Industrial Logistics Properties Trust Q4 Earnings Call Highlights

Industrial Logistics Properties Trust (NASDAQ:ILPT) reported fourth-quarter 2025 results that management described as “one of the strongest quarters” in the company’s history, citing record leasing volume, continued double-digit rent roll-ups, and year-over-year growth in normalized funds from operations.

Record leasing activity and rent growth

President and CEO Yael Duffy said ILPT ended 2025 with “robust demand” for its industrial and logistics portfolio. The company executed nearly 4 million square feet of leasing in the fourth quarter at a weighted average rent roll-up of 25.7%, which Duffy said marked the fifth consecutive quarter of double-digit rent growth.

Vice President Marc Krohn added that fourth-quarter leases carried a weighted average lease term of 9.5 years and were driven largely by renewals due to limited available space in the portfolio. Krohn reported a tenant retention rate of 96% for the quarter.

Management highlighted several large renewals completed during the period:

• Amazon: Three renewals totaling 2.3 million square feet with a weighted average lease term of 11.5 years and a rent roll-up of 26.8%.
• Restoration Hardware: A 1.2 million square foot renewal with a weighted average lease term of 7.4 years and a rent roll-up of 29%.
• FedEx: Three renewals totaling 152,000 square feet with a weighted average lease term of 4.6 years and a rent roll-up of 11.7%.

Duffy said ILPT continued expanding relationships with FedEx and Amazon—its two largest tenants—which accounted for 2.8 million square feet, or 38% of total 2025 leasing volume. For the full year, ILPT completed 42 new and renewal leases and two rent resets totaling 7.3 million square feet. Management expects that activity to generate approximately $10.6 million of annualized rental revenue, with about $5.8 million (55%) not yet commenced and therefore expected to contribute to cash flow in 2026 and beyond.

Portfolio update and leasing pipeline

As of December 31, 2025, ILPT owned 409 properties across 39 states totaling about 60 million square feet, with a weighted average lease term of seven years. Duffy emphasized ILPT’s Hawaii footprint, which includes 226 properties totaling 16.7 million square feet. She also said more than 76% of annualized revenue comes from investment-grade rated tenants or the company’s Hawaii land leases.

Consolidated occupancy was 94.5% at year-end, up 40 basis points from the third quarter, according to Duffy.

Looking ahead, Krohn said 8.8 million square feet—representing 11.8% of total annualized revenue—is scheduled to expire by the end of 2027, which he characterized as a source of “meaningful embedded rent growth opportunities.” He also said the company’s leasing pipeline totaled 6.4 million square feet, including 3.8 million square feet in advanced negotiations or lease documentation. Based on current discussions, management expects average rent roll-ups of about 20% on the mainland and 30% in Hawaii.

On the call’s Q&A, management addressed two vacancies Duffy referenced as 2026 leasing priorities: a 2.2 million square foot land parcel in Hawaii and a 535,000 square foot property in Indianapolis. Krohn said the Indianapolis space had made “really good progress,” with lease comments currently being exchanged, and suggested an update could come as soon as next quarter. For the Hawaii parcel, Duffy said ILPT remained in discussions with the same tenant referenced in prior quarters, but noted the size and complexity of the ground lease creates timing delays and limits concession options.

Financial results, joint venture earnings, and asset sales

Chief Financial Officer and Treasurer Tiffany Sy reported fourth-quarter normalized FFO of $18.9 million, or $0.29 per share, which she said was at the high end of guidance. Sy said this represented a 9% increase sequentially and a 113% increase from the same quarter a year ago.

Same property NOI was $88.2 million and same property cash basis NOI was $85.7 million, both increasing year over year and versus the prior quarter. Sy attributed the gains to strong tenant retention and rent roll-ups. Adjusted EBITDA totaled $85.1 million.

Sy also said ILPT recognized $14.6 million of earnings from its unconsolidated joint venture, “primarily driven by an increase in the fair value of the underlying real estate” owned by the JV. During the quarter, the company sold two vacant, unencumbered properties totaling 286,000 square feet for proceeds of $3.9 million, resulting in a $1.4 million net loss.

In January 2026, Sy said ILPT paid a $5.7 million incentive fee to its manager related to 2025 performance, which she said was triggered by ILPT outperforming the industry benchmark total return over the trailing three-year measurement period by more than 60%.

Balance sheet actions, refinancing outlook, and interest expense

Duffy highlighted a balance sheet milestone achieved in June, when ILPT refinanced $1.2 billion of floating-rate debt into fixed-rate debt, resulting in annual cash savings of more than $8 million. She also noted the company increased its annualized dividend from $0.04 to $0.20 per share.

Sy said ILPT ended the quarter with $95 million of cash on hand and $88 million of restricted cash. She reported the total net debt to total assets ratio declined modestly to 69%, and the net debt leverage ratio improved to 11.8x. Duffy said leverage declined from 12.4x to 11.8x over the last year.

As of year-end, Sy said all of ILPT’s debt was either fixed-rate or fixed through an interest rate cap, with a weighted average interest rate of 5.43%.

Regarding the consolidated joint venture’s $1.4 billion floating-rate loan, Sy said the company is evaluating refinancing options, and noted the loan does not mature until March 2027. She said ILPT currently expects to exercise the loan’s remaining extension option and purchase a related interest rate cap for about $4 million. In response to analyst questions, Sy said the extension provides flexibility because there are no additional fees beyond the interest rate cap purchase, which could potentially be sold later if refinancing occurs before maturity. Management also said the JV portfolio is 100% leased and does not require operational changes to position it for refinancing.

For the first quarter of 2026, Sy guided to interest expense of $61.5 million, including $57 million of cash interest expense and $4.5 million of non-cash amortization related to deferred financing fees and interest rate cap costs. In Q&A, she attributed the quarter-to-quarter change largely to the number of days in the quarter and noted the expected purchase of the interest rate cap could lower interest expense in the second quarter.

Guidance and management commentary on 2026

Sy provided first-quarter 2026 guidance for normalized FFO of $0.29 to $0.31 per share and Adjusted EBITDA of $84 million to $85 million. Duffy said ILPT remains focused on leasing priorities and expects opportunities to generate organic cash flow growth and further reduce leverage.

In discussing market conditions, management said it has not seen competing supply become a major issue and noted construction has slowed. Krohn also said tenants are increasingly weighing the costs and disruption of relocation, contributing to renewal activity.

Closing the call, Duffy said the company was pleased with its performance and momentum and expects to meet with investors at industry conferences in the spring.

About Industrial Logistics Properties Trust (NASDAQ:ILPT)

Industrial Logistics Properties Trust (NASDAQ: ILPT) is a real estate investment trust focused on acquiring, owning and operating industrial logistics properties across the United States. The company specializes in modern distribution centers, cross-dock facilities and last-mile delivery hubs designed to support e-commerce, retail, manufacturing and third-party logistics customers. ILPT’s assets are characterized by high ceilings, ample loading docks and clear spans to accommodate a wide range of warehouse functions.

Formed as a spin-off from STAG Industrial, Inc in January 2022, ILPT commenced operations with a portfolio of strategically located facilities and a disciplined acquisition strategy.