Fourth Quarter Net Income Attributable to Common Shareholders of $0.62 Per Share

Fourth Quarter Normalized FFO Attributable to Common Shareholders of $0.46 Per Share

Added Second Joint Venture Investor, Raising Equity Capital at Net Asset Value to Reduce Debt

NEWTON, Mass.--(BUSINESS WIRE)-- Industrial Logistics Properties Trust (Nasdaq: ILPT) today announced financial results for the quarter ended December 31, 2020.

John Murray, President and Chief Executive Officer of ILPT, made the following statement:

"We reported a strong finish to the year, with steady progress on our key priorities to reduce leverage, expand the portfolio, and create value for tenants and investors in today's competitive operating environment. ILPT entered into new and renewal leases for approximately 253,000 square feet, resulting in weighted average rental rates that were 14.1% higher than prior rental rates with a weighted average lease term of 13 years. Our portfolio occupancy also remained stable at 98.5%, which demonstrates the strong demand for ILPT's high quality industrial and logistics properties. We added a second third party investor to our existing 12-property joint venture, which resulted in substantially reducing our leverage, and we ended the year with more than $550 million of total liquidity. Finally, in December 2020, we completed the acquisition of a 645,000 square foot Class A industrial facility in the Kansas City area, which expands ILPT's geographic diversification into another top 20 U.S. industrial market. Looking ahead to 2021, we anticipate industrial real estate fundamentals will continue to remain strong with ILPT well positioned to pursue opportunities that will complement our existing industrial assets, drive growth across the portfolio, and create sustainable long-term shareholder value.”

Quarterly Results:

• Net income attributable to common shareholders of $40.3 million, or $0.62 per diluted share.
• Normalized FFO attributable to common shareholders of $30.2 million, or $0.46 per diluted share.
• Recorded a gain on sale of real estate of $24.0 million, or $0.37 per diluted share, principally related to our sale of equity interest in our joint venture to a second third party institutional investor.

Reconciliations of net income attributable to common shareholders determined in accordance with U.S. generally accepted accounting principles, or GAAP, to funds from operations, or FFO, attributable to common shareholders and normalized funds from operations, or Normalized FFO, attributable to common shareholders for the quarters ended December 31, 2020 and 2019 appear later in this press release. Reconciliations of net income determined in accordance with GAAP to net operating income, or NOI, and Cash Basis NOI, and a reconciliation of NOI to same property NOI and calculation of same property Cash Basis NOI, for the quarters ended December 31, 2020 and 2019, also appear later in this press release.

• In response to the COVID-19 pandemic, ILPT granted requests to 39 tenants to defer aggregate rent payments of $3.2 million as of February 15, 2021, and in most cases, these tenants were obligated to pay the deferred rents in 12 equal monthly installments beginning in September 2020.
• During the quarter ended December 31, 2020, ILPT collected approximately 98% of its contractual rents due after giving effect to such rent deferrals.

Acquisition and Disposition Activities:

• In December 2020, ILPT acquired a net leased Class A industrial property located in Kansas City, KS containing 645,462 rentable square feet and excess developable land that can either support a 550,000 square feet expansion to the existing building or 430,000 square feet free standing building for a purchase price of $44.0 million, excluding acquisition related costs. The existing building is 100% leased and has a remaining lease term of approximately 11.7 years.
• In December 2020, ILPT sold one property located in Virginia containing 308,217 rentable square feet for a sales price of $10.8 million, excluding closing costs.

Joint Venture:

• In November 2020, ILPT sold a 39% equity interest from its 61% equity interest in its existing joint venture for 12 of ILPT’s properties in the mainland United States, to a large, top tier global sovereign wealth fund for approximately $108.8 million. After giving effect to the sale, the then existing institutional investor in the joint venture maintains its 39% equity interest and ILPT continues to own the remaining 22% equity interest in the joint venture.
• Upon closing of the transaction, ILPT no longer consolidates the results of operations of the joint venture into its financial results, including the $407.0 million of debt associated with the 12 properties, and instead accounts for its remaining 22% equity interest as an unconsolidated joint venture interest.

Liquidity:

• As of December 31, 2020, ILPT had approximately $22.8 million of cash and cash equivalents, and approximately $529 million available to borrow under its revolving credit facility.

Conference Call:

On Thursday, February 18, 2021 at 10:00 a.m. Eastern Time, John Murray, Chief Executive Officer, Richard Siedel, Chief Financial Officer, and Yael Duffy, Chief Operating Officer, will host a conference call to discuss ILPT’s fourth quarter 2020 financial results.

The conference call telephone number is (877) 418-4826. Participants calling from outside the United States and Canada should dial (412) 902-6758. No pass code is necessary to access the call from either number. Participants should dial in about 15 minutes prior to the scheduled start of the call. A replay of the conference call will be available through 11:59 p.m. on Thursday, February 25, 2021. To access the replay, dial (412) 317-0088. The replay pass code is 10150720.

A live audio webcast of the conference call will also be available in a listen-only mode on ILPT’s website, at www.ilptreit.com. Participants wanting to access the webcast should visit ILPT’s website about five minutes before the call. The archived webcast will be available for replay on ILPT’s website following the call for about one week. The transcription, recording and retransmission in any way of ILPT’s fourth quarter conference call are strictly prohibited without the prior written consent of ILPT.

Supplemental Data:

A copy of ILPT’s Fourth Quarter 2020 Supplemental Operating and Financial Data is available for download at ILPT’s website, which is located at www.ilptreit.com. ILPT’s website is not incorporated as part of this press release.

ILPT is a real estate investment trust, or REIT, that owns and leases industrial and logistics properties throughout the United States. ILPT is managed by the operating subsidiary of The RMR Group Inc. (Nasdaq: RMR), an alternative asset management company that is headquartered in Newton, MA.

Non-GAAP Financial Measures:

ILPT presents certain “non-GAAP financial measures” within the meaning of applicable rules of the Securities and Exchange Commission, or SEC, including FFO attributable to common shareholders, Normalized FFO attributable to common shareholders, NOI and Cash Basis NOI. These measures do not represent cash generated by operating activities in accordance with GAAP and should not be considered alternatives to net income or net income attributable to common shareholders as indicators of ILPT’s operating performance or as measures of ILPT’s liquidity. These measures should be considered in conjunction with net income and net income attributable to common shareholders as presented in ILPT’s consolidated statements of income. ILPT considers these non-GAAP measures to be appropriate supplemental measures of operating performance for a REIT, along with net income and net income attributable to common shareholders. ILPT believes 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 ILPT’s operating performance between periods and with other REITs and, in the case of NOI and Cash Basis 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 ILPT’s properties.

Please see the pages attached hereto for a more detailed statement of ILPT’s operating results and financial condition and for an explanation of ILPT’s calculation of NOI, Cash Basis NOI, same property NOI, same property Cash Basis NOI, FFO attributable to common shareholders and Normalized FFO attributable to common shareholders and a reconciliation of those amounts to amounts determined in accordance with GAAP.

Warning Concerning Forward-Looking Statements

This press release contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Whenever ILPT uses words such as “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”, “will”, “may” and negatives or derivatives of these or similar expressions, ILPT is making forward-looking statements. These forward-looking statements are based upon ILPT’s present intent, beliefs or expectations, but forward-looking statements are not guaranteed to occur and may not occur. Actual results may differ materially from those contained in or implied by ILPT’s forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors, some of which are beyond ILPT’s control. For example:

• Mr. Murray states in this press release that ILPT reported a strong finish to the year, with steady progress on ILPT’s key priorities to reduce leverage, expand the portfolio, and create value for tenants and investors in today’s competitive operating environment. This may imply that ILPT will continue to make progress on its key priorities. However, ILPT’s business is subject to various risks, some of which are beyond its control, such as the COVID-19 pandemic and/or general economic conditions. As a result, ILPT may not continue to make progress on its key priorities,
• Mr. Murray’s statements in this press release regarding ILPT’s leasing activity may imply that ILPT will achieve similar or better results in the future. However, leasing activity depends on various factors, including the impact of the COVID-19 pandemic, existing tenants’ continuing need for space, the timing of the expiration of existing leases, the market demand to lease space at ILPT’s properties, ILPT’s ability to successfully compete for tenants and other economic and market conditions. As a result, ILPT may not realize similar or better leasing results in the future, and these leasing results may worsen,
• Mr. Murray states in this press release that ILPT added a second third party investor to its existing joint venture, which resulted in substantially reducing our leverage and that ILPT ended the year with more than $550 million of total liquidity. However, ILPT has a revolving credit facility under which it may borrow, repay and reborrow amounts and ILPT may seek to obtain additional debt financing in the future. As a result, ILPT may not maintain the reduced leverage or strong liquidity it achieved by adding a second partner to this joint venture, and
• Mr. Murray states in this press release that ILPT is well positioned to pursue opportunities that will complement ILPT’s existing industrial assets, drive growth across the portfolio, and create sustainable long-term shareholder value. However, ILPT’s ability to acquire and lease properties and to realize increased rents depends in large part on when such properties become available for acquisition or lease, when leases are negotiated or rents are reset, or market conditions in areas where ILPT’s properties are located. Market conditions often change and are beyond ILPT’s control. In the future, ILPT may not make acquisitions or negotiate expansions, may experience increasing vacancies, lower rents at its properties or lower demand for its properties and may experience a decline of its operating results.

The information contained in ILPT’s filings with the SEC, including under “Risk Factors” in ILPT’s periodic reports, or incorporated therein, identifies important factors that could cause ILPT’s actual results to differ materially from those stated in or implied by ILPT’s forward-looking statements. ILPT’s filings with the SEC are available on the SEC’s website at www.sec.gov.

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

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

A Maryland Real Estate Investment Trust with transferable shares of beneficial interest listed on the Nasdaq. No shareholder, Trustee or officer is personally liable for any act or obligation of the Trust.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210217005934/en/

Kevin Barry, Manager, Investor Relations (617) 658-0776

Source: Industrial Logistics Properties Trust