• Portfolio Size: 411 properties across 39 states, totaling approximately 60 million square feet.
• Hawaii Footprint: 226 properties totaling more than 16.7 million square feet.
• Occupancy Rate: 94.4% as of December 31, 2024.
• Lease Term: Weighted average lease term of 7 years.
• Top 10 Tenants: Account for 48% of total annualized rental revenues.
• New and Renewal Leases (2024): 58 leases totaling 6.1 million square feet with rental rates 18.2% higher than prior rates.
• Fourth Quarter Leasing: 731,000 square feet at rental rates 39.3% higher than prior rents.
• Normalized FFO (2024): $35.4 million or $0.54 per share, a 12.1% increase from 2023.
• NOI (2024): Increased by 0.6% to $341.2 million.
• Cash Basis NOI (2024): Increased by 1.5% to $329.2 million.
• Adjusted EBITDAre (2024): Increased by 2.2% to $335.6 million.
• Fourth Quarter Normalized FFO: $8.9 million or $0.13 per share, a 10% increase from the prior year.
• Fourth Quarter NOI: Decreased by 0.8% to $84.2 million.
• Fourth Quarter Adjusted EBITDAre: Decreased by 1.1% to $82.2 million.
• Interest Expense (Q4 2024): Declined by $2.2 million to $71.7 million.
• Cash on Hand (Dec 31, 2024): Over $130 million.
• Net Debt to Total Assets Ratio: 68.6%.
• Net Debt Coverage Ratio: 12.4 times.
• Expected Normalized FFO (Q1 2025): Between $0.16 and $0.18 per share.

• Warning! GuruFocus has detected 7 Warning Signs with ILPT.

Release Date: February 19, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• ILPT's portfolio consists of 411 distribution and logistics properties across 39 states, totaling approximately 60 million square feet, showcasing a strategically diversified portfolio.
• The company achieved a consolidated occupancy rate of 94.4% at year-end, consistent with the previous quarter, indicating stable occupancy levels.
• ILPT's leasing activity in 2024 resulted in 58 new and renewal leases, with rental rates 18.2% higher than prior rates, contributing to an $8.2 million increase in annualized rental revenue.
• The Hawaii portfolio demonstrated strong performance, with new leasing rates 43% higher than prior rents and a weighted average lease term of 21.3 years.
• ILPT reported a 12.1% increase in normalized FFO for the year, reaching $35.4 million or $0.54 per share, reflecting strong financial performance.

Negative Points

• Vacancies in Hawaii and Indianapolis negatively impacted earnings in the second half of the year, reducing occupancy by 4.6% and resulting in a $1.8 million loss in quarterly rental revenues.
• The company faces significant competition in the Indianapolis market as new buildings come online, posing challenges for leasing efforts.
• Fourth quarter NOI decreased by 0.8% compared to the same quarter in 2023, indicating a slight decline in net operating income.
• Interest expense remains a concern, although it declined by $2.2 million in the fourth quarter, it still represents a significant cost at $71.7 million.
• The company's net debt to total assets ratio is relatively high at 68.6%, which could pose financial risks if not managed carefully.

Q & A Highlights

Q: What's the biggest variance from your fourth quarter earnings to the first quarter that's driving some of the per share upside? Is it just interest expense? A: The percentage rent is not factored in as it is non-recurring. The main factors are interest expense and some leasing activities. Additionally, there was some bad debt in Q4, less than a million dollars, which we don't expect to recur, contributing to the increase.

Q: I noticed the leasing pipeline was down from over $8 million last quarter. Is there a broader change in the environment, or is it just seasonality? A: It would have been $8 million, but we completed $1.8 million subsequent to year-end, which was removed from the pipeline for these purposes. Adding the $6 million plus the $1.8 million brings us back to about $8 million.

Q: What is your percentage of execution on the leasing pipeline, and how is that working out for you? A: It's been consistent. Although it takes longer to finalize deals, once they reach the Letter of Intent (LOI) stage, we are generally successful in executing leases.

Q: Regarding the bankruptcy noted last quarter, how are discussions going, and is there a timeline for resolution? A: Assuming you're referring to American Tire, they have a date in May. They haven't rejected any leases, and we don't believe they will. They've initiated discussions about potential restructures, but we are not open to those conversations as we feel confident about the properties.

Q: Are there any specific dates or milestones for the American Tire situation? A: They have a date in May, and we feel good about the properties. We believe American Tire wants to remain at these locations, and we are holding firm on our position.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.