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Industrial Logistics Properties Trust - Quarter Report: 2023 June (Form 10-Q)


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
For the quarterly period ended June 30, 2023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
Commission File Number 001-38342 
INDUSTRIAL LOGISTICS PROPERTIES TRUST
(Exact Name of Registrant as Specified in Its Charter)
Maryland 82-2809631
(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)
Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458-1634
(Address of Principal Executive Offices)(Zip Code)
617-219-1460
(Registrant’s Telephone Number, Including Area Code)
Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name Of Each Exchange On Which Registered
Common Shares of Beneficial InterestILPTThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
Number of registrant’s common shares of beneficial interest, $.01 par value per share, outstanding as of July 21, 2023: 65,696,942


Table of Contents

INDUSTRIAL LOGISTICS PROPERTIES TRUST
 
FORM 10-Q
 
June 30, 2023
 
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.
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PART I. Financial Information
 
Item 1. Financial Statements
 
INDUSTRIAL LOGISTICS PROPERTIES TRUST 
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data)
(unaudited) 
 June 30,December 31,
 20232022
ASSETS  
Real estate properties:
Land$1,112,598 $1,117,779 
Buildings and improvements4,031,041 4,058,329 
Total real estate properties, gross5,143,639 5,176,108 
Accumulated depreciation(330,879)(273,467)
Total real estate properties, net4,812,760 4,902,641 
Assets of properties held for sale37,261 — 
Investment in unconsolidated joint venture129,082 124,358 
Acquired real estate leases, net267,889 297,445 
Cash and cash equivalents71,695 48,261 
Restricted cash138,673 92,519 
Rents receivable, including straight line rents of $87,797 and $80,710, respectively
110,638 107,011 
Other assets, net94,082 103,931 
Total assets$5,662,080 $5,676,166 
LIABILITIES AND EQUITY
Mortgages and notes payable, net$4,301,276 $4,244,501 
Liabilities of properties held for sale31 — 
Accounts payable and other liabilities73,916 73,547 
Assumed real estate lease obligations, net20,420 22,523 
Due to related persons5,148 4,824 
Total liabilities4,400,791 4,345,395 
Commitments and contingencies
Equity:
Equity attributable to common shareholders:
Common shares of beneficial interest, $.01 par value: 100,000,000 shares authorized; 65,697,959 and 65,568,145 shares issued and outstanding, respectively
657 656 
Additional paid in capital1,015,138 1,014,201 
Cumulative net income66,548 117,185 
Cumulative other comprehensive income26,487 21,903 
Cumulative common distributions(364,533)(363,221)
Total equity attributable to common shareholders744,297 790,724 
Total equity attributable to noncontrolling interest516,992 540,047 
Total equity1,261,289 1,330,771 
Total liabilities and equity$5,662,080 $5,676,166 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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INDUSTRIAL LOGISTICS PROPERTIES TRUST 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(amounts in thousands, except per share data)
(unaudited) 
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Rental income$108,043 $107,222 $218,301 $178,597 
Expenses:
Real estate taxes15,100 13,275 31,567 22,711 
Other operating expenses8,519 7,053 17,837 13,825 
Depreciation and amortization44,909 42,699 90,366 65,577 
General and administrative8,131 9,709 16,038 15,786 
Loss on impairment of real estate254 100,747 254 100,747 
Total expenses76,913 173,483 156,062 218,646 
Interest and other income1,797 354 2,943 832 
Interest expense (including net amortization of debt issuance costs, premiums and discounts of $6,721, $34,448, $13,434, and $54,769, respectively)
(71,846)(77,548)(142,617)(118,547)
Loss on sale of real estate— (10)(974)(10)
Loss on equity securities— (9,450)— (5,758)
Loss on early extinguishment of debt(359)— (359)(828)
Loss before income tax expense and equity in earnings of unconsolidated joint venture(39,278)(152,915)(78,768)(164,360)
Income tax expense(45)(16)(62)(85)
Equity in earnings of unconsolidated joint venture2,743 1,610 6,704 3,337 
Net loss(36,580)(151,321)(72,126)(161,108)
Net loss attributable to noncontrolling interest10,752 7,782 21,489 11,055 
Net loss attributable to common shareholders(25,828)(143,539)(50,637)(150,053)
Other comprehensive income:
Unrealized gain on derivatives12,021 4,438 3,243 10,070 
Less: unrealized gain (loss) on derivatives attributable to noncontrolling interest(419)(774)1,341 (2,498)
Other comprehensive (loss) income attributable to common shareholders11,602 3,664 4,584 7,572 
Comprehensive loss attributable to common shareholders$(14,226)$(139,875)$(46,053)$(142,481)
Weighted average common shares outstanding - basic and diluted65,369 65,221 65,339 65,217 
Per common share data (basic and diluted):
Net loss attributable to common shareholders$(0.40)$(2.20)$(0.77)$(2.30)

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



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INDUSTRIAL LOGISTICS PROPERTIES TRUST
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(dollars in thousands)
(unaudited)


CumulativeTotal EquityTotal Equity
Number ofAdditionalOtherCumulativeAttributable toAttributable to
CommonCommonPaid InCumulativeComprehensiveCommonCommonNoncontrollingTotal
SharesSharesCapitalNet IncomeIncomeDistributionsShareholdersInterestEquity
Balance at December 31, 202265,568,145 $656 $1,014,201 $117,185 $21,903 $(363,221)$790,724 $540,047 $1,330,771 
Net loss— — — (24,809)— — (24,809)(10,737)(35,546)
Share grants— — 388 — — — 388 — 388 
Share repurchases(976)— (3)— — — (3)— (3)
Share forfeitures(1,200)— (1)— — — (1)— (1)
Distributions to common shareholders— — — — — (656)(656)— (656)
Net current period other comprehensive loss— — — — (7,018)— (7,018)(1,760)(8,778)
Balance at March 31, 202365,565,969 $656 $1,014,585 $92,376 $14,885 $(363,877)$758,625 $527,550 $1,286,175 
Net loss— — — (25,828)— — (25,828)(10,752)(36,580)
Share grants140,000 567 — — — 568 — 568 
Share repurchases(7,110)— (12)— — — (12)— (12)
Share forfeitures(900)— (2)— — — (2)— (2)
Distributions to common shareholders— — — — — (656)(656)— (656)
Net current period other comprehensive loss— — — — 11,602 — 11,602 419 12,021 
Distributions to noncontrolling interest— — — — — — (225)(225)
Balance at June 30, 202365,697,959 $657 $1,015,138 $66,548 $26,487 $(364,533)$744,297 $516,992 $1,261,289 

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














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INDUSTRIAL LOGISTICS PROPERTIES TRUST
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(dollars in thousands)
(unaudited)


CumulativeTotal EquityTotal Equity
Number ofAdditionalOtherCumulativeAttributable toAttributable to
CommonCommonPaid InCumulativeComprehensiveCommonCommonNoncontrollingTotal
SharesSharesCapitalNet IncomeIncomeDistributionsShareholdersInterestEquity
Balance at December 31, 202165,404,592 $654 $1,012,224 $343,908 $— $(318,744)$1,038,042 $— $1,038,042 
Net (loss) income— — — (6,514)— — (6,514)(3,273)(9,787)
Share grants— — 407 — — — 407 — 407 
Share repurchases(333)— (7)— — — (7)— (7)
Share forfeitures(400)— (2)— — — (2)— (2)
Net current period other comprehensive income— — — — 3,908 — 3,908 1,724 5,632 
Contributions from noncontrolling interest— — — — — — — 591,268 591,268 
Distributions to common shareholders— — — — — (21,584)(21,584)— (21,584)
Balance at March 31, 202265,403,859 $654 $1,012,622 $337,394 $3,908 $(340,328)$1,014,250 $589,719 $1,603,969 
Net (loss) income— — — (143,539)— — (143,539)(7,782)(151,321)
Share grants24,500 — 800 — — — 800 — 800 
Share forfeitures(900)— (4)— — — (4)— (4)
Net current period other comprehensive income— — — — 3,664 — 3,664 774 4,438 
Distributions to noncontrolling interest— — — — — — — (1,365)(1,365)
Distributions to common shareholders— — — — — (21,583)(21,583)— (21,583)
Balance at June 30, 202265,427,459 $654 $1,013,418 $193,855 $7,572 $(361,911)$853,588 $581,346 $1,434,934 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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INDUSTRIAL LOGISTICS PROPERTIES TRUST 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
 Six Months Ended June 30,
20232022
CASH FLOWS FROM OPERATING ACTIVITIES:  
Net loss$(72,126)$(161,108)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation62,464 43,375 
Loss on impairment of real estate254 100,747 
Net amortization of debt issuance costs, premiums and discounts13,434 54,769 
Amortization of acquired real estate leases and assumed real estate lease obligations26,308 17,477 
Amortization of deferred leasing costs1,101 735 
Loss on equity securities— 5,758 
Straight line rental income(7,117)(4,376)
Loss on early extinguishment of debt359 828 
Loss on sale of real estate974 — 
Proceeds from settlement of derivatives(24,445)— 
Other non-cash expenses13,244 2,156 
Distributions of earnings from unconsolidated joint venture1,980 2,642 
Equity in earnings of unconsolidated joint venture(6,704)(3,337)
Change in assets and liabilities:
Rents receivable3,065 (9,933)
Deferred leasing costs(4,194)(4,565)
Other assets2,332 (4,695)
Accounts payable and other liabilities310 25,539 
Rents collected in advance(1,238)9,030 
Security deposits301 672 
Due to related persons329 5,217 
Net cash provided by operating activities10,631 80,931 
CASH FLOWS FROM INVESTING ACTIVITIES:
Real estate acquisitions— (3,551,509)
Real estate improvements(7,301)(5,305)
Proceeds from sale of marketable securities— 140,792 
Proceeds from settlement of derivatives24,445 — 
Proceeds from sale of real estate243 — 
Net cash provided by (used in) investing activities17,387 (3,416,022)

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















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INDUSTRIAL LOGISTICS PROPERTIES TRUST 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(dollars in thousands)
(unaudited)
Six Months Ended June 30,
20232022
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of mortgage notes payable91,000 2,100,000 
Repayment of mortgage notes payable(46,607)(7,161)
Proceeds from secured bridge loan facility— 1,385,158 
Borrowings under revolving credit facility— 3,000 
Repayments of revolving credit facility— (185,000)
Payment of debt issuance costs(1,271)(96,260)
Distributions to common shareholders(1,312)(43,167)
Proceeds from sale of noncontrolling interest, net— 587,440 
Repurchase of common shares(15)(7)
Distributions to noncontrolling interest(225)(1,365)
Net cash provided by financing activities41,570 3,742,638 
Increase in cash, cash equivalents and restricted cash69,588 407,547 
Cash, cash equivalents and restricted cash at beginning of period140,780 29,397 
Cash, cash equivalents and restricted cash at end of period$210,368 $436,944 
SUPPLEMENTAL DISCLOSURES:
Interest paid$142,095 $55,065 
Income taxes paid$545 $195 
Interest capitalized$324 $15 
NON-CASH INVESTING ACTIVITIES:
Real estate acquired by assumption of mortgage notes payable$— $323,432 
Real estate improvements accrued not paid$4,950 $4,055 
NON-CASH FINANCING ACTIVITIES:
Assumption of mortgage notes payable$— $(323,432)

SUPPLEMENTAL DISCLOSURE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH:
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets to the amounts shown in the condensed consolidated statements of cash flows:
As of June 30,
20232022
Cash and cash equivalents$71,695 $291,866 
Restricted cash (1)
138,673 145,078 
Total cash, cash equivalents and restricted cash shown in the statements of cash flows$210,368 $436,944 
(1) Restricted cash consists of amounts escrowed for capital expenditures at certain of our mortgaged properties and cash held for the operations of our consolidated joint venture arrangement in which we own a 61% equity interest.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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INDUSTRIAL LOGISTICS PROPERTIES TRUST 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)


Note 1. Basis of Presentation

The accompanying condensed consolidated financial statements of Industrial Logistics Properties Trust and its consolidated subsidiaries, or the Company, ILPT, we, us or our, are unaudited. Certain information and disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted. We believe the disclosures made are adequate to make the information presented not misleading. However, the accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2022, or our 2022 Annual Report. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of results for the interim period have been included. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Our operating results for interim periods are not necessarily indicative of the results that may be expected for the full year.
The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in the condensed consolidated financial statements include purchase price allocations, useful lives of fixed assets, and assessment of impairment of real estate and related intangibles.
Note 2. Real Estate Investments

As of June 30, 2023, our portfolio was comprised of 413 consolidated properties containing approximately 59,983,000 rentable square feet, including 226 buildings, leasable land parcels and easements containing approximately 16,729,000 rentable square feet of primarily industrial lands located on the island of Oahu, Hawaii, or our Hawaii Properties, and 187 industrial properties containing approximately 43,254,000 rentable square feet located in 38 other states, or our Mainland Properties, which included 94 properties owned by a consolidated joint venture in which we own a 61% equity interest. As of June 30, 2023, we also owned a 22% equity interest in an unconsolidated joint venture which owns 18 industrial properties located in 12 states totaling approximately 11,726,000 rentable square feet.
We operate in one business segment: ownership and leasing of properties that include industrial and logistics buildings and leased industrial lands.
We incurred capital expenditures and leasing costs at certain of our properties of $7,651 and $10,080 during the three months ended June 30, 2023 and 2022, respectively, and $12,582 and $13,845 for the six months ended June 30, 2023 and 2022, respectively. During the six months ended June 30, 2023, we committed $5,832 for expenditures related to tenant improvements and leasing costs for leases executed during the period for approximately 3,110,000 square feet. Committed, but unspent, tenant related obligations based on existing leases as of June 30, 2023 were $23,876, of which $6,481 is expected to be spent during the next 12 months.
We regularly evaluate whether events or changes in circumstances have occurred that could indicate an impairment in the value of long lived assets. Impairment indicators may include declining tenant occupancy, lack of progress releasing vacant space, tenant bankruptcies, low long term prospects for improvement in property performance, weak or declining tenant profitability, cash flow or liquidity, our decision to dispose of an asset before the end of its estimated useful life and legislative, market or industry changes that could permanently reduce the value of a property. If there is an indication that the carrying value of an asset is not recoverable, we estimate the projected undiscounted cash flows to determine if an impairment loss should be recognized. The future net undiscounted cash flows are subjective and are based in part on assumptions regarding hold periods, market rents and terminal capitalization rates. We determine the amount of any impairment loss by comparing the historical carrying value to estimated fair value. We estimate fair value through an evaluation of recent financial performance and projected discounted cash flows using standard industry valuation techniques. In addition to consideration of impairment upon the events or changes in circumstances described above, we regularly evaluate the remaining useful lives of our long lived assets. If we change our estimate of the remaining useful lives, we allocate the carrying value of the affected assets over their revised remaining useful lives.
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INDUSTRIAL LOGISTICS PROPERTIES TRUST 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share data)

During the three months ended June 30, 2023, we recorded a loss on impairment of real estate of $254 to reduce the carrying value of one of the two properties that were classified as held for sale at June 30, 2023 to its estimated sales price less costs to sell.
As of March 31, 2022, we classified 30 properties we acquired as part of our acquisition of Monmouth Real Estate Investment Corporation, or MNR, on February 25, 2022, as held for sale in our condensed consolidated balance sheet. During the three months ended June 30, 2022, we determined not to sell these properties as a result of market conditions and reclassified those properties to held and used and recorded a $100,747 loss on impairment of real estate to adjust the carrying value of 25 of those 30 properties to their estimated fair value.
Disposition Activities
As of June 30, 2023, we had two Mainland Properties with 551,000 square feet and an aggregate carrying value of $36,864 classified as held for sale. See Note 5 for more information on our properties held for sale.
In March 2023, we received gross proceeds of $270 and recorded a $974 net loss on sale of real estate as a result of a partial eminent domain taking at a property in Everett, Washington.
As of July 25, 2023, we have entered into agreements to sell three properties containing approximately 762,000 rentable square feet for an aggregate sales price of $65,265, excluding closing costs. These pending sales are subject to conditions; accordingly, we cannot be sure that we will complete these sales or that these sales will not be delayed or the terms will not change.
Joint Venture Activities
As of June 30, 2023, we had equity investments in our joint ventures that consisted of the following:
ILPT Carrying Value
ILPTof InvestmentNumber ofSquare
Joint VenturePresentationOwnershipat June 30, 2023PropertiesLocationFeet
Mountain Industrial REIT LLCConsolidated61%N/A94 Various20,980,661 
The Industrial Fund REIT LLCUnconsolidated22%$129,082 18 Various11,726,137 
Consolidated Joint Venture - Mountain Industrial REIT LLC:
We own a 61% equity interest in Mountain Industrial REIT LLC, or our consolidated joint venture. We control our consolidated joint venture and therefore account for the properties owned by this joint venture on a consolidated basis in our condensed consolidated financial statements. We recognized a 39% noncontrolling interest in our condensed consolidated financial statements for the three months ended June 30, 2023 and 2022, for the six months ended June 30, 2023 and the period from this joint venture’s formation date, February 25, 2022 to June 30, 2022. The portion of this joint venture's net loss not attributable to us, or $10,676 and $7,781, for the three months ended June 30, 2023 and 2022, respectively, and $21,404 and $11,042 for the six months ended June 30, 2023 and for the period from February 25, 2022 to June 30, 2022, respectively, is reported as net loss attributable to noncontrolling interest in our condensed consolidated statements of comprehensive income (loss). As of June 30, 2023, our consolidated joint venture had total assets of $3,092,534 and total liabilities of $1,775,802.
Unconsolidated Joint Venture - The Industrial Fund REIT LLC:
We own a 22% equity interest in The Industrial Fund REIT LLC, or the unconsolidated joint venture. We account for the unconsolidated joint venture under the equity method of accounting under the fair value option.
We recorded a change in the fair value of our investment in the unconsolidated joint venture of $2,743 and $1,610 for the three months ended June 30, 2023 and 2022, respectively, and $6,704 and $3,337 for the six months ended June 30, 2023 and 2022, respectively, as equity in earnings of unconsolidated joint venture in our condensed consolidated statements of comprehensive income (loss). In addition, the unconsolidated joint venture made aggregate cash distributions to us of $990 and
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INDUSTRIAL LOGISTICS PROPERTIES TRUST 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share data)

$1,322 during the three months ended June 30, 2023 and 2022, respectively, and $1,980 and $2,642 for the six months ended June 30, 2023 and 2022, respectively.
Consolidated Tenancy in Common:
An unrelated third party owns an approximate 33% tenancy in common interest in one property located in Somerset, New Jersey, and we own the remaining 67% tenancy in common interest in this property. The portion of this property’s net loss not attributable to us, or $76 and $1, for the three months ended June 30, 2023 and 2022, respectively, and $85 and $13 for the six months ended June 30, 2023 and the period from the date we acquired our interest in this property, February 25, 2022 to June 30, 2022, respectively, is reported as net loss attributable to noncontrolling interest in our condensed consolidated statements of comprehensive income (loss). During the three and six months ended June 30, 2023, this tenancy in common made cash distributions of $225 to the unrelated third party investor, which is reflected as a decrease in the total equity attributable to noncontrolling interest in our condensed consolidated balance sheet.
See Notes 4, 5, 7, 8 and 9 for more information regarding these joint ventures.
Note 3. Leases

We are a lessor of industrial and logistics properties. Our leases provide our tenants with the contractual right to use and economically benefit from all the physical space specified in their respective leases; therefore, we have determined to evaluate our leases as lease arrangements.
We recognize rental income from operating leases on a straight line basis over the lease term when we have determined that the collectability of substantially all of the lease payments is probable. We increased rental income by $3,355 and $3,220 to record revenue on a straight line basis during the three months ended June 30, 2023 and 2022, respectively, and $7,117 and $4,376 for the six months ended June 30, 2023 and 2022, respectively.
We do not include in our measurement of our lease receivables certain variable payments, including payments determined by changes in the index or market-based indices after the inception of the lease, certain tenant reimbursements and other income until the specific events that trigger the variable payments have occurred. Such payments totaled $18,291 and $16,828 for the three months ended June 30, 2023 and 2022, respectively, and $39,390 and $29,407 for the six months ended June 30, 2023 and 2022, respectively.
Right of use assets and lease liabilities. Three of our properties are subject to ground leases and we are also the lessee under a lease for one office property, which we assumed as part of our acquisition of MNR in February 2022. For these leases under which we are the lessee, we are required to record a right of use asset and lease liability for all leases with a term greater than 12 months. The values of our right of use assets and related liabilities representing our future obligations under the lease arrangements under which we are the lessee were $4,867 and $4,943, respectively, as of June 30, 2023, and $5,084 and $5,149, respectively, as of December 31, 2022. Our right of use assets and related lease liabilities are included in other assets, net and accounts payable and other liabilities, respectively, in our condensed consolidated balance sheets. We have a sublease for a portion of the MNR lease that expires on December 30, 2029. Rent expense incurred under the MNR lease, net of sublease revenue, if any, was $28 and $91 for three months ended June 30, 2023 and 2022, respectively, and $129 and $179 for the six months ended June 30, 2023 and the period from February 25, 2022 to June 30, 2022, respectively. Rent expense is included in general and administrative expense in our condensed consolidated statements of comprehensive income (loss).
Generally, payments of ground lease obligations are made by our tenants. However, if a tenant does not perform obligations under a ground lease or does not renew any ground lease, we may have to perform obligations under, or renew, the ground lease in order to protect our investment in the affected property.




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INDUSTRIAL LOGISTICS PROPERTIES TRUST 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share data)

Tenant Concentration
As of June 30, 2023, we had a concentration of properties leased to tenants, including their applicable subsidiaries, that leased over 5.0% of our total rentable square footage. The following table presents rental income recognized from these tenants for the three and six months ended June 30, 2023 and 2022:
% of
RentableRental IncomeRental Income
SquareThree Months EndedSix Months Ended
TenantFeet6/30/20236/30/20226/30/20236/30/2022
FedEx Corporation/ FedEx Ground Package System, Inc.22.0 %$32,934 30.5 %$31,063 29.0 %$67,721 31.0 %$44,531 24.9 %
Amazon.com Services, Inc./ Amazon.com Services LLC7.6 %7,326 6.8 %7,236 6.7 %14,841 6.8 %12,852 7.2 %
Total29.6 %$40,260 37.3 %$38,299 35.7 %$82,562 37.8 %$57,383 32.1 %
Geographic Concentration
For the three months ended June 30, 2023 and 2022, approximately 28.1% and 29.8%, respectively, of our rental income was from our Hawaii Properties. For the six months ended June 30, 2023 and 2022, approximately 27.8% and 32.8%, respectively, of our rental income was from our Hawaii Properties.
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INDUSTRIAL LOGISTICS PROPERTIES TRUST 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share data)

Note 4. Indebtedness

As of June 30, 2023, our outstanding indebtedness consisted of the following:
Net Book
Value
Principal Balance as ofof Collateral
June 30,December 31,InterestAt June 30,
EntityTypeSecured By:
2023 (1)
2022 (1)
RateMaturity2023
ILPTFloating Rate - Interest only
104 Properties
$1,235,000 $1,235,000 6.18%10/09/24$1,056,804 
ILPTFixed Rate - Interest only
186 Properties
650,000 650,000 4.31%02/07/29490,023 
ILPTFixed Rate - Interest only
17 Properties
700,000 700,000 4.42%03/09/32511,664 
Mountain JV (2)
Floating Rate - Interest only
82 Properties
1,400,000 1,400,000 6.17%03/09/241,883,377 
Mountain JV (2)
Fixed Rate - Interest only
Four Properties
91,000 — 6.25%06/10/30190,883 
Mountain JV (2)
Fixed Rate - Amortizing
One Property
12,042 12,691 3.67%05/01/3129,257 
Mountain JV (2)
Fixed Rate - Amortizing
One Property
13,536 14,144 4.14%07/01/3244,143 
Mountain JV (2)
Fixed Rate - Amortizing
One Property
29,797 30,949 4.02%10/01/3385,968 
Mountain JV (2)
Fixed Rate - Amortizing
One Property
41,636 43,219 4.13%11/01/33130,644 
Mountain JV (2)
Fixed Rate - Amortizing
One Property
25,310 26,175 3.10%06/01/3547,056 
Mountain JV (2)
Fixed Rate - Amortizing
One Property
40,759 42,087 2.95%01/01/36100,502 
Mountain JV (2)
Fixed Rate - Amortizing
One Property
44,991 46,109 4.27%11/01/37111,510 
Mountain JV (2)
Fixed Rate - Amortizing
One Property
50,684 52,031 3.25%01/01/38115,042 
Mountain JV (2)
Fixed Rate - Amortizing
One Property
— 13,556 3.76%10/01/28N/A
Mountain JV (2)
Fixed Rate - Amortizing
One Property
— 4,865 3.77%04/01/30N/A
Mountain JV (2)
Fixed Rate - Amortizing
One Property
— 5,145 3.85%04/01/30N/A
Mountain JV (2)
Fixed Rate - Amortizing
One Property
— 14,392 3.56%09/01/30N/A
Total indebtedness$4,334,755 $4,290,363 $4,796,873 
Unamortized debt issuance costs(33,479)(45,862)
Total indebtedness, net$4,301,276 $4,244,501 

(1)The principal balances are the amounts stated in contracts. In accordance with GAAP, our carrying values and recorded interest expense may be different because of market conditions at the time we assumed certain of these debts.
(2)Mountain JV is our consolidated joint venture in which we own a 61% equity interest. See Notes 2, 5, 7, 8 and 9 for more information regarding this joint venture.

Our $1,235,000 interest only floating rate loan, secured by 104 of our properties, or the ILPT Floating Rate Loan, matures in October 2024, subject to three, one year extension options, and requires that interest be paid at an annual rate of secured overnight financing rate, or SOFR, which is capped at an annual rate of 2.25% for the initial term of the ILPT Floating Rate Loan, plus a weighted average premium of 3.93%. The interest rate payable on the ILPT Floating Rate Loan as of June 30, 2023 was 6.18%. The weighted average interest rate payable under the ILPT Floating Rate Loan was 6.18% for both the three and six months ended June 30, 2023. Subject to the satisfaction of certain conditions, we have the option to prepay up to $247,000 of the ILPT Floating Rate Loan at par with no premium, and to prepay the balance of the ILPT Floating Rate Loan in full or in part at any time, subject to a premium, and beginning in October 2023, without a premium.
Our $1,400,000 interest only floating rate loan, secured by 82 properties owned by our consolidated joint venture, or the Floating Rate Loan, matures in March 2024, subject to three, one year extension options, and requires that interest be paid at an annual rate of SOFR, which is capped at an annual rate of 3.40% through the initial term of the Floating Rate Loan, plus a premium of 2.77%. The interest rate payable on the Floating Rate Loan as of June 30, 2023 was 6.17%. The weighted average annual interest rate payable under the Floating Rate Loan was 6.17% for both the three and six months ended June 30, 2023. The weighted average annual interest rate payable under the Floating Rate Loan was 3.61% and 3.38% for the three months ended June 30, 2022 and the period from the date we obtained the Floating Rate loan, February 25, 2022 to June 30, 2022,
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INDUSTRIAL LOGISTICS PROPERTIES TRUST 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share data)

respectively. Subject to the satisfaction of certain conditions, we have the option to prepay up to $280,000 of the Floating Rate Loan at par with no premium, and to prepay the balance of the Floating Rate Loan at any time, subject to a premium.
See Note 9 for more information regarding our interest rate caps.
In May 2023, our consolidated joint venture obtained a $91,000 fixed rate, interest only mortgage loan secured by four properties owned by our consolidated joint venture. This mortgage loan matures in June 2030 and requires that interest be paid at an annual rate of 6.25%. A portion of the net proceeds from this mortgage loan was used to repay four outstanding mortgage loans of our consolidated joint venture with an aggregate outstanding principal balance of $35,910 and a weighted average interest rate of 3.70%. We recognized a loss on extinguishment of debt of $359 in conjunction with the repayment of these mortgage loans.
The following table provides a summary of the mortgage debts of the unconsolidated joint venture:
Principal Balance
Interestat June 30,
Joint Venture (Unconsolidated)RateMaturity Date
2023 (1)
Mortgage notes payable (secured by one property in Florida)
3.60%(2)10/1/2023$56,980 
Mortgage notes payable (secured by six properties in four states)
5.30%10/1/2027123,700 
Mortgage notes payable (secured by 11 other properties in eight states)
3.33%11/7/2029350,000 
Weighted average/total3.82%(2)$530,680 
(1)Amounts are not adjusted for our minority interest; none of the debt is recourse to us.
(2)Includes the effect of mark to market purchase accounting.
The agreements governing certain of our indebtedness contain customary covenants and provide for acceleration of payment of all amounts due thereunder upon the occurrence and continuation of certain events of default.

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INDUSTRIAL LOGISTICS PROPERTIES TRUST 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share data)

Note 5. Fair Value of Assets and Liabilities

Our financial instruments include cash and cash equivalents, restricted cash, rents receivable, floating and fixed rate loans, accounts payable, rents collected in advance, interest rate caps, security deposits and amounts due from or to related persons. At June 30, 2023 and December 31, 2022, the fair value of our financial instruments approximated their carrying values in our condensed consolidated financial statements, due to their short term nature or floating interest rates, except as follows:
At June 30, 2023
At December 31, 2022
CarryingEstimatedCarryingEstimated
 
Value (1)
Fair Value
Value (1)
Fair Value
Fixed rate loan, 4.31% interest rate, due in 2029
$646,941 $612,132 $646,669 $592,295 
Fixed rate loan, 6.25% interest rate, due in 2030
89,994 94,568 — — 
Fixed rate loan, 3.67% interest rate, due in 2031
12,042 11,318 12,691 11,713 
Fixed rate loan, 4.42% interest rate, due in 2032
694,991 609,028 694,704 623,133 
Fixed rate loan, 4.14% interest rate, due in 2032
13,536 12,889 14,144 13,182 
Fixed rate loan, 4.02% interest rate, due in 2033
29,797 27,684 30,949 28,195 
Fixed rate loan, 4.13% interest rate, due in 2033
41,636 38,875 43,219 39,573 
Fixed rate loan, 3.10% interest rate, due in 2035
25,310 22,166 26,175 22,373 
Fixed rate loan, 2.95% interest rate, due in 2036
40,759 35,213 42,087 35,444 
Fixed rate loan, 4.27% interest rate, due in 2037
44,991 41,946 46,109 41,880 
Fixed rate loan, 3.25% interest rate, due in 2038
50,684 43,961 52,031 43,878 
Fixed rate loan, 3.76% interest rate, due in 2028 (2)
— — 13,556 12,784 
Fixed rate loan, 3.77% interest rate, due in 2030 (2)
— — 4,865 4,553 
Fixed rate loan, 3.85% interest rate, due in 2030 (2)
— — 5,145 4,829 
Fixed rate loan, 3.56% interest rate, due in 2030 (2)
— — 14,392 13,315 
$1,690,681 $1,549,780 $1,646,736 $1,487,147 
(1)Includes unamortized debt issuance costs, premiums and discounts of $9,073 and $8,628 as of June 30, 2023 and December 31, 2022, respectively.
(2)This loan was repaid in May 2023.
We estimate the fair value of our mortgage notes payable using discounted cash flow analyses and current prevailing market rates as of the measurement date (Level 3 inputs). As Level 3 inputs are unobservable, our estimated fair value may differ materially from the actual fair value.
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INDUSTRIAL LOGISTICS PROPERTIES TRUST 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share data)

The table below presents certain of our assets measured on a recurring and non-recurring basis at fair value at June 30, 2023, categorized by the level of inputs as defined in the fair value hierarchy under GAAP, used in the valuation of each asset:
Quoted Prices inSignificant OtherSignificant
Active Markets forObservableUnobservable
Identical AssetsInputsInputs
 Total(Level 1)(Level 2)(Level 3)
At June 30, 2023
Recurring fair value measurements
Investment in unconsolidated joint venture (1)
$129,082 $— $— $129,082 
Interest rate cap derivatives (2)
$64,097 $— $64,097 $— 
Non-recurring fair value measurements
Real estate properties (3)
$1,414 $— $— $1,414 
(1)The investment in the unconsolidated joint venture reflected in our condensed consolidated balance sheet is reported at fair value based on significant unobservable inputs (Level 3 inputs). The significant unobservable inputs used in the fair value are discount rates of between 5.25% and 7.00%, exit capitalization rates of between 4.95% and 6.00%, holding periods of approximately 10 years and market rents. Our assumptions are based on the location, type and nature of each property, and current and anticipated market conditions, which are derived from appraisers, industry publications and our experience. See Notes 2, 4, 7 and 8 for more information regarding this joint venture.
(2)Our derivative assets are carried at fair value as required by GAAP. The estimated fair values of the derivative assets are based on current market prices in secondary markets for similar derivative contracts (Level 2 inputs). See Notes 4 and 9 for more information regarding our derivatives and hedging activities.
(3)We recorded a loss on impairment of real estate of $254 to reduce the carrying value of one of the two properties that were classified as held for sale at June 30, 2023 on our condensed consolidated balance sheet to its estimated sales price less costs to sell (Level 3 inputs). See Note 2 for more information on our properties held for sale.

Note 6. Shareholders’ Equity

Common Share Awards:

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

Common Share Purchases:
During the six months ended June 30, 2023, we purchased an aggregate of 8,086 of our common shares, valued at a weighted average price of $2.00 per common share, from certain former officers and employees of The RMR Group LLC, or RMR, in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares.
Distributions:
During the six months ended June 30, 2023, we declared and paid regular quarterly distributions to common shareholders as follows:
Declaration DateRecord DatePayment DateDistribution Per ShareTotal Distribution
January 12, 2023January 23, 2023February 16, 2023$0.01 $656 
April 13, 2023April 24, 2023May 18, 20230.01 656 
$0.02 $1,312 
On July 13, 2023, we declared a regular quarterly distribution to common shareholders of record on July 24, 2023 of $0.01 per share, or approximately $657. We expect to pay this distribution to our shareholders on or about August 17, 2023 using cash balances.
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INDUSTRIAL LOGISTICS PROPERTIES TRUST 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share data)

Note 7. Business and Property Management Agreements with RMR

We have no employees. The personnel and various services we require to operate our business are provided to us by RMR. We have two agreements with RMR to provide management services to us: (1) a business management agreement, which relates to our business generally; and (2) a property management agreement, which relates to our property level operations.
Pursuant to our business management agreement with RMR, we recognized net business management fees of $5,656 and $11,382 for the three and six months ended June 30, 2023, respectively, and $6,957 and $11,356 for the three and six months ended June 30, 2022, respectively. Based on our common share total return, as defined in our business management agreement, as of June 30, 2023 and 2022, no incentive fees are included in the net business management fees we recognized for the three and six months ended June 30, 2023 or 2022. The actual amount of annual incentive fees for 2023, if any, will be based on our common share total return, as defined in our business management agreement, for the three-year period ending December 31, 2023, and will be payable in January 2024. We did not incur any incentive fee payable to RMR for the year ended December 31, 2022. We include business management fees in general and administrative expenses in our condensed consolidated statements of comprehensive income (loss).
Pursuant to our property management agreement with RMR, we recognized aggregate property management and construction supervision fees of $3,370 and $6,822 for the three and six months ended June 30, 2023, respectively, and $2,764 and $5,527 for the three and six months ended June 30, 2022, respectively. Of these amounts, for the three and six months ended June 30, 2023, $3,133 and $6,452, respectively, were expensed to other operating expenses in our condensed consolidated financial statements and $237 and $370, respectively, were capitalized as building improvements in our condensed consolidated balance sheets. For the three and six months ended June 30, 2022, $2,396 and $5,128, respectively, were expensed to other operating expenses in our condensed consolidated financial statements and $368 and $399, respectively, were capitalized as building improvements in our condensed consolidated balance sheets. The amounts capitalized are being depreciated over the estimated useful lives of the related capital assets.
We are generally responsible for all our operating expenses, including certain expenses incurred or arranged by RMR on our behalf. We are generally not responsible for payment of RMR’s employment, office or administrative expenses incurred to provide management services to us, except for the employment and related expenses of RMR’s employees assigned to work exclusively or partly at our properties, our share of the wages, benefits and other related costs of RMR’s centralized accounting personnel, our share of RMR’s costs for providing our internal audit function, or as otherwise agreed. Our property level operating expenses are generally incorporated into the rents charged to our tenants, including certain payroll and related costs incurred by RMR. We reimbursed RMR $2,000 and $3,841 for these expenses and costs for the three and six months ended June 30, 2023, respectively, and $1,704 and $3,308 for the three and six months ended June 30, 2022, respectively. These amounts are included in other operating expenses and general and administrative expenses, as applicable, in our condensed consolidated statements of comprehensive income (loss).
Management Agreements Between Our Joint Ventures and RMR. We have two separate joint venture arrangements, our consolidated joint venture and the unconsolidated joint venture. See Notes 2, 4, 5, 8 and 9 for further information about these joint ventures. RMR provides management services to both of these joint ventures. We are not obligated to pay management fees to RMR under our management agreements with RMR for the services it provides to the unconsolidated joint venture. We are obligated to pay management fees to RMR under our management agreements with RMR for the services it provides regarding our consolidated joint venture; however, that joint venture pays management fees directly to RMR, and any such fees paid by our consolidated joint venture are credited against the fees payable by us to RMR.
See Note 8 for further information regarding our relationships, agreements and transactions with RMR.
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INDUSTRIAL LOGISTICS PROPERTIES TRUST 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share data)

Note 8. Related Person Transactions

We have relationships and historical and continuing transactions with RMR, The RMR Group Inc., or RMR Inc., and others related to them, including other companies to which RMR or its subsidiaries provide management services and some of which have trustees, directors or officers who are also our Trustees or officers. RMR is a majority owned subsidiary of RMR Inc. The Chair of our Board of Trustees and one of our Managing Trustees, Adam D. Portnoy, is the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of RMR Inc., the chair of the board of directors, a managing director and the president and chief executive officer of RMR Inc. and an officer and employee of RMR. Matthew P. Jordan, our other Managing Trustee, is an executive vice president and the chief financial officer and treasurer of RMR Inc., an officer and employee of RMR and an officer of ABP Trust. John G. Murray, one of our Managing Trustees until June 1, 2022 and our President and Chief Executive Officer until March 31, 2022, also serves as an officer and employee of RMR, and each of our current officers is also an officer and employee of RMR. Some of our Independent Trustees also serve as independent trustees of other public companies to which RMR or its subsidiaries provide management services. Adam D. Portnoy serves as chair of the boards and as a managing trustee of those companies. Other officers of RMR, including Messrs. Jordan and Murray and certain of our officers, serve as managing trustees or officers of certain of these companies.
Our Manager, RMR. We have two agreements with RMR to provide management services to us. See Note 7 for further information regarding our management agreements with RMR.
Joint Ventures. We have two separate joint venture arrangements. RMR provides management services to each of these joint ventures. See Notes 2, 4, 5, 7 and 9 for further information regarding our joint ventures and RMR’s management agreements with our joint ventures. As of June 30, 2023 and December 31, 2022, we owed $556 and $616, respectively, to the unconsolidated joint venture for rents that we collected on behalf of that joint venture. These amounts are presented as due to related persons in our condensed consolidated balance sheet. We paid these amounts in January 2023 and July 2023, respectively.

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

Note 9. Derivatives and Hedging Activities
Risk Management Objective of Using Derivatives
We are exposed to certain risks relating to our ongoing business operations, including the impact of changes in interest rates. The only risk currently managed by us using derivative instruments is a part of our interest rate risk. We have an interest rate cap agreement to manage our interest rate risk exposure on each of the ILPT Floating Rate Loan and the Floating Rate Loan, both with interest payable at a rate equal to SOFR plus a premium. The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements are not able to perform under the agreements. To mitigate this risk, we only enter into derivative financial instruments with counterparties with high credit ratings and with major financial institutions with which we or our related parties may also have other financial relationships. We do not anticipate that any of the counterparties will fail to meet their obligations.
Cash Flow Hedges of Interest Rate Risk

As required by Accounting Standards Codification 815, Derivatives and Hedging, we record all derivatives on the balance sheet at fair value. The following table summarizes the terms of our outstanding interest rate cap agreements designated as cash flow hedges of interest rate risk as of June 30, 2023:
Interest Rate DerivativeBalance Sheet Line ItemUnderlying InstrumentNumber of InstrumentsStrike RateNotional AmountFair Value at June 30, 2023
Interest Rate CapOther assets
Floating Rate Loan (1)
13.40%$1,400,000 $19,022 
Interest Rate CapOther assetsILPT Floating Rate Loan22.25%$1,235,000 $45,075 
$64,097 
(1)The Floating Rate Loan was entered into by our consolidated joint venture.
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INDUSTRIAL LOGISTICS PROPERTIES TRUST 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share data)

Interest rate caps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium. For derivatives designated and qualifying as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive income (loss) and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings. Gains and losses on the derivative representing hedge components excluded from the assessment of effectiveness are recognized over the life of the hedge on a systematic and rational basis, as documented at hedge inception in accordance with our accounting policy election. The earnings recognition of excluded components is presented in interest expense. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on our applicable debt.
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Amount of gain recognized in cumulative other comprehensive income (loss)$20,025 $3,778 $16,249 $9,153 
Amount reclassified from cumulative other comprehensive income (loss) into interest expense(8,004)660 (13,006)917 
Unrealized gain on derivative instrument recognized in cumulative other comprehensive (loss) income, net$12,021 $4,438 $3,243 $10,070 
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
The following information should be read in conjunction with our condensed consolidated financial statements and accompanying notes included in this Quarterly Report on Form 10-Q and with our 2022 Annual Report.
OVERVIEW (dollars in thousands, except per share and per square foot data)
 
We are a real estate investment trust, or REIT, organized under Maryland law. As of June 30, 2023, our portfolio was comprised of 413 consolidated properties containing approximately 59,983,000 rentable square feet located in 39 states, including 226 buildings, leasable land parcels and easements containing approximately 16,729,000 rentable square feet located on the island of Oahu, Hawaii, and 187 properties containing approximately 43,254,000 rentable square feet located in 38 other states. As of June 30, 2023, our 413 consolidated properties included 94 properties that we own in a consolidated joint venture in which we own a 61% equity interest, and our consolidated properties were approximately 99.1% leased to 302 different tenants with a weighted average remaining lease term (by annualized rental revenues) of approximately 8.4 years. As of June 30, 2023, we also owned a 22% equity interest in an unconsolidated joint venture, which owns 18 properties located in 12 states in the mainland United States containing approximately 11,726,000 rentable square feet that were 99.4% leased with an average remaining lease term (based on annualized rental revenues) of 6.5 years. We define the term annualized rental revenues as used in this Quarterly Report on Form 10-Q as the annualized contractual rents as of June 30, 2023, including straight line rent adjustments and excluding lease value amortization, adjusted for tenant concessions including free rent and amounts reimbursed to tenants, plus estimated recurring expense reimbursements from tenants.
Long term e-commerce trends and supply chain resiliency have resulted in high occupancy and increases in rents. We believe customer service expectations, growth in the number of households and demand for supply chain resiliency will keep demand for industrial properties strong for the foreseeable future. However, inflationary pressures and rising interest rates in the United States and globally have given rise to economic uncertainty and they have caused disruptions in the financial markets. These conditions have increased our cost of capital and negatively impacted our ability to reduce our leverage. An economic recession, or continued or intensified disruptions in the financial markets, could adversely affect our financial condition and that of our tenants, could adversely impact the ability or willingness of our tenants to renew our leases or pay rent to us, may restrict our access to and would likely increase our cost of capital, may impact our ability to sell properties and may cause the values of our properties and of our securities to decline.
Property Operations
Occupancy data for our properties as of June 30, 2023 and 2022 were as follows (square feet in thousands):
All Properties
Comparable Properties (1)
As of June 30, As of June 30,
2023202220232022
Total properties413 412 285 285 
Total rentable square feet (in thousands) (2)
59,983 59,736 33,462 33,440 
Percent leased (3)
99.1 %98.9 %99.1 %99.3 %
(1)Consists of properties that we owned continuously since January 1, 2022 and excludes two properties classified as held for sale at June 30, 2023.
(2)Subject to modest adjustments when space is remeasured or reconfigured for new tenants and when land leases are converted to building leases.
(3)Percent leased includes (i) space being fitted out for occupancy pursuant to existing leases as of June 30, 2023, if any, and (ii) space which is leased but is not occupied or is being offered for sublease by tenants, if any.
The average effective rental rates per square foot, as defined below, for our properties for the three and six months ended June 30, 2023 and 2022 were as follows:
Three Months Ended June 30,Six Months Ended June 30,
Average effective rental rates per square foot leased: (1)
2023202220232022
All properties$7.30 $7.26 $7.38 $6.95 
Comparable properties (2)
$7.29 $7.26 $6.69 $6.48 
(1)Average effective rental rates per square foot leased represents annualized rental income during the period specified divided by the average rentable square feet leased during the period specified.
(2)Consists of properties that we owned continuously since April 1, 2022 and January 1, 2022, respectively.
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During the three and six months ended June 30, 2023, we entered into new and renewal leases as summarized in the following tables:
Three Months Ended June 30, 2023
New LeasesRenewalsTotals
Square feet leased during the period (in thousands)494 1,091 1,585 
Weighted average rental rate change (by rentable square feet)36.5 %25.5 %29.5 %
Weighted average lease term by square feet (years)11.6 7.7 8.9 
Total leasing costs and concession commitments (1)
$2,920 $975 $3,895 
Total leasing costs and concession commitments per square foot (1)
$5.91 $0.89 $2.46 
Total leasing costs and concession commitments per square foot per year (1)
$0.51 $0.12 $0.28 
Six Months Ended June 30, 2023
New LeasesRenewalsTotals
Square feet leased during the period (in thousands)530 2,198 2,728 
Weighted average rental rate change (by rentable square feet)37.7 %18.5 %22.3 %
Weighted average lease term by square feet (years)12.0 8.1 8.9 
Total leasing costs and concession commitments (1)
$3,080 $2,752 $5,832 
Total leasing costs and concession commitments per square foot (1)
$5.81 $1.25 $2.14 
Total leasing costs and concession commitments per square foot per year (1)
$0.48 $0.15 $0.24 
(1)Includes commitments made for leasing expenditures and concessions, such as leasing commissions, tenant improvements or other tenant inducements.
During the three and six months ended June 30, 2023, we completed rent resets for approximately 382 square feet of land at our Hawaii Properties at rental rates that were approximately 29.9% higher than prior rental rates.
As shown in the table below, approximately 2.0% of our total leased square feet and 2.1% of our total annualized rental revenues as of June 30, 2023 are included in leases scheduled to expire by December 31, 2023. As of June 30, 2023, our lease expirations by year were as follows (dollars and square feet in thousands):
% of TotalCumulative
% of TotalCumulative %AnnualizedAnnualized% of Total
LeasedLeasedof Total Rental RentalAnnualized
Number ofSquare FeetSquare FeetSquare FeetRevenuesRevenuesRental Revenues
Period / YearTenants
Expiring (1)
Expiring (1)
Expiring (1)
ExpiringExpiringExpiring
7/1/2023-12/31/202319 1,162 2.0 %2.0 %$8,916 2.1 %2.1 %
202443 6,058 10.2 %12.2 %30,777 7.2 %9.3 %
202535 4,802 8.1 %20.3 %28,423 6.6 %15.9 %
202626 3,853 6.5 %26.8 %26,588 6.2 %22.1 %
202737 8,694 14.6 %41.4 %52,197 12.2 %34.3 %
202837 5,831 9.8 %51.2 %42,076 9.8 %44.1 %
202921 4,194 7.1 %58.3 %21,382 5.0 %49.1 %
203016 2,519 4.2 %62.5 %20,929 4.9 %54.0 %
203117 3,265 5.5 %68.0 %25,366 5.9 %59.9 %
203237 3,615 6.1 %74.1 %35,322 8.2 %68.1 %
Thereafter109 15,422 25.9 %100.0 %137,179 31.9 %100.0 %
Total397 59,415 100.0 %$429,155 100.0 %
Weighted average remaining lease term (in years)7.3 8.4 
(1)Leased square feet is pursuant to existing leases as of June 30, 2023 and includes (i) space being fitted out for occupancy, if any, and (ii) space which is leased but is not occupied or is being offered for sublease by tenants, if any.
As of June 30, 2023, subsidiaries of FedEx Corporation and subsidiaries of Amazon.com Services, Inc. leased 22.0% and 7.6% of our total leased square feet, respectively, and represented 29.6% and 6.8% of our total annualized rental revenues, respectively.
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Mainland Properties. As of June 30, 2023, our Mainland Properties represented approximately 72.0% of our annualized rental revenues. We generally will seek to renew or extend the terms of leases at our Mainland Properties as their expirations approach. Due to the capital that many of the tenants in our Mainland Properties have invested in these properties and because many of these properties appear to be of strategic importance to the tenants’ businesses, we believe that it is likely that these tenants will renew or extend their leases prior to their expirations. If we are unable to extend or renew our leases, it may be time consuming and expensive to relet some of these properties and the terms of any leases we may enter may be less favorable to us than the terms of our existing leases for those properties.
Hawaii Properties. As of June 30, 2023, our Hawaii Properties represented approximately 28.0% of our annualized rental revenues. As of June 30, 2023, certain of our Hawaii Properties are lands leased for rents that periodically reset based on fair market values, generally every ten years. Revenues from our Hawaii Properties have generally increased under our or our predecessors’ ownership as rents under the leases for those properties have been reset or renewed. Lease renewals, lease extensions, new leases and rental rates for our Hawaii Properties in the future will depend on prevailing market conditions when these lease renewals, lease extensions, new leases and rental rates are set. As rent reset dates or lease expirations approach at our Hawaii Properties, we generally negotiate with existing or new tenants for new lease terms. If we are unable to reach an agreement with a tenant on a rent reset, our Hawaii Properties’ leases typically provide that rent is reset based on an appraisal process. Despite our and our predecessors’ prior experience with rent resets, lease extensions and new leases in Hawaii, our ability to increase rents when rents reset, leases are extended, or leases expire depends upon market conditions which are beyond our control. Accordingly, we cannot be sure that the historical increases achieved at our Hawaii Properties will continue in the future.
The following chart shows the annualized rental revenues as of June 30, 2023 scheduled to reset at our Hawaii Properties:
Scheduled Rent Resets at Hawaii Properties
(dollars in thousands) 
Annualized
Rental Revenues
as of June 30, 2023
Scheduled to Reset
7/1/2023-12/31/2023$— 
20241,144 
2025960 
20261,307 
2027781 
2028 and thereafter17,171 
Total$21,363 
As of June 30, 2023, $22,464, or 5.2%, of our annualized rental revenues are included in leases scheduled to expire by June 30, 2024 and 0.9% of our rentable square feet are currently vacant. Rental rates for which available space may be leased in the future will depend on prevailing market conditions when lease extensions, lease renewals or new leases are negotiated. Whenever we extend, renew or enter new leases for our properties, we intend to seek rents that are equal to or higher than our historical rents for the same properties; however, our ability to maintain or increase the rents for our current properties will depend in large part upon market conditions, which are beyond our control.
Tenant Review Process. Our manager, RMR, employs a tenant review process for us. RMR assesses tenants on an individual basis based on various applicable credit criteria. In general, depending on facts and circumstances, RMR evaluates the creditworthiness of a tenant based on information that is provided by the tenant and, in some cases, information that is publicly available or obtained from third party sources. RMR also may use a third party service to monitor the credit ratings of debt securities of our existing tenants whose debt securities are rated by a nationally recognized credit rating agency.
Disposition Activities
In March 2023, we received gross proceeds of $270 and recorded a $974 net loss on sale of real estate as a result of a partial eminent domain taking at a property in Everett, Washington.
As of July 25, 2023, we have entered into agreements to sell three properties containing approximately 762,000 rentable square feet for an aggregate sales price of $65,265, excluding closing costs. We expect to use the net proceeds from these sales
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for the repayment of debt and for general business purposes. These pending sales are subject to conditions; accordingly, we cannot be sure that we will complete these sales or that these sales will not be delayed or the terms will not change.
For further information regarding our disposition activities, see Notes 2 and 5 to our Condensed Consolidated Financial Statements included in Part I, Item 1 and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Our Investing and Financing Liquidity and Resources” of this Quarterly Report on Form 10-Q.

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RESULTS OF OPERATIONS
 
Three Months Ended June 30, 2023, Compared to Three Months Ended June 30, 2022 (dollars and share amounts in thousands, except per share data)
Comparable Properties Results (1)
Non-Comparable Properties Results (2)
Consolidated Results
Three Months Ended June 30,Three Months Ended June 30,Three Months Ended June 30,
$%$$%
20232022ChangeChange20232022Change20232022ChangeChange
Rental income$106,469 $106,118 $351 0.3%$1,574 $1,104 $470 $108,043 $107,222 $821 0.8%
Operating expenses:
Real estate taxes14,916 13,077 1,839 14.1%184 198 (14)15,100 13,275 1,825 13.7%
Other operating expenses8,399 6,908 1,491 21.6%120 145 (25)8,519 7,053 1,466 20.8%
Total operating expenses23,315 19,985 3,330 16.7%304 343 (39)23,619 20,328 3,291 16.2%
Net operating income (3)
$83,154 $86,133 $(2,979)(3.5)%$1,270 $761 $509 84,424 86,894 (2,470)(2.8)%
Other expenses:
Depreciation and amortization44,909 42,699 2,210 5.2%
General and administrative8,131 9,709 (1,578)(16.3)%
Loss on impairment of real estate254 100,747 (100,493)(99.7)%
Total other expenses53,294 153,155 (99,861)(65.2)%
Interest and other income1,797 354 1,443 N/M
Interest expense(71,846)(77,548)5,702 (7.4)%
Loss on sale of real estate— (10)10 (100.0)%
Loss on equity securities— (9,450)9,450 (100.0)%
Loss on early extinguishment of debt(359)— (359)N/M
Loss before income tax expense and equity in earnings of unconsolidated joint venture(39,278)(152,915)113,637 (74.3)%
Income tax expense(45)(16)(29)181.3%
Equity in earnings of unconsolidated joint venture2,743 1,610 1,133 70.4%
Net loss(36,580)(151,321)114,741 (75.8)%
Net loss attributable to noncontrolling interest10,752 7,782 2,970 38.2%
Net loss attributable to common shareholders$(25,828)$(143,539)$117,711 (82.0)%
Weighted average common shares outstanding - basic and diluted65,369 65,221 148 0.2%
Per common share data (basic and diluted):
Net loss attributable to common shareholders$(0.40)$(2.20)$1.80 (81.8)%
N/M - not meaningful
(1)Consists of properties that we owned continuously since April 1, 2022.
(2)Consists of four properties, including one property we acquired during the period from April 1, 2022 to June 30, 2023, one property under development and two properties classified as held for sale at June 30, 2023.
(3)See our definition of NOI and our reconciliation of net loss to NOI below under the heading "Non-GAAP Financial Measures."

References to changes in the income and expense categories below relate to the comparison of results for the three months ended June 30, 2023 compared to the three months ended June 30, 2022.
Rental income. The increase in rental income is primarily a result of our acquisition activities. Rental income increased at certain of our comparable properties primarily due to increases from our leasing activity and rent resets. Rental income includes non-cash straight line rent adjustments of $3,355 and $3,220 for the 2023 and 2022 periods, respectively, and net amortization of acquired real estate leases and assumed real estate lease obligations of $242 and $3,695 for the 2023 and 2022 periods, respectively.
Real estate taxes. Real estate taxes at certain of our comparable properties increased due to higher assessed values.
Other operating expenses. Other operating expenses at certain of our comparable properties increased primarily due to increases in insurance expenses and repairs and maintenance at certain of our properties.
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Depreciation and amortization. The increase in depreciation and amortization primarily reflects depreciation and amortization of improvements made to certain of our properties since April 1, 2022.
General and administrative. The decrease in general and administrative expenses is primarily due to a decrease in business management fees.
Loss on impairment of real estate. During the 2023 period, we recorded $254 on impairment of real estate to reduce the value of one property that was classified as held for sale at June 30, 2023 to its estimated fair value. During the 2022 period, we recorded a $100,747 loss on impairment of real estate to reduce the value of 25 properties reclassified from held for sale to held and used to their estimated fair value.
Interest and other income. The increase in interest and other income is primarily due to higher interest earned on cash balances during the 2023 period as compared to the 2022 period.
Interest expense. The decrease in interest expense is due to lower average interest rates and lower average outstanding indebtedness during the 2023 period as compared to the 2022 period.
Loss on sale of real estate. Loss on sale of real estate during the 2022 period represents a final true up adjustment to the sale of properties during the year ended December 31, 2021.
Loss on equity securities. Loss on equity securities represents the realized loss of $9,450 on the sale of certain equity securities we acquired as part of our acquisition of MNR.
Loss on early extinguishment of debt. Loss on early extinguishment of debt primarily relates to prepayment penalties incurred upon the repayment of four mortgage notes aggregating $35,910 in May 2023.
Income tax expense. Income tax expense primarily reflects state income taxes payable in certain jurisdictions.
Equity in earnings of unconsolidated joint venture. Equity in earnings of unconsolidated joint venture is the change in the fair value of our investment in the unconsolidated joint venture.
Net loss. The net loss for the 2023 period compared to the net loss for the 2022 period reflects the changes noted above.
Net loss attributable to noncontrolling interest. Net loss attributable to noncontrolling interest represents the net loss attributable to the 39% equity interest in our consolidated joint venture that we did not own.
Weighted average common shares outstanding - basic and diluted. The increase in weighted average common shares outstanding primarily reflects common shares awarded under our equity compensation plan since April 1, 2022.
Net loss attributable to common shareholders per common share - basic and diluted. The increase in net loss attributable to common shareholders per common share for the 2023 period compared to the net loss attributable to common shareholders per share for the 2022 period reflects the changes to net income attributable to common shareholders and weighted average common shares noted above.
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Six Months Ended June 30, 2023, Compared to Six Months Ended June 30, 2022 (dollars and share amounts in thousands, except per share data)
Comparable Properties Results (1)
Non-Comparable Properties Results (2)
Consolidated Results
Six Months Ended June 30,Six Months Ended June 30,Six Months Ended June 30,
$%$$%
20232022ChangeChange20232022Change20232022ChangeChange
Rental income$110,729 $107,732 $2,997 2.8%$107,572 $70,865 $36,707 $218,301 $178,597 $39,704 22.2%
Operating expenses:
Real estate taxes15,172 14,239 933 6.6%16,395 8,472 7,923 31,567 22,711 8,856 39.0%
Other operating expenses9,792 9,049 743 8.2%8,045 4,776 3,269 17,837 13,825 4,012 29.0%
Total operating expenses24,964 23,288 1,676 7.2%24,440 13,248 11,192 49,404 36,536 12,868 35.2%
Net operating income (3)
$85,765 $84,444 $1,321 1.6%$83,132 $57,617 $25,515 168,897 142,061 26,836 18.9%
Other expenses:
Depreciation and amortization90,366 65,577 24,789 37.8%
General and administrative16,038 15,786 252 1.6%
Loss on impairment of real estate254 100,747 (100,493)(99.7)%
Total other expenses106,658 182,110 (75,452)(41.4)%
Interest and other income2,943 832 2,111 N/M
Interest expense(142,617)(118,547)(24,070)20.3%
Loss on sale of real estate(974)(10)(964)N/M
Loss on equity securities— (5,758)5,758 (100.0)%
Loss on early extinguishment of debt(359)(828)469 (56.6)%
Loss before income tax expense and equity in earnings of unconsolidated joint venture(78,768)(164,360)85,592 (52.1)%
Income tax expense(62)(85)23 (27.1)%
Equity in earnings of unconsolidated joint venture6,704 3,337 3,367 100.9%
Net loss(72,126)(161,108)88,982 (55.2)%
Net loss attributable to noncontrolling interest21,489 11,055 10,434 94.4%
Net loss attributable to common shareholders$(50,637)$(150,053)$99,416 (66.3)%
Weighted average common shares outstanding - basic and diluted65,339 65,217 122 0.2%
Per common share data (basic and diluted):
Net loss attributable to common shareholders$(0.77)$2.30 $1.53 (66.5)%
N/M - not meaningful
(1)Consists of properties that we owned continuously since January 1, 2022.
(2)Consists of 126 properties, including (i) properties we acquired during the period from January 1, 2022 to June 30, 2023, including 94 properties we contributed to our consolidated joint venture in which we own a 61% equity interest and (ii) two properties classified as held for sale at June 30, 2023.
(3)See our definition of NOI and our reconciliation of net loss to NOI below under the heading "Non-GAAP Financial Measures."

References to changes in the income and expense categories below relate to the comparison of results for the six months ended June 30, 2023 compared to the six months ended June 30, 2022.
Rental income. The increase in rental income is primarily a result of our acquisition activities, which includes our acquisition of MNR in February 2022. Rental income increased at certain of our comparable properties primarily due to increases from our leasing activity and rent resets. Rental income includes non-cash straight line rent adjustments of $7,117 and $4,376 for the 2023 and 2022 periods, respectively, and net amortization of acquired real estate leases and assumed real estate lease obligations of $512 and $4,015 for the 2023 and 2022 periods, respectively.
Real estate taxes. The increase in real estate taxes primarily reflects our acquisition activities. Real estate taxes at certain of our comparable properties increased due to higher assessed values.
Other operating expenses. The increase in other operating expenses is primarily due to our acquisition activities. Other operating expenses at certain of our comparable properties increased primarily due to increases in insurance expenses and
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repairs and maintenance at certain of our properties, partially offset by a decrease in snow removal expenses at certain of our properties, during the 2023 period.
Depreciation and amortization. The increase in depreciation and amortization primarily reflects our acquisition activities during the 2022 period.
General and administrative. The increase in general and administrative expenses is primarily due to an increase in business management fees as a result of our acquisition activities during the 2022 period, partially offset by a decrease in business management fees as a result of a decline in our average market capitalization in the 2023 period, and an increase in professional fees in the 2023 period.
Loss on impairment of real estate. During the 2023 period, we recorded $254 on impairment of real estate to reduce the value of one property that was classified as held for sale at June 30, 2023 to its estimated fair value. During the 2022 period, we recorded a $100,747 loss on impairment of real estate to reduce the value of 25 properties reclassified from held for sale to held and used to their estimated fair value.
Interest and other income. The increase in interest and other income is primarily due to higher interest earned on cash balances during the 2023 period as compared to the 2022 period.
Interest expense. The increase in interest expense is primarily due to higher average outstanding indebtedness during the 2023 period as compared to the 2022 period, partially offset by lower average interest rates on the outstanding debt during the 2023 period as compared to the 2022 period.
Loss on sale of real estate. Loss on sale of real estate was a result of a partial eminent domain taking at one of our properties during the 2023 period and a final true up adjustment to the sale of properties during the year ended December 31, 2021 in the 2022 period.
Loss on equity securities. Loss on equity securities represents the realized loss of $5,758 on the sale of certain equity securities we acquired as part of our acquisition of MNR during the 2022 period.
Loss on early extinguishment of debt. Loss on early extinguishment of debt primarily relates to prepayment penalties incurred upon the repayment of four mortgage loans totaling $35,910 in May 2023 and our write off of unamortized costs related to the termination of our unsecured revolving credit facility in February 2022.
Income tax expense. Income tax expense primarily reflects state income taxes payable in certain jurisdictions.
Equity in earnings of unconsolidated joint venture. Equity in earnings of unconsolidated joint venture is the change in the fair value of our investment in the unconsolidated joint venture.
Net loss. The net loss for the 2023 period compared to the net loss for the 2022 period reflects the changes noted above.
Net loss attributable to noncontrolling interest. Net loss attributable to noncontrolling interest represents the net loss attributable to the 39% equity interest in our consolidated joint venture that we did not own.
Weighted average common shares outstanding - basic and diluted. The increase in weighted average common shares outstanding primarily reflects common shares awarded under our equity compensation plan since January 1, 2022.
Net loss attributable to common shareholders per common share - basic and diluted. The increase in net loss attributable to common shareholders per common share for the 2023 period compared to the net loss attributable to common shareholders per share for the 2022 period reflects the changes to net income attributable to common shareholders and weighted average common shares noted above.
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Non-GAAP Financial Measures
We present certain “non-GAAP financial measures” within the meaning of the applicable rules of the Securities and Exchange Commission, or the SEC, including net operating income, or NOI, funds from operations, or FFO, attributable to common shareholders and normalized funds from operations, or Normalized FFO, attributable to common shareholders. These measures do not represent cash generated by operating activities in accordance with GAAP and should not be considered alternatives to net loss or net loss attributable to common shareholders as indicators of our operating performance or as measures of our liquidity. These measures should be considered in conjunction with net loss and net loss attributable to common shareholders as presented in our condensed consolidated statements of comprehensive income (loss). We consider these non-GAAP measures to be appropriate supplemental measures of operating performance for a REIT along with net loss and net loss attributable to common shareholders. We believe these measures provide useful information to investors because by excluding the effects of certain historical amounts, such as depreciation and amortization expense, they may facilitate a comparison of our operating performance between periods and with other REITs and, in the case of NOI, reflecting only those income and expense items that are generated and incurred at the property level may help both investors and management to understand the operations of our properties.
Net Operating Income
We calculate NOI as shown below. We define NOI as income from our rental of real estate less our property operating expenses. The calculation of NOI excludes certain components of net loss in order to provide results that are more closely related to our property level results of operations. NOI excludes amortization of capitalized tenant improvement costs and leasing commissions that we record as depreciation and amortization expense. We use NOI to evaluate individual and company-wide property level performance. Other real estate companies and REITs may calculate NOI differently than we do.
The following table presents the reconciliation of net loss to NOI for the three and six months ended June 30, 2023 and 2022 (dollars in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Reconciliation of Net Loss to NOI:
Net loss$(36,580)$(151,321)$(72,126)$(161,108)
Equity in earnings of unconsolidated joint venture(2,743)(1,610)(6,704)(3,337)
Income tax expense45 16 62 85 
Loss before income tax expense and equity in earnings of unconsolidated joint venture(39,278)(152,915)(78,768)(164,360)
Loss on early extinguishment of debt359 — 359 828 
Interest and other income(1,797)(354)(2,943)(832)
Interest expense71,846 77,548 142,617 118,547 
Loss on sale of real estate— 10 974 10 
Loss on equity securities— 9,450 — 5,758 
General and administrative8,131 9,709 16,038 15,786 
Loss on impairment of real estate254 100,747 254 100,747 
Depreciation and amortization44,909 42,699 90,366 65,577 
NOI$84,424 $86,894 $168,897 $142,061 
NOI:
Hawaii Properties$22,619 $24,745 $44,741 $44,037 
Mainland Properties61,805 62,149 124,156 98,024 
NOI$84,424 $86,894 $168,897 $142,061 

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Funds From Operations Attributable to Common Shareholders and Normalized Funds From Operations Attributable to Common Shareholders
We calculate FFO attributable to common shareholders and Normalized FFO attributable to common shareholders as shown below. FFO attributable to common shareholders is calculated on the basis defined by The National Association of Real Estate Investment Trusts, which is net loss attributable to common shareholders, calculated in accordance with GAAP, excluding loss on impairment of real estate, any gain or loss on sale of real estate, equity in earnings of unconsolidated joint venture and any realized and unrealized gains or losses on equity securities, plus real estate depreciation and amortization of consolidated properties and our proportionate share of FFO of unconsolidated joint venture properties and minus FFO adjustments attributable to noncontrolling interest, as well as certain other adjustments currently not applicable to us. In calculating Normalized FFO attributable to common shareholders, we adjust for the items shown below including similar adjustments for the unconsolidated joint venture, if any. FFO attributable to common shareholders and Normalized FFO attributable to common shareholders are among the factors considered by our Board of Trustees when determining the amount of distributions to our shareholders. Other factors include, but are not limited to, requirements to maintain our qualification for taxation as a REIT, limitations in the agreements governing our debt, the availability to us of debt and equity capital, our distribution rate as a percentage of the trading price of our common shares, or dividend yield, and our dividend yield compared to the dividend yields of other industrial REITs, our expectation of our future capital requirements and operating performance and our expected needs for and availability of cash to pay our obligations. Other real estate companies and REITs may calculate FFO attributable to common shareholders and Normalized FFO attributable to common shareholders differently than we do.
The following table presents our calculation of FFO attributable to common shareholders and Normalized FFO attributable to common shareholders and reconciliations of net loss attributable to common shareholders to FFO attributable to common shareholders and Normalized FFO attributable to common shareholders for the three months ended June 30, 2023 and 2022 (dollars in thousands, except per share data):
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Reconciliation of Net Loss Attributable to Common Shareholders to FFO Attributable to Common Shareholders and Normalized FFO Attributable to Common Shareholders:
Net loss attributable to common shareholders$(25,828)$(143,539)$(50,637)$(150,053)
Depreciation and amortization44,909 42,699 90,366 65,577 
Equity in earnings of unconsolidated joint venture(2,743)(1,610)(6,704)(3,337)
Loss on equity securities— 9,450 — 5,758 
Share of FFO from unconsolidated joint venture1,502 1,676 2,970 3,437 
Loss on impairment of real estate254 100,747 254 100,747 
Loss on sale of real estate— 10 974 10 
FFO adjustments attributable to noncontrolling interest(10,719)(11,434)(21,932)(16,038)
FFO attributable to common shareholders7,375 (2,001)15,291 6,101 
Loss on early extinguishment of debt359 — 359 828 
Acquisition, transaction related and certain other financing costs (1)
— 30,303 — 48,976 
Normalized FFO adjustments attributable to noncontrolling interest(140)— (140)— 
Normalized FFO attributable to common shareholders$7,594 $28,302 $15,510 $55,905 
Weighted average common shares outstanding - basic and diluted65,369 65,221 65,339 65,217 
Per common share data (basic and diluted):
FFO attributable to common shareholders$0.11 $(0.03)$0.23 $0.09 
Normalized FFO attributable to common shareholders$0.12 $0.43 $0.24 $0.86 
(1)Amounts for the three and six months ended June 30, 2022 primarily include certain debt issuance costs recorded as interest expense related to certain financing and other transaction related costs expensed under GAAP.
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LIQUIDITY AND CAPITAL RESOURCES
 
Our Operating Liquidity and Resources (dollars in thousands) 
Our principal sources of funds to meet our operating and capital expenses, pay debt service obligations and make distributions to our shareholders are rents from tenants at our properties. As of June 30, 2023, investment grade rated tenants, subsidiaries of investment grade rated parent entities or our Hawaii land leases represented 77.2% of our annualized rental revenues and only 5.2% of our annualized rental revenues were from leases expiring over the next 12 months. We believe that these sources of funds will be sufficient to meet our operating and capital expenses, pay debt service obligations and make distributions to our shareholders for the next 12 months and for the foreseeable future thereafter.
Our future cash flows from operating activities will depend primarily upon our ability to:
collect rents from our tenants when due;
maintain the occupancy of, and maintain or increase the rental rates at, our properties;
control our operating cost increases;
purchase additional properties that produce cash flows in excess of our costs of acquisition capital and property operating expenses; and
develop properties to produce cash flows in excess of our costs of capital.

The following is a summary of our sources and uses of cash flows for the periods presented, as reflected in our condensed consolidated statements of cash flows (dollars in thousands):
 Six Months Ended June 30,
 20232022
Cash and cash equivalents and restricted cash at beginning of period$140,780 $29,397 
Net cash provided by (used in):
Operating activities10,631 80,931 
Investing activities17,387 (3,416,022)
Financing activities41,570 3,742,638 
Cash and cash equivalents and restricted cash at end of period$210,368 $436,944 
The decrease in net cash provided by operating activities for the three months ended June 30, 2023 compared to the prior year is primarily due to higher interest expense paid in the 2023 period, partially offset by higher cash flows from the properties we acquired pursuant to our acquisition of MNR in February 2022. The change from net cash used in investing activities in the 2022 period compared to net cash provided by investing activities in the 2023 period is primarily due to our acquisition of MNR in February 2022 as compared to no property acquisitions during the 2023 period. The decrease in net cash provided by financing activities in the 2022 period to the 2023 period was primarily due to the net borrowings and sale of joint venture equity interests used to finance our acquisition of MNR in the 2022 period.
Our Investing and Financing Liquidity and Resources (dollars in thousands, except per share and per square foot data)
Our future acquisition or development activity cannot be accurately projected because such activity depends upon available opportunities that come to our attention, our ability to successfully acquire and develop properties, financing available to us, our cost of capital, other commitments we have made and alternative uses for the amounts that would be required for the acquisition or development, the extent of our leverage, and the expected impact of the acquisition or development on certain of our financial metrics and debt covenants. We generally do not intend to purchase “turn around” properties, or properties that do not generate positive cash flows, but we may conduct construction or redevelopment activities on our properties.
As of June 30, 2023, we had cash and cash equivalents of $71,695. To maintain our qualification for taxation as a REIT under the Internal Revenue Code of 1986, as amended, or the IRC, we generally are required to distribute at least 90% of our REIT taxable income annually, subject to specified adjustments and excluding any net capital gain. This distribution requirement limits our ability to retain earnings and thereby provide capital for our operations or acquisitions. We may use our cash and cash equivalents on hand, the cash flow from our operations, net proceeds from any sales of assets and net proceeds of offerings of equity or debt securities to fund our distributions to our shareholders.

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The ILPT Floating Rate Loan secured by 104 of our properties matures in October 2024, subject to three, one year extension options, and requires that interest be paid at an annual rate of SOFR, which is capped at an annual rate of 2.25% for the initial term of the ILPT Floating Rate Loan, plus a weighted average premium of 3.93%. The interest rate payable on the ILPT Floating Rate Loan as of June 30, 2023 was 6.18%. The weighted average interest rate payable under the ILPT Floating Rate Loan was 6.18% for both the three and six months ended June 30, 2023. Subject to the satisfaction of certain conditions, we have the option to prepay up to $247,000 of the ILPT Floating Rate Loan at par with no premium, and to prepay the balance of the ILPT Floating Rate Loan in full or in part at any time, subject to a premium, and beginning in October 2023, without a premium.
The Floating Rate Loan secured by 82 properties owned by our consolidated joint venture matures in March 2024, subject to three, one year extension options, and requires that interest be paid at an annual rate of SOFR, which is capped at an annual rate of 3.40% through the initial term of the Floating Rate Loan, plus a premium of 2.77%. The interest rate payable on the Floating Rate Loan as of June 30, 2023 was 6.17%. The weighted average annual interest rate payable under the Floating Rate Loan was 6.17% for the three and six months ended June 30, 2023. Subject to the satisfaction of certain conditions, we have the option to prepay up to $280,000 of the Floating Rate Loan at par with no premium, and to prepay the balance of the Floating Rate Loan at any time, subject to a premium.
In May 2023, our consolidated joint venture obtained a $91,000 fixed rate, interest only mortgage loan secured by four properties owned by our consolidated joint venture. This mortgage loan matures in June 2030 and requires that interest be paid at an annual rate of 6.25%. A portion of the net proceeds from this mortgage loan was used to repay four outstanding mortgage loans of our consolidated joint venture with an aggregate outstanding principal balance of $35,910 and a weighted average interest rate of 3.70%.
As of June 30, 2023, we had an aggregate principal amount of $4,334,755 of debt, including the Floating Rate Loan and the ILPT Floating Rate Loan, scheduled to mature between 2024 and 2038.
For further information regarding our investing and financing activities, see Notes 2 and 4 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Consolidated Joint Venture - Mountain Industrial REIT LLC:
We own a 61% equity interest in Mountain Industrial REIT LLC, or our consolidated joint venture. We control our consolidated joint venture and therefore account for the properties owned by this joint venture on a consolidated basis in our condensed consolidated financial statements. We recognized a 39% noncontrolling interest in our condensed consolidated financial statements for the three months ended June 30, 2023 and 2022, for the six months ended June 30, 2023 and the period from this joint venture’s formation date, February 25, 2022 to June 30, 2022. The portion of this joint venture's net loss not attributable to us, or $10,676 and $7,781, for the three months ended June 30, 2023 and 2022, respectively, and $21,404 and $11,042 for the six months ended June 30, 2023 and the period from this joint venture’s formation date, February 25, 2022 to June 30, 2022, respectively, is reported as net loss attributable to noncontrolling interest in our condensed consolidated statements of comprehensive income (loss). As of June 30, 2023, our consolidated joint venture had total assets of $3,092,534 and total liabilities of $1,775,802.
Unconsolidated Joint Venture - The Industrial Fund REIT LLC:
We own a 22% equity interest in The Industrial Fund REIT LLC, or the unconsolidated joint venture. We account for the unconsolidated joint venture under the equity method of accounting under the fair value option.
We recorded a change in the fair value of our investment in the unconsolidated joint venture of $2,743 and $1,610 for the three months ended June 30, 2023 and 2022, respectively, and $6,704 and $3,337 for the six months ended June 30, 2023 and 2022, respectively, as equity in earnings of unconsolidated joint venture in our condensed consolidated statements of comprehensive income (loss). In addition, the unconsolidated joint venture made aggregate cash distributions to us of $990 and $1,322 during the three months ended June 30, 2023 and 2022, respectively, and $1,980 and $2,642 for the six months ended June 30, 2023 and 2022, respectively.
For further information regarding these joint ventures, see Notes 2, 4, 5, 7, 8 and 9 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
We expect to use proceeds we may receive from the other investors in our joint ventures in connection with any additional properties we may sell to our joint ventures, equity contributions from any third party investors in our joint ventures or any future joint ventures and net proceeds from offerings of equity or debt securities to fund any future property acquisitions,
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developments and redevelopments. We may also assume mortgage loans or incur debt in connection with future acquisitions, developments and redevelopments. When the maturities of our debt approach or we desire to reduce our leverage or refinance debt, we intend to explore refinancing alternatives, property sales or sales of equity interests in joint ventures. Such alternatives may include incurring term debt, obtaining financing secured by mortgages on properties we own, issuing new equity or debt securities, obtaining a revolving credit facility, participating or selling equity interests in joint ventures or selling properties. We currently have an effective shelf registration statement that allows us to issue up to $500,000 in aggregate amount of public securities on an expedited basis, but we cannot be sure that there will be purchasers for such securities. Further, any issuances of our equity securities may be dilutive to our existing shareholders. Although we cannot be sure that we will be successful in completing any particular type of financing, we believe that we will have access to financing, such as debt or equity offerings, to fund capital expenditures, future acquisitions, development, redevelopment and other activities and to pay our obligations.
The completion and the costs of any future financings will depend primarily upon our success in operating our business and upon market conditions. In particular, the feasibility and cost of any future debt financings will depend primarily on our then current credit qualities and on market conditions. We have no control over market conditions. Potential lenders in future debt transactions will evaluate our ability to fund required debt service and repay principal balances when they become due by reviewing our financial condition, results of operations, business practices and plans and our ability to maintain our earnings, to stagger our debt maturities and to balance our use of debt and equity capital so that our financial performance and leverage ratios afford us flexibility to withstand any reasonably anticipated adverse changes. We intend to conduct our business activities in a manner which will afford us reasonable access to capital for investing and financing activities.
During the six months ended June 30, 2023, we paid quarterly cash distributions to our shareholders totaling $1,312 using cash balances.
On July 13, 2023, we declared a regular quarterly distribution to common shareholders of record on July 24, 2023 of $0.01 per share, or approximately $657. We expect to pay this distribution to our shareholders on or about August 17, 2023 using cash balances. For more information regarding these distributions, see Note 6 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
During the three and six months ended June 30, 2023 and 2022, amounts capitalized for tenant improvements, leasing costs, building improvements and development and redevelopment activities were as follows:
Three Months EndedSix Months Ended
June 30,June 30,
2023202220232022
Tenant improvements and leasing costs (1)
$2,498 $2,627 $4,538 $5,988 
Building improvements (2)
1,283 376 1,653 486 
Development, redevelopment and other activities (3)
3,870 7,077 6,391 7,371 
$7,651 $10,080 $12,582 $13,845 
(1)Tenant improvements and leasing costs include capital expenditures used to improve tenants’ space or amounts paid directly to tenants to improve their space and leasing related costs, such as brokerage commissions and tenant inducements.
(2)Building improvements generally include expenditures to replace obsolete building components and expenditures that extend the useful life of existing assets.
(3)Development, redevelopment and other activities generally include capital expenditure projects that reposition a property or result in new sources of revenues.

As of June 30, 2023, we had estimated unspent leasing related obligations of $23,876, of which $6,481 is expected to be spent during the next 12 months.
Debt Covenants (dollars in thousands)
Our principal debt obligations as of June 30, 2023 were: (1) $1,235,000 outstanding principal amount of the ILPT Floating Rate Loan secured by 104 of our properties; (2) $1,400,000 outstanding principal amount of the Floating Rate Loan secured by 82 properties owned by our consolidated joint venture; (3) $700,000 outstanding principal amount of a mortgage loan secured by 17 our properties; (4) $650,000 outstanding principal amount of a mortgage loan secured by 186 of our properties; and (5) $349,755 aggregate principal amount of mortgage loans secured by 12 properties owned by our consolidated joint venture in which we own a 61% equity interest. For further information regarding our indebtedness, see Note 4 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
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The agreements and related documents governing the ILPT Floating Rate Loan, the Floating Rate Loan, the $700,000 mortgage loan and the $650,000 mortgage loan contain customary covenants, provide for acceleration of payment of all amounts due thereunder upon the occurrence and continuation of certain events of default and, in the case of the $650,000 mortgage loan, also require us to maintain a minimum consolidated net worth of at least $250,000 and liquidity of at least $15,000. As of June 30, 2023, we believe that we were in compliance with all of the covenants and other terms under the agreements governing these loans.
Certain of the mortgage loans we assumed in connection with our acquisition of MNR are non-recourse, subject to certain limitations, and do not contain any material financial covenants. The agreements governing the ILPT Floating Rate Loan, the Floating Rate Loan, the $700,000 mortgage loan and the $650,000 mortgage loan contain certain exceptions to the general non-recourse provisions, including our obligation to indemnify the lenders for certain potential environmental losses.
Related Person Transactions
We have relationships and historical and continuing transactions with RMR, RMR Inc. and others related to them. For further information about these and other such relationships and related person transactions, see Notes 7 and 8 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, our 2022 Annual Report, our definitive Proxy Statement for our 2023 Annual Meeting of Shareholders and our other filings with the SEC. In addition, see the section captioned “Risk Factors” of our 2022 Annual Report for a description of risks that may arise as a result of these and other related person transactions and relationships. We may engage in additional transactions with related persons, including businesses to which RMR or its subsidiaries provide management services.
Critical Accounting Estimates
The preparation of our Condensed Consolidated Financial Statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in the condensed consolidated financial statements include purchase price allocations, useful lives of fixed assets and assessment of impairment of real estate and related intangibles.
A discussion of our critical accounting estimates is included in our 2022 Annual Report. There have been no significant changes in our critical accounting estimates since the year ended December 31, 2022.
Item 3. Quantitative and Qualitative Disclosures About Market Risk (dollars in thousands, except per share data)
 
We are exposed to risks associated with market changes in interest rates. We manage our exposure to this market risk by monitoring available financing alternatives. Our strategy to manage exposure to changes in interest rates is materially unchanged since December 31, 2022. Other than as described below, we do not currently expect any significant changes in our exposure to fluctuations in interest rates or in how we manage this exposure in the near future.
Floating Rate Debt
At June 30, 2023, our outstanding floating rate debt consisted of the following:
AnnualAnnualInterest
PrincipalInterestInterestPayments
Debt
Balance (1)
Rate (1)
Expense (1)
MaturityDue
ILPT Floating Rate Loan$1,235,000 6.18 %$76,323 2024Monthly
Floating Rate Loan1,400,000 6.17 %86,380 2024Monthly
$2,635,000 $162,703 
(1)The principal balance, annual interest rate and annual interest expense are the amounts stated in the applicable contract, as adjusted by our interest rate caps as applicable. In accordance with GAAP, our carrying values and recorded interest expense may differ from these amounts because of market conditions at the time we assumed or issued this debt.

At June 30, 2023, our aggregate floating rate debt was $2,635,000, consisting of the $1,235,000 outstanding principal amount of the ILPT Floating Rate Loan, and the $1,400,000 outstanding principal amount of the Floating Rate Loan secured by 82 properties owned by our consolidated joint venture. The ILPT Floating Rate Loan matures on October 9, 2024, subject to three, one year extension options, and requires that interest be paid at an annual rate of SOFR plus a weighted average premium of 3.93%. The Floating Rate Loan matures on March 9, 2024, subject to three, one year extension options, and requires that interest be paid at an annual rate of SOFR plus a premium of 2.77%. We are vulnerable to changes in the U.S. dollar based on
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short term rates, specifically SOFR. In conjunction with these borrowings, to hedge our exposure to risks related to changes in SOFR rates, we purchased interest rate caps with a SOFR strike rate equal to 2.25% for the ILPT Floating Rate Loan and 3.40% for the Floating Rate Loan.
In addition, upon renewal or refinancing of these obligations, we are vulnerable to increases in interest rate premiums due to market conditions and our perceived credit risk. Generally, a change in interest rates would not affect the value of our floating rate debt but would affect our operating results. The following table presents the approximate impact a one percentage point increase in interest rates would have on our annual floating rate interest expense at June 30, 2023, excluding the impact of our interest rate caps:
Impact of an Increase in Interest Rates
Total Interest Annual
Interest Rate OutstandingExpenseEarnings Per
Per YearDebtPer Year
Share Impact (1)
At June 30, 2023
6.17 %$2,635,000 $162,703 $2.49 
One percentage point increase7.17 %$2,635,000 $188,930 $2.89 
(1)Based on the diluted weighted average common shares outstanding for the six months ended June 30, 2023.
The foregoing table shows the impact of an immediate one percentage point change in floating interest rates. If interest rates were to change gradually over time, the impact would be spread over time. Our exposure to fluctuations in floating interest rates will increase or decrease in the future with increases or decreases in the outstanding amounts of any floating rate debt we may incur.
Fixed Rate Debt
At June 30, 2023, our outstanding fixed rate debt consisted of the following mortgage notes:
AnnualAnnualInterest
PrincipalInterestInterestPayments
Debt
Balance (1)
Rate (1)
Expense (1)
MaturityDue
Mortgage notes (186 Hawaii Properties)
$650,000 4.31 %$28,015 2029Monthly
Mortgage notes (17 Mainland Properties)
700,000 4.42 %30,940 2032Monthly
Mortgage note (2)
91,000 6.25 %5,688 2030Monthly
Mortgage note (3)
12,042 3.67 %442 2031Monthly
Mortgage note (3)
13,536 4.14 %560 2032Monthly
Mortgage note (3)
29,797 4.02 %1,198 2033Monthly
Mortgage note (3)
41,636 4.13 %1,720 2033Monthly
Mortgage note (3)
25,310 3.10 %785 2035Monthly
Mortgage note (3)
40,759 2.95 %1,202 2036Monthly
Mortgage note (3)
44,991 4.27 %1,921 2037Monthly
Mortgage note (3)
50,684 3.25 %1,647 2038Monthly
$1,699,755 $74,118 

(1)The principal balance, annual interest rate and annual interest expense are the amounts stated in the applicable contract. In accordance with GAAP, our carrying values and recorded interest expense may differ from these amounts because of market conditions at the time we assumed or issued this debt.
(2)Our consolidated joint venture, in which we own a 61% equity interest, obtained this mortgage loan, which is secured by four properties.
(3)Our consolidated joint venture, in which we own a 61% equity interest, assumed these former MNR mortgage loans, which are secured by eight properties in aggregate.

Our $650,000, $700,000 and $91,000 mortgage notes require interest only payments until maturity. The remaining fixed rate mortgage notes require amortizing payment of principal and interest until maturity. Because our mortgage notes require interest to be paid at a fixed rate, changes in market interest rates during the terms of these mortgage notes will not affect our interest obligations. If these mortgage notes are refinanced at an interest rate which is one percentage point higher or lower than shown above, our annual interest cost would increase or decrease by approximately $16,998.
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Changes in market interest rates would affect the fair value of our fixed rate debt obligations. Increases in market interest rates decrease the fair value of our fixed rate debt, while decreases in market interest rates increase the fair value of our fixed rate debt. The U.S. Federal Reserve has raised interest rates multiple times since the beginning of 2022 in an effort to combat inflation and may continue to do so. Based on the balances outstanding at June 30, 2023 and discounted cash flow analyses through the maturity date, and assuming no other changes in factors that may affect the fair value of our fixed rate debt obligation, a hypothetical immediate one percentage point change in the interest rates would change the fair value of this obligation by approximately $91,876.
Item 4. Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, our management carried out an evaluation, under the supervision and with the participation of our Managing Trustees, our President and Chief Operating Officer and our Chief Financial Officer and Treasurer, of the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, our Managing Trustees, our President and Chief Operating Officer and our Chief Financial Officer and Treasurer concluded that our disclosure controls and procedures are effective.
There have been no changes in our internal control over financial reporting during the quarter ended June 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Warning Concerning Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws that are subject to risks and uncertainties. These statements may include words such as “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”, “will”, “may” and negatives or derivatives of these or similar expressions. These forward-looking statements include, among others, statements about: economic and market conditions; our expectations regarding the demand for industrial properties; our future leasing activity; our leverage levels and possible future financings; our liquidity needs and sources; our capital expenditure plans and commitments; acquisitions and dispositions; our existing and possible future joint venture arrangements; our redevelopment and construction activities and plans; and the amount and timing of future distributions.
Forward-looking statements reflect our current expectations, are based on judgments and assumptions, are inherently uncertain and are subject to risks, uncertainties and other factors, which could cause our actual results, performance or achievements to differ materially from expected future results, performance or achievements expressed or implied in those forward-looking statements. Some of the risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements include, but are not limited to, the following:
Our ability and the ability of our tenants to operate under unfavorable market and economic conditions, such as rising or sustained high interest rates, high inflation, labor market challenges, dislocation and volatility in the public equity and debt markets, challenges in the commercial real estate industry generally and in the industrial and logistics sector, geopolitical instability and economic recessions or downturns,
Demand for industrial and logistics properties,
Our ability to reduce our leverage, generate cash flow and take advantage of mark-to-market leasing opportunities,
Our ability to cost-effectively raise and balance our use of debt or equity capital,
Our ability to pay interest on and principal of our debt,
Our ability to maintain sufficient liquidity,
Our tenants’ ability and willingness to pay their rent obligations to us,
Our ability to successfully compete for tenancies, the likelihood that the rents we realize will increase when we renew or extend our leases, enter new leases, or our rents reset at our properties in Hawaii,
Whether our tenants will renew or extend their leases or that we will be able to obtain replacement tenants on terms as favorable to us as the terms of our existing leases,
The credit qualities of our tenants,
Changes in the security of cash flows from our properties,
Our ability to maintain high occupancy at our properties,
Our tenant and geographic concentrations,
Potential defaults of our leases by our tenants,
Changes in global supply chain conditions and emerging technologies,
Whether the industrial and logistics sector and the extent to which our tenants’ businesses are critical to sustaining a resilient supply chain and that our business will benefit as a result,
Our ability to pay distributions to our shareholders and to increase or sustain the amount of such distributions,
Our ability to acquire properties that realize our targeted returns,
Our ability to sell properties at prices we target,
Our ability to prudently pursue, and successfully and profitably complete, expansion and renovation projects at our properties and to realize our expected returns on those projects,
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Our ability to sell additional equity interests in, or contribute additional properties to, our existing joint ventures, or enter into additional, real estate joint ventures or to attract co-venturers and benefit from our existing joint ventures or any real estate joint ventures we may enter into,
The ability of our manager, RMR, to successfully manage us,
Our qualification for taxation as a REIT under the IRC,
Changes in federal or state tax laws,
Changes in environmental laws or in their interpretations or enforcement as a result of climate change or otherwise, or our incurring environmental remediation costs or other liabilities,
Our expected capital expenditures and leasing costs, as well as risks and uncertainties regarding the development, redevelopment or repositioning of our properties, including as a result of inflation, cost overruns, supply chain challenges, labor shortages, construction delays or inability to obtain necessary permits, and our ability to lease space at these properties at targeted returns,
Competition within the commercial real estate industry, particularly for industrial and logistics properties in those markets in which our properties are located,
Compliance with, and changes to, federal, state and local laws and regulations, accounting rules, tax laws and similar matters,
Limitations imposed on our business and our ability to satisfy complex rules in order for us to maintain our qualification for taxation as a REIT for U.S. federal income tax purposes,
Non-performance by the counterparties to our interest rate caps and the costs for renewing or replacing the interest rate caps,
Actual and potential conflicts of interest with our related parties, including our managing trustees, RMR and others affiliated with them,
Acts of terrorism, outbreaks or continuation of pandemics or other significant adverse public health safety events or conditions, war or other hostilities, supply chain disruptions, climate change or other manmade or natural disasters beyond our control, and
Other matters.
These risks, uncertainties and other factors are not exhaustive and should be read in conjunction with other cautionary statements that are included in our periodic filings. The information contained elsewhere in our filings with the SEC, including under the caption “Risk Factors” in our periodic reports, or incorporated therein, identifies important factors that could cause differences from our forward-looking statements in this Quarterly Report on Form 10-Q. Our filings with the SEC are available on the SEC’s website at www.sec.gov.
You should not place undue reliance upon our forward-looking statements.
Except as required by law, we do not intend to update or change any forward-looking statements as a result of new information, future events or otherwise.

Statement Concerning Limited Liability

The Amended and Restated Declaration of Trust establishing Industrial Logistics Properties Trust, dated January 11, 2018, as amended, as filed with the State Department of Assessments and Taxation of Maryland, provides that no trustee, officer, shareholder, employee or agent of Industrial Logistics Properties Trust shall be held to any personal liability, jointly or severally, for any obligation of, or claim against, Industrial Logistics Properties Trust. All persons dealing with Industrial Logistics Properties Trust in any way shall look only to the assets of Industrial Logistics Properties Trust for the payment of any sum or the performance of any obligation.
PART II. Other Information
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Item 1A. Risk Factors
There have been no material changes to the risk factors from those we previously provided in our 2022 Annual Report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer purchases of equity securities. The following table provides information about our purchases of our equity securities during the quarter ended June 30, 2023:
Maximum
Total Number ofApproximate Dollar
Shares PurchasedValue of Shares that
Number ofAverageas Part of PubliclyMay Yet Be Purchased
SharesPrice PaidAnnounced PlansUnder the Plans or
Calendar Month
Purchased (1)
per Shareor ProgramsPrograms
May 1, 2023 - May 31, 20235,762 $1.82 — $— 
June 1, 2023 - June 30, 20231,348 1.84 — — 
Total
7,110 $1.82 — $— 

(1)    These common share withholdings and purchases were made to satisfy tax withholding and payment obligations of certain former officers and employees of RMR in connection with the vesting of prior awards of common shares to them. We withheld and purchased these common shares at their fair market values based upon the trading prices of our common shares at the close of trading on Nasdaq on the purchase dates.
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Item 6. Exhibits
 
Exhibit Number
Description
  
3.1
3.2
4.1
31.1
31.2
31.3
31.4
32.1
101.INSXBRL 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.SCHXBRL Taxonomy Extension Schema Document. (Filed herewith.)
101.CALXBRL Taxonomy Extension Calculation Linkbase Document. (Filed herewith.)
101.DEFXBRL Taxonomy Extension Definition Linkbase Document. (Filed herewith.)
101.LABXBRL Taxonomy Extension Label Linkbase Document. (Filed herewith.)
101.PREXBRL Taxonomy Extension Presentation Linkbase Document. (Filed herewith.)
104Cover 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 Operating Officer
  
Dated: July 25, 2023
   
   
 By:/s/ Brian E. Donley
  Brian E. Donley
  Chief Financial Officer and Treasurer
  (Principal Financial Officer and Principal Accounting Officer)
  
Dated: July 25, 2023

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