Industrial Logistics Properties Trust Q1 Earnings Call Highlights

Key Points

• ILPT’s consolidated JV priced a $1.6 billion fixed‑rate, interest‑only loan at 5.71% (expected close ~May 8), converting all consolidated debt to fixed rate with a weighted average of 5.48%, no maturities until 2029 and an expected ~$20 million uplift to annual cash flow by eliminating amortizing debt and interest caps.
• Operationally ILPT reported its sixth consecutive quarter of double‑digit rent growth, leasing 862,000 sq ft at a 26.3% weighted average rent roll‑up and 94.6% consolidated occupancy, and expects to fully lease a key 535,000‑sq‑ft Indianapolis vacancy in June with cash benefits starting in H2.
• Q1 Normalized FFO was $22 million ($0.33/share), beating guidance by $0.02 per share partly due to $1.1 million of one‑time items, and full‑year 2026 guidance calls for Normalized FFO of $1.27–$1.34/share and Adjusted EBITDAre of $344–$349 million, with interest expense around $245 million.

Industrial Logistics Properties Trust NASDAQ: ILPT used its first-quarter 2026 earnings call to emphasize a major refinancing at its consolidated joint venture and to detail continued leasing gains that management said are supporting cash flow and earnings growth.

JV refinancing shifts consolidated debt to fixed-rate, interest-only structure

President and CEO Yael Duffy opened by highlighting a financing milestone announced the prior week: ILPT’s consolidated joint venture “successfully priced $1.6 billion of fixed rate interest only debt” at an interest rate of 5.71%.

Duffy said the outcome “was achieved despite geopolitical headwinds and capital markets volatility,” and attributed it to “the strength of our high quality industrial portfolio, the credit worthiness of our tenants, and the depth of the banking relationships our manager, The RMR Group, has built.”

Chief Financial Officer and Treasurer Tiffany Sy said ILPT expects to close the loan “on or about May 8th” and intends to use proceeds to refinance the JV’s existing $1.4 billion floating-rate loan and $205 million of fixed-rate amortizing debt. The new borrowing is secured by “the same 90 mainland properties as the existing borrowing,” she said.

Sy said the refinancing will “unlock nearly $20 million in annual cash flow by eliminating its amortizing debt and the need to purchase interest rate caps.” Following the transaction, she said “all of ILPT’s consolidated debt will be fixed rate,” with a weighted average interest rate of 5.48% and “no debt maturities until 2029.” Duffy similarly noted that the refinancing would “substantially strengthen” the joint venture’s capital structure and “insulat[e] it from interest rate swings.”

First-quarter results beat guidance on one-time items

Sy reported first-quarter Normalized FFO of $22 million, or $0.33 per share, which exceeded the high end of the company’s guidance by $0.02 per share. She said the beat was “driven by one-time revenues and fees totaling $1.1 million.”

Normalized FFO grew 16% sequentially and 63% versus the same quarter a year ago, Sy said. She also reported:

• Same Property NOI: $90.3 million
• Same Property Cash Basis NOI: $87.4 million
• Adjusted EBITDAre: $87 million

Duffy said Same Property Cash Basis NOI increased “more than four percent year-over-year,” while Normalized FFO grew “more than 60%,” which she said reflected progress on both “reducing financing costs and driving rent growth.”

In response to an analyst question about the quarter’s one-time items, Sy said $650,000 related to “percentage rent that gets trued up” and $450,000 was “a one-time remediation fee related to a move-out that has already been released.” She added that the percentage-rent true-up is “always a 1Q item,” though the amount can vary and may not occur every year.

Leasing: rent roll-ups continue; Indianapolis vacancy expected to be leased in June

Management pointed to continued leasing momentum, including what Duffy described as the sixth consecutive quarter of double-digit rent growth. During the quarter, ILPT leased 862,000 square feet at a weighted average rent roll-up of 26.3%, she said. Renewals represented about 70% of leasing activity, and Duffy reported consolidated occupancy of 94.6%.

Duffy also quantified near-term lease expiration exposure and embedded mark-to-market opportunity, stating that 8.1 million square feet—representing 11.5% of total annualized revenue—was scheduled to expire by the end of 2027. She said ILPT’s leasing pipeline stood at about 6 million square feet, with more than 2 million square feet in advanced negotiation or lease documentation.

A key operational focus discussed on the call was a 535,000-square-foot vacancy in Indianapolis. Duffy said the company anticipates “fully leasing” the space in June, calling it a “key 2026 initiative.” Asked about timing and economics, Duffy said the lease is expected to be signed in June, with “minimal free rent of four months.” She added, “We’ll start seeing the cash in the back half of the year, and it will be at a roll-up in rent.”

Balance sheet metrics and cash position

Sy said ILPT ended the quarter with $100 million of cash on hand and $86 million of restricted cash. She also reported that the net debt to total assets ratio “declined modestly to 68.8%,” and that the company’s net debt leverage ratio improved to 11.6x from 11.8x.

On capital allocation, Duffy said management was “evaluating all of our options” and stressed the need to maintain liquidity to address tenant needs. She said the company is in early discussions with “a couple tenants” about potential building expansions where tenants want ILPT to partner with them. When asked about acquisitions, Duffy said, “Given where our leverage is today, I don’t see us looking to acquire any properties, at least in the short term, unless it’s a very specific situation or an opportunistic one.”

Sy also said first-quarter capital expenditures were unusually low. “Current quarter was an anomaly,” she said, adding that while first quarter can sometimes be seasonally lower, “That’s not what we are forecasting going forward.”

Guidance: full-year outlook introduced; refinancing impact incorporated

Sy said ILPT introduced full-year 2026 guidance in addition to its quarterly outlook. For the second quarter of 2026, the company expects:

• Interest expense: $61.5 million (including $59 million cash interest and $2.5 million non-cash amortization of deferred financing fees)
• Adjusted EBITDAre: $85.5 million to $86.5 million
• Normalized FFO: $0.31 to $0.33 per share

For full-year 2026, ILPT guided to:

• Interest expense: approximately $245 million (including $234.5 million cash interest and $10.5 million non-cash interest)
• Adjusted EBITDAre: $344 million to $349 million
• Normalized FFO: $1.27 to $1.34 per share

Sy said the guidance reflects the impact of the consolidated joint venture’s refinancing and assumes the Indianapolis vacant property is leased in June 2026. She added that the outlook “does not include the lease up of our Hawaii land parcel.”

During the Q&A, Sy said a key driver between the low and high ends of guidance relates to potential one-time items, such as “one-time reimbursements” or “one-time fees,” which she described as typically not large.

Asked whether the new debt structure provides flexibility for asset sales, Sy noted a “24-month lockout period” in the new debt. Duffy added that completing the Indianapolis lease would give the company “flexibility on the $1.16 billion debt to be able to look to sell properties in that pool,” though she indicated dispositions within the newly refinanced pool would not be possible in the near term.

Closing the call, Duffy said management believes it has momentum across “a meaningfully strengthened capital structure, continued double-digit leasing spreads, and a healthy pipeline of embedded mark-to-market opportunities,” and she said the company looks forward to meeting with investors at the Nareit conference in June.

About Industrial Logistics Properties Trust NASDAQ: ILPT

Industrial Logistics Properties Trust NASDAQ: ILPT is a real estate investment trust focused on acquiring, owning and operating industrial logistics properties across the United States. The company specializes in modern distribution centers, cross-dock facilities and last-mile delivery hubs designed to support e-commerce, retail, manufacturing and third-party logistics customers. ILPT’s assets are characterized by high ceilings, ample loading docks and clear spans to accommodate a wide range of warehouse functions.

Formed as a spin-off from STAG Industrial, Inc in January 2022, ILPT commenced operations with a portfolio of strategically located facilities and a disciplined acquisition strategy.

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