Industrial Logistics Properties Trust 8-K, filed Nov 5, 2021
Industrial Logistics Properties Trust (ILPT)
About this 8-K
Industrial Logistics Properties Trust filed this 8-K on November 5, 2021.
Items reported
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Item 7.01. Regulation FD Disclosure.
On November 5, 2021, Industrial Logistics Properties Trust (the “Company”) issued a press release announcing that it had entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Monmouth Real Estate Investment Corporation, a Maryland corporation (“Monmouth”), and Maple Delaware Merger Sub LLC, a Delaware limited liability company and wholly owned subsidiary of the Company (“Merger Sub”), under which the Company has agreed, subject to the terms and conditions thereof, to acquire Monmouth in an all-cash transaction. A copy of the Company’s press release is attached as Exhibit 99.1 and incorporated by reference in this Current Report on Form 8-K.
On November 5, 2021, the Company will lead an investor conference call regarding the proposed transaction with Monmouth. A copy of the presentation materials is attached as Exhibit 99.2 and incorporated by reference in this Current Report on Form 8-K.
The information in Item 7.01 of this Current Report on Form 8-K, including Exhibits 99.1 and 99.2 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall such information, including Exhibits 99.1 and 99.2, be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, regardless of the general incorporation language of such filing, except as shall be expressly set forth by specific reference in such filing.
Forward-Looking Statements
The information contained in this Current Report on Form 8-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Whenever we use words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “will,” “may” and negative or derivatives of these or similar expressions, we are making forward-looking statements. These forward-looking statements are based upon the Company’s present intent, beliefs or expectations, but forward-looking statements and the implications of these statements are not guaranteed to occur and may not occur for various reasons, some of which are beyond the Company’s control. Actual results may differ materially from those contained in or implied by our forward-looking statements as a result of various factors. For example:
| · | The information in this Current Report on Form 8-K states the Company entered into the Merger Agreement to acquire Monmouth and that such transaction is expected to close in the first half of 2022. The transaction is subject to closing conditions, including obtaining the approval of Monmouth’s stockholders, that may not be met. The transaction may not be completed on the contemplated terms, or at all, or it may be delayed. |
| · | The information in this Current Report on Form 8-K states the Company expects to finance the acquisition of Monmouth by entering into a joint venture with one or more institutional investors for equity investments of between approximately $430 million and $1.3 billion. However, the Company may not be able to enter such joint venture or obtain such equity investments on favorable terms, and the Company may not be able to find alternative financing in such amount and/or on as favorable terms, if at all. In addition, there are conditions to the funding of the bridge loan facility that may not be satisfied. |
| · | The information in this Current Report on Form 8-K states the Company expects the debt to Adjusted EBITDAre to be between 6 and 8 times following the closing of the merger and the execution of the financing plan and that the Company expects this acquisition to expand the Company’s growth opportunities and access to capital and drive cash flow growth and long-term shareholder value; however, there can be no assurance in these regards. These expectations are subject to a number of risks and uncertainties that could adversely affect the Company’s business, results of operations and liquidity, including, but not limited to: |
| o | the impact of economic conditions and the capital markets on the Company and its tenants, |
| o | competition within the real estate industry, particularly for industrial and logistics properties in those markets in which the Company’s properties are located, |
| o | the Company’s tenants’ ability and willingness to pay their rent obligations to the Company and the terms of future leases, which may not be as favorable as anticipated, |
| o | the Company’s ability to refinance Monmouth’s debt or sell certain properties on attractive terms or at all, |
| o | compliance with, and changes to, federal, state and local laws and regulations, accounting rules, tax laws and similar matters, |
| o | limitations imposed on the Company’s business and its ability to satisfy complex rules in order for the Company to maintain its qualification for taxation as a REIT for U.S. federal income tax purposes, |
| o | actual and potential conflicts of interest with the Company’s related parties, including its managing trustees, The RMR Group Inc. or others affiliated with them, and |
| o | acts of terrorism, outbreaks of pandemics, including COVID-19, or other manmade or natural disasters beyond the Company’s control. |
| · | The information in this Current Report on Form 8-K states the Company expects this acquisition to be immediately accretive to Normalized FFO per share; however, for many reasons, including, but not limited to, the Company’s ability to finance the transaction or sell its or Monmouth’s properties on attractive terms, the performance of its or Monmouth’s portfolio, and the impact of asset sales, the merger may not be accretive to Normalized FFO per share at expected levels or at all. Moreover, the ultimate amount of accretion will primarily depend on the size and structure of the joint venture used by the Company to finance the acquisition, and there can be no assurance as to whether the terms of such joint venture will be favorable or whether the Company will use common shares or preferred shares in connection with this transaction. |
The information contained in the Company’s filings with the U.S. Securities and Exchange Commission (“SEC”), including under the caption “Risk Factors” in the Company’s periodic reports, or incorporated therein, identifies other important factors that could cause differences from the Company’s forward-looking statements. The Company’s filings with the SEC are available on the SEC’s website at www.SEC.gov. You should not place undue reliance upon forward-looking statements. Except as required by law, the Company does not intend to update or change any forward-looking statements as a result of new information, future events or otherwise.
No Solicitation
The Company, its directors and executive officers are not soliciting proxies from the stockholders of Monmouth in connection with the proposed transaction and are not participants in the solicitation of proxies by Monmouth, nor is this communication an offer to buy or sell any securities.
Item 9.01. Financial Statements and Exhibits.
| (d) | Exhibits |
| 99.1 | Press Release dated November 5, 2021 | |
| 99.2 | Investor Presentation dated November 5, 2021 | |
| 104 | Cover Page Interactive Data File. (Embedded within the Inline XBRL document.) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| INDUSTRIAL LOGISTICS PROPERTIES TRUST | ||
| By: | /s/ Richard W. Siedel, Jr. | |
| Name: | Richard W. Siedel, Jr. | |
| Title: | Chief Financial Officer and Treasurer | |
Dated: November 5, 2021
Exhibit 99.1
 |
 |
FOR IMMEDIATE RELEASE
Industrial Logistics Properties Trust to Acquire
Monmouth Real Estate Investment Corporation for $4.0 Billion
High Quality Diversified Portfolio of 126 Class A, Single Tenant, Net Leased,
E-commerce Focused Industrial Properties
Over 26 Million Square Feet in 32 States, 99.7% Leased for Weighted Average Lease Term
of Approximately 8 Years
All-Cash Transaction Expected to be Immediately Accretive to Normalized FFO Per Share
Significantly Improves Quality and Diversity of ILPT’s High Quality Industrial and Logistics Portfolio
ILPT Expected to Benefit from Increased Scale and Growth Opportunities
ILPT Expects to Finance This Acquisition by Entering into a Joint Venture with Institutional Investors
ILPT to Host Conference Call Today at 8:30 a.m., Eastern Time
______________________________________________________________________________
Newton, MA (November 5, 2021): Industrial Logistics Properties Trust (Nasdaq: ILPT) today announced that it has entered into a definitive agreement to acquire all of the outstanding shares of Monmouth Real Estate Investment Corporation (NYSE: MNR) for $21.00 per share in an all-cash transaction, valued at approximately $4.0 billion, including committed MNR acquisitions, transaction costs and the assumption of $409 million of debt. The transaction adds 126 new, Class A, single tenant, net leased, e-commerce focused industrial properties to ILPT’s existing high-quality portfolio and improves geographic and tenant diversity. The portfolio contains over 26 million square feet of space, has a weighted average remaining lease term of approximately 8 years, is over 80% leased to investment grade rated tenants and generates annualized rental revenue of $169.4 million. ILPT expects this transaction to be immediately accretive to Normalized Funds from Operations, or FFO, per share.
John Murray, Chief Executive Officer of ILPT, made the following statement:
“This transaction adds 126 high-quality industrial assets to ILPT’s portfolio and expands ILPT’s ability to benefit from ongoing strong fundamental tailwinds in the industrial sector. This accretive transaction more than doubles the properties in ILPT’s mainland portfolio and this scale is expected to expand ILPT’s growth opportunities and access to capital which we expect will drive cash flow growth and long-term value for our shareholders.”
Certain highlights of the acquired portfolio include:
| · | 126 industrial and logistics properties with approximately 26.3 million rentable square feet. |
| · | Geographically diverse portfolio across 32 states with an average age of approximately 9 years. |
| · | 99.7% occupied with a weighted average lease term of approximately 8 years. |
| · | Over 80% of annual rents come from investment grade tenants. |
| · | Annualized rental revenue of $169.4 million as of September 30, 2021. | |
| · | Manageable near-term lease expirations average 6.4% of contractual rents per year over the next three years. |
Certain expected benefits of the transaction include:
| · | Accretive Acquisition – This acquisition is expected to be immediately accretive to Normalized FFO per share. The ultimate amount of accretion will primarily depend on the size and structure of the joint venture used by ILPT to finance this acquisition. The year one cash cap rate on this acquisition is 4.0% and the GAAP cap rate is approximately 4.3%, both of which ILPT believes are higher than could be achieved if the properties were acquired one off in marketed transactions. | |
| · | Complements ILPT’s Existing Portfolio – The acquisition improves ILPT’s mainland portfolio by adding Class A, e-commerce-focused assets, more than 80% of which are leased to investment grade tenants, with a weighted average lease term of approximately 8 years. | |
| · | Increases Scale – ILPT gains significant scale with high quality assets. Larger REITs with high quality portfolios historically gain greater exposure to potential property investment opportunities | |
| · | Adds Geographic Diversity – The acquisition adds geographic diversity for ILPT, particularly in Georgia and Texas where ILPT does not currently own industrial buildings. | |
| · | Enhances Tenant Diversity – The acquisition enhances tenant diversity of ILPT’s existing tenant base, adding new tenant relationships with household names such as Home Depot, International Paper, Mercedes Benz, Toyota and Ulta. | |
| · | Provides Platform for Additional Growth – The acquisition includes an active pipeline both through acquisitions and property expansions which provides ILPT with attractive future growth potential and enhanced tenant retention. It also allows ILPT to continue to nurture MNR’s existing strong relationships with merchant builders, providing a platform for growth in addition to ILPT’s traditional external growth through acquisition and organic growth through its leasing activities. |
Deal Structure, Approvals and Timing
To finance this acquisition, ILPT expects to enter into a joint venture with one or more institutional investors for equity investments of between approximately $430 million and $1.3 billion. Accordingly, ILPT does not currently plan to issue common shares in connection with this transaction. ILPT plans to finance the balance of the $4.0 billion purchase with proceeds from new mortgage debt and the assumption of approximately $409 million of existing MNR mortgage debt. Depending on the ultimate size of the joint venture equity investments, ILPT may also use proceeds from the sale of up to approximately $1.6 billion of MNR properties to finance this transaction. Following the closing of the acquisition and execution of the financing plan described above, consolidated net debt to Adjusted EBITDAre is expected to be between 6 and 8 times at year end 2022. To ensure ILPT can finance the closing of this transaction, ILPT has secured commitments from lenders for a $4.0 billion bridge loan facility.
The transaction is subject to customary closing conditions, including MNR shareholder approval, and is expected to close in the first half of 2022.
Non-GAAP Financial Measures
ILPT refers to Normalized FFO and Adjusted EBITDAre in this press release. Normalized FFO and Adjusted EBITDAre are “non-GAAP financial measures” within the meaning of the applicable rules of the SEC. For a calculation and definition of these measures, and a reconciliation to net income, please see ILPT’s Third Quarter 2021 Supplemental Operating and Financial Data, or the Supplemental. The Supplement was attached as Exhibit 99.2 to ILPT’s Current Report on Form 8-K furnished with the SEC on October 27, 2021. In addition, please see the Supplemental for statements as to why ILPT’s management believes that these measures provide useful information to investors and additional purposes for which ILPT management uses this measure.
Advisors
Citigroup is acting as exclusive financial advisor, Hunton Andrews Kurth LLP is serving as legal advisor on the transaction and Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal advisor on the bridge financing to ILPT. Joint lead arrangers and bookrunners for the bridge loan are Citigroup Global Markets Inc. and UBS Securities LLC.
Conference Call
On Friday, November 5, 2021, at 8:30 a.m., Eastern time, ILPT will host a conference call to discuss the acquisition. Following management's remarks, there will be a question and answer period. ILPT will also provide a presentation in advance of the conference call regarding the transaction that will be available at ILPT’s website at www.ilptreit.com and as an exhibit to a Current Report on a Form 8-K furnished with the Securities and Exchange Commission, or SEC.
The conference call telephone number is 877-418-4826. Participants calling from outside the United States and Canada should dial 412-902-6758. No pass code is necessary to access the call from either number. Participants should dial in about 15 minutes prior to the scheduled start of the call. A replay of the conference call will be available for about one week after the call. To hear the replay, dial 412-317-0088. The replay pass code is 10161961.
A live audio webcast of the conference call will also be available in a listen-only mode on ILPT’s website at www.ilptreit.com. Participants wanting to access the webcast should visit ILPT’s website about five minutes before the call. The archived webcast will be available for replay on ILPT’s website after the call.
About Industrial Logistics Properties Trust
Industrial Logistics Properties Trust (Nasdaq: ILPT) is a real estate investment trust, or REIT, focused on owning and leasing high quality distribution and logistics properties that serve the growing needs of e-commerce. ILPT’s portfolio consists of more than 290 properties containing approximately 36 million rentable square feet leased to over 260 tenants in 33 states. More than 70% of ILPT’s annual rental revenues are derived from investment grade tenants, tenants that are subsidiaries of investment grade rated entities or Hawaii land leases. ILPT is managed by an operating subsidiary of The RMR Group Inc. (Nasdaq: RMR), an alternative asset management company with more than $32 billion in assets under management and more than 35 years of institutional experience in buying, selling, financing and operating commercial real estate. ILPT is headquartered in Newton, MA. For more information, visit ilptreit.com.
WARNING CONCERNING FORWARD-LOOKING STATEMENTS
This press release 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 upon ILPT’s present beliefs and expectations, but these statements and the implications of these statements are not guaranteed to occur and may not occur for various reasons, some of which are beyond ILPT’s control. For example:
| · | This press release states ILPT entered into a definitive merger agreement to acquire MNR and that such transaction is expected to close in the first half of 2022. The transaction is subject to closing conditions, including obtaining the approval of MNR’s stockholders, that may not be met. The transaction may not be completed on the contemplated terms, or at all, or it may be delayed. |
| · | This press release states ILPT expects to finance this acquisition by entering into a joint venture with one or more institutional investors for equity investments of between approximately $430 million and $1.3 billion. However, ILPT may not be able to enter such joint venture or obtain such equity investments on favorable terms, and ILPT may not be able to find alternative financing in such amount and/or on as favorable terms, if at all. In addition, there are conditions to the funding of the bridge loan facility that may not be satisfied. |
| · | This press release states ILPT expects the debt to Adjusted EBITDAre to be between 6 and 8 times following the closing of the merger and the execution of the financing plan and that ILPT expects this acquisition to expand ILPT’s growth opportunities and access to capital and drive cash flow growth and long-term shareholder value; however, there can be no assurance in these regards. These expectations are subject to a number of risks and uncertainties that could adversely affect ILPT’s business, results of operations and liquidity, including, but not limited to: |
| o | the impact of economic conditions and the capital markets on ILPT and its tenants, |
| o | competition within the real estate industry, particularly for industrial and logistics properties in those markets in which ILPT’s properties are located, |
| o | ILPT’s tenants’ ability and willingness to pay their rent obligations to ILPT and the terms of future leases, which may not be as favorable as anticipated, |
| o | ILPT’s ability to refinance MNR’s debt or sell certain properties on attractive terms or at all, |
| o | compliance with, and changes to, federal, state and local laws and regulations, accounting rules, tax laws and similar matters, |
| o | limitations imposed on ILPT’s business and its ability to satisfy complex rules in order for ILPT to maintain its qualification for taxation as a REIT for U.S. federal income tax purposes, |
| o | actual and potential conflicts of interest with ILPT’s related parties, including its managing trustees, The RMR Group Inc. or others affiliated with them, and |
| o | acts of terrorism, outbreaks of pandemics, including COVID-19, or other manmade or natural disasters beyond ILPT’s control. |
| · | This press release states ILPT expects this acquisition to be immediately accretive to Normalized FFO per share; however, for many reasons, including, but not limited to, ILPT’s ability to finance the transaction or sell its or MNR’s properties on attractive terms, the performance of its or MNR’s portfolio, and the impact of asset sales, the merger may not be accretive to Normalized FFO per share at expected levels or at all. Moreover, the ultimate amount of accretion will primarily depend on the size and structure of the joint venture used by ILPT to finance the acquisition, and there can be no assurance as to whether the terms of such joint venture will be favorable or whether ILPT will use common shares or preferred shares in connection with this transaction. |
The information contained in ILPT’s filings with the Securities and Exchange Commission, or SEC, including under the caption “Risk Factors” in ILPT’s periodic reports or incorporated therein, identifies important factors that could cause ILPT’s actual results to differ materially from those stated or implied by ILPT’s forward-looking statements. ILPT’s filings with the SEC are available at the SEC’s website at www.sec.gov.
You should not place undue reliance upon forward-looking statements.
Except as required by law, ILPT does not intend to update or change any forward-looking statements as a result of new information, future events or otherwise.
NO SOLICITATION
ILPT, its directors and executive officers are not soliciting proxies from the shareholders of MNR in connection with the proposed acquisition and are not participants in the solicitation of proxies by MNR, nor is this communication an offer to buy or sell any securities. ILPT is making this communication for informational purposes only and does not intend to file any communication relating to the merger on a proxy statement on Schedule 14A with the SEC.
| Investor Contact: |
| Kevin Barry | |
| Director, Investor Relations | |
| (617) 658-0776 |
| Media Contacts: | |
| Jon Keehner / Jack Kelleher | |
| Joele Frank | |
| 212-355-4449 |
(end)
Exhibit 99.2
| Acquisition of Monmouth Real Estate Corporation November 5, 2021 |
| 2 This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Also, whenever Industrial Logistics Properties Trust (ILPT) uses words such as “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”, “will”, “may” and negatives or derivatives of these or similar expressions, ILPT is making forward-looking statements. These forward-looking statements are based upon ILPT’s present intent, beliefs or expectations, but forward-looking statements are not guaranteed to occur and may not occur. Forward-looking statements in this presentation relate to various aspects of ILPT’s business and the proposed transaction, including: ILPT’s tenants’ ability and willingness to pay their rent obligations; the likelihood that ILPT’s tenants will renew or extend their leases or that ILPT will be able to obtain replacement tenants on terms as favorable to ILPT; ILPT's belief that the industrial and logistics sector and many of its tenants are critical to sustaining a resilient supply chain and that its business will benefit as a result; ILPT’s expectations that e-commerce will continue to stimulate demand for industrial and logistics properties and that strong absorption and rent growth and high occupancy will continue; ILPT’s acquisitions or sales of properties; ILPT’s ability to compete for acquisitions and tenancies effectively; the likelihood that ILPT’s rents will increase when ILPT renews or extends its leases, when it enters new leases, or when its rents reset at its properties in Hawaii; ILPT’s expectation that any possible development or redevelopment of its properties will be completed on budget by the estimated completion dates; ILPT’s ability to pay distributions to its shareholders and to sustain the amount of such distributions; the future availability of borrowings under ILPT’s revolving credit facility; ILPT’s policies and plans regarding investments, financings and dispositions; ILPT’s ability to raise debt or equity capital; ILPT’s ability to pay interest on and principal of its debt; ILPT’s ability to appropriately balance its use of debt and equity capital; ILPT’s ability to expand its existing or enter into additional real estate joint ventures or to attract co-venturers and benefit from its existing joint venture or any joint ventures it may enter into; whether ILPT may contribute additional properties and receive proceeds from the other investors in joint ventures; the credit qualities of ILPT’s tenants; changes in the security of cash flows from ILPT’s properties; the duration and severity of the COVID-19 pandemic and its impact on ILPT's tenants; ILPT's ability and the ability of the industrial and logistics properties real estate sector and ILPT's tenants to operate throughout the COVID-19 pandemic and current economic conditions; ILPT's ability to maintain sufficient liquidity for the duration of the COVID-19 pandemic and any resulting economic impact; ILPT’s ability to prudently pursue, and successfully and profitably complete, expansion and renovation projects at its properties and to realize its expected returns on those projects; ILPT’s expectation that it benefits from its relationships with The RMR Group LLC (RMR); ILPT’s qualification for taxation as a real estate investment trust (REIT); changes in federal or state tax laws and changes in environmental laws or in their interpretations or enforcement as a result of climate change or otherwise; or ILPT’s incurring environmental remediation costs or other liabilities. In addition, this presentation discussed a definitive merger agreement to acquire Monmouth Real Estate Investment Corporation (MNR), but transaction is subject to closing conditions, including obtaining the approval of MNR’s stockholders, that are outside ILPT’s control and may not be met. The transaction may not be completed on the contemplated terms, or at all, or it may be delayed. ILPT’s actual results may differ materially from those contained in or implied by its forward-looking statements as a result of various factors, such as the impact of conditions in the economy and the capital markets on ILPT and its tenants, competition within the real estate industry, compliance with, and changes to, federal, state and local laws and regulations, accounting rules, tax laws and similar matters, limitations imposed on ILPT’s business and its ability to satisfy complex rules in order for ILPT to maintain its qualification for taxation as a REIT for U.S. federal income tax purposes, actual and potential conflicts of interest with ILPT’s related parties, including its managing trustees, RMR and others affiliated with them, and acts of terrorism, outbreaks of pandemics, including COVID-19, or other manmade or natural disasters beyond its control. ILPT’s Annual Report on Form 10-K for the year ended December 31, 2020 and its other filings with the Securities and Exchange Commission (SEC) identify other important factors that could cause differences from its forward-looking statements. ILPT’s filings with the SEC are available on the SEC’s website at www.sec.gov. You should not place undue reliance upon ILPT’s forward-looking statements. Except as required by law, ILPT does not intend to update or change any forward-looking statements as a result of new information, future events or otherwise. No Solicitation ILPT, its directors and executive officers are not soliciting proxies from the stockholders of Monmouth Real Estate Investment Corporation (MNR) in connection with the proposed transaction and are not participants in the solicitation of proxies by MNR, nor is this communication an offer to buy or sell any securities. ILPT is making this communication for informational purposes only and does not intend to file any communication relating to the merger on a proxy statement on Schedule 14A with the SEC. Notes Regarding Certain Information in this Presentation This presentation contains industry and statistical data that ILPT obtained from various third party sources. Nothing in the data used or derived from third party sources should be construed as investment advice. Some data and other information presented are also based on ILPT’s good faith estimates and beliefs derived from its review of internal surveys and independent sources and its experience. ILPT believes that these external sources, estimates and beliefs are reliable and reasonable, but it has not independently verified them. Although ILPT is not aware of any misstatements regarding the data presented herein, these estimates and beliefs involve inherent risks and uncertainties and are based on assumptions that are subject to change. Unless otherwise noted, (1) all data presented are as of or for the three months ended September 30, 2021, (2) references to “weighted average” mean a weighted average by annualized rental revenues and (3) references to “annualized rental revenues” mean the annualized contractual rents, as of September 30, 2021, including straight line rent adjustments and excluding lease value amortization, adjusted for tenant concessions, including free rent and amounts reimbursed to tenants, plus estimated recurring expense reimbursements from tenants (annualized rental revenues may differ from actual historical rental revenues calculated pursuant to U.S. Generally Accepted Accounting Principles (GAAP)) Non-GAAP Financial Measures This presentation contains non-GAAP financial measures including Normalized FFO and Adjusted EBITDAre. Normalized FFO and Adjusted EBITDAre are “non-GAAP financial measures” within the meaning of the applicable rules of the SEC. For a calculation and definition of these measures, and a reconciliation to net income, please see ILPT’s Third Quarter 2021 Supplemental Operating and Financial Data, or the Supplemental. The Supplement was attached as Exhibit 99.2 to ILPT’s Current Report on Form 8-K furnished with the SEC on October 27, 2021. In addition, please see the Supplemental for statements as to why ILPT’s management believes that these measures provide useful information to investors and additional purposes for which ILPT management uses this measure. INDUSTRIAL LOGISTICS PROPERTIES TRUST WARNING REGARDING FORWARD LOOKING STATEMENTS |
| 3 EXISTING PORTFOLIOS AT A GLANCE INDUSTRIAL LOGISTICS PROPERTIES TRUST $2.7 Billion Total Market Capitalization 36 Million Rentable Square Feet Located in 33 States 99.0% Occupancy 9.0 Years of Weighted Average Remaining Lease Term 49% Annualized Rental Revenue from Properties in Hawaii 71% Rents from Investment Grade Tenants/Subsidiaries or Hawaii Land Leases U.S. REIT with 294 Industrial & Logistics Properties $4.0 Billion Total Transaction Value 26 Million Rentable Square Feet Located in 32 States 99.7% Occupancy 8.0 Years of Weighted Average Remaining Lease Term 56% Annualized Rental Revenue from FedEx 83% Rents from Investment Grade Tenants/Subsidiaries U.S. REIT with 126 Industrial & Logistics Properties |
| 4 INDUSTRIAL LOGISTICS PROPERTIES TRUST TRANSACTION OVERVIEW Transaction Details • All-cash acquisition by Industrial Logistics Properties Trust (Nasdaq: “ILPT”) of Monmouth Real Estate Corporation (NYSE: “MNR”) (“Transaction”). • Consideration of $21.00 per MNR common share. • Total Transaction value of ~$4.0B, inclusive of MNR contracted acquisitions / expansions and transaction expenses. • ILPT plans to finance the transaction by entering into a joint venture with one or more institutional investors for equity investments of between approximately $430M and $1.3B. • ILPT does not currently plan to issue any common shares in connection with this transaction. • The balance of the purchase price will be financed with proceeds of new mortgage debt and the assumption of approximately $409M of existing MNR mortgage debt. • Depending on the ultimate size of the joint venture equity investments, ILPT may also use proceeds from the sale of up to $1.6B of MNR properties to finance the transaction. • To ensure ILPT can finance the closing of the transaction, ILPT has secured commitments from lenders for a $4.0B bridge loan facility. Timing & Approvals • The Transaction is expected to close during the first half of 2022, subject to customary closing conditions. • Approval is required from two-thirds of the outstanding common shares of MNR. |
| 5 TRANSACTION STRATEGIC RATIONALE INDUSTRIAL LOGISTICS PROPERTIES TRUST • Expected to be immediately accretive to Normalized FFO per share. • The ultimate amount of accretion will primarily depend on the size and structure of the joint venture used by ILPT to finance the Transaction. • Year one cash cap rate on this acquisition is 4.0% and the GAAP cap rate is approximately 4.3%. Accretive Acquisition • Adds Class A, e-commerce-focused assets, which are 83% leased to investment grade tenants for a weighted average lease term of approximately 8.0 years. Complements ILPT’s Existing Portfolio • Enhances capital markets access with potential to reduce cost of capital and improve valuation as a larger REIT. • Strengthens ILPT’s competitive position for private market acquisitions. Increases Scale • Adds new tenant relationships with household names such as Home Depot, International Paper, Ulta, Mercedes Benz and Toyota. Enhances Tenant Diversity • Increased exposure to major southeastern U.S. markets with assets located near airports, seaports and transportation hubs. • Positioned to serve both the first mile and last mile of the supply chain. Adds Geographic Diversity • Enables ILPT to continue to nurture MNR’s strong relationships with merchant builders. Provides Platform for Additional Growth |
| 6 PRO FORMA COMBINED COMPANY1 INDUSTRIAL LOGISTICS PROPERTIES TRUST 50 Million Rentable Square Feet Located in 39 States 99.3% Occupancy 9.2 Years of Weighted Average Remaining Lease Term 21% Annualized Rental Revenue from FedEx 34% Annualized Revenues from Properties in Hawaii 77% Rents from Investment Grade Tenants/Subsidiaries or Hawaii Land Leases U.S. REIT with 339 Industrial & Logistics Properties 1. Includes MNR retained portfolio after the sale of approximately $1.6 billion of assets. |
| 7 INDUSTRIAL LOGISTICS PROPERTIES TRUST PRO FORMA PORTFOLIO OVERVIEW1 Source: Monmouth public filings as of 06/30/2021 unless otherwise stated. ILPT public filings as of 09/30/2021. 1. Represents MNR retained portfolio after the sale of approximately $1.6 billion of assets. MNR information as of 10/27/2021 as adjusted for Burlington, VT, Kodak, TN, and Birmingham, AL acquisitions announced subsequent to quarter end. Increased exposure to major southeastern and Texas population centers. 0 – 700k 700k – 900k 900k – 1.1mm 1.1mm – 16.8mm ILPT MNR |
| 8 INDUSTRIAL LOGISTICS PROPERTIES TRUST STABLE CASH FLOWS FROM STRONG CREDIT QUALITY TENANTS ~77% of pro forma rent will be from investment grade rated tenants1 with ~30% from FedEx and Amazon capitalizing on e-commerce industrial sector tailwinds. Source: Monmouth public filings. Information as of 06/30/2021 unless otherwise stated. 1. Includes Investment Grade Rated (IGRs) tenants or subsidiaries of IGR entities. Top 10 Tenants % of Annualized Rental Income 1 FedEx Corporation and FedEx Ground Package System 20.7% 2 Subsidiaries of Amazon.com, Inc. 9.0% 3 Restoration Hardware, Inc. 1.9% 4 Home Depot U.S.A., Inc. 1.7% 5 American Tire Distributors, Inc. 1.7% 6 Servco Pacific Inc. 1.6% 7 UPS Supply Chain Solutions, Inc. 1.5% 8 EF Transit Inc. 1.3% 9 BJ’s Wholesale Club, Inc. 1.1% 10 Shaw Industries, Inc. 1.1% Total 41.6% Investment Grade Rated Tenants/Subsidiaries or Hawaii Land 77% Non-IGR Tenants 23% |
| 9 INDUSTRIAL LOGISTICS PROPERTIES TRUST ILLUSTRATIVE TRANSACTION SOURCES & USES Sources Uses ILPT post closing Consolidated Net Debt / Adjusted EBITDAre is estimated to be ~6.0x - 8.0x by year end 2022. (amounts in millions, except per share data) Joint Venture Equity $430 - $1,300 New Mortgage Debt $1,500 - $2,400 Assumption of MNR Debt $409 Sale of MNR Properties $0 - $1,600 MNR Cash/Securities $25 - $162 ILPT Cash/Revolver $0 - $33 Total Sources $4,134 MNR Purchase Price Calculation Total Transaction Uses $4,134 Less: MNR Cash/Securities ($162) MNR Purchase Price $3,972 MNR Purchase Price Per Share $21.00 MNR Fully Diluted Shares Outstanding 98,632 Purchase of MNR Common Stock $2,071 Repayment of MNR Preferred Stock $550 Repayment of MNR Debt $700 Assumption of MNR Debt $409 MNR Acquisitions & Commitments $144 Est. Total Transaction Expenses $260 Total Uses $4,134 |
| 10 RMR’s Operations Include: National Multi-Sector Investment Platform OFFICE INDUSTRIAL GOVERNMENT MEDICAL OFFICE LIFE SCIENCE SENIOR LIVING HOTELS SERVICE RETAIL RMR Managed Companies 37,000 Employees Nearly 2,100 Properties ~$10 billion in Annual Revenues $32.7 Billion in AUM More than 600 CRE Professionals Over 30 Offices Throughout the U.S. Financial Services: Real Estate Services: Business Services: Accounting Acquisitions/ Dispositions Administration Capital Markets Asset Management Human Resources Compliance/ Audit Construction/ Development Information Technology (IT) Finance/ Planning Engineering Investor Relations Treasury Leasing Marketing Tax Property Management Legal/ Risk Management Credit Analysis INDUSTRIAL LOGISTICS PROPERTIES TRUST MANAGED BY THE RMR GROUP LLC The RMR Group LLC |
| Acquisition of Monmouth Real Estate Corporation November 2021 |
