Industrial Logistics Properties Trust Q4 2024: Key Contradictions in Leasing Pipeline, Vacates, and Rent Strategies

These are the key contradictions discussed in Industrial Logistics Properties Trust's latest 2024Q4 earnings call, specifically including: Leasing Pipeline, Known Vacates, Leasing Pipeline and Execution, and Rent Modifications:



Leasing Activity and Rental Revenue Growth:
- ILPT completed 6.1 million square feet of leasing for the full year, with weighted average rental rates 18.2% higher than prior rates, resulting in an increase of $8.2 million in annualized rental revenue.
- The growth was driven by strong demand for their high-quality portfolio, mark-to-market rent growth through leasing, and continued strong tenant retention.

Portfolio Stability and Tenant Retention:
- For the fourth quarter, ILPT executed 731,000 square feet of leasing at rental rates 39.3% higher than prior rents, with a weighted average remaining lease term of 10.5 years.
- Hawaii accounted for all new leasing with rates 43% higher than prior rents, showcasing the value of their unique Hawaii portfolio and the ability to realize mark-to-market rent growth.

Financial Performance and Interest Expense:
- ILPT reported normalized FFO of $35.4 million or $0.54 per share for the year ended December 31, 2024, representing an increase of 12.1% compared to 2023.
- The decline in fourth-quarter interest expense by $2.2 million to $71.7 million was due to the impact of a new interest rate cap purchased as part of a 1-year extension of a floating-rate loan.

Leasing Pipeline and Vacancy Management:
- ILPT's lease pipeline remains robust with 28 deals for more than 6.5 million square feet, including discussions for vacancies in Hawaii and Indianapolis.
- The company is focused on leasing the 2.2 million square foot land parcel in Hawaii and the 535,000 square foot property in Indianapolis due to their negative impact on earnings in the second half of the year.