254 to reduce the carrying value of one of the two properties that were classified as held for sale at June 30, 2023 on our condensed consolidated balance sheet to its estimated sales price less costs to sell (Level 3 inputs). See Note 2 for more information on our properties held for sale.

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Shareholders' Equity (Tables)

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

Schedule of Distributions Declared and Paid

During the six months ended June 30, 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
April 13, 2023	April 24, 2023	May 18, 2023	0.01		656
			$	0.02	$	1,312

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Derivatives and Hedging Activities (Tables)

6 Months Ended

Jun. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Interest Rate Swap Derivatives

The following table summarizes the terms of our outstanding interest rate cap agreements designated as cash flow hedges of interest rate risk as of June 30, 2023:

Interest Rate Derivative	Balance Sheet Line Item	Underlying Instrument	Number of Instruments	Strike Rate	Notional Amount		Fair Value at June 30, 2023
Interest Rate Cap	Other assets	Floating Rate Loan (1)	1	3.40%	$	1,400,000	$	19,022
Interest Rate Cap	Other assets	ILPT Floating Rate Loan	2	2.25%	$	1,235,000	$	45,075
							$	64,097

(1)The Floating Rate Loan was entered into by our consolidated joint venture.

Schedule of Effects on Consolidated Statements of Income and Comprehensive Income

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Amount of gain recognized in cumulative other comprehensive income (loss)	$	20,025	$	3,778	$	16,249	$	9,153
Amount reclassified from cumulative other comprehensive income (loss) into interest expense	(8,004)		660		(13,006)		917
Unrealized gain on derivative instrument recognized in cumulative other comprehensive (loss) income, net	$	12,021	$	4,438	$	3,243	$	10,070

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Real Estate Investments - Narrative (Details) $ in Thousands		1 Months Ended	3 Months Ended		4 Months Ended	6 Months Ended
	Mar. 31, 2022 property	Mar. 31, 2023 USD ($)	Jun. 30, 2023 USD ($) ft² property building state	Jun. 30, 2022 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) ft² property building segment state	Jun. 30, 2022 USD ($)	Jul. 25, 2023 USD ($) ft² property
Real Estate Properties [Line Items]
Number of properties owned | property			413			413
Rentable square feet (in sqft) | ft²			59,983,000			59,983,000
Number of business segments | segment						1
Capital expenditures incurred			$ 7,651	$ 10,080		$ 12,582	$ 13,845
Commitments related to tenant improvements and leasing costs						$ 5,832
Tenant improvements (in sqft) | ft²			3,110,000			3,110,000
Committed but unspent tenant related obligations			$ 23,876			$ 23,876
Committed but unspent tenant related obligations expected to be spent in the next 12 months			6,481			6,481
Loss on impairment of real estate			$ 254	100,747		$ 254	100,747
Number of properties impaired | property			1
Number of real estate properties | property			2			2
Net loss attributable to noncontrolling interest			$ 10,752	7,782		$ 21,489	11,055
Equity in earnings of unconsolidated joint venture			2,743	1,610		6,704	3,337
Distributions of earnings from unconsolidated joint venture			990	1,322		1,980	2,642
Unrelated Third Party | Mountain Industrial REIT LLC
Real Estate Properties [Line Items]
Cash distributions			$ 225			$ 225
Mountain Industrial REIT LLC
Real Estate Properties [Line Items]
Noncontrolling interest, ownership percentage by noncontrolling owners			39.00%			39.00%
Mountain Industrial REIT LLC
Real Estate Properties [Line Items]
Net loss attributable to noncontrolling interest			$ 10,676	7,781	$ 11,042	$ 21,404
Mountain Industrial REIT LLC | Other Joint Venture Investor
Real Estate Properties [Line Items]
Joint venture, total assets			3,092,534			3,092,534
Joint venture, liabilities			$ 1,775,802			$ 1,775,802
Twelve Mainland Properties
Real Estate Properties [Line Items]
Rentable square feet (in sqft) | ft²			11,726,000			11,726,000
Number of states where real estate is located | state			12			12
Ownership interest (as percent)			22.00%			22.00%
Number of properties contributed | property			18			18
Monmouth Real Estate Investment Corporation
Real Estate Properties [Line Items]
Loss on impairment of real estate			$ 100,747
Number of properties impaired | property			25
Number of real estate properties | property			30			30
Number of properties | property	30
Mainland Properties
Real Estate Properties [Line Items]
Aggregate sales price excluding closing costs			$ 36,864			$ 36,864
Mainland Properties | Disposal Group, Held-for-sale, Not Discontinued Operations
Real Estate Properties [Line Items]
Rentable square feet (in sqft) | ft²			551,000			551,000
Number of real estate properties | property			2			2
Mainland Properties | Disposal Group, Disposed of by Sale, Not Discontinued Operations | Subsequent Event
Real Estate Properties [Line Items]
Rentable square feet (in sqft) | ft²								762,000
Number of real estate properties | property								3
Aggregate sales price								$ 65,265
Consolidated | Mountain Industrial REIT LLC
Real Estate Properties [Line Items]
Number of properties owned | property			94			94
Rentable square feet (in sqft) | ft²			20,980,661			20,980,661
Ownership interest (as percent)			61.00%			61.00%
Number of properties contributed | property			94			94
Joint Venture | The Industrial Fund REIT LLC
Real Estate Properties [Line Items]
Rentable square feet (in sqft) | ft²			11,726,137			11,726,137
Ownership interest (as percent)			22.00%			22.00%
Number of properties contributed | property			18			18
Hawaii
Real Estate Properties [Line Items]
Rentable square feet (in sqft) | ft²			16,729,000			16,729,000
Number of buildings, leasable land parcels easements | building			226			226
Other States
Real Estate Properties [Line Items]
Number of properties owned | property			187			187
Rentable square feet (in sqft) | ft²			43,254,000			43,254,000
Number of states where real estate is located | state			38			38
Everett, WA | Land | Disposal Group, Disposed of by Sale, Not Discontinued Operations
Real Estate Properties [Line Items]
Proceeds from sale of real estate		$ 270
Losses on sale of real estate		$ 974
Somerset, New Jersey | Mountain Industrial REIT LLC | Unrelated Third Party
Real Estate Properties [Line Items]
Noncontrolling interest, ownership percentage by noncontrolling owners			33.00%			33.00%
Somerset, New Jersey | Mountain Industrial REIT LLC
Real Estate Properties [Line Items]
Ownership interest (as percent)			67.00%			67.00%
Number of properties | property						1
Net loss attributable to noncontrolling interest			$ 76	$ 1		$ 85	$ 13

XML

Real Estate Investments - Joint Venture Activities (Details) $ in Thousands	Jun. 30, 2023 USD ($) ft² property	Dec. 31, 2022 USD ($)
Unconsolidated
Investment in unconsolidated joint venture | $	$ 129,082	$ 124,358
Rentable square feet (in sqft)	59,983,000
Mountain Industrial REIT LLC | Consolidated
Unconsolidated
Ownership interest (as percent)	61.00%
Number of properties contributed | property	94
Rentable square feet (in sqft)	20,980,661
The Industrial Fund REIT LLC | Joint Venture
Unconsolidated
Ownership interest (as percent)	22.00%
Investment in unconsolidated joint venture | $	$ 129,082
Number of properties contributed | property	18
Rentable square feet (in sqft)	11,726,137

XML

Leases - Narrative (Details) $ in Thousands	3 Months Ended		4 Months Ended	6 Months Ended
	Jun. 30, 2023 USD ($) property	Jun. 30, 2022 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) property	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)
Lessor, Lease, Description [Line Items]
Straight line rental income	$ 3,355	$ 3,220		$ 7,117	$ 4,376
Certain variable payments	$ 18,291	16,828		$ 39,390	$ 29,407
Number of properties subject to ground leases | property	3			3
Lessee, number of properties under an operating lease | property				1
Right-of-use asset	$ 4,867			$ 4,867		$ 5,084
Operating lease liability	4,943			4,943		$ 5,149
Sublease revenue	$ 28	$ 91	$ 179	$ 129
Percentage of leased rentable square footage	5.00%			5.00%
Sales Revenue, Net | Geographic Concentration Risk | Hawaii
Lessor, Lease, Description [Line Items]
Concentration risk	28.10%	29.80%		27.80%	32.80%

XML

Leases - Schedule of Impact of Tenants Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Lessor, Lease, Description [Line Items]
Rental income	$ 108,043	$ 107,222	$ 218,301	$ 178,597
FedEx Corporation/ FedEx Ground Package System, Inc.
Lessor, Lease, Description [Line Items]
Percentage of rentable square feet	22.00%		22.00%
Rental income	$ 32,934	$ 31,063	$ 67,721	$ 44,531
FedEx Corporation/ FedEx Ground Package System, Inc. | Sales Revenue, Net | Customer Concentration Risk
Lessor, Lease, Description [Line Items]
Rentable income percentage	30.50%	29.00%	31.00%	24.90%
Amazon.com Services, Inc./ Amazon.com Services LLC
Lessor, Lease, Description [Line Items]
Percentage of rentable square feet	7.60%		7.60%
Rental income	$ 7,326	$ 7,236	$ 14,841	$ 12,852
Amazon.com Services, Inc./ Amazon.com Services LLC | Sales Revenue, Net | Customer Concentration Risk
Lessor, Lease, Description [Line Items]
Rentable income percentage	6.80%	6.70%	6.80%	7.20%
Two Major Customers
Lessor, Lease, Description [Line Items]
Percentage of rentable square feet	29.60%		29.60%
Rental income	$ 40,260	$ 38,299	$ 82,562	$ 57,383
Two Major Customers | Sales Revenue, Net | Customer Concentration Risk
Lessor, Lease, Description [Line Items]
Rentable income percentage	37.30%	35.70%	37.80%	32.10%

XML

Indebtedness - Schedule of Outstanding Indebtedness (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2023 USD ($) property state	Dec. 31, 2022 USD ($)
Debt Instrument [Line Items]
Total indebtedness	$ 4,334,755	$ 4,290,363
Unamortized debt issuance costs	(33,479)	(45,862)
Total indebtedness, net	4,301,276	4,244,501
Net book value of collateral	$ 4,796,873
Mountain Industrial REIT LLC
Debt Instrument [Line Items]
Percentage of interest in subsidiaries	61.00%
Fixed rate loan, 3.67% interest rate, due in 2031
Debt Instrument [Line Items]
Interest rate (as a percent)	3.67%
Fixed rate loan, 4.02% interest rate, due in 2033
Debt Instrument [Line Items]
Interest rate (as a percent)	4.02%
Fixed rate loan, 4.13% interest rate, due in 2033
Debt Instrument [Line Items]
Interest rate (as a percent)	4.13%
Fixed rate loan, 3.10% interest rate, due in 2035
Debt Instrument [Line Items]
Interest rate (as a percent)	3.10%
Fixed rate loan, 2.95% interest rate, due in 2036
Debt Instrument [Line Items]
Interest rate (as a percent)	2.95%
Fixed rate loan, 4.27% interest rate, due in 2037
Debt Instrument [Line Items]
Interest rate (as a percent)	4.27%
Fixed rate loan, 3.25% interest rate, due in 2038
Debt Instrument [Line Items]
Interest rate (as a percent)	3.25%
Fixed rate loan, 3.76% interest rate, due in 2028
Debt Instrument [Line Items]
Interest rate (as a percent)	3.76%
Fixed rate loan, 3.77% interest rate, due in 2030
Debt Instrument [Line Items]
Interest rate (as a percent)	3.77%
Fixed rate loan, 3.85% interest rate, due in 2030
Debt Instrument [Line Items]
Interest rate (as a percent)	3.85%
Fixed rate loan, 3.56% interest rate, due in 2030
Debt Instrument [Line Items]
Interest rate (as a percent)	3.56%
Floating Rate Loan
Debt Instrument [Line Items]
Total indebtedness, net	$ 1,400
Floating Rate Loan | Floating Rate Loan, 6.18%, due in 2024
Debt Instrument [Line Items]
Total indebtedness	$ 1,235,000	1,235,000
Interest rate (as a percent)	6.18%
Net book value of collateral	$ 1,056,804
Floating Rate Loan | Floating Rate Loan, 6.17%, due in 2024
Debt Instrument [Line Items]
Number of properties used as collateral | property	82
Total indebtedness	$ 1,400,000	1,400,000
Interest rate (as a percent)	6.17%
Net book value of collateral	$ 1,883,377
Fixed Rate Loan | Fixed Rate Loan, 4.31%, due in 2029
Debt Instrument [Line Items]
Total indebtedness	$ 650,000	650,000
Interest rate (as a percent)	4.31%
Net book value of collateral	$ 490,023
Fixed Rate Loan | Fixed Rate Loan, 4.42%, due in 2032
Debt Instrument [Line Items]
Total indebtedness	$ 700,000	700,000
Interest rate (as a percent)	4.42%
Net book value of collateral	$ 511,664
Fixed Rate Loan | Fixed rate loan, 6.25% due in 2030
Debt Instrument [Line Items]
Total indebtedness	$ 91,000	0
Interest rate (as a percent)	6.25%
Net book value of collateral	$ 190,883
Fixed Rate Loan | Fixed rate loan, 3.67% interest rate, due in 2031
Debt Instrument [Line Items]
Total indebtedness	$ 12,042	12,691
Interest rate (as a percent)	3.67%
Net book value of collateral	$ 29,257
Fixed Rate Loan | Fixed Rate Loan, 4.14%, due in 2032
Debt Instrument [Line Items]
Total indebtedness	$ 13,536	14,144
Interest rate (as a percent)	4.14%
Net book value of collateral	$ 44,143
Fixed Rate Loan | Fixed rate loan, 4.02% interest rate, due in 2033
Debt Instrument [Line Items]
Total indebtedness	$ 29,797	30,949
Interest rate (as a percent)	4.02%
Net book value of collateral	$ 85,968
Fixed Rate Loan | Fixed rate loan, 4.13% interest rate, due in 2033
Debt Instrument [Line Items]
Total indebtedness	$ 41,636	43,219
Interest rate (as a percent)	4.13%
Net book value of collateral	$ 130,644
Fixed Rate Loan | Fixed rate loan, 3.10% interest rate, due in 2035
Debt Instrument [Line Items]
Total indebtedness	$ 25,310	26,175
Interest rate (as a percent)	3.10%
Net book value of collateral	$ 47,056
Fixed Rate Loan | Fixed rate loan, 2.95% interest rate, due in 2036
Debt Instrument [Line Items]
Total indebtedness	$ 40,759	42,087
Interest rate (as a percent)	2.95%
Net book value of collateral	$ 100,502
Fixed Rate Loan | Fixed rate loan, 4.27% interest rate, due in 2037
Debt Instrument [Line Items]
Total indebtedness	$ 44,991	46,109
Interest rate (as a percent)	4.27%
Net book value of collateral	$ 111,510
Fixed Rate Loan | Fixed rate loan, 3.25% interest rate, due in 2038
Debt Instrument [Line Items]
Total indebtedness	$ 50,684	52,031
Interest rate (as a percent)	3.25%
Net book value of collateral	$ 115,042
Fixed Rate Loan | Fixed rate loan, 3.76% interest rate, due in 2028
Debt Instrument [Line Items]
Total indebtedness	$ 0	13,556
Interest rate (as a percent)	3.76%
Fixed Rate Loan | Fixed rate loan, 3.77% interest rate, due in 2030
Debt Instrument [Line Items]
Total indebtedness	$ 0	4,865
Interest rate (as a percent)	3.77%
Fixed Rate Loan | Fixed rate loan, 3.85% interest rate, due in 2030
Debt Instrument [Line Items]
Total indebtedness	$ 0	5,145
Interest rate (as a percent)	3.85%
Fixed Rate Loan | Fixed rate loan, 3.56% interest rate, due in 2030
Debt Instrument [Line Items]
Total indebtedness	$ 0	$ 14,392
Interest rate (as a percent)	3.56%
Mortgage note payable
Debt Instrument [Line Items]
Total indebtedness	$ 530,680
Weighted average interest rate (as a percent)	3.82%
Mortgage note payable | Floating Rate Loan, 6.18%, due in 2024
Debt Instrument [Line Items]
Number of properties used as collateral | property	104
Mortgage note payable | Fixed Rate Loan, 4.31%, due in 2029
Debt Instrument [Line Items]
Number of properties used as collateral | property	186
Mortgage note payable | Fixed Rate Loan, 4.42%, due in 2032
Debt Instrument [Line Items]
Number of properties used as collateral | property	17
Mortgage note payable | Floating Rate Loan, 6.17%, due in 2024
Debt Instrument [Line Items]
Number of properties used as collateral | property	82
Mortgage note payable | Fixed rate loan, 6.25% due in 2030
Debt Instrument [Line Items]
Number of properties used as collateral | property	4
Mortgage note payable | Fixed rate loan, 3.67% interest rate, due in 2031
Debt Instrument [Line Items]
Number of properties used as collateral | property	1
Mortgage note payable | Fixed Rate Loan, 4.14%, due in 2032
Debt Instrument [Line Items]
Number of properties used as collateral | property	1
Mortgage note payable | Fixed rate loan, 4.02% interest rate, due in 2033
Debt Instrument [Line Items]
Number of properties used as collateral | property	1
Mortgage note payable | Fixed rate loan, 4.13% interest rate, due in 2033
Debt Instrument [Line Items]
Number of properties used as collateral | property	1
Mortgage note payable | Fixed rate loan, 3.10% interest rate, due in 2035
Debt Instrument [Line Items]
Number of properties used as collateral | property	1
Mortgage note payable | Fixed rate loan, 2.95% interest rate, due in 2036
Debt Instrument [Line Items]
Number of properties used as collateral | property	1
Mortgage note payable | Fixed rate loan, 4.27% interest rate, due in 2037
Debt Instrument [Line Items]
Number of properties used as collateral | property	1
Mortgage note payable | Fixed rate loan, 3.25% interest rate, due in 2038
Debt Instrument [Line Items]
Number of properties used as collateral | property	1
Mortgage note payable | Fixed rate loan, 3.76% interest rate, due in 2028
Debt Instrument [Line Items]
Number of properties used as collateral | property	1
Mortgage note payable | Fixed rate loan, 3.77% interest rate, due in 2030
Debt Instrument [Line Items]
Number of properties used as collateral | property	1
Mortgage note payable | Fixed rate loan, 3.85% interest rate, due in 2030
Debt Instrument [Line Items]
Number of properties used as collateral | property	1
Mortgage note payable | Fixed rate loan, 3.56% interest rate, due in 2030
Debt Instrument [Line Items]
Number of properties used as collateral | property	1
Mortgage note payable | Mortgage Note Payable, 3.60%, Due In 2023
Debt Instrument [Line Items]
Number of properties used as collateral | property	1
Total indebtedness	$ 56,980
Interest rate (as a percent)	3.60%
Mortgage note payable | Mortgage Note Payable, 5.3%, Due In 2027
Debt Instrument [Line Items]
Number of properties used as collateral | property	6
Total indebtedness	$ 123,700
Interest rate (as a percent)	3.33%
Number of states with properties securing debt | state	4
Mortgage note payable | Mortgage Note Payable 3.33% Due in 2029
Debt Instrument [Line Items]
Number of properties used as collateral | property	11
Total indebtedness	$ 350,000
Interest rate (as a percent)	5.30%
Number of states with properties securing debt | state	8

XML

Indebtedness - Narrative (Details) $ in Thousands	1 Months Ended	3 Months Ended		6 Months Ended
	May 31, 2023 USD ($) mortgage property	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) option property	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)
Debt Instrument [Line Items]
Debt outstanding		$ 4,301,276		$ 4,301,276		$ 4,244,501
Number of outstanding mortgage loans | mortgage	4
Aggregate outstanding principal balance		4,334,755		4,334,755		4,290,363
Loss on extinguishment of debt		$ 359	$ 0	$ 359	$ 828
Floating Rate Loan, 6.17%, due in 2024
Debt Instrument [Line Items]
Weighted average interest rate (as a percent)		3.61%		3.38%
ILPT Floating Rate Loan | Floating Rate Loan, 6.18%, due in 2024
Debt Instrument [Line Items]
Debt outstanding		$ 1,235		$ 1,235
Number of properties used as collateral | property				104
Number of options to extend maturity date | option				3
Extension period				1 year
Interest rate (as a percent)		6.18%		6.18%
Weighted average interest rate (as a percent)		6.18%		6.18%
Prepayment terms without premium amount		$ 247		$ 247
ILPT Floating Rate Loan | Secured Overnight Financing Rate (SOFR)
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)				2.25%
ILPT Floating Rate Loan | Secured Overnight Financing Rate (SOFR) | Floating Rate Loan, 6.18%, due in 2024
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)				3.93%
Floating Rate Loan
Debt Instrument [Line Items]
Debt outstanding		$ 1,400		$ 1,400
Floating Rate Loan | Floating Rate Loan, 6.18%, due in 2024
Debt Instrument [Line Items]
Interest rate (as a percent)		6.18%		6.18%
Aggregate outstanding principal balance		$ 1,235,000		$ 1,235,000		1,235,000
Floating Rate Loan | Floating Rate Loan, 6.17%, due in 2024
Debt Instrument [Line Items]
Number of properties used as collateral | property				82
Number of options to extend maturity date | option				3
Extension period				1 year
Interest rate (as a percent)		6.17%		6.17%
Weighted average interest rate (as a percent)		6.17%
Prepayment terms without premium amount		$ 280		$ 280
Aggregate outstanding principal balance		1,400,000		$ 1,400,000		$ 1,400,000
Floating Rate Loan | Secured Overnight Financing Rate (SOFR)
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)				3.40%
Floating Rate Loan | Secured Overnight Financing Rate (SOFR) | Floating Rate Loan, 6.17%, due in 2024
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)				2.77%
Mortgage note payable
Debt Instrument [Line Items]
Aggregate outstanding principal balance		$ 530,680		$ 530,680
Weighted average interest rate (as a percent)		3.82%		3.82%
Mortgage note payable | Floating Rate Loan, 6.18%, due in 2024
Debt Instrument [Line Items]
Number of properties used as collateral | property				104
Mortgage note payable | Floating Rate Loan, 6.17%, due in 2024
Debt Instrument [Line Items]
Number of properties used as collateral | property				82
Mortgage note payable | Fixed Rate Loan, 6.25%, Due in 2030 | Joint Venture
Debt Instrument [Line Items]
Number of properties used as collateral | property	4
Debt instrument, face amount	$ 91,000
Annual interest rate (as a percent)	6.25%
Aggregate outstanding principal balance	$ 35,910
Weighted average interest rate (as a percent)	3.70%
Loss on extinguishment of debt	$ 359

XML

Fair Value of Assets and Liabilities - Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Fair Value of Financial Instruments
Fixed rate loan	$ 4,301,276	$ 4,244,501
Unamortized premiums	$ 9,073	8,628
Fixed rate loan, 4.31% interest rate, due in 2029
Fair Value of Financial Instruments
Interest rate (as a percent)	4.31%
Fixed rate loan, 6.25% interest rate, due in 2030
Fair Value of Financial Instruments
Interest rate (as a percent)	6.25%
Fixed rate loan, 3.67% interest rate, due in 2031
Fair Value of Financial Instruments
Interest rate (as a percent)	3.67%
Fixed rate loan, 4.42% interest rate, due in 2032
Fair Value of Financial Instruments
Interest rate (as a percent)	4.42%
Fixed rate loan, 4.14% interest rate, due in 2032
Fair Value of Financial Instruments
Interest rate (as a percent)	4.14%
Fixed rate loan, 4.02% interest rate, due in 2033
Fair Value of Financial Instruments
Interest rate (as a percent)	4.02%
Fixed rate loan, 4.13% interest rate, due in 2033
Fair Value of Financial Instruments
Interest rate (as a percent)	4.13%
Fixed rate loan, 3.10% interest rate, due in 2035
Fair Value of Financial Instruments
Interest rate (as a percent)	3.10%
Fixed rate loan, 2.95% interest rate, due in 2036
Fair Value of Financial Instruments
Interest rate (as a percent)	2.95%
Fixed rate loan, 4.27% interest rate, due in 2037
Fair Value of Financial Instruments
Interest rate (as a percent)	4.27%
Fixed rate loan, 3.25% interest rate, due in 2038
Fair Value of Financial Instruments
Interest rate (as a percent)	3.25%
Fixed rate loan, 3.76% interest rate, due in 2028
Fair Value of Financial Instruments
Interest rate (as a percent)	3.76%
Fixed rate loan, 3.77% interest rate, due in 2030
Fair Value of Financial Instruments
Interest rate (as a percent)	3.77%
Fixed rate loan, 3.85% interest rate, due in 2030
Fair Value of Financial Instruments
Interest rate (as a percent)	3.85%
Fixed rate loan, 3.56% interest rate, due in 2030
Fair Value of Financial Instruments
Interest rate (as a percent)	3.56%
Carrying Amount
Fair Value of Financial Instruments
Long-term debt	$ 1,690,681	1,646,736
Carrying Amount | Fixed rate loan, 4.31% interest rate, due in 2029
Fair Value of Financial Instruments
Fixed rate loan	646,941	646,669
Carrying Amount | Fixed rate loan, 6.25% interest rate, due in 2030
Fair Value of Financial Instruments
Fixed rate loan	89,994	0
Carrying Amount | Fixed rate loan, 3.67% interest rate, due in 2031
Fair Value of Financial Instruments
Fixed rate loan	12,042	12,691
Carrying Amount | Fixed rate loan, 4.42% interest rate, due in 2032
Fair Value of Financial Instruments
Fixed rate loan	694,991	694,704
Carrying Amount | Fixed rate loan, 4.14% interest rate, due in 2032
Fair Value of Financial Instruments
Fixed rate loan	13,536	14,144
Carrying Amount | Fixed rate loan, 4.02% interest rate, due in 2033
Fair Value of Financial Instruments
Fixed rate loan	29,797	30,949
Carrying Amount | Fixed rate loan, 4.13% interest rate, due in 2033
Fair Value of Financial Instruments
Fixed rate loan	41,636	43,219
Carrying Amount | Fixed rate loan, 3.10% interest rate, due in 2035
Fair Value of Financial Instruments
Fixed rate loan	25,310	26,175
Carrying Amount | Fixed rate loan, 2.95% interest rate, due in 2036
Fair Value of Financial Instruments
Fixed rate loan	40,759	42,087
Carrying Amount | Fixed rate loan, 4.27% interest rate, due in 2037
Fair Value of Financial Instruments
Fixed rate loan	44,991	46,109
Carrying Amount | Fixed rate loan, 3.25% interest rate, due in 2038
Fair Value of Financial Instruments
Fixed rate loan	50,684	52,031
Carrying Amount | Fixed rate loan, 3.76% interest rate, due in 2028
Fair Value of Financial Instruments
Fixed rate loan	0	13,556
Carrying Amount | Fixed rate loan, 3.77% interest rate, due in 2030
Fair Value of Financial Instruments
Fixed rate loan	0	4,865
Carrying Amount | Fixed rate loan, 3.85% interest rate, due in 2030
Fair Value of Financial Instruments
Fixed rate loan	0	5,145
Carrying Amount | Fixed rate loan, 3.56% interest rate, due in 2030
Fair Value of Financial Instruments
Fixed rate loan	0	14,392
Estimated Fair Value
Fair Value of Financial Instruments
Long-term debt	1,549,780	1,487,147
Estimated Fair Value | Fixed rate loan, 4.31% interest rate, due in 2029
Fair Value of Financial Instruments
Fixed rate loan	612,132	592,295
Estimated Fair Value | Fixed rate loan, 6.25% interest rate, due in 2030
Fair Value of Financial Instruments
Fixed rate loan	94,568	0
Estimated Fair Value | Fixed rate loan, 3.67% interest rate, due in 2031
Fair Value of Financial Instruments
Fixed rate loan	11,318	11,713
Estimated Fair Value | Fixed rate loan, 4.42% interest rate, due in 2032
Fair Value of Financial Instruments
Fixed rate loan	609,028	623,133
Estimated Fair Value | Fixed rate loan, 4.14% interest rate, due in 2032
Fair Value of Financial Instruments
Fixed rate loan	12,889	13,182
Estimated Fair Value | Fixed rate loan, 4.02% interest rate, due in 2033
Fair Value of Financial Instruments
Fixed rate loan	27,684	28,195
Estimated Fair Value | Fixed rate loan, 4.13% interest rate, due in 2033
Fair Value of Financial Instruments
Fixed rate loan	38,875	39,573
Estimated Fair Value | Fixed rate loan, 3.10% interest rate, due in 2035
Fair Value of Financial Instruments
Fixed rate loan	22,166	22,373
Estimated Fair Value | Fixed rate loan, 2.95% interest rate, due in 2036
Fair Value of Financial Instruments
Fixed rate loan	35,213	35,444
Estimated Fair Value | Fixed rate loan, 4.27% interest rate, due in 2037
Fair Value of Financial Instruments
Fixed rate loan	41,946	41,880
Estimated Fair Value | Fixed rate loan, 3.25% interest rate, due in 2038
Fair Value of Financial Instruments
Fixed rate loan	43,961	43,878
Estimated Fair Value | Fixed rate loan, 3.76% interest rate, due in 2028
Fair Value of Financial Instruments
Fixed rate loan	0	12,784
Estimated Fair Value | Fixed rate loan, 3.77% interest rate, due in 2030
Fair Value of Financial Instruments
Fixed rate loan	0	4,553
Estimated Fair Value | Fixed rate loan, 3.85% interest rate, due in 2030
Fair Value of Financial Instruments
Fixed rate loan	0	4,829
Estimated Fair Value | Fixed rate loan, 3.56% interest rate, due in 2030
Fair Value of Financial Instruments
Fixed rate loan	$ 0	$ 13,315

XML

Fair Value of Assets and Liabilities - Assets Measured on Recurring Basis (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023 USD ($) property	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) property	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)
Fair Value of Financial Instruments
Real estate properties	$ 4,812,760		$ 4,812,760		$ 4,902,641
Loss on impairment of real estate	$ 254	$ 100,747	$ 254	$ 100,747
Number of properties impaired | property	1
Number of properties | property	2		2
Fair Value, Inputs, Level 3
Fair Value of Financial Instruments
Holding period			10 years
Fair Value, Inputs, Level 3 | Minimum | Measurement Input, Discount Rate
Fair Value of Financial Instruments
Unconsolidated joint venture measurement input	0.0525		0.0525
Fair Value, Inputs, Level 3 | Minimum | Measurement Input, Exit Capitalization Rate
Fair Value of Financial Instruments
Unconsolidated joint venture measurement input	0.0495		0.0495
Fair Value, Inputs, Level 3 | Maximum | Measurement Input, Discount Rate
Fair Value of Financial Instruments
Unconsolidated joint venture measurement input	0.0700		0.0700
Fair Value, Inputs, Level 3 | Maximum | Measurement Input, Exit Capitalization Rate
Fair Value of Financial Instruments
Unconsolidated joint venture measurement input	0.0600		0.0600
Fair Value, Recurring
Fair Value of Financial Instruments
Investments in unconsolidated joint venture	$ 129,082		$ 129,082
Interest rate cap derivatives	64,097		64,097
Fair Value, Recurring | Fair Value, Inputs, Level 1
Fair Value of Financial Instruments
Investments in unconsolidated joint venture	0		0
Interest rate cap derivatives	0		0
Fair Value, Recurring | Fair Value, Inputs, Level 2
Fair Value of Financial Instruments
Investments in unconsolidated joint venture	0		0
Fair Value, Recurring | Fair Value, Inputs, Level 3
Fair Value of Financial Instruments
Investments in unconsolidated joint venture	129,082		129,082
Interest rate cap derivatives	0		0
Fair Value, Nonrecurring
Fair Value of Financial Instruments
Real estate properties	1,414		1,414
Fair Value, Nonrecurring | Fair Value, Inputs, Level 1
Fair Value of Financial Instruments
Real estate properties	0		0
Fair Value, Nonrecurring | Fair Value, Inputs, Level 2
Fair Value of Financial Instruments
Real estate properties	0		0
Fair Value, Nonrecurring | Fair Value, Inputs, Level 3
Fair Value of Financial Instruments
Real estate properties	$ 1,414		$ 1,414

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Shareholders' Equity (Details) $ / shares in Units, $ in Thousands					3 Months Ended				6 Months Ended
	Jul. 13, 2023 USD ($) $ / shares	May 18, 2023 USD ($) $ / shares	Feb. 16, 2023 USD ($) $ / shares	Jun. 01, 2022 trustee $ / shares shares	Jun. 30, 2023 USD ($) $ / shares shares	Mar. 31, 2023 USD ($) shares	Jun. 30, 2022 USD ($)	Mar. 31, 2022 USD ($) shares	Jun. 30, 2023 USD ($) $ / shares shares
Shareholders' Equity
Number of officers | trustee				7
Dividends paid (in dollars per share)		$ 0.01	$ 0.01						$ 0.02
Total Distribution | $		$ 656	$ 656		$ 656	$ 656	$ 21,583	$ 21,584	$ 1,312
Subsequent Event
Shareholders' Equity
Common distributions declared (in dollars per share)	$ 0.01
Dividends payable | $	$ 657
Common shares
Shareholders' Equity
Share repurchases to pay for tax withholding (in shares) | shares					7,110	976		333	8,086
Share price (in dollars per share)					$ 2.00				$ 2.00
Trustee
Shareholders' Equity
Common shares granted (in shares) | shares				20,000
Common share price (in usd per share)				$ 1.78

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Business and Property Management Agreements with RMR (Details)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023 USD ($) employee agreement	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) employee agreement	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)
Related Party Transaction [Line Items]
Number of employees | employee	0		0
Other operating expenses	$ 8,519,000	$ 7,053,000	$ 17,837,000	$ 13,825,000
Related Party
Related Party Transaction [Line Items]
Number of management service agreements | agreement	2		2
Management fee expense	$ 5,656,000	6,957,000	$ 11,382,000	11,356,000
Incentive fee expense	$ 0	0	$ 0	0	$ 0
Management service agreement term			3 years
Number of joint venture agreements | agreement	2		2
Reit Management And Research L L C | Related Party
Related Party Transaction [Line Items]
Number of management service agreements | agreement	2		2
Property Management and Construction Supervision Fees
Related Party Transaction [Line Items]
Related party transaction, amount	$ 3,370,000	2,764,000	$ 6,822,000	5,527,000
Expensed Property Management and Construction Supervision Fees | Related Party
Related Party Transaction [Line Items]
Other operating expenses	3,133,000	2,396,000	6,452,000	5,128,000
Capitalized Property Management and Construction Supervision Fees
Related Party Transaction [Line Items]
Related party transaction, amount	237,000	368,000	370,000	399,000
Reimbursed Property Level Operating Expenses
Related Party Transaction [Line Items]
Related party transaction, amount	$ 2,000,000	$ 1,704,000	$ 3,841,000	$ 3,308,000

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Related Person Transactions (Details) $ in Thousands	Jun. 30, 2023 USD ($) agreement	Dec. 31, 2022 USD ($)
Related Party
Related Party Transaction [Line Items]
Number of management service agreements	2
Number of joint venture agreements	2
Accounts payable and other liabilities | $	$ 5,148	$ 4,824
Joint Venture
Related Party Transaction [Line Items]
Number of joint venture agreements	2
Accounts payable and other liabilities | $	$ 556	$ 616

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Derivatives and Hedging Activities - Schedule of Interest Rate Cap Agreements (Details) - Interest Rate Swap - Cash Flow Hedging - Designated as Hedging Instrument $ in Thousands	Jun. 30, 2023 USD ($) derivative_instrument
Derivative Instruments, Gain (Loss) [Line Items]
Fair value	$ 64,097
Floating Rate Loan
Derivative Instruments, Gain (Loss) [Line Items]
Number of Instruments | derivative_instrument	1
Strike Rate	3.40%
Notional Amount	$ 1,400,000
Fair value	$ 19,022
ILPT Floating Rate Loan
Derivative Instruments, Gain (Loss) [Line Items]
Number of Instruments | derivative_instrument	2
Strike Rate	2.25%
Notional Amount	$ 1,235,000
Fair value	$ 45,075

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Derivatives and Hedging Activities - Schedule of Activity (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Amount of gain recognized in cumulative other comprehensive income (loss)	$ 20,025	$ 3,778	$ 16,249	$ 9,153
Amount reclassified from cumulative other comprehensive income (loss) into interest expense	(8,004)	660	(13,006)	917
Unrealized gain on derivative instrument recognized in cumulative other comprehensive (loss) income, net	$ 12,021	$ 4,438	$ 3,243	$ 10,070