Good morning and good day and welcome to Industrial Logistics Properties Trust Fourth Quarter 2024 Financial Results Conference Call. All participants will be in listen-only mode. Please note, this event is being recorded. I would now like to turn the conference over to Matt Murphy, Manager of Investor Relations. Please go ahead.

Good afternoon. Joining me on today's call are ILPT's President and Chief Operating Officer, Yael Duffy; Chief Financial Officer and Treasurer, Tiffany Sy; and Vice President, Marc Krohn. Today's call includes a presentation by management, followed by a question-and-answer session with analysts. Please note that the recording and retransmission of today's conference call is prohibited without the prior written consent of the company. Also, please 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. These forward-looking statements are based on ILPT's beliefs and expectations as of today, February 19, 2025, 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, or SEC, 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, and adjusted EBITDAre and cash basis net operating income or 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. With that, I will now turn the call over to Yael.

Thank you, Matt, and good afternoon. On today's call, I will begin with an overview of our portfolio, summarize leasing activity for 2024 as well as the fourth quarter, and look ahead to our objectives for 2025. I will then turn the call over to Marc, who will provide further detail into leasing within our Mainland portfolio as well as our pipeline. Then Tiffany will review our financial results and provide guidance on normalized FFO. As of December 31st, 2024, ILPT's portfolio consisted of 411 distribution and logistics properties in 39 states, totaling approximately 60 million square feet. Our strategically diversified portfolio is highlighted by our unique Hawaii footprint consisting of 226 properties totaling more than 16.7 million square feet. Our consolidated occupancy at year-end was 94.4%, in line with our third quarter results. Our portfolio carries a weighted average lease term of seven years and is anchored by tenants with strong business profiles and stable cash flows. ILPT's top 10 tenants account for 48% of our total annualized rental revenues, and nearly 77% of our annualized revenues come from investment-grade tenants or from secure Hawaii land leases. We finished the year with strong demand for our high-quality portfolio, consistent with the trends we saw throughout 2023. For the full year, we entered 58 new and renewal leases and one rent reset, totaling 6.1 million square feet at weighted average rental rates that were 18.2% higher than prior rental rates for the same space. The impact of this activity is an increase of $8.2 million in annualized rental revenue, of which 41% has not yet been realized and will take effect in 2025 or beyond. These results showcase our ability to generate organic cash flow growth while maintaining portfolio stability. During the fourth quarter, we completed 731,000 square feet of leasing at rental rates that were 39.3% higher than prior rents for the same space and had a weighted average remaining lease term of 10.5 years. Hawaii accounted for all of our new leasing, 148,000 square feet at rental rates that were 43% higher than prior rents and had a weighted average lease term of 21.3 years. Meanwhile, lease renewals on the Mainland accounted for 98% of our renewal activity this quarter, which Marc will provide additional detail on shortly. These results highlight the value of our Hawaii portfolio, our ability to realize mark-to-market rent growth through leasing, and continued strong tenant retention. As we look ahead to 2025, we remain focused on leasing our vacancies. Specifically, the 2.2 million square foot land parcel in Hawaii that became vacant in April and a 535,000 square foot property in the East submarket of Indianapolis, which became vacant in July. Together, these vacancies have negatively impacted our earnings in the second half of the year, reducing occupancy by 4.6% and accounting for a loss of $1.8 million in quarterly rental revenues. As we have mentioned on prior calls, leasing efforts are underway, and we are in active discussions with tenants for both locations. While we have experienced robust leasing in Hawaii historically, this site is unique due to its undeveloped 50-acre size. Accordingly, as one would expect, prospective tenants are conducting extensive due diligence to understand the feasibility of operating on the site and the costs associated with its development. In Indianapolis, while we have seen strong tour and proposal activity, we faced significant competition as new buildings come online. We remain optimistic that both locations will be leased in 2025.

Thank you and good afternoon, everyone. As Yael mentioned, we executed 731,000 square feet of leasing during the fourth quarter which includes three renewals on the mainland totaling 571,000 square feet in Reno, Nevada; Waco, Texas; and Roanoke, Virginia. In aggregate, these renewals represent a weighted average rental rate increase of 38.7%, with a weighted average lease term of eight years and were completed with minimal lease concessions. Looking ahead, 6.3 million square feet or 8.7% of ILPT's annualized revenue is scheduled to roll by the end of 2026. We are engaging in renewal discussions with our tenants at least 18 months in advance to best understand their space needs. We believe this is especially important today as we have seen decisions and lease negotiation timelines lengthening. To that end, we are pleased to share that as of today, we have already addressed nearly 1.8 million square feet of our expirations reducing ILPT's lease expirations to 4.5 million square feet through 2026 or just 6.4% of total annualized revenue. Furthermore, our total leasing pipeline remains robust as we are currently tracking 28 deals for more than 6.5 million square feet, including tenants for the two vacancies in Hawaii and Indianapolis that Yael mentioned earlier. Before I turn the call over to Tiffany, I want to highlight the recent results of the RMR Group's Kingsley Survey, which was completed on our behalf. For those unfamiliar with the survey, it is the trusted industry benchmark in tenant satisfaction and is used to assess property performance and identify areas for improvement. Our portfolio exceeded the Kingsley benchmark in every category, including management satisfaction, leasing satisfaction, renewal intentions and overall satisfaction. Additionally, 34 properties received the Kingsley Excellence Award, which recognizes properties that outperformed the index benchmark for overall satisfaction. These results highlight the value of RMR as our manager and its ability to deliver outstanding property management services for our tenants.

Thank you, Marc. Last night, we reported financial results for the year and quarter ended December 31st, 2024. Starting with our annual results. We closed out the year with normalized FFO of $35.4 million or $0.54 per share, representing an increase of 12.1% compared to 2023. NOI increased by 0.6% to $341.2 million and cash basis NOI increased by 1.5% to $329.2 million, while adjusted EBITDAre increased by 2.2% to $335.6 million. For the fourth quarter, we reported normalized FFO of $8.9 million or $0.13 per share, an increase of approximately 10% on both a sequential quarter and prior year basis. Compared to the same quarter in 2023, fourth quarter NOI decreased by 0.8% to $84.2 million and cash basis NOI remained relatively flat at $81.6 million. Adjusted EBITDAre decreased by 1.1% to $82.2 million. As we discussed during our last earnings call, we exercised the first of our three one-year extension options for a $1.2 billion floating rate loan in October of 2024. As part of the extension, we purchased a one-year interest rate cap for $17 million with a SOFR strike rate of 2.78%, replacing our previous cap with a rate of 2.25%. Our fourth quarter interest expense declined by $2.2 million to $71.7 million, reflecting the impact of the new interest rate cap. Turning to our balance sheet, as of December 31st, cash on hand exceeded $130 million and restricted cash held by our consolidated joint venture was over $110 million. Our net debt to total assets ratio was 68.6%, and our net debt coverage ratio was 12.4 times, each of which were relatively flat compared to the fourth quarter of 2023. As a reminder, all of our debt is currently carried at a fixed rate or fixed through interest rate caps with a weighted average interest rate of 5.51% as of December 31st, including extension options, ILPT has no debt maturities until 2027. Heading into 2025, in March, our consolidated joint venture will exercise the second of its three one-year extensions for its $1.4 billion floating rate loan, which requires an interest rate cap to be purchased. In connection with the exercise of its first extension option in March 2024, our consolidated joint venture purchased a cap for $26 million. Last week, we purchased a cap with a SOFR strike rate of 3.1% for the second extension for $15 million, or $11 million less than the previous cap. Including the impact of the new interest rate cap, we expect our interest expense for the first quarter of 2025 to decline to approximately $70 million, with $59 million of cash interest expense, net of the cash we received from our interest rate caps and $11 million of non-cash amortization of financing and interest rate cap costs. In closing, ILPT is anchored by quality assets, strong tenants, and stable cash flows. Based on the leasing activity, both Yael and Marc mentioned earlier and our expectations for interest expense, we expect normalized FFO for the first quarter of 2025 to be between $0.16 and $0.18 per share. That concludes our prepared remarks. Operator, please open the line for questions.

We will now begin the question-and-answer session. The first question comes from Mitch Germain with Citizens JMP. Please go ahead.

Thank you, guys. Maybe Tiffany, what's the biggest variance from your 4Q earnings to 1Q that's driving some of the per share upside? Is it just interest expense? I think you get some percentage rent as well, like a one-time 1Q? Like what are the main variables that are changing quarter-over-quarter?

That percentage rent is not factored in. We're not considering that. That's not an amount that stayed the same period-over-period. So, we would consider that non-recurring. But there's two things. So, it's interest expense, but it's also some of the leasing that Yael and Marc were mentioning. But in addition to that, we did have some bad debt in this quarter in Q4, and that was less than $1 million, which we wouldn't expect to be recurring. So, that's part of the increase.

Got you. Okay, that's super helpful. I noticed that the leasing pipeline was down. I think it was over $8 million last quarter. Obviously, you executed some deals in Q4, but I'm curious if there is a broader change in the environment that you're seeing? Is it just really seasonality? Anything that you could attribute that to?

Hi Mitch, it would actually still be $8 million. In Marc's prepared comments, he noted that since year-end, we've already completed $1.8 million, so we removed that from our pipeline for this discussion. Therefore, if you add the $6 million to the $1.8 million, we'd reach approximately $8 million.

And what is your kind of percentage of execution on that pipeline? I'm sure you're tracking it over time. How is that kind of working out for you guys?

It's been pretty consistent. Again, as Marc mentioned, it's taking us a little longer to get deals over the finish line. But generally, once it makes it to an LOI, we're pretty successful in getting it to lease execution.

Great. Obviously, it seems like, I believe, you had a bankruptcy that you noted last quarter. It appears that you're going to be keeping those spaces, but you kind of left open the potential for some rent modifications. How are your discussions ongoing? I know you can't share that much, but is there some sort of date in which there should be some of the validity as to what specifically how that situation will play out?

Yes, I think you're referring to American Tire. They have a date in May, and as far as we know, they haven't rejected any of our leases, and we don't expect them to. However, there's still time for that to change. They have initiated discussions about potential restructures, but we are not currently considering those conversations. We feel confident about these properties, which generally have a size of about 125,000 square feet in distinct markets that don't compete with each other. We believe American Tire wants to remain at these locations, and we plan to hold them accountable to their obligations.

Great. That’s it for me. Thank you.

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

Thank you for joining us and your interest in ILPT.

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