Good morning, and welcome to Industrial Logistics Properties Trust's Third Quarter 2025 Financial Results Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Kevin Barry, Senior Director of Investor Relations. Please go ahead.

Good morning. Thank you for joining us today. With me on the call are ILPT's President and Chief Operating 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 our performance for the third quarter of 2025, 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. These forward-looking statements are based on ILPT's beliefs and expectations as of today, October 29, 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, 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. I will now turn the call over to Yael.

Thank you, Kevin, and good morning. I will begin today's call with a brief overview of ILPT's portfolio and highlight our third quarter results before turning the call over to Marc to discuss our leasing activity and pipeline. From there, Tiffany will review our financial performance. Despite macroeconomic and tariff uncertainty, the industrial real estate sector continues to demonstrate resilience as reflected in our solid third quarter results. We are seeing tenants show greater confidence in their long-term space needs, especially compared to the start of the year, and we are making significant progress addressing our 2026 and 2027 lease expirations. Though industrial vacancy rates remain elevated compared to pandemic lows, new supply is limited and long-term demand drivers such as e-commerce growth and reshoring initiatives continue to underpin demand in the sector. ILPT's third quarter reflects continued demand for our high-quality portfolio of industrial and logistics properties and growth in many of our key metrics. Same-property cash basis NOI increased 3% compared to the same period a year ago, supported by strong renewal activity and rent growth. Additionally, normalized FFO increased over 100% year-over-year, primarily from the refinancing we executed in June. ILPT's portfolio consists of 411 distribution and logistics properties across 39 states, totaling 60 million square feet with a weighted average lease term of 7.4 years. Our well-diversified portfolio is further highlighted by our unique Hawaii footprint, consisting of 226 properties totaling 16.7 million square feet. Our portfolio has a weighted average lease term of 6.5 years and is anchored by tenants with strong business profiles and stable cash flows. Over 76% of our annualized revenues come from investment-grade rated tenants or from our secure Hawaii land leases. We finished the quarter with consolidated occupancy of 94.1%, outperforming the U.S. industrial average by 150 basis points. Turning to our leasing activity. During the third quarter, we completed 836,000 square feet of leasing, including a rent reset at weighted average rental rates that were 22% higher than prior rental rates for the same space and for an average lease term of 8 years. Renewals accounted for 70% of our activity, highlighting strong tenant retention. As we continue to execute on our leasing priorities, we are simultaneously focused on evaluating opportunities to improve our balance sheet and reduce leverage. To that end, we have identified 3 properties for sale totaling 867,000 square feet. We are in various stages of the sale process and anticipate a combined sales price of approximately $55 million. One property is encumbered by debt and the proceeds from the sale will be used to partially repay ILPT's $700 million loan, which comes due in 2032. We anticipate these transactions to close in the fourth quarter and into early 2026. I will now turn the call over to Marc.

Thank you, and good morning. As Yael mentioned, we executed 836,000 square feet of new and renewal leasing during the quarter, including one rent reset. Renewals represented most of the leasing activity and our Mainland portfolio accounted for over 80% of the leasing volume, including notable transactions with FedEx and the United States Postal Service. Looking ahead, approximately 4% of ILPT's total annualized revenues are set to expire by the end of 2026 and approximately 11% expires in 2027. Our leasing pipeline continues to grow and now exceeds 8 million square feet with the majority relating to renewal discussions for leases expiring in 2026 and 2027. We anticipate a near-term conversion of approximately 75% of our pipeline, which is in advanced stages of negotiation or lease documentation. Additionally, our leasing pipeline could result in positive net absorption of 3 million square feet, including continued interest for our vacancies in Hawaii and Indiana. Overall, we expect the leasing in our pipeline to yield average roll-ups in rent of 20% on the Mainland and 30% in Hawaii, further supporting our objective of enhancing cash flow and creating long-term value for our shareholders. I will now turn the call over to Tiffany.

Thank you, Marc, and good morning, everyone. Yesterday, we reported third quarter normalized FFO of $17.4 million or $0.26 per share, which was in line with our expectations and represents an increase of 26% on a sequential quarter basis and 116% compared to the same quarter a year ago. Same-property NOI was $86.4 million and same-property cash basis NOI was $84.2 million, both representing an increase on a year-over-year and sequential quarter basis, supported by strong tenant retention and rent roll-ups. Adjusted EBITDAre ended the quarter at $84.1 million. Interest expense decreased by $4.4 million compared to the second quarter of 2025 to $63.5 million, reflecting the impact of our $1.16 billion fixed-rate debt refinancing completed in June. We expect interest expense to remain flat in the fourth quarter with $58.5 million of cash interest expense and $5 million of noncash amortization of financing and interest rate cap costs. As Yael mentioned, we have 3 properties held for sale. During the quarter, we recognized a $6.1 million impairment charge on one of those properties to write down its carrying value to its estimated sales price less cost of sale. At September 30, the carrying value of the 3 held-for-sale properties was approximately $31 million. Turning to our balance sheet. We ended the quarter with cash on hand of $83 million and restricted cash of $95 million. Our net debt to total assets ratio decreased slightly to 69.3%, and our net debt coverage ratio remained unchanged at 12x. All of ILPT's debt is currently carried at a fixed rate or is fixed through an interest rate cap with a weighted average interest rate of 5.43% as of September 30. ILPT has no debt maturities until 2029, except for the $1.4 billion floating-rate loan related to our consolidated joint venture. Including its remaining extension option, this loan is not due until 2027, providing us the flexibility to continue monitoring the capital markets as we evaluate opportunities to move to a fixed rate, extend the maturity and reduce our overall leverage. In closing, ILPT's operating and financial performance during the third quarter remained strong and continues to benefit from our high-quality industrial portfolio, investment-grade tenant roster and skilled asset management and leasing teams. Looking ahead to the fourth quarter of 2025, we expect normalized FFO to be between $0.27 and $0.29 per share, excluding incentive fees and adjusted EBITDAre between $84 million and $85 million. That concludes our prepared remarks. Operator, please open the line for questions.

The first question comes from John Massocca with B. Riley.

Maybe touching on guidance first. I noticed it was net of or not including incentive fees to the external manager. Do you have any kind of range you're expecting for what those fees may be? I know it's contingent on the stock price performance. But I guess maybe based on where the stock would be today, how would that look? And just to confirm, is that going to flow through your reported normalized FFO per share number in 4Q?

All right. So if we were to use results as of September 30, we would pay full year incentive fee of $6.3 million, which would we would record less than $2 million in Q4 for that to get to that amount. We do not plan on including that in normalized FFO for Q4.

That would be a cash payment. You would basically be paying a full cash payment for the year in 4Q, though, if we're thinking about CAD and cash flow?

It's paid in January of '26.

Paid in 1Q. Would that impact then the 1Q '26 normalized FFO per share number?

It's in January. So...

Okay. Maybe I'm just saying, like is that essentially, you're thinking about normalized FFO, maybe even on a go-forward basis, if there are more incentive fees that are paid in future years, right? Obviously, you back that out of normalized FFO because it's kind of an accrual, right, in kind of past quarters.

Yes.

As it's paid out in cash, I mean, that is going to impact the normalized FFO number as it is reported.

Normalized FFO is intended to exclude one-time nonrecurring activities. And so this is not a normal payment we've had in recent times. I hope that's helpful.

Okay. And maybe moving on to the portfolio itself. I noticed the positive GAAP leasing spreads on the overall portfolio, but it seems like the Mainland wholly owned assets only saw a 1.8% increase in GAAP rent. Was there something specific driving that, maybe one re-leasing transaction, or just kind of curious why that number was so much lower than the rest of the portfolio?

No. John, I think it was really one deal that kind of drove down the deal with the United States Postal Service was just about a 2% GAAP roll-up. This is a little bit of a unique building. And so we were happy to be able to get it leased, but it wasn't at the spreads that we usually see.

In terms of the dispositions, how much, if any, of the $55 million includes the user owner buyer that was discussed last quarter? And I guess maybe as well, what are you kind of seeing today on pricing for those sales, maybe in terms of cap rate and even if you have it kind of price per square foot?

Sure. The majority of the proceeds, around $50 million, comes from the sale to the owner user. This situation is unique because owner users typically pay a premium, resulting in a cap rate of under 6%. The other two properties are vacant, and one is also being sold to an owner user, who is likely paying a premium as well. As for the third property, it's still early in the process, so I don't have pricing details at this time.

Okay. And then in terms of the impairment, was that driven by the vacant asset sales?

Yes.

And then as we look out to 2026, what are you seeing in terms of kind of the disposition opportunity set? I mean, is there an opportunity to do more transactions? Do you kind of want to shore up the balance sheet on the Mountain JV side before you get more active overall in the portfolio in terms of selling assets to deleverage? I mean, is that a strategic priority? Just any kind of color on what you're expecting in 2026 from a sales perspective.

We are continually assessing our portfolio and identifying opportunities where we can either maximize value or streamline it. I believe we may sell additional properties in 2026, possibly within the Mountain joint venture. It's uncertain whether this will happen in conjunction with a potential refinancing or beforehand. That's likely where you'll see most of our asset sales, if there are any.

Okay. Does completing the refinancing open up more assets to sell in that JV? Or are you pretty open just given the structure of that debt to sell assets out of that JV as you see fit or as opportunities arise?

As opportunities arise, we do have flexibility. So the refinancing is not really reliant on the refinancing.

Okay. And then one last one. You kind of mentioned it in the prepared remarks, but any update, particularly on potential lease-up in Indianapolis? I know Hawaii is kind of a unique situation, but any kind of progress on the leasing front in Indianapolis?

I can certainly jump in on Indianapolis. We have 3 proposals out right now. We're very optimistic, but realistic in many ways. And so perhaps we can lease that up in the first half of next year.

Okay. I really appreciate the color.

Sorry, I didn't know if you wanted an update on Hawaii as well. So we have one tenant, one prospect actually, full site user that's in diligence. And so John, you're a little bit new to the story, but it does take a long time for this parcel because it's undeveloped land, but they're about halfway through an access agreement that's 90 days, and they're digging in. So we're hopeful that this could lead to a lease.

And then one last one with kind of leasing in mind. Anything else to be aware of on the leasing front or the renewal front in 2026, as we start to kind of build out the model for that and impacting potentially '27 numbers?

No. I mean we're making good progress on our '26 and '27 expirations. As Marc mentioned in the prepared remarks that we have a lot of signed LOIs or active lease negotiations. And there isn't anything material in terms of expected vacates.

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.

Thanks for joining our call today. Please reach out to Investor Relations if you're interested in scheduling a meeting with ILPT. Operator, that concludes the call.

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