0001104659-23-021502.txt : 20230214 0001104659-23-021502.hdr.sgml : 20230214 20230214160224 ACCESSION NUMBER: 0001104659-23-021502 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 13 CONFORMED PERIOD OF REPORT: 20230214 ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20230214 DATE AS OF CHANGE: 20230214 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Industrial Logistics Properties Trust CENTRAL INDEX KEY: 0001717307 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 822809631 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-38342 FILM NUMBER: 23628567 BUSINESS ADDRESS: STREET 1: TWO NEWTON PLACE STREET 2: 255 WASHINGTON STREET, SUITE 300 CITY: NEWTON STATE: MA ZIP: 02458 BUSINESS PHONE: 617-796-8303 MAIL ADDRESS: STREET 1: TWO NEWTON PLACE STREET 2: 255 WASHINGTON STREET, SUITE 300 CITY: NEWTON STATE: MA ZIP: 02458 8-K 1 tm236401d1_8k.htm FORM 8-K
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): February 14, 2023

 

Industrial Logistics Properties Trust

(Exact Name of Registrant as Specified in Its Charter)

 

Maryland

(State or Other Jurisdiction of Incorporation)

 

001-38342   82-2809631
(Commission File Number)   (IRS Employer Identification No.)

 

Two Newton Place, 255 Washington Street, Suite 300 Newton, Massachusetts   02458-1634
(Address of Principal Executive Offices)   (Zip Code)

 

617-219-1460

(Registrant’s Telephone Number, Including Area Code)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities Registered Pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common Shares of Beneficial Interest   ILPT   The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

 

 

In this Current Report on Form 8-K, the terms “we”, “us”, “our” and “ILPT” refer to Industrial Logistics Properties Trust and its consolidated subsidiaries, unless otherwise expressly stated or the context indicates otherwise.

 

Item 9.01. Financial Statements and Exhibits.

 

This Current Report on Form 8-K includes updated unaudited pro forma financial information for ILPT, which gives effect to the acquisition of Monmouth Real Estate Investment Corporation, a Maryland corporation, and other transactions that occurred in connection therewith, as if all of these transactions occurred on January 1, 2022. This unaudited pro forma condensed consolidated statement of income (loss) is not necessarily indicative of the expected results of operations for any future period. Differences could result from numerous factors, including future changes in our portfolio of investments, capital structure, property level operating expenses and revenues, including rents expected to be received from our existing leases or leases we may enter into in the future, changes in interest rates, the performance of our joint ventures and other reasons. Actual future results are likely to be different from the amounts presented in this unaudited pro forma condensed consolidated statement of income (loss) and such differences could be significant.

 

(b) Pro Forma Financial Information.

 

The following unaudited pro forma financial information of ILPT is attached as Exhibit 99.1 to this Current Report on Form 8-K and incorporated by reference herein:

 

Introduction to Unaudited Pro Forma Condensed Consolidated Financial Statement F-1
Unaudited Pro Forma Condensed Consolidated Statement of Income (Loss) for the Nine Months Ended September 30, 2022 F-2
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statement F-3

 

(d) Exhibits.

 

99.1Unaudited Pro Forma Condensed Consolidated Financial Statement of Industrial Logistics Properties Trust.
104Cover Page Interactive Data File. (Embedded within the Inline XBRL document.)

 

2 

 

 

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/ Brian E. Donley
  Name: Brian E. Donley
  Title: Chief Financial Officer and Treasurer

 

Dated: February 14, 2023

 

3 

 

EX-99.1 2 tm236401d1_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

INDUSTRIAL LOGISTICS PROPERTIES TRUST

Introduction to Unaudited Pro Forma Condensed Financial Statement

(dollars in thousands)

 

On February 25, 2022, Industrial Logistics Properties Trust, or ILPT, acquired Monmouth Real Estate Investment Corporation, or MNR, pursuant to the merger of MNR with and into one of ILPT’s wholly owned subsidiaries, or the Merger. MNR’s portfolio included 124 Class A, single tenant, net leased, e-commerce focused industrial properties containing approximately 25,745,000 rentable square feet and two then committed, but not yet then completed, property acquisitions. Immediately following the closing of the Merger, ILPT entered into a new joint venture arrangement for 95 of the acquired MNR properties, including two then committed, but not yet then completed, property acquisitions (one of which was subsequently completed and one of which was subsequently terminated), in which ILPT retained a 61% equity interest. In connection with the transaction, the joint venture entered into a $1,400,000 floating rate commercial mortgage backed securities, or CMBS, loan secured by 82 properties, or the Floating Rate Loan. In connection with the closing of the Merger, ILPT entered into a $1,385,158 bridge loan secured by 109 ILPT and MNR properties not owned by the joint venture, or the Bridge Loan, which ILPT repaid in full on September 22, 2022, and ILPT also entered into a $700,000 fixed rate CMBS loan secured by 17 ILPT properties, or the Fixed Rate Loan.

 

The following unaudited pro forma condensed consolidated statement of income (loss) for the nine months ended September 30, 2022 presents ILPT’s results of operations as if all of the transactions described in the notes to the unaudited pro forma condensed consolidated statement of income (loss) were completed on January 1, 2022. This unaudited pro forma condensed consolidated statement of income (loss) should be read in conjunction with (i) ILPT’s audited consolidated financial statements as of and for the year ended December 31, 2021 and the notes thereto, included in ILPT’s Annual Report on Form 10-K for the year ended December 31, 2021 filed on February 15, 2022 with the Securities and Exchange Commission, or SEC, and (ii) ILPT’s unaudited condensed consolidated financial statements as of and for the nine months ended September 30, 2022 and the notes thereto, included in ILPT’s Quarterly Report on Form 10-Q filed on October 25, 2022 with the SEC.

 

This unaudited pro forma condensed consolidated statement of income (loss) is provided for informational purposes only. In the opinion of ILPT’s management, all adjustments necessary to reflect the effects of the Merger and in the notes to the unaudited pro forma condensed consolidated statement of income (loss) have been included and are based upon available information and assumptions that ILPT’s management believes are reasonable. Adjustments have been made to the unaudited pro forma condensed consolidated statement of income (loss) to reflect factually supportable items that are directly attributable to these transactions, and which is expected to have a continuing impact on ILPT’s financial results.

 

This unaudited pro forma condensed consolidated statement of income (loss) is not necessarily indicative of ILPT’s expected results of operations for any future period. Differences could result from numerous factors, including future changes in ILPT’s portfolio of investments, capital structure, property level operating expenses and revenues, including rents expected to be received from ILPT’s existing leases or leases ILPT may enter into in the future, changes in interest rates, the performance of ILPT’s joint ventures and other reasons. Actual future results are likely to be different from the amounts presented in these unaudited pro forma condensed consolidated statement of income (loss) and such differences could be significant.

 

F-1 

 

 

Industrial Logistics Properties Trust

Unaudited Pro Forma Condensed Consolidated Statement of Income (Loss)

For the Nine Months Ended September 30, 2022

(amounts in thousands, except per share data)

 

   ILPT
Historical
   Adjustments for the
Acquired MNR
Properties
   Financing
Transactions
   Transaction
Accounting
Adjustments
   ILPT
Pro Forma
 
       (A)   (B)         
Rental income  $281,812   $28,683   $   $950(C)  $311,445 
                          
Expenses:                         
Real estate taxes   36,460    3,399            39,859 
Other operating expenses   22,278    1,103        860(D)   24,241 
Depreciation and amortization   114,096            31,791(E)   145,887 
Acquisition and other transaction related costs   586                586 
General and administrative   24,896            2,813(F)   27,709 
Loss on impairment of real estate assets   100,747                100,747 
Total expenses   299,063    4,502        35,464    339,029 
                          
Loss on sale of real estate   (10)               (10)
Interest and other income   1,900                1,900 
Loss on equity securities   (5,758)               (5,758)
Interest expense   (208,286)   (1,773)   (34,522)       (244,581)
Loss on early extinguishment of debt   (22,198)               (22,198)
Income (loss) before income tax expense and equity in earnings of unconsolidated joint venture   (251,603)   22,408    (34,522)   (34,514)   (298,231)
Income tax expense   (113)               (113)
Equity in earnings of unconsolidated joint venture   6,634                6,634 
Net income (loss)   (245,082)   22,408    (34,522)   (34,514)   (291,710)
Net loss attributable to noncontrolling interest   49,402            4,442(G)   53,844 
Net income (loss) attributable to common shareholders  $(195,680)  $22,408   $(34,522)  $(30,072)  $(237,866)
                          
Weighted average common shares outstanding - basic and diluted   65,228                   65,228 
                          
Per common share data (basic and diluted):                         
Net loss attributable to common shareholders  $(3.00)                 $(3.65)

 

The accompanying notes are an integral part of this unaudited pro forma condensed consolidated financial statement.

 

F-2 

 

 

Industrial Logistics Properties Trust

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statement

(dollars in thousands)

 

Adjustments to the Unaudited Pro Forma Condensed Consolidated Financial Statement

 

(A)The adjustments reflect the pro forma statement of revenues, operating expenses and interest expense of the properties acquired from MNR for the period January 1, 2022 through February 24, 2022.

 

(B)The adjustments reflect the effect on interest expense related to the debt financing used to acquire MNR. The components of the interest expense adjustment for the period from January, 2022 to February 24, 2022 are as follows:

 

Floating Rate Loan due March 2024    
Principal  $1,400,000 
Interest rate (1)   2.815%
Annual cash interest   39,410 
Annual amortization of debt issuance costs   17,969 
Total annual interest expense   57,379 
Pro-rated interest expense for the period from January 1, 2022 to February 24, 2022   8,646 
      
Bridge Loan due February 2023     
Principal   1,385,158 
Weighted average interest rate (2)   2.969%
Annual cash interest   41,125 
Amortization of debt issuance costs (3)   103,653 
Total annual interest expense   144,778 
Pro-rated interest expense for the period from January 1, 2022 to February 24, 2022   21,816 
      
Fixed Rate Loan due March 2032     
Principal   700,000 
Weighted average interest rate   4.417%
Annual cash interest   30,919 
Amortization of debt issuance costs   578 
Total annual interest expense   31,497 
Pro-rated interest expense for the period from January 1, 2022 to February 24, 2022   4,746 
      
Total interest expense for the period from January 1, 2022 to February 24, 2022   35,208 
Less: interest expense incurred under ILPT’s revolving credit facility (4)   (686)
Total interest expense adjustment  $34,522 

 

(1)Contractual interest rate is secured overnight financing rate, or SOFR, as of February 25, 2022, plus a premium of 2.765%.
(2)Contractual interest rate is SOFR as of February 25, 2022, plus a weighted average premium of 2.919%.
(3)Represents amortization of debt issuance costs and other fees related to the Bridge Loan.
(4)Represents actual interest expense incurred during the period from January 1, 2022 to February 24, 2022 by ILPT under its unsecured revolving credit facility, which was terminated after ILPT’s repayment of the outstanding principal balance thereunder at the closing of the Merger.

 

An increase or decrease in the variable interest rates of 1/8 of a percent would increase or decrease, respectively, annual interest expense under the Floating Rate Loan and the Bridge Loan by $1,750 and $1,731, respectively.

 

F-3 

 

 

(C)The adjustment represents estimated non-cash straight line rent and non-cash amortization of above and below market leases related to the acquired MNR properties in the Merger. Capitalized above and below market lease values are amortized as a reduction or an increase, respectively, to rental income over the 8.3 year weighted average remaining lease term at the closing of the Merger. The components of the rental income adjustment for the period from January 1, 2022 to February 24, 2022 are as follows:

 

Non-cash straight line rent adjustments  $740 
Non-cash net above and below market lease amortization   210 
   $950 

 

(D)The adjustment represents the effect on other operating expenses of $860 related to the acquired MNR properties for the period from January 1, 2022 to February 24, 2022 based on ILPT’s contractual obligations under its property management agreement with its manager, The RMR Group LLC, or RMR.

 

(E)The adjustment includes estimated depreciation and amortization expenses of $31,791 for the period from January 1, 2022 to February 24, 2022 related to the acquired MNR properties based on the estimated fair values of the assets acquired and liabilities assumed. Real estate investments are depreciated on a straight line basis over estimated useful lives generally ranging up to 40 years. Capitalized acquired in place leases, exclusive of the value of acquired above and below market leases, are amortized on a straight line basis over the 8.3 year weighted average remaining lease term at the closing of the Merger.

 

(F)The adjustment includes estimated general and administrative expenses related to the acquired MNR properties of $2,813 for the period from January 1, 2022 to February 24, 2022 based on ILPT’s contractual obligations under its business management agreement with RMR.

 

(G)The adjustment represents the noncontrolling interest related to the 39% equity interest owned by a third party institutional investor in the consolidated joint venture with 93 MNR properties, as well as the 33% noncontrolling interest owned by an unrelated third party in one tenancy in common property, for the period from January 1, 2022 to February 24, 2022.

 

F-4 

 

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