Q4 2025 Industrial Logistics Properties Trust Earnings Call

February 19, 2026

Speaker #2: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions.

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Speaker #2: I would now like to turn the conference over to Kevin Barry, Senior Director of Investor Relations. Please go ahead. Good afternoon, and thank you for joining.

Kevin Barry: Good afternoon, and thank you for joining ILPT's Q4 2025 earnings call. With me on today's call are President and Chief Executive Officer Yael Duffy, Chief Financial Officer and Treasurer Tiffany Sy, and Vice President Mark Krohn. In just a moment, they will provide details about our business and quarterly results, followed by a question-and-answer session with sell-side analysts. Please note that the recording and retransmission of today's conference call is prohibited without the prior written consent of the company. Also note that today's conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws, including guidance with respect to certain Q1 2026 financial measures.

Kevin Barry: Good afternoon, and thank you for joining ILPT's Q4 2025 earnings call. With me on today's call are President and Chief Executive Officer Yael Duffy, Chief Financial Officer and Treasurer Tiffany Sy, and Vice President Marc Krohn. In just a moment, they will provide details about our business and quarterly results, followed by a question-and-answer session with sell-side analysts. Please note that the recording and retransmission of today's conference call is prohibited without the prior written consent of the company. Also note that today's conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws, including guidance with respect to certain Q1 2026 financial measures.

Speaker #2: ILPT's fourth quarter 2025 earnings call. With me on today's call are President and Chief Executive Officer Yael Duffy, Chief Financial Officer and Treasurer Tiffany Sy, and Vice President Marc Krohn.

Speaker #2: In just a moment, they will provide details about our business and quarterly results, followed by a question-and-answer session with sell-side analysts. Please note that the recording and retransmission of today's conference call is prohibited without the prior written consent of the company.

Speaker #2: Also note that today's conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws.

Speaker #2: Including guidance with respect to certain first quarter 2026 financial measures. These forward-looking statements are based on ILPT's beliefs and expectations as of today, February 19, 2026, and actual results may differ materially from those that we project.

Kevin Barry: These forward-looking statements are based on ILPT's beliefs and expectations as of today, 19 February 2026, and actual results may differ materially from those that we project. The company undertakes no obligation to revise or publicly release the results of any revision to the forward-looking statements made in today's conference call. Additional information concerning factors that could cause those differences is contained in our filings with the Securities and Exchange Commission, which can be accessed from our website, ilptreit.com. Investors are cautioned not to place undue reliance upon any forward-looking statements. In addition, we will be discussing non-GAAP financial measures during this call, including normalized funds from operations or normalized FFO, Adjusted EBITDAre, net operating income or NOI, and cash basis NOI. A reconciliation of these non-GAAP measures to net income is available in our financial results package, which can be found on our website.

Speaker #2: The company undertakes no obligation to revise or publicly release the results of any revision to the forward-looking statements made in today's conference call. Additional information concerning factors that could cause those differences is contained in our filings with the Securities and Exchange Commission, which can be accessed from our website, ilptreat.com.

Speaker #2: Investors are cautioned not to place undue reliance upon any forward-looking statements. In addition, we will be discussing non-GAAP financial measures during this call, including normalized funds from operations, or normalized FFO; adjusted EBITDAre; net operating income, or NOI; and cash basis NOI.

Speaker #2: A reconciliation of these non-GAAP measures to net income is available in our financial results package, which can be found on our website. Lastly, we will be providing guidance on this call, including estimated normalized FFO and adjusted EBITDAre.

Kevin Barry: Lastly, we will be providing guidance on this call, including estimated Normalized FFO and Adjusted EBITDAre. We are not providing a reconciliation of these non-GAAP measures as part of our guidance because certain information required for such reconciliation is not available without unreasonable efforts or at all. I will now turn the call over to Yael.

Speaker #2: We are not providing a reconciliation of these non-GAAP measures as part of our guidance because certain information required for such reconciliation is not available without unreasonable efforts, or at all.

Speaker #2: I will now turn the call over to Yael.

Speaker #3: Thank you, Kevin, and good afternoon. We ended the year with robust demand for our high-quality portfolio of industrial and logistics properties, consistent with the trends we saw throughout 2025—delivering one of the strongest quarters in ILPT's history.

Yael Duffy: Thank you, Kevin, and good afternoon. We ended the year with robust demand for our high-quality portfolio of industrial and logistics properties, consistent with the trends we saw throughout 2025, delivering one of the strongest quarters in ILPT's history. We achieved record quarterly leasing volume, executing nearly 4 million sq ft at a weighted average rent roll-up of 25.7%, marking our fifth consecutive quarter of double-digit rent growth.... normalized FFO grew 113% year-over-year, and same-property cash basis NOI increased 5.2%. Our improved performance resulted in ILPT generating a total shareholder return of more than 55% in 2025, ranking us third in the US across all REITs. Additionally, we made notable progress on our strategic priorities, including improving our balance sheet and positioning ILPT for future growth.

Yael Duffy: Thank you, Kevin, and good afternoon. We ended the year with robust demand for our high-quality portfolio of industrial and logistics properties, consistent with the trends we saw throughout 2025, delivering one of the strongest quarters in ILPT's history. We achieved record quarterly leasing volume, executing nearly 4 million sq ft at a weighted average rent roll-up of 25.7%, marking our fifth consecutive quarter of double-digit rent growth, normalized FFO grew 113% year-over-year, and same-property cash basis NOI increased 5.2%. Our improved performance resulted in ILPT generating a total shareholder return of more than 55% in 2025, ranking us third in the US across all REITs. Additionally, we made notable progress on our strategic priorities, including improving our balance sheet and positioning ILPT for future growth.

Speaker #3: We achieved record quarterly leasing volume, executing nearly 4 million square feet at a weighted average rent roll-up of 25.7%, marking our fifth consecutive quarter of double-digit rent growth.

Speaker #3: Normalized FFO grew 113% year over year, and same property cash basis NOI increased 5.2%. Our improved performance resulted in ILPT generating a total shareholder return of more than 55% in 2025, ranking us third in the US across all REITs.

Speaker #3: Additionally, we made notable progress on our strategic priorities, including improving our balance sheet and positioning ILPT for future growth. In June, we successfully refinanced $1.2 billion of floating-rate debt into fixed-rate debt, resulting in annual cash savings of more than $8 million.

Yael Duffy: In June, we successfully refinanced $1.2 billion of floating rate debt into fixed rate debt, resulting in annual cash savings of more than $8 million. Shortly thereafter, we announced a material increase in our annualized dividend from $0.04 to $0.20 per share. Turning to our portfolio. As of 31 December 2025, ILPT owned 409 properties across 39 states, totaling approximately 60 million sq ft, with a weighted average lease term of 7 years. Our well-diversified portfolio is further highlighted by our unique Hawaii footprint, consisting of 226 properties totaling 16.7 million sq ft. More than 76% of our annualized revenues come from investment-grade rated tenants or from our secure Hawaii land leases.

Speaker #3: Shortly thereafter, we announced a material increase in our annualized dividend from $0.04 to $0.20 per share. Turning to our portfolio, as of December 31, 2025, ILPT owned 409 properties across 39 states, totaling approximately 60 million square feet, with a weighted average lease term of seven years.

Speaker #3: Our well-diversified portfolio is further highlighted by our unique Hawaii footprint, consisting of 226 properties totaling 16.7 million square feet. More than 76% of our annualized revenues come from investment-grade rated tenants or from our secure Hawaii land leases.

Speaker #3: Consolidated occupancy at year-end was 94.5%, representing a 40 basis point increase over the third quarter. During 2025, we completed 42 new and renewal leases and two rent resets, totaling 7.3 million square feet.

Yael Duffy: Consolidated occupancy at year-end was 94.5%, representing a 40 basis point increase from the third quarter. During 2025, we completed 42 new and renewal leases and 2 rent resets, totaling 7.3 million sq ft. This activity is expected to generate an increase of approximately $10.6 million in annualized rental revenue, of which approximately $5.8 million, or 55%, has not yet commenced and will contribute to cash flow in 2026 and beyond. Additionally, we continue to expand our relationships with FedEx and Amazon, our two largest tenants, which accounted for 2.8 million sq ft, or 38% of our annual leasing volume. These results showcase our ability to realize mark-to-market rent growth through leasing and continued strong tenant retention.

Yael Duffy: Consolidated occupancy at year-end was 94.5%, representing a 40 basis point increase from the Q3. During 2025, we completed 42 new and renewal leases and 2 rent resets, totaling 7.3 million sq ft. This activity is expected to generate an increase of approximately $10.6 million in annualized rental revenue, of which approximately $5.8 million, or 55%, has not yet commenced and will contribute to cash flow in 2026 and beyond. Additionally, we continue to expand our relationships with FedEx and Amazon, our two largest tenants, which accounted for 2.8 million sq ft, or 38% of our annual leasing volume. These results showcase our ability to realize mark-to-market rent growth through leasing and continued strong tenant retention.

Speaker #3: This activity is expected to generate an increase of approximately $10.6 million in annualized rental revenue, of which approximately $5.8 million, or 55%, has not yet commenced and will contribute to cash flow in 2026 and beyond.

Speaker #3: Additionally, we continue to expand our relationships with FedEx and Amazon, our two largest tenants, which accounted for 2.8 million square feet, or 38% of our annual leasing volume.

Speaker #3: These results showcase our ability to realize mark-to-market rent growth through leasing and continued strong tenant retention. Looking ahead to 2026, we remain focused on our leasing priorities, specifically the 2.2 million square foot land parcel in Hawaii and a 535,000 square foot property in Indianapolis.

Yael Duffy: Looking ahead to 2026, we remain focused on our leasing priorities, specifically the 2.2 million sq ft land parcel in Hawaii and a 535,000 sq ft property in Indianapolis. We believe there is continued opportunity to generate organic cash flow growth and reduce leverage, which has declined from 12.4 times to 11.8 times over the last year. We are pleased with the strong performance and momentum we are building at ILPT, and we look forward to delivering long-term value for our shareholders. I will now turn the call over to Mark, who will provide further details into our Q4 leasing results within our mainland portfolio, as well as our pipeline.

Yael Duffy: Looking ahead to 2026, we remain focused on our leasing priorities, specifically the 2.2 million sq ft land parcel in Hawaii and a 535,000 sq ft property in Indianapolis. We believe there is continued opportunity to generate organic cash flow growth and reduce leverage, which has declined from 12.4 times to 11.8 times over the last year. We are pleased with the strong performance and momentum we are building at ILPT, and we look forward to delivering long-term value for our shareholders. I will now turn the call over to Marc, who will provide further details into our Q4 leasing results within our mainland portfolio, as well as our pipeline.

Speaker #3: We believe there is continued opportunity to generate organic cash flow growth and reduced leverage, which has declined from 12.4 times to 11.8 times over the last year.

Speaker #3: We are pleased with the strong performance and momentum we are building at ILPT, and we look forward to delivering long-term value for our shareholders.

Speaker #3: I will now turn the call over to Marc, who will provide further details on our fourth quarter leasing results within our mainland portfolio, as well as our pipeline.

Speaker #2: Thank you, Yael, and good afternoon, everyone. During the fourth quarter, we executed nearly 4 million square feet of leasing at a weighted average lease term of 9.5 years and a roll-up in rent of 25.7%.

Marc Krohn: Thank you, Yael, and good afternoon, everyone. During Q4, we executed nearly 4 million sq ft of leasing at a weighted average lease term of 9.5 years and a roll-up in rent of 25.7%. Given the limited available space within our portfolio, renewals represented the majority of the activity this quarter, reflecting a tenant retention rate of 96%. Notable leases include three lease renewals totaling 2.3 million sq ft with Amazon, our second-largest tenant, for a weighted average lease term of 11.5 years and a roll-up in rent of 26.8%. A 1.2 million sq ft renewal with Restoration Hardware, our fourth-largest tenant, for a weighted average lease term of 7.4 years, and a roll-up in rent of 29%.

Speaker #2: Given the limited available space within our portfolio, renewals represented the majority of the activity this quarter, reflecting a tenant retention rate of 96%. Notable leases include three lease renewals, totaling 2.3 million square feet with Amazon, our second largest tenant, for a weighted average lease term of 11.5 years, and a roll-up in rent of 26.8%.

Speaker #2: A 1.2 million square foot renewal with Restoration Hardware, our fourth largest tenant, for a weighted average lease term of 7.4 years, and a roll-up in rent of 29%.

Speaker #2: And three lease renewals, totaling 152,000 square feet with FedEx, our largest tenant, for a weighted average lease term of 4.6 years, and a roll-up in rent of 11.7%.

Marc Krohn: Three lease renewals totaling 152,000 sq ft with FedEx, our largest tenant, for a weighted average lease term of 4.6 years and a roll-up in rent of 11.7%. These results are a testament to the quality of our portfolio, showcase our commitment to fostering strong tenant relationships, and underscore our collaborative and strategic approach to leasing. As we look ahead, 8.8 million sq ft, or 11.8% of ILPT's total annualized revenue, is scheduled to expire by the end of 2027, which provides meaningful embedded rent growth opportunities. Today, our leasing pipeline consists of 6.4 million sq ft, of which 3.8 million sq ft is in advanced stages of negotiation or lease documentation.

Speaker #2: These results are a testament to the quality of our portfolio, showcase our commitment to fostering strong tenant relationships, and underscore our collaborative and strategic approach to leasing.

Speaker #2: As we look ahead, 8.8 million square feet, or 11.8% of ILPT's total annualized revenue, is scheduled to expire by the end of 2027, which provides meaningful embedded rent growth opportunities.

Speaker #2: Today, our leasing pipeline consists of 6.4 million square feet, of which 3.8 million square feet is in advanced stages of negotiation or lease documentation.

Speaker #2: Based on current discussions, we expect this activity to generate average rent roll-ups of approximately 20% on the mainland and 30% in Hawaii. I will now turn the call over to Tiffany to review our financial results.

Marc Krohn: Based on current discussions, we expect this activity to generate average rent roll-ups of approximately 20% on the mainland and 30% in Hawaii. I will now turn the call over to Tiffany to review our financial results.

Speaker #3: Thank you, Mark. Yesterday, we reported fourth quarter normalized FFO of $18.9 million, or $0.29 per share, which was at the high end of our guidance.

Tiffany Sy: Thank you, Mark. Yesterday, we reported Q4 normalized FFO of $18.9 million, or $0.29 per share, which was at the high end of our guidance. This represents an increase of 9% on a quarter-over-quarter basis, and 113% compared to the same quarter a year ago. Same-property NOI was $88.2 million, and same-property cash basis NOI was $85.7 million, both increasing on a year-over-year and quarter-over-quarter basis, driven by strong tenant retention and rent roll-ups. Adjusted EBITDAre totaled $85.1 million. During the quarter, we recognized $14.6 million of earnings from our unconsolidated joint venture, which was primarily driven by an increase in the fair value of the underlying real estate owned by this joint venture.

Tiffany Sy: Thank you, Marc. Yesterday, we reported Q4 normalized FFO of $18.9 million, or $0.29 per share, which was at the high end of our guidance. This represents an increase of 9% on a quarter-over-quarter basis, and 113% compared to the same quarter a year ago. Same-property NOI was $88.2 million, and same-property cash basis NOI was $85.7 million, both increasing on a year-over-year and quarter-over-quarter basis, driven by strong tenant retention and rent roll-ups. Adjusted EBITDAre totaled $85.1 million. During the quarter, we recognized $14.6 million of earnings from our unconsolidated joint venture, which was primarily driven by an increase in the fair value of the underlying real estate owned by this joint venture.

Speaker #3: This represents an increase of 9% on a sequential quarter basis and 113% compared to the same quarter a year ago. Same property NOI was $88.2 million, and same property cash basis NOI was $85.7 million.

Speaker #3: Both increasing on a year-over-year and sequential quarter basis, driven by strong tenant retention and rent roll-ups. Adjusted EBITDAre totaled $85.1 million. During the quarter, we recognized $14.6 million of earnings from our unconsolidated joint venture, which was primarily driven by an increase in the fair value of the underlying real estate owned by this joint venture.

Speaker #3: Additionally, we sold two vacant, unencumbered properties totaling 286,000 square feet for total proceeds of $3.9 million, resulting in a $1.4 million net loss.

Tiffany Sy: Additionally, we sold two vacant, unencumbered properties totaling 286,000 sq ft, for total proceeds of $3.9 million, resulting in a $1.4 million net loss. In January 2026, we paid our manager an incentive fee of $5.7 million, incurred for the year ended 31 December 2025. This payment resulted from ILPT outperforming the total return of the industry benchmark over the trailing three-year measurement period by more than 60%. Turning to our balance sheet, we ended the quarter with cash on hand of $95 million and restricted cash of $88 million. Our total net debt to total assets ratio declined modestly to 69%, and our net debt leverage ratio improved to 11.8 times.

Speaker #3: In January 2026, we paid our manager an incentive fee of $5.7 million incurred for the year ended December 31, 2025. This payment resulted from ILPT outperforming the total return of the industry benchmark over the trailing three-year measurement period by more than 60%.

Speaker #3: Turning to our balance sheet, we ended the quarter with cash on hand of $95 million and restricted cash of $88 million. Our total net debt to total assets ratio declined modestly to 69%, and our net debt leverage ratio improved to 11.8 times.

Speaker #3: As of December 31, all of ILPT's debt is either fixed rate or fixed through an interest rate cap, with a weighted average interest rate of 5.43%.

Tiffany Sy: As of December 31, all of ILPT's debt is either fixed rate or fixed through an interest rate cap, with a weighted average interest rate of 5.43%. We continue to monitor capital market conditions as we evaluate opportunities to refinance our consolidated joint venture's $1.4 billion floating rate loan, including its remaining extension option. This loan does not mature until March 2027. We currently expect to exercise this extension option and purchase a related interest rate cap for approximately $4 million. Looking ahead to Q1, we expect interest expense to be $61.5 million, including $57 million of cash interest expense and $4.5 million of non-cash amortization of deferred financing fees and interest rate cap costs.

Speaker #3: We continue to monitor capital market conditions as we evaluate opportunities to refinance our consolidated joint venture's $1.4 billion floating rate loan. Including its remaining extension option, this loan does not mature until March 2027.

Speaker #3: We currently expect to exercise this extension option and purchase a related interest rate cap for approximately $4 million. Looking ahead to the first quarter, we expect interest expense to be $61.5 million, including $57 million of cash interest expense and $4.5 million of non-cash amortization of deferred financing fees and interest rate cap costs.

Speaker #3: We expect normalized FFO to be between $29 and $31 per share, and adjusted EBITDAre between $84 million and $85 million. In summary, ILPT ended 2025 with strong operating momentum, improving financial performance, and less exposure to market and interest rate volatility.

Tiffany Sy: We expect normalized FFO to be between 29 and 31 cents per share, and adjusted EBITDAre between $84 and 85 million. In summary, ILPT ended 2025 with strong operating momentum, improving financial performance, and less exposure to market and interest rate volatility. Our leasing results, stable tenant base, and focus on strengthening ILPT's balance sheet has us well positioned for 2026. That concludes our prepared remarks. Operator, please open the line for questions.

Speaker #3: Our leasing results, stable tenant base, and focus on strengthening ILPT's balance sheet have us well positioned for 2026. That concludes our prepared remarks, operator.

Speaker #3: Please open the line for questions.

Speaker #4: We will now begin the question-and-answer session. To ask a question, you may press star, then one, on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.

Operator: We will now begin the question and answer session. To ask a question, you may press Star then One on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press Star then Two. At this time, we will pause momentarily to assemble our roster. The first question today comes from Mitchell Germain with Citizens JMP. Please go ahead.

Speaker #4: If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster.

Speaker #4: The first question today comes from Mitchell Jermaine with Citizens Bank. Please go ahead.

Speaker #5: Thank you. Tiffany, you were speaking a little too fast for me. What's the non-cash interest amount for the quarter, I mean?

Mitchell Germain: Thank you. Tiffany, you're speaking a little too fast for me, for me. What's the non-cash interest amount for the year, for the quarter, I mean?

Speaker #3: For the quarter—well, for the forecasted quarter—is $4.5 million. For.

Tiffany Sy: For the quarter... Well, for the forecasted quarter, it's $4.5 million for-

Tiffany Sy: For the quarter. Well, for the forecasted quarter, it's $4.5 million for-

Speaker #5: So, $61.5 starting out next year, is that the way to think about it?

Mitchell Germain: 61.5, starting out next year, is that the way to think about it?

Speaker #3: That's correct.

Tiffany Sy: That's correct.

Speaker #5: Okay, great. I believe there was another asset that was under contract or maybe in discussion for sale? Can you provide an update there?

Mitchell Germain: Okay, great. I believe there was another asset that was under contract or maybe in discussion for sale. Can you provide an update there?

Speaker #3: Sure. Hi, Mitch. Yep. We had another property under LOI for about $50 million, and the tenant was actually going to be the buyer of that property.

Yael Duffy: Sure. Hi, Mitch. Yep, we had another property under LOI for about $50 million, and the tenant was actually gonna be the buyer of that property, and they decided that they preferred to engage in a renewal discussion versus buy the property. So we have a signed LOI for them for a seven-year renewal now that we're negotiating.

Speaker #3: And they decided that they preferred to engage in a renewal discussion versus buy the property. So we have a signed LOI for them for a seven-year renewal now that we're negotiating.

Speaker #5: Okay, that's helpful. Marc talked about expirations for the next two years. Are there any known move-outs we need to be aware of?

Mitchell Germain: Okay, that's helpful. Mark talked about expirations for next two years. Are there any known move-outs we need to be aware of?

Mitchell Germain: Okay, that's helpful. Marc talked about expirations for next two years. Are there any known move-outs we need to be aware of?

Marc Krohn: Hey, Mitch. Nothing material in nature at this point. We're making really good progress on our 2026 expirations and 2027 as we kind of move into, you know, beyond 2026. So we feel good about kind of where we're landing right now.

Speaker #6: Hey, Mitch. Nothing material in nature at this point. We've been making really good progress on our '26 expirations and '27 as we kind of move into beyond 2026.

Speaker #6: So, we feel good about kind of where we're landing right now.

Speaker #5: And Marc, while I have you, are there any changes that you're making in the marketing process for the Indy and Hawaii vacancies? I know it's been north of a year that you've been sitting on them now.

Mitchell Germain: Mark, while I have you, is there any changes that you're making in the marketing process for the Indy and Hawaii vacancies? I know it's been north of a year that you've been sitting on them now. You know, have you kind of looked at possibly, you know, changing the concession package or some sort of adjustments there?

Mitchell Germain: Marc, while I have you, is there any changes that you're making in the marketing process for the Indy and Hawaii vacancies? I know it's been north of a year that you've been sitting on them now. You know, have you kind of looked at possibly, you know, changing the concession package or some sort of adjustments there?

Speaker #5: Have you kind of looked at possibly changing the concession package, or making some sort of adjustments there?

Speaker #6: Well, I'll touch on Indy, and then I'll let Yael touch on Hawaii. But Indy, we've made some really good progress, and we're actually exchanging lease comments right now.

Marc Krohn: Well, I'll touch on Indy, and then I'll let Yael touch on Hawaii. But Indy, we made some really good progress, and we're actually exchanging lease comments right now. So that could be as early as next quarter that where we would be in a position to maybe provide some positive news about the lease up of that space.

Speaker #6: So that could be as early as next quarter that we would be in a position to maybe provide some positive news about the lease-up of that space.

Speaker #3: And then, as it relates to Hawaii, we're continuing. We're in discussions with the same tenant that we've talked about the last couple of quarters.

Yael Duffy: Then, as it relates to Hawaii, we're continuing. We're in discussions with the same tenant that we've talked about the last couple of quarters. As I think, you know, it's just the size of that parcel and the complexity of it just provide some timing delays, but we're hopeful we'll be able to lease that one. But in terms of concessions, there really, for that site specifically, there really isn't anything we can do, just given it's a ground lease. So it's just finding kind of that unicorn that wants to take such a big parcel.

Speaker #3: I think you know it's just the size of that parcel, and the complexity of it just provides some timing delays. But we're hopeful we'll be able to lease that one.

Speaker #3: But in terms of concessions, there really, for that site specifically, there really isn't anything we can do. Just given it's a ground lease, so it's just finding kind of that unicorn that wants to take such a big parcel.

Speaker #5: Got you. I guess last one for me, maybe just Tiffany, can you bridge me from—I think it was around $64 million or $63 million in interest expense in Q4—to the forecast that you just laid out for Q1?

Mitchell Germain: Got you. I guess last one for me, and maybe just Tiffany, like, bridge me from, I think it was around $64 million or $63 million in interest expense in Q4 to the forecast that you just laid out in Q1. How did we get there?

Speaker #5: How do we get there?

Speaker #3: That's really the number of days. There were 92 days in this quarter, and there are only 90 in the next quarter.

Tiffany Sy: It's really number of days. There were 92 days in this quarter, and there's only 90 in the next quarter.

Speaker #5: So does that suggest that it goes up again in Q2?

Mitchell Germain: So does that suggest that it goes up again in Q2?

Speaker #3: Well, if you know, it doesn't, because if you consider what we think we would pay for a cap—$4 million—we'll have the impact of that in Q2, which should lower interest expense.

Tiffany Sy: Well, if you-- no, it doesn't, because if you consider what we think we would pay for a cap, $4 million, we'll have the impact of that in Q2, which should lower interest expense-

Speaker #5: Okay, great. Thank you, guys. Appreciate it.

Speaker #3: In Q2.

Mitchell Germain: Okay.

Tiffany Sy: Q2.

Mitchell Germain: Great. Thank you, guys. Appreciate it.

Speaker #3: You're welcome.

Tiffany Sy: Welcome.

Speaker #4: Thanks, Mitch.

Yael Duffy: Thanks, Mitch.

Speaker #6: Thank you.

Operator: Thank you. As a reminder, if you would like to ask a question, please press Star and one to enter the question queue. Your next question comes from John Massocca with B. Riley. Please go ahead.

Speaker #4: As a reminder, if you would like to ask a question, please press star then one to enter the question queue. Your next question comes from John Mascotta with B.

Speaker #4: Riley. Please go ahead.

Speaker #7: Good afternoon. So just maybe looking at the. Got it. So maybe looking at the same strand of high growth in the quarter, a little higher versus kind of your past three quarters.

John Massocca: Good afternoon.

Yael Duffy: Hi, John.

John Massocca: So looking at the same store NOI growth in the quarter, a little higher versus kind of your past three quarters, was there anything specific that drove that beyond kind of leasing and addressing some of the vacancy in the mainland portfolio? Just curious if there's any kind of cash rent coming online or anything like that that may have caused that to be elevated relative to the last three quarters of the year.

Speaker #7: Was there anything specific that drove that beyond kind of leasing and addressing some of the vacancy in the mainland portfolio? Just curious if there's any kind of cash rent coming online or anything like that that may have caused that to be elevated relative to the last three quarters of the year.

Speaker #3: So, I mean, Tiffany might want to expand, but I think really the reasoning is we do a lot of our leases ahead of time.

Yael Duffy: So, I mean, Tiffany might want to expand, but I think really the reasoning is we do a lot of our leases ahead of time, so, you know, it could be 12 to 18 months ahead of a natural lease expiration. So it does take a little while for the cash impact of the new leases to kind of hit. And so I think that's the majority of the increase.

Speaker #3: So, it could be 12 to 18 months ahead of a natural lease expiration. So it does take a little while for the cash impact of the new leases to kind of hit.

Speaker #3: And so I think that's the majority of the increase.

Speaker #6: That's right. It's leasing.

Tiffany Sy: That's right, is leasing.

Speaker #5: Okay. And I mean, would that be something then that, as some of those new leases keep hitting, this level of same-store NOI growth is sustainable long-term, or is it really going to be a product of just addressing some of the maturing leases that are still left in '26 and '27?

John Massocca: Okay. And, I mean, would that be something then that as some of those new leases keep hitting, that this level of same store NOI growth is sustainable long term, or is it really gonna be a product of just, you know, addressing some of the maturing leases that are still left in 2026 and 2027?

Speaker #3: So I'll give you as an example. This quarter, we did, I think, the impact of that—of our leasing—was about $10 million of cash growth.

Yael Duffy: So I'll give you as an example. For this quarter, we did, I think the impact of that, of our leasing was about $10 million of cash growth, and most of that hasn't been—we haven't seen that yet this quarter. A lot of that, I mean, you know, at least 50% is gonna hit probably in the back half of 2026 and into 2027, because that's when the leases we renewed this quarter are gonna actually go into effect, so later. So I will say, I would say that it's sustainable to continue to see that growth.

Yael Duffy: So I'll give you as an example. For this quarter, we did, I think the impact of that, of our leasing was about $10 million of cash growth, and most of that we haven't seen that yet this quarter. A lot of that, I mean, you know, at least 50% is gonna hit probably in the back half of 2026 and into 2027, because that's when the leases we renewed this quarter are gonna actually go into effect, so later. So I will say, I would say that it's sustainable to continue to see that growth.

Speaker #3: And most of that hasn't been—we haven't seen that yet this quarter. A lot of that, I mean, I would say at least 50% is going to hit probably in the back half of '26 and into '27 because that's when the leases we renewed this quarter are going to actually go into effect.

Speaker #3: So, later. So, I would say that it's sustainable to continue to see that growth.

Speaker #5: Okay. And then, outside of the transactions closed in Q4 and the transaction that was potentially going to be a disposition but became a lease renewal, what's the outlook for disposition activity for the remainder of 2026?

John Massocca: Okay. And then outside of the transactions closed in Q4 and the transaction that it was potentially going to be a disposition but became a lease renewal, what's the outlook for, you know, disposition activity for the remainder of 2026?

Speaker #3: I don't see it being a huge part of our business plan, at least in the near term. But we do get a lot of inbounds, and sometimes they appear really good, and we kind of investigate them further.

Yael Duffy: I don't see it being a huge part of our business plan, at least in the near term. But, you know, we do get a lot of inbounds and sometimes, they appear really good and we kind of, you know, investigate them further. So I think it'll be any sales will really be opportunistic, but not a material part of our business plan.

Speaker #3: So I think any sales will really be opportunistic, but not a material part of our business plan.

Speaker #5: Okay. And then with regards to the Mountain JV loan, it sounds like you're going to utilize the extension. But what's kind of the thought process around refinancing?

John Massocca: Okay. And then with regards to the mountain JV loan, you know, it sounds like you're gonna utilize the extension, but what's kind of the thought process around refinancing? How are you thinking about timing there? You know, is there something you want to see in the markets or, you know, something else kind of structurally with the JV you want to see before looking to address that refi? Just kind of curious how we should think about that.

Speaker #5: How do you think about timing there? Is there something you want to see in the markets, or something else kind of structurally with the JV you want to see before looking to address that refi?

Speaker #5: Just kind of curious how we should think about that.

Speaker #3: Oh, we're actively evaluating refinance opportunities. The good thing is, with the extension option that we have, it gives us flexibility to really not have to rush into anything because it's no extra fees.

Tiffany Sy: We're actively evaluating refinance opportunities. The good thing is, you know, with the extension option that we have, it gives us flexibility to really not have to rush into anything because it's, it's no extra fees. The only thing we have to do is purchase the interest rate cap, which we can later sell when we refinance, if we refinance before the maturity date.

Speaker #3: The only thing we have to do is purchase the interest rate cap, which we can later sell when we refinance, if we refinance before the maturity date.

Speaker #5: So I guess is there I mean, is it just you want to see what kind of macro environment shapes out in terms of where we are with kind of base interest rates, or is there something within the portfolio or within the JV you're kind of looking to see before you go out there to kind of maximize the best pricing?

John Massocca: So I guess, is there, I mean, is it just do you want to see what kind of macro environment shapes out in terms of where we are with kind of base interest rates, or is there something within the portfolio or within the JV you're kind of looking to see before you go out there to kind of maximize the best pricing?

Speaker #3: No, I wouldn't say that. I would think we're currently looking at macroeconomic factors and what's available to us. And these types of things do take some time, and we are aware of that.

Tiffany Sy: No, I wouldn't say that. I would think we're currently looking at macroeconomic factors and what's available to us. And, you know, these types of things do take some time, and we are aware of that, so-

Speaker #3: So yeah.

Speaker #4: And I would just add, John, I think the portfolio—it's 100% leased, and we've been seeing really good tenant retention. Even if we get a vacancy, we're able to lease it up.

Yael Duffy: Yeah, and I would just add, John, I think the portfolio is 100% leased. It has. We've been seeing really good tenant retention. Even if we get a vacancy, we're able to lease it up. So from an operating perspective, it's. There's nothing to do to put in a position to refinance.

Speaker #4: So, from an operating perspective, there's nothing to do to put us in a position to refinance.

Speaker #5: Okay. And then, lastly, I mean, how are some of your kind of core markets looking, particularly on the mainland, in terms of competing supply?

John Massocca: Okay. And then lastly, I mean, how do some of your kind of core markets look, particularly on the mainland, in terms of kind of competing supply? You know, is that at all kind of a near-term concern, or is that something that, you know, given where interest rates moved in the last couple of years and, you know, et cetera, that that's not, not really a big issue going forward?

Speaker #5: Is that at all kind of a near-term concern, or is that something that, given where interest rates have moved in the last couple of years, that's not really a big issue going forward?

Speaker #3: We haven't seen it be a big issue. I think the construction has slowed, and I think the vacancy increase from a macro perspective has just been new supply coming to the market.

Yael Duffy: We haven't seen it be a big issue. You know, I think the construction has slowed, and I think the vacancy increase, you know, from a macro perspective, has just been new supply coming to the market. But I think tenants are realizing that it costs money to relocate and is also disruptive to their operations. So, I think we've had some tenants that have looked into potential relocations and then have come back and wanted to do a lease renewal.

Speaker #3: But I think tenants are realizing that it costs money to relocate and is also disruptive to their operations. So I think we've had some tenants that have looked into potential relocations and then have come back and wanted to do a lease renewal.

Speaker #5: Okay, that's it for me. I appreciate all the color.

John Massocca: Okay. That's it for me. I appreciate all the color.

Speaker #3: Thanks, John.

Yael Duffy: Thanks, John.

Speaker #1: This concludes our question and answer session. I would like to turn the conference back over to Yael Duffy, President and Chief Executive Officer, for any closing remarks.

Operator: This concludes our question and answer session. I would like to turn the conference back over to Yael Duffy, President and Chief Executive Officer, for any closing remarks.

Speaker #3: Thank you for joining today's call, and we look forward to meeting with many of you at industry conferences this spring. Please reach out to Investor Relations if you're interested in scheduling a meeting with ILPT.

Yael Duffy: Thank you for joining today's call, and we look forward to meeting with many of you at industry conferences this spring. Please reach out to Investor Relations if you're interested in scheduling a meeting with ILPT. Operator, that concludes our call.

Speaker #3: Operator, that concludes our call.

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Q4 2025 Industrial Logistics Properties Trust Earnings Call

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