What Industrial Logistics Properties Trust (ILPT) Said on Its Q3 Earnings Call

Key Points

• Third-quarter performance improved: Normalized FFO rose 42% year over year to $21.3 million, or $0.32 per share, while same-property NOI increased 5.7% and occupancy reached 98.3%.
• Leasing momentum remained strong: ILPT completed 645,000 square feet of leasing at 163% GAAP and 99% cash rent spreads, with a pipeline of 5 million square feet carrying an expected rent increase of about 30%.
• Guidance was raised amid lower financial risk: The company fixed all debt at a 5.48% weighted-average rate with no maturities until 2029, reduced leverage to 11.6 times, and lifted its 2026 NOI outlook to $363 million-$364 million.

Industrial Logistics Properties Trust NASDAQ: ILPT reported third-quarter results marked by higher occupancy, rent growth and lower interest expense following refinancing activity, while raising its full-year 2026 net operating income outlook.

Normalized funds from operations totaled $21.3 million, or $0.32 per share, for the third quarter, up 42% from a year earlier. President and Chief Executive Officer Yael Duffy said the increase primarily reflected the company’s refinancing earlier in 2026, as well as stronger occupancy.

Same-property NOI increased 5.7% year over year, supported by rent growth and contributions from formerly vacant properties in Hawaii and Indianapolis. Those two properties generated nearly $3 million of incremental NOI during the quarter, Duffy said.

Leasing activity and occupancy

ILPT ended the quarter with 409 properties totaling nearly 60 million square feet and consolidated occupancy of 98.3%, an increase of 420 basis points from a year earlier. The portfolio had a weighted-average lease term of eight years, and approximately 79% of annualized rental revenue came from investment-grade tenants, their subsidiaries or Hawaii land leases.

During the quarter, the company completed 645,000 square feet of leasing with a weighted-average lease term of nearly 16 years. The leases produced GAAP and cash rent spreads of 163% and 99%, respectively, and are expected to add about $3.5 million of annualized rental revenue, with most of that revenue already effective or expected to begin by year-end.

• In Phoenix, ILPT renewed a 288,000-square-foot lease with a beverage bottling manufacturer for 16 years at a 200% GAAP rent increase.
• In Hawaii, the company completed a 30-year renewal for a 214,000-square-foot land lease, resetting rent to market levels after the tenant had paid nominal rent while remediating the site.
• In St. Louis, ILPT signed a new 100,000-square-foot lease at an 8% rent increase after two months of downtime.

Over the past 12 months, ILPT signed about 11 million square feet of leases at rents 35% above prior levels. The third quarter represented its eighth consecutive quarter of double-digit rent increases, according to management.

The company’s leasing pipeline totaled 5 million square feet, with roughly 90% tied to upcoming lease expirations and an expected weighted-average rent increase of about 30%. About 4 million square feet of the pipeline relates to lease renewals, Duffy said during the question-and-answer session.

Less than 16% of annualized rental revenue is scheduled to expire through the end of 2028. Management characterized the approximately 8% of the portfolio coming due next year as “business as usual,” with no material planned move-outs.

Cash rent timing and Hawaii demand

Same-property cash-basis NOI rose 1.9% during the quarter, lagging the growth in same-property NOI because of rent-free periods at the Hawaii and Indianapolis lease-ups.

The Indianapolis tenant’s rent-free period ended in August, and ILPT expects to record a full quarter of cash rent from the property in the fourth quarter. In Hawaii, the company’s 2.2 million-square-foot lease has a three-year free-rent period as the tenant develops infrastructure including roads and utilities. The 53-year lease requires the tenant to begin paying real estate taxes immediately, which Duffy said exceed $800,000 annually.

Duffy said Hawaii continues to show favorable leasing conditions because of limited land availability. When space or ground leases become available, she said the company has generally experienced little downtime, typically three to six months, alongside strong rent increases.

Occupancy declined sequentially due to one tenant vacancy in Columbus, Ohio, which occurred in July. Vice President Marc Krohn said ILPT is marketing the space and sees the Columbus market, particularly the southeast submarket, as strong. He cited market vacancy of about 4.7% and said the company expects to lease the space before much of the area’s new construction is delivered.

Debt, cash and outlook

ILPT said it has fixed all of its debt at a weighted-average interest rate of 5.48%, with no debt maturities until 2029. The company refinanced its $1.2 billion floating-rate loan with fixed-rate financing in June 2025. In May 2026, its Mountain joint venture closed a $1.62 billion fixed-rate, interest-only loan at 5.71%, using proceeds to refinance a $1.4 billion floating-rate loan and retire $205 million of amortizing debt.

As of Sept. 30, ILPT had about $131 million of unrestricted cash. Chief Financial Officer and Treasurer Anthony Paula said cash declined sequentially because of the timing of real estate tax and annual property insurance payments. Management said it intends to retain cash flow to reduce leverage organically and preserve flexibility for potential tenant expansion opportunities.

Leverage fell to 11.6 times from 12.2 times a year earlier, driven by leasing activity, though the calculation also reflected a change in the presentation of Adjusted EBITDAre. The company said its quarterly dividend of $0.10 per share is well covered.

ILPT raised its 2026 NOI guidance midpoint by $2 million and narrowed its outlook ranges. The company now expects:

• NOI of $363 million to $364 million;
• Adjusted EBITDAre of $344 million to $345 million;
• Normalized FFO of $82 million to $83 million; and
• Normalized FFO per share of $1.23 to $1.25.

The revised guidance includes $8.4 million, or $0.13 per share, of accrued incentive management fees as of Sept. 30. Paula said the final fee, if any, will depend on ILPT’s total shareholder return relative to its benchmark through Dec. 31 and could differ materially from the accrued amount.

Non-GAAP presentation changes

The company also changed its non-GAAP presentation following an interpretation from Securities and Exchange Commission staff. Beginning in the third quarter, Normalized FFO, Adjusted EBITDAre and cash available for distribution include estimated incentive management fees as accrued under GAAP. Prior periods were recast to conform to the new presentation.

Paula said the change does not affect GAAP results, cash flows, the calculation of the incentive fee or the amount ultimately payable to RMR. Third-quarter Normalized FFO and Adjusted EBITDAre included $1.9 million, or $0.03 per share, of accrued incentive management fees. Year-to-date accrued fees totaled $6.3 million, or $0.09 per share.

About Industrial Logistics Properties Trust (NASDAQ:ILPT)

Industrial Logistics Properties Trust NASDAQ: ILPT is a real estate investment trust focused on owning and leasing industrial and logistics properties. Its portfolio includes distribution centers, warehouse facilities, and other properties used for transportation, storage, manufacturing, and related business activities.

The company serves tenants across the United States, with properties located in a variety of major logistics markets and industrial regions. Its facilities support supply-chain operations for businesses that require strategically located space near transportation networks and population centers.

Industrial Logistics Properties Trust was established in 2017 and is externally managed by The RMR Group, a property management and real estate services company.

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