ILPT

Leasing Activity

• Completed a record 5.4 million square feet of new/renewal leases in Q2 2026, marking the seventh consecutive quarter of double-digit rent growth and fifth straight quarter of accelerating mark-to-market spreads, with an overall 35% cash leasing spread. The weighted average lease term for Q2 activity was 18.6 years, adding $8.2 million in annualized rental revenue, 70% of which will take effect in H2 2026 or 2027.
• Resolved two large portfolio vacancies: signed a 10-year lease with FedEx for 532,000 square feet in Indianapolis (14% cash gap, 4% roll-up) and a 53-year ground lease for 2.2 million square feet in Hawaii (162% cash gap, 52% roll-up), driving the 450 basis point occupancy increase.
• The current leasing pipeline totals 3.4 million square feet, with 2.2 million square feet related to upcoming 12-month expirations already in advanced negotiations; management expects 20% average rent roll-ups on mainland properties and 30% in Hawaii. The lease expiration schedule is well-balanced, with less than 17% of annualized rental revenue expiring through the end of 2028.

Financial Position

• Refinanced $1.62 billion of floating rate and existing fixed rate debt in the consolidated joint venture to 5.71% fixed-rate 5-year interest-only debt, leaving 100% of ILPT's consolidated debt fixed rate with no maturities until 2029, eliminating variable rate exposure.
• The refinancing unlocked previously restricted cash, allowing the joint venture to distribute $38 million, with $23 million going to ILPT as 61% owner. ILPT ended the quarter with $135 million in unrestricted cash and $46 million in restricted cash; net debt to total assets is 69.2%, and net debt leverage improved to 11.5x.
• Doubled the quarterly dividend to 10 cents per share, reflecting confidence in durable earnings; the Q2 CAD payout ratio rose to 50% driven by elevated one-time leasing commissions from the record leasing volume, and management confirms the new dividend is well-covered by underlying cash flows.

Portfolio Performance

• The portfolio outperformed the broader industrial market, with occupancy 590 basis points above the national industrial average, supported by high-quality locations, a diverse tenant base, and irreplaceable Hawaii land holdings. ILPT delivered a 63% total shareholder return in H1 2026, outperforming the Industrial REIT benchmark by 55 percentage points.

• For Q3 2026: Management expects total interest expense of $61 million ($59 million cash interest, $2 million non-cash amortization), adjusted EBITDA RE between $87.5 million and $88.5 million, and normalized FFO between 34 and 36 cents per share.
• For full year 2026: Management expects capital expenditures between $29 million and $34 million, total interest expense of ~$245 million ($234.5 million cash interest, $10.5 million non-cash interest).
• Full year 2026 guidance was revised upward: adjusted EBITDA RE guidance is now $348 million to $353 million, a $4 million increase at the midpoint; normalized FFO guidance is now $1.31 to $1.39 per share, a 5 cent increase at the midpoint. The wider 8 cent range for full-year normalized FFO is a function of converting a $5 million absolute range to per-share terms, not increased uncertainty around performance.

ILPT operates a single-segment industrial real estate portfolio with no separate product segments disclosed. For Q2 2026: normalized FFO was $20.8 million (31 cents per share), a 51% year-over-year increase. Same property NOI was $88.6 million, same property cash basis NOI was $85.7 million, both growing 2% year-over-year. Adjusted EBITDA RE totaled $87.4 million, a 3% year-over-year increase. Capital expenditures for the quarter were $14 million, with $10 million allocated to leasing commissions. As of quarter end, the portfolio holds 409 properties totaling 60 million square feet, with 99% consolidated occupancy, a 450 basis point increase quarter-over-quarter. The weighted average remaining lease term across the portfolio is 8 years.

• Leverage remains elevated at 69.2% net debt to total assets, though management has reduced financial risk materially over the past year via refinancing.
• ILPT currently has no active revolving credit facility for liquidity buffer.
• The company recorded a one-time bad debt reserve for a Hawaii tenant in Q2 2026, which reduced quarterly NOI by 180 basis points; collections for this tenant remain unresolved, though management noted the associated annualized revenue is not material to overall portfolio performance.

Q: The analyst asked what the three-cent normalized FFO adjustment for non-controlling interest was, and how management will use excess cash at the ILPT corporate level after refinancing. He also asked about future joint venture opportunities for the stabilized portfolio. / A: The NFFO adjustment was a one-time charge for the non-controlling interest share of the loss on debt extinguishment from the refinancing. Management plans to build excess cash reserves for future leverage reduction, specifically to pay down debt when the Hawaii portfolio matures in 2029. Any future joint venture opportunities would likely be for the existing consolidated mainland joint venture, as the stabilized, fixed-rate structure makes it attractive to potential outside investors, though discussions are still early.

Q: The analyst asked why same-property cash NOI only grew 2% in Q2, and what the current average annual rent escalator is for ILPT's leases. / A: The 2% growth was depressed by two one-time factors: delayed revenue recognition from new lease commencements and a one-time bad debt reserve for a Hawaii tenant; adjusted for the reserve, underlying cash NOI growth would have been 3.8%. The average annual rent escalator across the portfolio is ~3%, with some leases in stronger markets carrying escalators as high as 4%.

Q: The analyst asked when the full cash benefit from the large Hawaii ground lease will flow to ILPT, and what the baseline CapEx run rate is after 2026. / A: The Hawaii tenant took possession July 1, 2026, but has a three-year free rent period, so no base rental cash flow will be recognized until 2029; ILPT will immediately receive annual real estate tax recoveries of ~$800,000. Q2 2026 CapEx was outsized due to $10 million in one-time leasing commissions from record activity; the baseline quarterly building improvement CapEx run rate is $2 million to $4 million, with only a potential one-time redevelopment project expected to push 2027 CapEx higher.