Industrial Logistics Properties Trust

Good morning and welcome to the Industrial Logistics Properties Trust's third quarter 2024 financial results conference call. All participants will be in the listen-only mode. 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. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star 2. Please note, this event is being recorded. I would now like to turn the call over to Melissa McCarthy, Manager of Investor Relations. Please go ahead.

Thank you, Darwin. Good morning. Joining me on today's call are ILTT President and Chief Operating Officer Yael Duffy, Chief Financial Officer and Treasurer Tiffany Tsai, and Vice President Mark Fromm. 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 four looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. These four looking statements are based on ILCT's beliefs and expectations as of today, October 30, 2024, 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, ilptreach.com. Investors are cautioned not to place under reliance upon any forward-looking statements. In addition, we will be discussing non-GAAP financial measures during this call, including funds from operations, or FFO, adjusted EBITDA RE, 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 Gail.

Thank you, Melissa, and good morning. On today's call, I will start with a high-level update on our portfolio and third quarter operating performance before handing it over to Mark to discuss our leasing achievements. From there, Tiffany will review our financial results. We remain encouraged by the continued demand for ILPT's high-quality portfolio and the strength in industrial real estate fundamentals. we delivered strong results in the third quarter with year-over-year growth in key metrics, including FFO and cash basis NOI. Given many of our leases have contractual escalations and we have illustrated a track record of capturing rent growth through our leasing efforts, we believe there is embedded opportunity to drive organic cash flow growth. As of September 30th, 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 portfolio carries a weighted average lease term of eight years and is anchored by tenants with strong business profiles and stable cash flows. ILTT's top 10 tenants account for nearly half of our total annualized rental revenues, and 77% of our annualized revenues come from investment-grade rated tenants or from our secure Hawaii land leases. Last week, American Tire Distributors, our fourth largest tenant representing 1.6% of ILPT's annualized revenues, filed voluntary Chapter 11 proceedings as it contemplates a restructuring agreement with an ad hoc group of its lenders. American Tire has publicly indicated that it will continue to operate across its nationwide distribution network. Within our portfolio, all rent obligations have been paid and the five properties they lease from us are being fully utilized. At quarter end, our consolidated occupancy was 94.4%, a slight decrease from the second quarter, primarily due to the previously disclosed 535,000 square foot property located in the east sub-market of Indianapolis that became vacant in July. Leasing this vacancy along with the 2.2 million square foot parcel in Hawaii that became vacant on April 1st are among our top priorities. Tour and proposal activity for the sites has increased, and we are optimistic that both will be leased in 2025. Also impacting our GAAP NOI results this quarter is a $1.3 million non-cash charge resulting from the early termination of one tenant, which leased two parcels within our Hawaii portfolio. After the end of the quarter, we were able to execute a new lease with a replacement tenant for one parcel and are negotiating a lease for the other parcel, both at average roll-ups in rent of 48%. These results continue to highlight the scarcity of land, persistent demand, and value of our Hawaii real estate. In the third quarter, strong relationships with key tenants such as FedEx drove much of our leasing momentum as we executed over 2.7 million square feet of leasing at weighted average rates that were 7% higher than prior leases with a weighted average lease term of five and a half years, which Mark will provide more detail on momentarily. We intend to continue capitalizing on the attractive operating environment to deliver favorable leasing outcomes. While near-term expirations are minimal, with approximately 4.5% of total annualized revenues scheduled to expire through 2025, we plan to address expirations in a way that will maximize mark-to-market rent growth while minimizing potential downtime in capital costs. Lastly, earlier this month, ILPT announced that it would maintain its quarterly cash dividend at a penny per share. In recent months, we have been frequently asked when we expect to increase our dividend. We recognize the value of the dividend to our investors, and it is a topic that we discuss regularly at both the management and board levels. However, as ILTT does not have a credit facility, we feel it is important that we have ample liquidity and financial flexibility to address future leasing costs, capital expenditures, and obligations under our debt agreement before increasing the dividend level. With that, I'll turn the call over to Mark.