Industrial Logistics Properties Trust (ILPT) Q2 2024 earnings summary

Executive summary

• Portfolio comprised 411 industrial and logistics properties totaling 59.9 million sq ft across 39 states, with 77% of annualized rental revenues from investment grade tenants or Hawaii land leases and 95.4% occupancy as of June 30, 2024.

• Q2 2024 saw strong leasing activity, with 628,000 sq ft of new and renewal leases executed at 15.8% higher GAAP rents, and same property cash basis NOI up 2.6% year-over-year.

• 26 leases totaling 2.6 million sq ft were signed in H1 2024 at rental rates 30.5% above prior rates, adding $4.2 million in annualized rental revenue, most to be realized in H2 2024 or 2025.

• Occupancy declined to 95.4% due to a large Hawaii property vacancy, but tenant retention and rent growth remain strategic priorities.

• High occupancy and rent growth are driven by e-commerce and supply chain trends, though inflation and high interest rates have increased cost of capital.

Financial highlights

• Q2 2024 Normalized FFO was $9.0 million ($0.14/share), up 18.1% year-over-year; net loss attributable to common shareholders was $23.2 million ($0.35/share).

• GAAP NOI for Q2 2024 was $86.3 million (+2.2% YoY); cash basis NOI was $82.9 million (+2.6% YoY); Adjusted EBITDAre was $85.1 million (+4.6% YoY).

• Rental income for Q2 2024 was $110.6 million, up 2.4% from Q2 2023.

• Cash and restricted cash totaled $260 million as of June 30, 2024, including $112 million restricted cash.

• Quarterly distribution declared at $0.01 per share for Q2 2024.

Outlook and guidance

• Management expects continued strong demand for industrial properties, supported by e-commerce and supply chain needs.

• $1.2 billion loan maturing in October 2024 will be extended; no debt maturities until 2027 with extension options.

• Cost for replacement interest rate cap expected to be $25–$30 million, likely executed near September 30.

• Leasing pipeline active with 36 deals for over 7 million sq ft, 2.5 million sq ft in advanced negotiations.

• Only 5.1% of annualized rental revenues are from leases expiring in the next 12 months; 4.6% of rentable square feet is vacant.