ILPT Q3 2026 Normalized FFO Rises 42% as Occupancy Reaches 98.3%

Industrial Logistics Properties Trust (Nasdaq: ILPT) reported a 42.4% year-over-year increase in normalized funds from operations for the third quarter of 2026, supported by higher occupancy, property-level income growth and lower interest expense following a May refinancing. Leasing spreads remained strong, although the REIT’s GAAP net loss widened as its unconsolidated joint venture recorded losses.

Normalized FFO attributable to common shareholders increased to $21.3 million, or $0.32 per share, from $14.9 million, or $0.23 per share, a year earlier. Adjusted EBITDAre rose to $87.0 million from $81.6 million. Beginning this quarter, ILPT’s normalized FFO, adjusted EBITDAre and cash available for distribution include incentive management fees recognized under GAAP, with prior periods recast on the same basis. Third-quarter 2026 results included $1.9 million of those fees.

Rental income rose 5.3% to $116.8 million. Net operating income increased 5.8% to $92.0 million, while cash-basis NOI advanced 2.1% to $86.5 million. On a same-property basis, NOI grew 5.7% and cash-basis NOI increased 1.9%.

The GAAP net loss attributable to common shareholders widened to $30.2 million, or $0.46 per share, from $21.6 million, or $0.33 per share, in the prior-year quarter. The latest result included $19.0 million of equity losses from ILPT’s unconsolidated joint venture, compared with $2.2 million of equity earnings a year earlier. Interest expense declined 3.6% to $61.2 million, reflecting the May 2026 refinancing by Mountain Industrial REIT LLC.

Occupancy and Leasing

ILPT’s 409-property portfolio was 98.3% leased at September 30, up 420 basis points from a year earlier. The portfolio contained approximately 59.6 million rentable square feet across 39 states.

The REIT completed approximately 645,000 square feet of leasing during the quarter, comprising 103,000 square feet of new leases and 542,000 square feet of renewals. Weighted-average GAAP rents were 162.7% above prior rents for the same space, marking the eighth consecutive quarter of double-digit rent increases. The leases had a weighted-average term of 18 years by square footage and 15.8 years by annualized rental revenue.

Wholly owned properties accounted for 543,000 square feet of the quarter’s leasing and recorded a 210% weighted-average increase in GAAP rents. Mountain JV completed 102,000 square feet at an 8.1% increase. Mountain JV, in which ILPT owns a 61% interest, remained fully occupied, while wholly owned mainland and Hawaii properties were 96.0% and 99.3% occupied, respectively.

ILPT’s overall weighted-average remaining lease term was 8.1 years based on annualized rental revenue, with 65.8% of annualized rents scheduled to expire after 2030. Investment-grade tenants, their subsidiaries and Hawaii land leases generated 78.9% of annualized rental revenue.

Balance Sheet and Guidance

ILPT ended the quarter with $130.7 million of cash and cash equivalents, excluding restricted cash. Outstanding debt totaled $4.22 billion, with a weighted-average interest rate of 5.48% and a weighted-average maturity of 4.2 years. All consolidated debt was fixed-rate and interest-only, with no scheduled maturities until 2029.

Net debt was $4.04 billion, equivalent to 11.6 times annualized adjusted EBITDAre. Adjusted EBITDAre covered interest expense by 1.4 times. Recurring capital expenditures totaled $7.8 million in the quarter and $24.5 million for the first nine months of 2026.

For the fourth quarter, ILPT expects NOI of $92 million to $93 million and normalized FFO attributable to common shareholders of $22 million to $23 million, or $0.33 to $0.35 per diluted share. Full-year guidance calls for NOI of $363 million to $364 million and normalized FFO of $82 million to $83 million, or $1.23 to $1.25 per diluted share. The guidance now incorporates incentive management fees under the company’s revised presentation.

The forecast assumes approximately $245 million of full-year interest expense, $42 million of general and administrative expense, including $8.4 million of incentive management fees, and no acquisitions or dispositions. Full-year recurring capital expenditures are expected to be between $32 million and $34 million.

ILPT declared a quarterly distribution of $0.10 per common share, its second consecutive quarter at that level following the July 2026 increase. The distribution is scheduled to be paid on or about November 12.

The presentation identified leverage, liquidity, leasing costs, tenant retention and the ability to maintain occupancy as key uncertainties. Tenant concentration also remains significant: FedEx represented 27.7% of annualized rental revenue, and ILPT’s 10 largest tenants accounted for 47.8%. Other risks cited by the company include interest rates, inflation, capital-market volatility, changing trade policies and broader commercial real estate conditions.