Industrial Logistics Properties Trust Q4 FY2025 earnings call

• Ended 2025 with robust demand for industrial and logistics properties, record quarterly leasing volume of nearly 4 million square feet at a weighted average rent roll-up of 25.7%, fifth consecutive quarter of double-digit rent growth.
• Normalized FFO grew 113% year-over-year, same-property cash basis NOI increased 5.2%. Total shareholder return in 2025 was over 55%, ranking third in U.S. REITs.
• In June 2025, refinanced $1.2 billion of floating rate debt to fixed rate debt, saving over $8 million annually. Announced increase in annualized dividend from $0.04 to $0.20 per share.
• As of Dec 31, 2025, owned 409 properties across 39 states, ~60 million square feet, weighted average lease term 7 years. Unique Hawaii footprint with 226 properties totaling 16.7 million square feet. Occupancy at year-end 94.5%, 40 basis point increase from third quarter. Completed 42 new/renewal leases and 2 rent resets in 2025, expected to generate ~$10.6 million in annualized rental revenue.
• Focused on leasing priorities in 2026: 2.2 million square foot land parcel in Hawaii and 535,000 square foot property in Indianapolis. Leasing pipeline of 6.4 million square feet, with 3.8 million square feet in advanced negotiation stages, expecting average rent roll-ups of ~20% on Mainland and 30% in Hawaii.

In the fourth quarter, normalized FFO was $18.9 million or $0.29 per share, up 9% sequentially and 113% year-over-year. Same-property NOI was $88.2 million and same-property cash basis NOI was $85.7 million. Adjusted EBITDAre totaled $85.1 million. As of December 31, 2025, ILPT owned 409 properties across 39 states totaling ~60 million square feet with a weighted average lease term of 7 years. Over 76% of annualized revenues come from investment-grade rated tenants or secure Hawaii land leases. Consolidated occupancy at year-end was 94.5%. During 2025, 42 new and renewal leases and 2 rent resets totaling 7.3 million square feet were completed, expected to generate ~$10.6 million in annualized rental revenue, with ~$5.8 million not yet commenced. The two largest tenants, FedEx and Amazon, accounted for 2.8 million square feet or 38% of annual leasing volume.

• For first quarter 2026, expect interest expense to be $61.5 million, including $57 million cash interest expense and $4.5 million noncash amortization. Normalized FFO expected between $0.29 and $0.31 per share. Adjusted EBITDAre expected between $84 million and $85 million.
• Remain focused on leasing priorities in 2026, believe in continued organic cash flow growth and leverage reduction (leverage declined from 12.4x to 11.8x over last year).

Q: What's the noncash interest amount for the quarter?

A: For the forecasted quarter is $4.5 million.

Q: Can you provide an update on the asset under contract for sale?

A: Had another property under LOI for about $50 million, tenant decided to engage in renewal discussion vs buy the property, now have a signed LOI for a 7-year renewal being negotiated.

Q: Are there any known move-outs we need to be aware of?

A: Nothing material in nature at this point, making good progress on '26 and '27 expirations.

Q: Any changes in the marketing process for the Indi and Hawaii vacancies?

A: For Indi, making good progress, exchanging lease comments and could provide positive news about lease-up of that space soon. For Hawaii, continuing discussions with same tenant, size and complexity cause timing delays, but it's a ground lease so concessions not really an option, just looking for the right tenant to take the big parcel.

Q: How do we get from 4Q interest expense to the forecast for 1Q?

A: Number of days, there were 92 days in this quarter and only 90 in the next quarter.

Q: Was there anything specific driving same-store NOI growth beyond leasing and addressing vacancy?

A: Reason is leases are done ahead of time, 12 to 18 months ahead of natural lease expiration, so cash impact of new leases takes a little while to hit, majority of increase from leasing.

Q: Outlook for disposition activity for the remainder of 2026?

A: Don't see it being a huge part of business plan in near term, sales will be opportunistic, not material part of business plan.

Q: Thought process around refinancing the Mountain JV loan?

A: Actively evaluating refinance opportunities, extension option gives flexibility, no extra fees needed except purchasing interest rate cap which can be sold later if refinanced before maturity. Actively looking at macroeconomic factors and what's available, portfolio is 100% leased with good tenant retention, so no immediate need to rush into refinancing.

Q: Concern about core markets on Mainland in terms of competing supply?

A: Haven't seen it be a big issue, construction has slowed, macro vacancy increase is from new supply, but tenants realize relocation costs and disruption, so some have come back for lease renewals