NEWTON, Mass.--(BUSINESS WIRE)--Industrial Logistics Properties Trust (Nasdaq: ILPT) today announced financial results for the quarter and six months ended June 30, 2020.
John Murray, President and Chief Executive Officer of ILPT, made the following statement:
“Despite a challenging economic environment during the second quarter, industrial and logistics real estate has remained in strong demand, evidenced by an accelerated shift by consumers to e-commerce throughout the COVID-19 pandemic. We believe we are operating from a position of strength because the majority of our tenants are considered essential businesses, our liquidity remains strong and we have seen a minimal negative impact on our operating results and financial condition. We are pleased to report continued high occupancy of nearly 99%, growing FFO, and healthy same property cash basis NOI growth of 3.4%. We completed lease renewals and rent resets for over 1.9 million square feet, which resulted in weighted average rental rates that are 23.1% higher than prior rates. After giving effect to modest rent deferrals granted to certain tenants, we collected 97% of our contractual rents for the quarter, highlighting the health and durability of our tenant base. Our joint venture also performed well during its first full quarter and we continue to assess ways to potentially grow the joint venture and unlock value for our shareholders. We are encouraged by the strength of our portfolio and believe we are well positioned to benefit from continued tailwinds in the industrial and logistics sector.”
Results for the Quarter Ended June 30, 2020:
Net income attributable to common shareholders for the quarter ended June 30, 2020 was $14.8 million, or $0.23 per diluted share, compared to $13.1 million, or $0.20 per diluted share, for the same quarter last year. Normalized funds from operations attributable to common shareholders, or Normalized FFO attributable to common shareholders, for the quarter ended June 30, 2020 were $30.6 million, or $0.47 per diluted share, compared to $29.8 million, or $0.46 per diluted share, for the same quarter last year.
Reconciliations of net income attributable to common shareholders determined in accordance with U.S. generally accepted accounting principles, or GAAP, to funds from operations, or FFO, attributable to common shareholders and to Normalized FFO attributable to common shareholders for the quarters ended June 30, 2020 and 2019 appear later in this press release.
Results for the Six Months Ended June 30, 2020:
Net income attributable to common shareholders for the six months ended June 30, 2020 was $27.7 million, or $0.42 per diluted share, compared to $29.9 million, or $0.46 per diluted share, for the same period last year. Normalized FFO attributable to common shareholders for the six months ended June 30, 2020 were $60.7 million, or $0.93 per diluted share, compared to $56.2 million, or $0.86 per diluted share, for the same period last year.
Reconciliations of net income attributable to common shareholders determined in accordance with GAAP to FFO attributable to common shareholders and to Normalized FFO attributable to common shareholders for the six months ended June 30, 2020 and 2019 appear later in this press release.
Leasing, Occupancy and Same Property Results:
During the quarter ended June 30, 2020, ILPT entered lease renewals and completed rent resets for approximately 1,915,000 square feet, which resulted in weighted average (by square feet) rental rates that were approximately 23.1% higher than prior rental rates for the same space, with a weighted average (by square feet) lease term of 20.1 years for lease renewals. Commitments for leasing capital and concessions for lease renewals entered during the quarter ended June 30, 2020 totaled approximately $229,000, or approximately $0.04 per square foot per lease year.
As of June 30, 2020, 98.8% of ILPT’s total rentable square feet was leased, compared to 98.9% as of March 31, 2020 and 99.3% as of June 30, 2019. Occupancy for properties owned continuously since April 1, 2019 on a same property basis decreased to 98.4% at June 30, 2020 from 99.1% at June 30, 2019. Same property cash basis net operating income, or Cash Basis NOI, increased 3.4% for the quarter ended June 30, 2020 compared to the quarter ended June 30, 2019, primarily as a result of contractual rent increases and leasing activity at certain properties since April 1, 2019.
Reconciliations of net income determined in accordance with GAAP to net operating income, or NOI, and Cash Basis NOI, and a reconciliation of NOI to same property NOI and calculation of same property Cash Basis NOI, for the quarters ended June 30, 2020 and 2019, appear later in this press release.
In response to the COVID-19 pandemic, ILPT granted requests for 42 tenants to defer rent payments totaling $2.8 million as of July 27, 2020, and these tenants will be obligated to pay, in most cases, the deferred rents in 12 equal monthly installments commencing in September 2020. For the quarter ended June 30, 2020, ILPT collected approximately 97% of its contractual rents due after giving effect to such rent deferrals.
Recent Financing Activities:
In May 2020, ILPT prepaid a mortgage note secured by one of its properties with an outstanding principal balance of approximately $48.8 million, an annual interest rate of 3.48% and a maturity date in November 2020. ILPT prepaid this mortgage note using cash on hand and borrowings under its revolving credit facility.
Supplemental Data:
A copy of ILPT’s Second Quarter 2020 Supplemental Operating and Financial Data is available for download at ILPT’s website, which is located at www.ilptreit.com. ILPT’s website is not incorporated as part of this press release.
ILPT is a real estate investment trust, or REIT, that owns and leases industrial and logistics properties throughout the United States. ILPT is managed by the operating subsidiary of The RMR Group Inc. (Nasdaq: RMR), an alternative asset management company that is headquartered in Newton, MA.
