SEC Form 10-Q filed by Industrial Logistics Properties Trust
$ILPT
Real Estate Investment Trusts
Real Estate
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
For the quarterly period ended March 31, 2026
OR
Commission File Number 001-38342
(Exact Name of Registrant as Specified in Its Charter)
| (State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |||||||
| (Address of Principal Executive Offices) | (Zip Code) | ||||||||||||||||
(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 | ||||||||||||
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 | ☐ | ☒ | ||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||
| Emerging growth company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Number of registrant’s common shares of beneficial interest, $.01 par value per share, outstanding as of April 27, 2026: 66,665,471 .
INDUSTRIAL LOGISTICS PROPERTIES TRUST
FORM 10-Q
March 31, 2026
INDEX
| Page | ||||||||
References in this Quarterly Report on Form 10-Q to the Company, we, us or our include Industrial Logistics Properties Trust and its consolidated subsidiaries unless otherwise expressly stated or the context indicates otherwise.
2
PART I. Financial Information
Item 1. Financial Statements
INDUSTRIAL LOGISTICS PROPERTIES TRUST
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data)
(unaudited)
| March 31, | December 31, | ||||||||||
| 2026 | 2025 | ||||||||||
| ASSETS | |||||||||||
| Real estate properties: | |||||||||||
| Land | $ | $ | |||||||||
| Buildings and improvements | |||||||||||
| Total real estate properties, gross | |||||||||||
| Accumulated depreciation | ( | ( | |||||||||
| Total real estate properties, net | |||||||||||
| Investment in unconsolidated joint venture | |||||||||||
| Acquired real estate leases, net | |||||||||||
| Cash and cash equivalents | |||||||||||
Restricted cash and cash equivalents | |||||||||||
Rents receivable, including straight line rents of $ | |||||||||||
| Other assets, net | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND EQUITY | |||||||||||
| Mortgage notes payable, net | $ | $ | |||||||||
| Accounts payable and other liabilities | |||||||||||
| Assumed real estate lease obligations, net | |||||||||||
| Due to related persons | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies | |||||||||||
| Equity: | |||||||||||
| Equity attributable to common shareholders: | |||||||||||
Common shares of beneficial interest, $ | |||||||||||
| Additional paid in capital | |||||||||||
Cumulative net deficit | ( | ( | |||||||||
| Cumulative other comprehensive gain (loss) | ( | ||||||||||
| Cumulative common distributions | ( | ( | |||||||||
| Total equity attributable to common shareholders | |||||||||||
Noncontrolling interests | |||||||||||
| Total equity | |||||||||||
| Total liabilities and equity | $ | $ | |||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
INDUSTRIAL LOGISTICS PROPERTIES TRUST
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(amounts in thousands, except per share data)
(unaudited)
Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Rental income | $ | $ | |||||||||
| Expenses: | |||||||||||
| Real estate taxes | |||||||||||
| Other operating expenses | |||||||||||
| Depreciation and amortization | |||||||||||
| General and administrative | |||||||||||
| Total expenses | |||||||||||
| Interest income | |||||||||||
Interest expense | ( | ( | |||||||||
| Loss before income taxes and equity in earnings (losses) of unconsolidated joint venture | ( | ( | |||||||||
| Income tax expense | ( | ( | |||||||||
| Equity in earnings (losses) of unconsolidated joint venture | ( | ||||||||||
| Net loss | ( | ( | |||||||||
Net loss attributable to noncontrolling interests | |||||||||||
| Net loss attributable to common shareholders | ( | ( | |||||||||
| Other comprehensive income (loss): | |||||||||||
| Unrealized gain (loss) on derivatives | ( | ||||||||||
| Less: unrealized (gain) loss on derivatives attributable to noncontrolling interests | ( | ||||||||||
| Other comprehensive income (loss) attributable to common shareholders | ( | ||||||||||
| Comprehensive loss attributable to common shareholders | $ | ( | $ | ( | |||||||
| Weighted average common shares outstanding (basic and diluted) | |||||||||||
| Net loss per share attributable to common shareholders (basic and diluted) | $ | ( | $ | ( | |||||||
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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Number of | Additional | Other | Cumulative | Attributable to | |||||||||||||||||||||||||||||||||||||||||||||||||
| Common | Common | Paid In | Cumulative | Comprehensive | Common | Common | Noncontrolling | Total | |||||||||||||||||||||||||||||||||||||||||||||
| Shares | Shares | Capital | Net Deficit | Gain (Loss) | Distributions | Shareholders | Interests | Equity | |||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | — | — | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Share grants, repurchases and forfeitures | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to common shareholders | — | — | — | — | — | ( | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive gain | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2026 | $ | $ | $ | ( | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | — | — | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Share grants, repurchases and forfeitures | ( | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to common shareholders | — | — | — | — | — | ( | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | ( | — | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
INDUSTRIAL LOGISTICS PROPERTIES TRUST
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
| Net loss | $ | ( | $ | ( | |||||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||
| Depreciation | |||||||||||
Amortization of interest rate caps | |||||||||||
| Net amortization of debt issuance costs, premiums and discounts | |||||||||||
| Amortization of acquired real estate leases and assumed real estate lease obligations | |||||||||||
| Amortization of deferred leasing costs | |||||||||||
| Straight line rental income | ( | ( | |||||||||
| Proceeds from settlement of interest rate caps | ( | ( | |||||||||
General and administrative expenses paid in common shares | |||||||||||
| Distributions of earnings from unconsolidated joint venture | |||||||||||
| Equity in (earnings) losses of unconsolidated joint venture | ( | ||||||||||
| Change in assets and liabilities: | |||||||||||
| Rents receivable | |||||||||||
| Other assets | ( | ||||||||||
| Accounts payable and other liabilities | |||||||||||
| Due to related persons | ( | ||||||||||
Net cash provided by operating activities | |||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
| Real estate improvements | ( | ( | |||||||||
Purchase of interest rate cap | ( | ( | |||||||||
| Proceeds from settlement of interest rate caps | |||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
Repayment of mortgage notes payable | ( | ( | |||||||||
| Payment of debt issuance costs | ( | ( | |||||||||
| Distributions to common shareholders | ( | ( | |||||||||
| Repurchase of common shares | ( | ( | |||||||||
| Distributions to noncontrolling interests | ( | ( | |||||||||
Net cash used in financing activities | ( | ( | |||||||||
| Increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents | ( | ||||||||||
| Cash and cash equivalents and restricted cash and cash equivalents at beginning of period | |||||||||||
| Cash and cash equivalents and restricted cash and cash equivalents at end of period | $ | $ | |||||||||
| SUPPLEMENTAL DISCLOSURES: | |||||||||||
| Interest paid | $ | $ | |||||||||
| Income taxes paid | $ | $ | |||||||||
| NON-CASH INVESTING ACTIVITIES: | |||||||||||
| Real estate improvements accrued not paid | $ | $ | |||||||||
6
| SUPPLEMENTAL DISCLOSURE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS: | ||||||||||||||
The following table provides a reconciliation of cash and cash equivalents and restricted cash and cash equivalents reported within the condensed consolidated balance sheets to the amounts shown in the condensed consolidated statements of cash flows: | ||||||||||||||
As of March 31, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Cash and cash equivalents | $ | $ | ||||||||||||
Restricted cash and cash equivalents (1) | ||||||||||||||
Total cash and cash equivalents and restricted cash | $ | $ | ||||||||||||
(1)Restricted cash and cash equivalents consist of cash held for the operations of our consolidated joint venture and amounts escrowed as required by the agreements governing certain of our mortgage debt.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7
INDUSTRIAL LOGISTICS PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)
Note 1. Basis of Presentation
The accompanying condensed consolidated financial statements of Industrial Logistics Properties Trust and its consolidated subsidiaries, or the Company, or ILPT, 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, 2025, or our 2025 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.
Note 2. Recent Accounting Pronouncements
Note 3. Real Estate Investments
As of March 31, 2026, our portfolio was comprised of 409 properties containing approximately 59,604,000 rentable square feet located in 39 states, including 226 buildings, leasable land parcels and easements containing approximately 16,729,000 rentable square feet that were primarily industrial lands located on the island of Oahu, Hawaii, or our Hawaii Properties, and 183 properties containing approximately 42,875,000 rentable square feet that were industrial and logistics properties located in 38 other states, or our Mainland Properties, as well as 94 properties in 27 states totaling approximately 20,978,000 rentable square feet, owned by Mountain Industrial REIT LLC, or our consolidated joint venture, or Mountain JV, in which we own a 61 % equity interest. As of March 31, 2026, we also owned a 22 % equity interest in The Industrial Fund REIT LLC, or the unconsolidated joint venture.
8
INDUSTRIAL LOGISTICS PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)
Capital Expenditures
During the three months ended March 31, 2026 and 2025, amounts capitalized at certain of our properties for tenant improvements, leasing costs and building improvements were as follows:
Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
Tenant improvements (1) | $ | $ | |||||||||
Leasing costs (1) | |||||||||||
Building improvements (2) | |||||||||||
Total capital expenditures | $ | $ | |||||||||
(1)Includes 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)Includes expenditures to replace obsolete building components and expenditures that extend the useful life of existing assets.
During the three months ended March 31, 2026 and 2025, net loss attributable to noncontrolling interests in our condensed consolidated financial statements was as follows:
Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Consolidated joint venture | $ | $ | |||||||||
| Tenancy in common | ( | ( | |||||||||
Total net loss attributable to noncontrolling interests | $ | $ | |||||||||
Consolidated Joint Venture
We own a 61 % equity interest in our consolidated joint venture. We control this consolidated joint venture and therefore account for the properties owned by this joint venture on a consolidated basis in our condensed consolidated financial statements.
Consolidated Tenancy in Common
An unrelated third party owns an approximate 33 % tenancy in common interest in one property located in Somerset, New Jersey with approximately 64,000 rentable square feet, and we own the remaining approximate 67 % tenancy in common interest in this property. The tenancy in common made cash distributions to the unrelated third party investor of $150 and $30 during three months ended March 31, 2026 and 2025, respectively.
Unconsolidated Joint Venture
We own a 22 % equity interest in the unconsolidated joint venture, which owns 18 industrial properties located in 12 states totaling approximately 11,726,000 rentable square feet. We account for the unconsolidated joint venture using the equity method of accounting under the fair value option. We recognize changes in the fair value of our investment in the unconsolidated joint venture as equity in earnings (losses) of unconsolidated joint venture in our condensed consolidated financial statements.
9
INDUSTRIAL LOGISTICS PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)
Note 4. Leases
We are a lessor of industrial and logistics properties. Our leases provide our tenants with the contractual right to use and economically benefit from the physical space specified in their respective leases and are generally classified as operating leases.
Our leases provide for base rent payments and may also include variable payments. Rental income from operating leases, including any payments derived by index or market-based indices, is recognized on a straight line basis over the lease term when we have determined that the collectability of substantially all of the lease payments is probable. Some of our leases have options to extend or terminate the lease exercisable at the option of our tenants, which are considered when determining the lease term.
We do not include in our measurement of our lease receivables certain variable payments, including 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 $22,284 and $19,857 for the three months ended March 31, 2026 and 2025, respectively.
Generally, payments of ground lease obligations are made by our tenants. However, if a tenant does not pay obligations under a ground lease or does not renew a ground lease, we may have to pay obligations under the ground lease in order to protect our investment in the affected property.
Right of Use Assets and Lease Liabilities
We are the lessee for three of our properties subject to ground leases and one office lease. For leases with a term greater than 12 months under which we are the lessee, we recognize right of use assets and lease liabilities. The values of our right of use assets and related lease liabilities were $3,606 and $3,700 , respectively, as of March 31, 2026, and $3,726 and $3,821 , respectively, as of December 31, 2025. 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.
Geographic Concentration
We define annualized rental revenues as the annualized contractual base rents from our tenants pursuant to our lease agreements as of the measurement date, including straight line rent adjustments and estimated recurring expense reimbursements to be paid to us, and excluding amortization of deferred leasing costs.
Our Hawaii Properties represented 28.0 % and 27.7 % of our annualized rental revenues as of March 31, 2026 and 2025, respectively.
Tenant Concentration
FedEx Corporation and its subsidiaries, or FedEx, and Amazon.com Services, Inc. and its subsidiaries, or Amazon, represented 27.7 % and 7.6 % of our annualized rental revenues as of March 31, 2026, respectively, and 28.7 % and 6.7 % as of March 31, 2025, respectively.
10
INDUSTRIAL LOGISTICS PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)
Note 5. Indebtedness
Our outstanding indebtedness as of March 31, 2026 and December 31, 2025 is summarized below:
| Number of | ||||||||||||||||||||||||||||||||||||||
| Properties | Principal | Interest | Carrying Value | |||||||||||||||||||||||||||||||||||
| Entity | Secured By | Balance | Rate (1) | Type | Maturity | of Collateral | ||||||||||||||||||||||||||||||||
As of March 31, 2026 | ||||||||||||||||||||||||||||||||||||||
| ILPT | $ | Fixed | 02/07/2029 | $ | ||||||||||||||||||||||||||||||||||
| ILPT | Fixed | 07/09/2030 | ||||||||||||||||||||||||||||||||||||
ILPT | Fixed | 03/09/2032 | ||||||||||||||||||||||||||||||||||||
Mountain JV (2) | Floating | 03/09/2027 | ||||||||||||||||||||||||||||||||||||
| Mountain JV | Fixed | 06/10/2030 | ||||||||||||||||||||||||||||||||||||
Mountain JV (2) | Fixed | 05/01/2031 | ||||||||||||||||||||||||||||||||||||
Mountain JV (2) | Fixed | 07/01/2032 | ||||||||||||||||||||||||||||||||||||
Mountain JV (2) | Fixed | 10/01/2033 | ||||||||||||||||||||||||||||||||||||
Mountain JV (2) | Fixed | 11/01/2033 | ||||||||||||||||||||||||||||||||||||
Mountain JV (2) | Fixed | 06/01/2035 | ||||||||||||||||||||||||||||||||||||
Mountain JV (2) | Fixed | 01/01/2036 | ||||||||||||||||||||||||||||||||||||
Mountain JV (2) | Fixed | 11/01/2037 | ||||||||||||||||||||||||||||||||||||
Mountain JV (2) | Fixed | 01/01/2038 | ||||||||||||||||||||||||||||||||||||
| Total / weighted average | $ | |||||||||||||||||||||||||||||||||||||
| Unamortized debt issuance costs | ( | |||||||||||||||||||||||||||||||||||||
| Total indebtedness, net | $ | |||||||||||||||||||||||||||||||||||||
As of December 31, 2025 | ||||||||||||||||||||||||||||||||||||||
| ILPT | $ | Fixed | 02/07/2029 | $ | ||||||||||||||||||||||||||||||||||
| ILPT | Fixed | 07/09/2030 | ||||||||||||||||||||||||||||||||||||
| ILPT | Fixed | 03/09/2032 | ||||||||||||||||||||||||||||||||||||
| Mountain JV | Floating | 03/09/2026 | ||||||||||||||||||||||||||||||||||||
| Mountain JV | Fixed | 06/10/2030 | ||||||||||||||||||||||||||||||||||||
| Mountain JV | Fixed | 05/01/2031 | ||||||||||||||||||||||||||||||||||||
| Mountain JV | Fixed | 07/01/2032 | ||||||||||||||||||||||||||||||||||||
| Mountain JV | Fixed | 10/01/2033 | ||||||||||||||||||||||||||||||||||||
| Mountain JV | Fixed | 11/01/2033 | ||||||||||||||||||||||||||||||||||||
| Mountain JV | Fixed | 06/01/2035 | ||||||||||||||||||||||||||||||||||||
| Mountain JV | Fixed | 01/01/2036 | ||||||||||||||||||||||||||||||||||||
| Mountain JV | Fixed | 11/01/2037 | ||||||||||||||||||||||||||||||||||||
| Mountain JV | Fixed | 01/01/2038 | ||||||||||||||||||||||||||||||||||||
| Total / weighted average | $ | |||||||||||||||||||||||||||||||||||||
| Unamortized debt issuance costs | ( | |||||||||||||||||||||||||||||||||||||
| Total indebtedness, net | $ | |||||||||||||||||||||||||||||||||||||
(1)Interest rate reflects the impact of interest rate caps, if any.
(2)In April 2026, our consolidated joint venture priced a $1,620,000 year, fixed rate, interest only mortgage loan at 5.71 %. This mortgage loan is expected to close on or about May 8, 2026 and our consolidated joint venture expects to use the net proceeds to repay these loans in full.
11
INDUSTRIAL LOGISTICS PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)
In June 2025, we obtained a $1,160,000 fixed rate, interest only mortgage loan secured by 101 of our properties. This mortgage loan matures in July 2030 and requires that interest be paid at an annual rate of 6.40 %. Subject to the satisfaction of certain conditions, we have the option to prepay our $1,160,000 mortgage loan in full or in part with a premium prior to January 9, 2030 and at par with no premium on or after January 9, 2030. We used the net proceeds from our $1,160,000 mortgage loan and cash on hand to repay in full our $1,235,000 loan, or the ILPT Floating Rate Loan.
Our consolidated joint venture’s $1,400,000 loan, or the Mountain Floating Rate Loan, is secured by 82 properties, matures in March 2027 and requires that interest be paid at an annual rate of secured overnight financing rate, or SOFR, plus a weighted average premium of 2.77 %. In March 2026, our consolidated joint venture exercised the third of its three , one-year extension options for the maturity date of this loan. In connection with the exercise of the extension, our consolidated joint venture purchased a one-year interest rate cap for $3,720 with a SOFR strike rate equal to 3.29 %, which replaced the previous interest rate cap with a SOFR strike rate equal to 3.10 %. Subject to the satisfaction of certain conditions, our consolidated joint venture has the option to prepay the Mountain Floating Rate Loan in full or in part at any time at par with no premium.
In April 2026, our consolidated joint venture priced a $1,620,000 year, fixed rate, interest only mortgage loan to be secured by 90 of its properties. This mortgage loan is expected to close on or about May 8, 2026 and our consolidated joint venture expects to use the net proceeds from this mortgage loan to repay in full the Mountain Floating Rate Loan and $204,999 of its amortizing fixed rate debt secured by eight properties.
The weighted average interest rates under our floating rate loans for the three months ended March 31, 2026 and 2025 were as follows:
Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
ILPT Floating Rate Loan (1) | |||||||||||
Mountain Floating Rate Loan (2) | |||||||||||
(1)In June 2025, we repaid in full the ILPT Floating Rate Loan using proceeds from our $1,160,000 mortgage loan and cash on hand. Reflects the impact of interest rate caps, which prior to the repayment, had a SOFR strike rate equal to 2.78 % which replaced the previous strike rate equal to 2.25 % in October 2024.
(2)Reflects the impact of interest rate caps with a current SOFR strike rate equal to 3.29 % which replaced the previous strike rate equal to 3.10 % in March 2026.
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. As of March 31, 2026, we believe that we were in compliance with all of the covenants and other terms under the agreements governing our debt obligations. See Note 10 for further information regarding our current and former interest rate caps.
The required principal payments due during the next five years and thereafter, excluding extension options, under all our outstanding debt as of March 31, 2026 are as follows:
| Principal | ||||||||
| Payment | ||||||||
| 2026 | $ | |||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 | ||||||||
| Thereafter | ||||||||
| Total | $ | |||||||
12
INDUSTRIAL LOGISTICS PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)
Note 6. Fair Value of Assets and Liabilities
Our financial instruments include cash and cash equivalents, restricted cash and cash equivalents, mortgage notes payable, accounts payable and interest rate caps. We remeasure our interest rate caps at fair value on a quarterly basis. As of March 31, 2026 and December 31, 2025, the fair value of our other financial instruments approximated their carrying values in our condensed consolidated financial statements due to their short term nature or floating interest rates, except for our fixed rate mortgage notes payable.
Our fixed rate mortgage notes payable had an aggregate carrying value of $2,789,555 and $2,793,219 as of March 31, 2026 and December 31, 2025, respectively, and a fair value of $2,762,661 and $2,784,286 as of March 31, 2026 and December 31, 2025, respectively. We estimate the fair value of our fixed rate mortgage notes payable using significant unobservable inputs, including discounted cash flow analyses and prevailing market interest rates.
The table below presents certain of our assets measured on a recurring basis at fair value as of March 31, 2026 and December 31, 2025, 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) | |||||||||||||||||||||||
As of March 31, 2026 | ||||||||||||||||||||||||||
| Interest rate cap | $ | $ | $ | $ | ||||||||||||||||||||||
| Investment in unconsolidated joint venture | $ | $ | $ | $ | ||||||||||||||||||||||
As of December 31, 2025 | ||||||||||||||||||||||||||
| Interest rate cap | $ | $ | $ | $ | ||||||||||||||||||||||
| Investment in unconsolidated joint venture | $ | $ | $ | $ | ||||||||||||||||||||||
The fair values of our interest rate caps are based on prevailing market prices in secondary markets for similar derivative contracts as of the measurement date.
The fair value of our investment in the unconsolidated joint venture is determined by applying our ownership percentage to the net asset value of the entity. The net asset value of the unconsolidated joint venture uses similar estimation techniques as those used for consolidated real estate properties, including discounting expected future cash flows of the underlying real estate investments based on prevailing market rents over a holding period and including an exit capitalization rate to determine the final year of cash flows.
The discount rates, exit capitalization rates and holding periods used to determine the fair value of our investment in the unconsolidated joint venture are significant unobservable inputs and are shown in the table below:
| Exit | ||||||||||||||||||||||||||
| Valuation | Discount | Capitalization | Holding | |||||||||||||||||||||||
| Technique | Rates | Rates | Periods | |||||||||||||||||||||||
As of March 31, 2026 | ||||||||||||||||||||||||||
| Investment in unconsolidated joint venture | Discounted cash flow | |||||||||||||||||||||||||
As of December 31, 2025 | ||||||||||||||||||||||||||
| Investment in unconsolidated joint venture | Discounted cash flow | |||||||||||||||||||||||||
13
INDUSTRIAL LOGISTICS PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)
The table below presents a summary of the changes in fair value for our investment in the unconsolidated joint venture:
Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Beginning balance | $ | $ | |||||||||
| Equity in earnings (losses) of unconsolidated joint venture | ( | ||||||||||
| Distributions from unconsolidated joint venture | ( | ( | |||||||||
| Ending balance | $ | $ | |||||||||
Note 7. Shareholders’ Equity
Common Share Awards
On March 18, 2026, in accordance with our Trustee compensation arrangements, we awarded 15,625 of our common shares in connection with the election of one of our Trustees, valued at $6.08 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 three months ended March 31, 2026, we purchased an aggregate of 2,704 of our common shares, valued at $6.08 per share, from certain former 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. We withheld and purchased these common shares at their fair market value based upon the trading price of our common shares at the close of trading on Nasdaq on the purchase date.
Distributions
During the three months ended March 31, 2026, we declared and paid a regular quarterly distribution to common shareholders as follows:
| Distribution | Total | |||||||||||||||||||||||||
| Declaration Date | Record Date | Payment Date | Per Share | Distribution | ||||||||||||||||||||||
| January 15, 2026 | January 26, 2026 | February 19, 2026 | $ | $ | ||||||||||||||||||||||
On April 9, 2026, we declared a regular quarterly distribution to common shareholders of record on April 21, 2026 of $0.05 per share, or approximately $3,333 . We expect to pay this distribution on or about May 14, 2026 using cash on hand.
Note 8. 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.
Business Management Agreement. Pursuant to our business management agreement and in accordance with GAAP, we accrued estimated incentive management fees during the three months ended March 31, 2026. The actual amount of incentive management fees incurred for 2026, 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, 2026, and will be payable to RMR in January 2027. We incurred an incentive management fee of $5,679 for the year ended December 31, 2025.
14
INDUSTRIAL LOGISTICS PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)
Property Management Agreement. We are generally responsible for all of 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 and as otherwise agreed. Our property level operating expenses are generally incorporated into rents charged to our tenants, including certain payroll and related costs incurred by RMR which are included in other operating expenses and general and administrative expenses, as applicable, in our condensed consolidated statements of comprehensive income (loss).
For the three months ended March 31, 2026 and 2025, the business management fees, incentive management fees, property management fees, construction supervision fees and expense reimbursements recognized in our condensed consolidated financial statements were as follows:
Three Months Ended March 31, | ||||||||||||||||||||
| Financial Statement Line Item | 2026 | 2025 | ||||||||||||||||||
| Pursuant to business management agreement: | ||||||||||||||||||||
Business management fees | General and administrative expenses | $ | ` | $ | ||||||||||||||||
Incentive management fees | General and administrative expenses | |||||||||||||||||||
| Total | $ | $ | ||||||||||||||||||
| Pursuant to property management agreement: | ||||||||||||||||||||
Property management fees | Other operating expenses | $ | $ | |||||||||||||||||
Construction supervision fees | Buildings and improvements (1) | |||||||||||||||||||
| Total | $ | $ | ||||||||||||||||||
| Expense reimbursement: | ||||||||||||||||||||
Other expenses | General and administrative expenses | $ | $ | |||||||||||||||||
Property level expenses | Other operating expenses | |||||||||||||||||||
| Total | $ | $ | ||||||||||||||||||
(1)Amounts capitalized as buildings and improvements are depreciated over the estimated useful lives of the related assets.
Management Agreements Between Our Joint Ventures and RMR. We have two separate joint venture arrangements, our consolidated joint venture and the unconsolidated joint venture. 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 to our consolidated joint venture; however, our consolidated 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 9 for further information regarding our relationships, agreements and transactions with RMR.
15
INDUSTRIAL LOGISTICS PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)
Note 9. 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. Yael Duffy, our other Managing Trustee and our President and Chief Executive Officer, is also an executive vice president of RMR Inc. and a managing trustee and president and chief executive officer of Office Properties Income Trust, one of the other public companies managed by RMR. Each of our 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. Mr. Portnoy serves as chair of the boards and as a managing trustee of these public companies. Other officers of RMR, including Ms. Duffy, serve as managing trustees or officers of certain of these public companies.
Our Manager, RMR. We have two agreements with RMR to provide management services to us. See Note 8 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 Note 3 for further information regarding our joint ventures.
For further information about these and other such relationships and certain other related person transactions, see our 2025 Annual Report.
Note 10. Derivatives and Hedging Activities
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 our interest rate risk. As required under the loan agreement, we have an interest rate cap agreement to manage our interest rate risk exposure on the Mountain Floating Rate Loan, 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.
Our interest rate cap agreement for the Mountain Floating Rate Loan is designated as a cash flow hedge of interest rate risk and is measured on a recurring basis at fair value.
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 cumulative other comprehensive 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 cumulative other comprehensive loss related to derivatives will be reclassified to interest expense as interest payments are made on our applicable debt.
16
INDUSTRIAL LOGISTICS PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)
The following table summarizes the terms of our outstanding interest rate cap agreements as of March 31, 2026 and December 31, 2025:
| Balance | ||||||||||||||||||||||||||||||||||||||
| Sheet | Underlying | Maturity | Strike | Notional | Fair Value at | |||||||||||||||||||||||||||||||||
| Line Item | Instrument | Date | Rate | Amount | March 31, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||
Other assets, net | Mountain Floating Rate Loan | 03/15/2026 | $ | $ | $ | |||||||||||||||||||||||||||||||||
Other assets, net | Mountain Floating Rate Loan | 03/15/2027 | $ | |||||||||||||||||||||||||||||||||||
| Total | $ | $ | ||||||||||||||||||||||||||||||||||||
The following table summarizes the activity related to our cash flow hedges within cumulative other comprehensive income (loss) for the periods shown:
Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Amount of gain (loss) recognized on derivatives in other comprehensive income (loss) | $ | $ | ( | ||||||||
| Amount of loss reclassified from cumulative other comprehensive income (loss) into interest expense | $ | ( | $ | ( | |||||||
Total amount of interest expense presented in the condensed consolidated statements of comprehensive income (loss) | $ | ( | $ | ( | |||||||
Note 11. Segment Reporting
17
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 Part I, Item 1 of this Quarterly Report on Form 10-Q and with our 2025 Annual Report.
OVERVIEW (dollars in thousands, except per square foot data)
We are a real estate investment trust, or REIT, organized under Maryland law. As of March 31, 2026, our portfolio was comprised of 409 properties containing approximately 59,604,000 rentable square feet located in 39 states with 94.6% occupancy, leased to approximately 300 different tenants. As of March 31, 2026, we also owned a 22% equity interest in the unconsolidated joint venture.
We believe consumer expectations, long-term growth of e-commerce and modernization of and demand for supply chain resiliency will keep demand for industrial properties strong for the foreseeable future. This continued demand has contributed to favorable market conditions, resulting in positive mark-to-market rents on our lease renewals and new leases. Currently, there are uncertainties in global and U.S. economic conditions driven by fluctuations in interest rates and inflation, wars and other geopolitical hostilities and tensions and changes in trade policies and tariffs, all of which have impacted financial markets and supply chains. While these factors have not had a significant adverse impact on our results of operations, if continued or if they worsen, they could adversely affect our financial condition primarily through our tenants’ financial stability, including their ability or willingness to renew leases, including at increased rental rates, or satisfy lease obligations. Most of our leases require our tenants to be responsible for certain operating expenses, including real estate taxes, insurance and common area maintenance, thereby reducing our exposure to increases in operating expenses resulting from inflation or other factors.
Our portfolio as of March 31, 2026 is summarized below (square feet in thousands):
| % of | Weighted | |||||||||||||||||||||||||||||||||||||||||||||||||
| Rentable | Annualized | Average | ||||||||||||||||||||||||||||||||||||||||||||||||
Ownership | Number of | Square | Rental | Remaining | ||||||||||||||||||||||||||||||||||||||||||||||
Vehicle | Ownership | Properties | Location | Feet | Occupancy | Revenues | Lease Term (1) | |||||||||||||||||||||||||||||||||||||||||||
Mainland Properties | ILPT | 100% | 88 | 33 states | 21,833 | 95.7% | 34.1% | 5.5 | ||||||||||||||||||||||||||||||||||||||||||
| Hawaii Properties | ILPT | 100% | 226 | Hawaii | 16,729 | 86.2% | 28.0% | 11.9 | ||||||||||||||||||||||||||||||||||||||||||
Mainland Properties | Mountain JV | 61% | 94 | 27 states | 20,978 | 100.0% | 37.6% | 5.7 | ||||||||||||||||||||||||||||||||||||||||||
Mainland Properties | Tenancy in common | 67% | 1 | New Jersey | 64 | 100.0% | 0.3% | 3.9 | ||||||||||||||||||||||||||||||||||||||||||
| Total / weighted average | 409 | 59,604 | 94.6% | 100.0% | 7.4 | |||||||||||||||||||||||||||||||||||||||||||||
(1)Based on annualized rental revenues as of March 31, 2026.
Property Operations
Occupancy data for our portfolio as of March 31, 2026 and 2025 were as follows (square feet in thousands):
| All Properties | Comparable Properties (1) | ||||||||||||||||||||||
as of March 31, | as of March 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Total properties | 409 | 411 | 409 | 409 | |||||||||||||||||||
| Total rentable square feet | 59,604 | 59,890 | 59,604 | 59,604 | |||||||||||||||||||
Percent leased (2) | 94.6 | % | 94.6 | % | 94.6 | % | 94.8 | % | |||||||||||||||
(1)Consists of properties that we have owned continuously since January 1, 2025.
(2)Leased square feet is pursuant to existing leases as of March 31, 2026, and includes space being fitted out for occupancy, if any, and space which is leased but is not occupied, if any.
18
The average effective rental rates per square foot represents total rental income divided by the average rentable square feet leased during the periods specified for our properties. For the three months ended March 31, 2026 and 2025, the average effective rental rates per square foot of our properties were as follows:
Three Months Ended March 31, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| All properties | $ | 8.26 | $ | 7.92 | ||||||||||
Comparable properties (1) | $ | 8.26 | $ | 7.93 | ||||||||||
(1)Consists of properties that we have owned continuously since January 1, 2025.
Mainland Properties. We generally will seek to renew or extend the terms of leases for our Mainland Properties as their expirations approach. A majority of the leases for our Mainland Properties include periodic set dollar amount or percentage increases that increase the cash rent payable to us. 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 new leases we enter into may be less favorable to us than the terms of our existing leases for those properties.
Hawaii Properties. Revenues from our Hawaii Properties have generally increased 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. Due to the limited availability of land suitable for industrial uses that might compete with our Hawaii Properties, we believe that our Hawaii Properties offer the potential for future rent growth as a result of periodic rent resets, lease extensions and new leasing. Certain of our Hawaii Properties are lands leased for rents that periodically reset based on fair market values, generally every 10 years.
During the three months ended March 31, 2026, we entered into new and renewal leases as summarized in the following table, excluding the impact of rent resets (square feet in thousands):
| Three Months Ended March 31, 2026 | |||||||||||||||||
| New Leases | Renewals | Totals | |||||||||||||||
| Square feet leased during the period | 135 | 605 | 740 | ||||||||||||||
| Weighted average rental rate change (by rentable square feet) | 54.2 | % | 15.5 | % | 25.2 | % | |||||||||||
| Weighted average lease term by square feet (years) | 15.2 | 3.5 | 5.6 | ||||||||||||||
Total leasing costs and concession commitments (1) | $ | 617 | $ | 961 | $ | 1,578 | |||||||||||
Total leasing costs and concession commitments per square foot (1) | $ | 4.57 | $ | 1.59 | $ | 2.13 | |||||||||||
Total leasing costs and concession commitments per square foot per year (1) | $ | 0.30 | $ | 0.46 | $ | 0.38 | |||||||||||
(1)Includes commitments made for leasing expenditures and concessions, such as leasing commissions, tenant improvements or other tenant inducements.
During the three months ended March 31, 2026, we completed rent resets for approximately 122,000 square feet of land at our Hawaii Properties at rental rates that were 30.6% higher than prior rental rates.
19
The following table provides the annualized rental revenues scheduled to reset at our Hawaii Properties as of March 31, 2026:
| Annualized | ||||||||
| Rental Revenues | ||||||||
| Scheduled to Reset | ||||||||
| 2026 | $ | 1,656 | ||||||
| 2027 | 814 | |||||||
| 2028 | — | |||||||
| 2029 | 8,394 | |||||||
| 2030 | 5,900 | |||||||
| Thereafter | 5,764 | |||||||
| Total | $ | 22,528 | ||||||
As of March 31, 2026, our remaining lease expirations by year were as follows (square feet in thousands):
Cumulative | % of Total | Cumulative | ||||||||||||||||||||||||||||||||||||||||||
| % of Total | % of Total | Annualized | Annualized | % of Total | ||||||||||||||||||||||||||||||||||||||||
| Leased | Leased | Leased | Rental | Rental | Annualized | |||||||||||||||||||||||||||||||||||||||
| No. of | Square Feet | Square Feet | Square Feet | Revenues | Revenues | Rental Revenues | ||||||||||||||||||||||||||||||||||||||
| Year | Leases | Expiring (1) | Expiring (1) | Expiring (1) | Expiring | Expiring | Expiring | |||||||||||||||||||||||||||||||||||||
| 2026 | 20 | 2,576 | 4.6% | 4.6% | $ | 14,062 | 3.1% | 3.1% | ||||||||||||||||||||||||||||||||||||
| 2027 | 43 | 5,613 | 10.0% | 14.6% | 37,742 | 8.4% | 11.5% | |||||||||||||||||||||||||||||||||||||
| 2028 | 48 | 5,303 | 9.4% | 24.0% | 42,082 | 9.3% | 20.8% | |||||||||||||||||||||||||||||||||||||
| 2029 | 38 | 6,937 | 12.3% | 36.3% | 45,622 | 10.1% | 30.9% | |||||||||||||||||||||||||||||||||||||
| 2030 | 34 | 5,450 | 9.7% | 46.0% | 40,976 | 9.1% | 40.0% | |||||||||||||||||||||||||||||||||||||
| Thereafter | 206 | 30,487 | 54.0% | 100.0% | 270,583 | 60.0% | 100.0% | |||||||||||||||||||||||||||||||||||||
| Total | 389 | 56,366 | 100.0% | $ | 451,067 | 100.0% | ||||||||||||||||||||||||||||||||||||||
Weighted average remaining lease term (years) | 6.7 | 7.4 | ||||||||||||||||||||||||||||||||||||||||||
(1)Leased square feet is pursuant to existing leases as of March 31, 2026, and includes space being fitted out for occupancy, if any, and space which is leased but is not occupied, if any.
As of March 31, 2026, FedEx and Amazon leased 22.7% and 8.1% of our total leased square feet, respectively, and represented 27.7% and 7.6% of our total annualized rental revenues, respectively.
As of March 31, 2026, $16,556, or 3.7%, of our annualized rental revenues were included in leases scheduled to expire by March 31, 2027 and 5.4% of our rentable square feet were 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. Despite our 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.
Tenant Review Process. Our manager, RMR, conducts a tenant review process for us. RMR assesses tenants on an individual basis based on various applicable credit criteria. 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.
20
RESULTS OF OPERATIONS
Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025 (dollars and share amounts in thousands, except per share data)
Comparable (1) | Non-Comparable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Properties Results | Properties Results | Consolidated Properties Results | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended | Three Months Ended | Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
March 31, | March 31, | March 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $ | % | $ | $ | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | Change | 2026 | 2025 | Change | 2026 | 2025 | Change | Change | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rental income | $ | 116,419 | $ | 111,737 | $ | 4,682 | 4.2% | $ | — | $ | 168 | $ | (168) | $ | 116,419 | $ | 111,905 | $ | 4,514 | 4.0% | |||||||||||||||||||||||||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Real estate taxes | 16,015 | 14,116 | 1,899 | 13.5% | (1) | 38 | (39) | 16,014 | 14,154 | 1,860 | 13.1% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other operating expenses | 10,055 | 10,115 | (60) | (0.6)% | 43 | 134 | (91) | 10,098 | 10,249 | (151) | (1.5)% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total operating expenses | 26,070 | 24,231 | 1,839 | 7.6% | 42 | 172 | (130) | 26,112 | 24,403 | 1,709 | 7.0% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net operating income (2) | $ | 90,349 | $ | 87,506 | $ | 2,843 | 3.2% | $ | (42) | $ | (4) | $ | (38) | 90,307 | 87,502 | 2,805 | 3.2% | ||||||||||||||||||||||||||||||||||||||||||||||||
| Other expenses: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 40,801 | 41,518 | (717) | (1.7)% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General and administrative | 9,464 | 8,238 | 1,226 | 14.9% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total other expenses | 50,265 | 49,756 | 509 | 1.0% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest income | 1,044 | 1,968 | (924) | (47.0)% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest expense | (61,702) | (69,813) | 8,111 | (11.6)% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loss before income taxes and equity in earnings of unconsolidated joint venture | (20,616) | (30,099) | 9,483 | 31.5% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income tax expense | (114) | (28) | (86) | (307.1)% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity in earnings (losses) of unconsolidated joint venture | 2,871 | (1,042) | 3,913 | 375.5% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | (17,859) | (31,169) | 13,310 | 42.7% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss attributable to noncontrolling interests | 8,432 | 9,637 | (1,205) | (12.5)% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss attributable to common shareholders | $ | (9,427) | $ | (21,532) | $ | 12,105 | 56.2% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Weighted average common shares outstanding (basic and diluted) | 66,178 | 65,834 | 344 | 0.5% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss per share attributable to common shareholders (basic and diluted) | $ | (0.14) | $ | (0.33) | $ | 0.19 | 57.6% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(1)Consists of properties that we have owned continuously since January 1, 2025.
(2)See our definition of net operating income, or 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 March 31, 2026 compared to the three months ended March 31, 2025.
Rental income. Rental income increased primarily due to increases from our net leasing activity and increases in real estate tax reimbursements at certain of our properties.
Real estate taxes. Real estate taxes increased primarily due to a refund received during the three months ended March 31, 2025 as a result of a successful real estate tax appeal at one of our Mainland Properties and higher tax rates at certain of our properties during the three months ended March 31, 2026.
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Other operating expenses. The decrease in other operating expenses is primarily due to decreases in repairs and maintenance expenses, other professional fees and insurance expenses, partially offset by increases in snow removal expenses at certain of our properties.
Depreciation and amortization. The decrease in depreciation and amortization primarily reflects the impact of certain acquired real estate leases fully amortizing and the disposition of two properties since April 1, 2025, partially offset by increased depreciation related to improvements made to certain of our properties since April 1, 2025.
General and administrative. The increase in general and administrative expenses is primarily due to increases in accrued incentive management fees, legal costs and trustee share award expense during the three months ended March 31, 2026 compared to the three months ended March 31, 2025.
Interest income. The decrease in interest income is primarily due to lower cash balances and lower interest rates during the 2026 period as compared to the 2025 period.
Interest expense. The decrease in interest expense is primarily due to the repayment of the ILPT Floating Rate Loan in June 2025 and the discontinuation of hedge accounting for the related interest rate cap. As a result, no further amortization of the related interest rate cap was recognized during the 2026 period. Additionally, amortization of interest rate cap costs of our consolidated joint venture decreased during the 2026 period.
Income tax expense. Income tax expense reflects state income taxes payable in certain jurisdictions.
Equity in earnings (losses) of unconsolidated joint venture. Equity in earnings (losses) of unconsolidated joint venture represents the change in the fair value of our investment in the unconsolidated joint venture.
Non-GAAP Financial Measures (dollars in thousands, except per share data)
We present certain “non-GAAP financial measures” within the meaning of the applicable rules of the Securities and Exchange Commission, or the SEC, including 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 as 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 depreciation and amortization. We use NOI to evaluate individual and company-wide property level performance. Other real estate companies and REITs may calculate NOI differently than we do.
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The following table presents the reconciliation of net loss to NOI for the three months ended March 31, 2026 and 2025:
| Three Months Ended | |||||||||||
March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Net loss | $ | (17,859) | $ | (31,169) | |||||||
| Equity in (earnings) losses of unconsolidated joint venture | (2,871) | 1,042 | |||||||||
| Income tax expense | 114 | 28 | |||||||||
| Loss before income taxes and equity in earnings of unconsolidated joint venture | (20,616) | (30,099) | |||||||||
| Interest expense | 61,702 | 69,813 | |||||||||
| Interest income | (1,044) | (1,968) | |||||||||
| General and administrative | 9,464 | 8,238 | |||||||||
| Depreciation and amortization | 40,801 | 41,518 | |||||||||
| NOI | $ | 90,307 | $ | 87,502 | |||||||
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: (1) net loss attributable to common shareholders calculated in accordance with GAAP, excluding (i) any recovery or loss on impairment of real estate, (ii) any gain or loss on sale of real estate and (iii) equity in earnings or losses of unconsolidated joint venture; (2) plus (i) real estate depreciation and amortization and (ii) our proportionate share of FFO from unconsolidated joint venture properties; (3) minus FFO adjustments attributable to noncontrolling interests; and (4) certain other adjustments currently not applicable to us. In calculating Normalized FFO attributable to common shareholders, we adjust for certain nonrecurring items shown below, including adjustments for such items related to the unconsolidated joint venture, if any, loss on extinguishment of debt, if any, and incentive management fees, 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, the then current and expected needs for and availability of cash to pay our obligations and fund our investments, limitations in our debt agreements, 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 REITs and our expectation of future capital requirements and operating performance. Other real estate companies and REITs may calculate FFO attributable to common shareholders and Normalized FFO attributable to common shareholders differently than we do.
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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 March 31, 2026 and 2025:
| Three Months Ended | |||||||||||
March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Net loss attributable to common shareholders | $ | (9,427) | $ | (21,532) | |||||||
| Equity in (earnings) losses of unconsolidated joint venture | (2,871) | 1,042 | |||||||||
| Depreciation and amortization | 40,801 | 41,518 | |||||||||
| Share of FFO from unconsolidated joint venture | 1,849 | 1,505 | |||||||||
FFO adjustments attributable to noncontrolling interests | (9,936) | (10,010) | |||||||||
| FFO attributable to common shareholders | 20,416 | 12,523 | |||||||||
Incentive management fees (1) | 1,567 | 967 | |||||||||
| Normalized FFO attributable to common shareholders | $ | 21,983 | $ | 13,490 | |||||||
| Weighted average common shares outstanding (basic and diluted) | 66,178 | 65,834 | |||||||||
| Per common share data (basic and diluted): | |||||||||||
Net loss attributable to common shareholders | $ | (0.14) | $ | (0.33) | |||||||
| FFO attributable to common shareholders | $ | 0.31 | $ | 0.19 | |||||||
| Normalized FFO attributable to common shareholders | $ | 0.33 | $ | 0.20 | |||||||
(1)Incentive management fees are estimated and accrued during the applicable measurement period. Actual incentive management fees are calculated based on common share total return, as defined in our business management agreement, for the three year period ending December 31 of the applicable calendar year, are included in general and administrative expenses in our condensed consolidated statements of comprehensive income (loss) and are payable to RMR in January of the following calendar year.
LIQUIDITY AND CAPITAL RESOURCES (dollars in thousands, except per share and per square foot data)
Our principal sources of funds to meet our operating and capital obligations, pay our debt service obligations and make distributions to our shareholders are rents from tenants at our properties. As of March 31, 2026, investment grade rated tenants, subsidiaries of investment grade rated entities or our Hawaii land leases represented 76.9% of our annualized rental revenues and only 3.7% 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 obligations, pay our debt service obligations and make distributions to our shareholders for the next 12 months and for the foreseeable future thereafter.
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:
Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash and cash equivalents and restricted cash and cash equivalents at beginning of period | $ | 183,031 | $ | 242,480 | |||||||
| Net cash provided by (used in): | |||||||||||
| Operating activities | 15,892 | 11,371 | |||||||||
| Investing activities | (4,695) | (11,689) | |||||||||
| Financing activities | (8,438) | (5,460) | |||||||||
| Total | 2,759 | (5,778) | |||||||||
| Cash and cash equivalents and restricted cash and cash equivalents at end of period | $ | 185,790 | $ | 236,702 | |||||||
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The increase in net cash from operating activities for the three months ended March 31, 2026 compared to the 2025 period is primarily due to higher cash flows and reimbursements from our properties and lower interest expense, excluding the impact of settlement of our interest rate caps. The decrease in net cash used in investing activities for the three months ended March 31, 2026 compared to the 2025 period is primarily due to reduced interest rate cap purchase costs and real estate improvements in 2026. The increase in net cash used in financing activities for the three months ended March 31, 2026 compared to the 2025 period is due to increases in distributions to common shareholders in 2026.
Our Operating Liquidity and Resources
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; and
•control operating cost increases, including interest and other financing costs.
Our Investing and Financing Liquidity and Resources
As of March 31, 2026, we had cash and cash equivalents, excluding restricted cash and cash equivalents, of $99,500. To maintain our qualification for taxation as a REIT under the Internal Revenue Code of 1986, as amended, 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 any offerings of equity or debt securities to fund our distributions to our shareholders.
As our debt approaches maturity or we desire to reduce our leverage or refinance debt, we may 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 or obtaining a revolving credit facility. We may also assume mortgage loans or incur debt in connection with future acquisitions, developments and redevelopments. 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.
Capital Expenditures
As of March 31, 2026, committed, but unspent, tenant related obligations based on existing leases were $4,868, of which $3,900 is expected to be spent during the next 12 months.
For further information regarding our capital expenditures, see Note 3 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Joint Ventures
We own a 61% equity interest in our consolidated joint venture. We control this 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 also own a 22% equity interest in the unconsolidated joint venture. We account for the unconsolidated joint venture using the equity method of accounting under the fair value option. The unconsolidated joint venture made aggregate cash distributions to us of $1,188 and $990 for the three months ended March 31, 2026 and 2025, respectively.
For further information regarding our consolidated joint venture and the unconsolidated joint venture, see Note 3 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Indebtedness
As of March 31, 2026, we had an aggregate principal amount of $4,209,229 of indebtedness, primarily including: (1) our $1,160,000 mortgage loan; (2) the Mountain Floating Rate Loan; (3) our $700,000 mortgage loan; (4) our $650,000 mortgage loan; (5) our consolidated joint venture’s $91,000 mortgage loan; and (6) $208,229 of our consolidated joint venture’s amortizing mortgage loans, with maturity dates between 2027 and 2038.
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In June 2025, we obtained a $1,160,000 fixed rate, interest only mortgage loan secured by 101 of our properties. This mortgage loan matures in July 2030 and requires that interest be paid at an annual rate of 6.40%. Subject to the satisfaction of certain conditions, we have the option to prepay our $1,160,000 mortgage loan in full or in part with a premium prior to January 9, 2030 and at par with no premium on or after January 9, 2030. We used the net proceeds from our $1,160,000 mortgage loan and cash on hand to repay in full the ILPT Floating Rate Loan.
The Mountain Floating Rate Loan is secured by 82 properties, matures in March 2027 and requires that interest be paid at an annual rate of SOFR plus a weighted average premium of 2.77%. In March 2026, our consolidated joint venture exercised the third of its three, one-year extension options for the maturity date of this loan. In connection with the exercise of the extension, our consolidated joint venture purchased a one-year interest rate cap for $3,720 with a SOFR strike rate equal to 3.29%, which replaced the previous interest rate cap with a SOFR strike rate equal to 3.10%. The weighted average interest rates under the Mountain Floating Rate Loan were 5.90% and 5.82% for three months ended March 31, 2026 and 2025, respectively, including the impact of our interest rate caps.
In April 2026, our consolidated joint venture priced a $1,620,000 five year, fixed rate, interest only mortgage loan to be secured by 90 of its properties. This mortgage loan is expected to close on or about May 8, 2026 and our consolidated joint venture expects to use the net proceeds from this mortgage loan to repay in full the Mountain Floating Rate Loan and $204,999 of its amortizing fixed rate debt secured by eight properties.
The agreements and related documents governing our $1,160,000 mortgage loan, the Mountain Floating Rate Loan, our $700,000 mortgage loan and our $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 March 31, 2026, we believe that we were in compliance with all of the covenants and other terms under the agreements governing these loans.
For further information regarding our indebtedness and historical weighted average interest rates of our floating rate loans, see Notes 5 and 6 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Distributions
During the three months ended March 31, 2026, we declared and paid a regular quarterly distribution to common shareholders totaling $3,333 using cash on hand.
On April 9, 2026, we declared a regular quarterly distribution to common shareholders of record on April 21, 2026 of $0.05 per share, or approximately $3,333. We expect to pay this distribution on or about May 14, 2026 using cash on hand.
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 8 and 9 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, our 2025 Annual Report, our definitive Proxy Statement for our 2026 Annual Meeting of Shareholders and our other filings with the SEC. In addition, see the section captioned “Risk Factors” of our 2025 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 assumptions used in the evaluation of impairment of real estate and related intangibles.
A discussion of our critical accounting estimates is included in our 2025 Annual Report. There have been no significant changes in our critical accounting estimates since the year ended December 31, 2025.
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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, including fixed rate debt, and employing derivative instruments, including interest rate caps, to limit our exposure to increasing interest rates. 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
As of March 31, 2026, our outstanding floating rate debt consisted of the following:
| Annual | Annual | Interest | ||||||||||||||||||||||||||||||
| Principal | Interest | Interest | Maturity | Payments | ||||||||||||||||||||||||||||
| Debt | Balance | Rate (1) | Expense | Date | Due | |||||||||||||||||||||||||||
Mountain Floating Rate Loan | $ | 1,400,000 | 6.06% | $ | 86,018 | 03/09/2027 | Monthly | |||||||||||||||||||||||||
(1)The annual interest rate is the rate stated in the applicable contract, as adjusted by the related interest rate cap.
The Mountain Floating Rate Loan requires that interest be paid at an annual rate of SOFR plus a weighted average premium of 2.77%. We are vulnerable to changes in the U.S. dollar based on short term interest rates, specifically SOFR. In conjunction with this borrowing, to hedge our exposure to risks related to changes in SOFR and as required under the loan agreement, our consolidated joint venture purchased an interest rate cap with a current SOFR strike rate equal to 3.29% for the Mountain Floating Rate Loan. In addition, upon refinancing of the Mountain Floating Rate Loan, we are vulnerable to increases in interest rate premiums due to market conditions and our perceived credit risk.
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 March 31, 2026, including the impact of our interest rate cap:
| Impact of an Increase in Interest Rates | ||||||||||||||||||||||||||
| Total Interest | Annual | |||||||||||||||||||||||||
| Annual | Outstanding | Expense | Earnings Per | |||||||||||||||||||||||
Interest Rate | Debt | Per Year | Share Impact (1) | |||||||||||||||||||||||
At March 31, 2026 | 6.06 | % | $ | 1,400,000 | $ | 86,018 | $ | (1.30) | ||||||||||||||||||
One percentage point increase (2) | 6.06 | % | $ | 1,400,000 | $ | 86,018 | $ | (1.30) | ||||||||||||||||||
(1)Based on the diluted weighted average common shares outstanding for the three months ended March 31, 2026.
(2)A one percentage point increase in interest rates would not have an impact on annual total interest expense for our floating rate debt because current interest rates exceed the strike rate of the related interest rate cap. However, a one percentage point increase in our annual interest rate of the Mountain Floating Rate Loan debt to 7.06% at March 31, 2026 would result in total floating rate interest expense per year of $100,213 and a decrease in annual earnings per share of $1.51.
The foregoing table shows the impact of an immediate one percentage point change in floating interest rates, including the impact of our interest rate caps. 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 and the impact, if any, of interest rate caps we may purchase. Generally, if interest rates were to change gradually over time, the impact would be spread over time.
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Fixed Rate Debt
As of March 31, 2026, our outstanding fixed rate debt consisted of the following:
| Number of | Annual | Annual | Interest | |||||||||||||||||||||||||||||||||||
| Properties | Principal | Interest | Interest | Payments | ||||||||||||||||||||||||||||||||||
| Entity | Secured By | Balance | Rate (1) | Expense | Maturity | Due | ||||||||||||||||||||||||||||||||
| ILPT | 186 | $ | 650,000 | 4.31% | $ | 28,015 | 02/07/2029 | Monthly | ||||||||||||||||||||||||||||||
| ILPT | 101 | 1,160,000 | 6.40% | 74,240 | 07/09/2030 | Monthly | ||||||||||||||||||||||||||||||||
| ILPT | 17 | 700,000 | 4.42% | 30,940 | 03/09/2032 | Monthly | ||||||||||||||||||||||||||||||||
| Mountain JV | 4 | 91,000 | 6.25% | 5,688 | 06/10/2030 | Monthly | ||||||||||||||||||||||||||||||||
Mountain JV (2) | 1 | 8,248 | 3.67% | 303 | 05/01/2031 | Monthly | ||||||||||||||||||||||||||||||||
Mountain JV (2) | 1 | 9,960 | 4.14% | 412 | 07/01/2032 | Monthly | ||||||||||||||||||||||||||||||||
Mountain JV (2) | 1 | 23,032 | 4.02% | 926 | 10/01/2033 | Monthly | ||||||||||||||||||||||||||||||||
Mountain JV (2) | 1 | 32,318 | 4.13% | 1,335 | 11/01/2033 | Monthly | ||||||||||||||||||||||||||||||||
Mountain JV (2) | 1 | 20,311 | 3.10% | 630 | 06/01/2035 | Monthly | ||||||||||||||||||||||||||||||||
Mountain JV (2) | 1 | 33,094 | 2.95% | 976 | 01/01/2036 | Monthly | ||||||||||||||||||||||||||||||||
Mountain JV (2) | 1 | 38,399 | 4.27% | 1,640 | 11/01/2037 | Monthly | ||||||||||||||||||||||||||||||||
Mountain JV (2) | 1 | 42,867 | 3.25% | 1,393 | 01/01/2038 | Monthly | ||||||||||||||||||||||||||||||||
| Total / weighted average | $ | 2,809,229 | 5.21% | $ | 146,498 | |||||||||||||||||||||||||||||||||
(1)The annual interest rate is the rate stated in the applicable contract.
(2)In April 2026, our consolidated joint venture priced a $1,620,000 five year, fixed rate, interest only mortgage loan at 5.71%. This mortgage loan is expected to close on or about May 8, 2026 and expects to use the net proceeds to repay these loans in full.
Our $650,000, $1,160,000, $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 $27,955.
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. Interest rates continue to remain elevated despite reductions in 2025 by the U.S. Federal Reserve. There are uncertainties surrounding interest rates and they may remain at current levels, decrease or increase. Based on the balances outstanding at March 31, 2026 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 these obligations by approximately $108,298.
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 President and Chief Executive Officer and our Chief Financial Officer and Treasurer, of the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, our President and Chief Executive Officer and our Chief Financial Officer and Treasurer concluded that our disclosure controls and procedures are effective.
There have been no changes in our internal control over financial reporting during the quarter ended March 31, 2026 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; our existing and possible future joint venture arrangements; our redevelopment and construction activities and plans; the closing of our consolidated joint venture’s fixed rate mortgage loan and its expected use of proceeds; 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:
•Whether our tenants will renew or extend their leases or whether we will obtain replacement tenants on terms as favorable to us as the terms of our existing leases,
•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 located in Hawaii,
•Our ability to maintain high occupancy at our 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 purchase cost effective interest rate caps,
•Our consolidated joint venture's ability to refinance its debt on the expected terms or timeline,
•Our expected capital expenditures and leasing costs,
•Our ability to maintain sufficient liquidity,
•Our ability and the ability of our tenants to operate under unfavorable market and commercial real estate industry conditions, due to uncertainties surrounding interest rates and inflation, changing tariffs and trade policies and related uncertainty, supply chain disruptions, emerging technologies, volatility in the public equity and debt markets, geopolitical instability and tensions, pandemics, any U.S. government shutdown, economic downturns or a possible recession, labor market conditions or changes in real estate utilization,
•Demand for industrial and logistics properties,
•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,
•Competition within the commercial real estate industry, particularly for industrial and logistics properties in those markets in which our properties are located,
•Our tenant and geographic concentrations,
•Our tenants’ ability and willingness to pay their rent obligations to us,
•The credit qualities of our tenants,
•Changes in the security of cash flows from our properties,
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•Potential defaults of our leases by our tenants,
•Our ability to pay distributions to our shareholders and to increase or sustain the amount of such distributions,
•Our ability to sell properties at prices or returns we target, and the timing of such sales,
•Our ability to complete sales without delay, or at all, pursuant to existing agreement terms,
•Our ability to sell additional equity interests in, or contribute additional properties to, our existing joint ventures, to 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,
•Risks and uncertainties regarding the development, redevelopment or repositioning of our properties, including as a result of inflation, cost overruns, tariffs, supply chain challenges, labor market conditions, construction delays or our inability to obtain necessary permits, our ability to lease space at these properties at targeted returns and volatility in the commercial real estate markets,
•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,
•Non-performance by the counterparty to our interest rate cap,
•The ability of our manager, RMR, to successfully manage us,
•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,
•Compliance with, and changes to, federal, state and local laws and regulations, accounting rules, tax laws and similar matters,
•Limitations imposed by and our ability to satisfy complex rules to maintain our qualification for taxation as a REIT for U.S. federal income tax purposes,
•Actual and potential conflicts of interest with our related parties, including our Managing Trustees, RMR and others affiliated with them,
•Acts of terrorism, war or other hostilities, outbreaks of pandemics or other public health safety events or conditions, global 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.
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PART II. Other Information
Item 1A. Risk Factors
There have been no material changes to our risk factors from those we previously disclosed in our 2025 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 March 31, 2026:
| Maximum | ||||||||||||||||||||||||||
| Total Number of | Approximate Dollar | |||||||||||||||||||||||||
| Shares Purchased | Value of Shares that | |||||||||||||||||||||||||
| Number of | 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 | ||||||||||||||||||||||
| March 1, 2026 - March 31, 2026 | 2,704 | $ | 6.08 | — | — | |||||||||||||||||||||
Total / weighted average | 2,704 | $ | 6.08 | — | $ | — | ||||||||||||||||||||
(1) These common share withholdings and purchases were made to satisfy tax withholding and payment obligations of certain former employees of RMR in connection with the vesting of awards of our common shares. We withheld and purchased these common shares at their fair market value based upon the trading price of our common shares at the close of trading on Nasdaq on the purchase date.
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Item 6. Exhibits
Exhibit Number | Description | ||||
| 3.1 | |||||
| 3.2 | |||||
| 4.1 | |||||
| 31.1 | |||||
| 31.2 | |||||
| 32.1 | |||||
| 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.) | ||||
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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 Executive Officer | ||||||||
Dated: April 29, 2026 | ||||||||
| By: | /s/ Tiffany R. Sy | |||||||
| Tiffany R. Sy | ||||||||
| Chief Financial Officer and Treasurer | ||||||||
| (Principal Financial Officer and Principal Accounting Officer) | ||||||||
Dated: April 29, 2026 | ||||||||
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