Good day. Welcome to the Industrial Logistics Properties Trust second quarter 2023 financial results conference call. All participants will be in a listen-only mode. If you need assistance, please signal a conference specialist by pressing the star key, followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touchtone phone. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would like now to turn the conference over to Stephen Colbert, Director of investor relations. Please go ahead, sir. Good morning. Joining me on today's call are Yael Duffy, President and Chief Operating Officer, and Brian Donley, Treasurer and Chief Financial Officer. Today's call includes a presentation by management, followed by a question and answer session with analysts. Please note that the recording and retransmission of today's conference call is prohibited without the prior written consent of the company. Note that today's conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. These forward-looking statements are based on ILPT's beliefs and expectations as of today, July 26, 2023, and actual results may differ materially from those that we project. The company undertakes no obligation to revise or publicly release the results of any revision to the forward-looking statements made in today's conference call. Additional information concerning factors that could cause those differences is contained in our filings with the Securities and Exchange Commission, or SEC, which can be accessed from our website, ilptreit.com, or the SEC's website. Investors are cautioned not to place undue reliance upon any forward-looking statements. In addition, we will be discussing non-GAAP financial numbers during this call, including normalized Funds From Operations or normalized FFO, adjusted EBITDA, and cash basis Net Operating Income, or cash basis NOI. This quarter, we are also introducing our calculation of Cash Available for Distribution, or CAD. A reconciliation of these non-GAAP figures to net income is available in our supplemental operating and financial data package, which can be found on our website. With that, I will turn the call over to Yael. Thank you, Stephen. Good morning. On today's call, I will review ILPT's operating and leasing performance and then provide an update on our disposition activity before turning the call over to Brian to discuss our financial results. As we enter the second half of the year, we remain encouraged by the continued demand for ILPT's high-quality portfolio and the strength in real estate fundamentals. In the first six months of 2023, we signed 32 leases totaling more than 3.1 million sq ft at weighted average rental rates that were 23% higher than prior rental rates for the same space. The impact of this activity is an increase of $4.8 million in annualized rental revenue, of which more than half will take effect in the second half of 2023 or in 2024. These results, along with a tenant retention rate of 87%, showcase our ability to generate organic cash flow growth while maintaining portfolio stability. As of June 30, 2023, our portfolio, which consists of 413 warehouse and distribution properties, achieved 99.1% occupancy, representing a 40 basis point increase sequentially. During the quarter, we executed 17 new and renewal leases and three rent resets for nearly 2 million sq ft at a weighted average lease term of 8.9 years. This activity resulted in GAAP and cash leasing spreads of 29.6% and 10.2%, respectively. Highlighted in these results is the robust activity within our Hawaii portfolio. With a market vacancy rate under 1%, strong tenant demand, and minimal new construction in the pipeline, we have been able to take advantage of mark-to-market opportunities. We executed 855,000 sq ft of leasing in Hawaii at weighted average rental rates that were 41.7% higher than prior rents, including five new leases totaling 195,000 sq ft at increases in rent of 62.2%. Leasing in our wholly owned mainland portfolio was also strong, with total leasing of approximately 428,000 sq ft, including one new lease and three renewals at weighted average roll-ups in rent of 50% and 36%, respectively. Looking ahead, 12 million square feet or 16% of ILPT's total annualized revenue is set to expire through 2025. We believe there is ample opportunity to increase cash flows consistent with the 30% roll up in GAAP rents we achieved over the past 12 months. Turning to transactions. Among the most frequently asked questions we receive is when we expect to resume our disposition program to reduce leverage. We believe the market has slowly begun to thaw as investors look for opportunities to deploy capital. We consistently receive unsolicited offers for the high-quality properties in our portfolio. Given we are not a distressed seller, it isn't as simple as finding a buyer. As we evaluate each opportunity, our ability to transact is dependent on pricing and the impact to our financial position. For each offer we may receive, we compare the potential transaction price to the allocated loan amount under our debt agreements and confirm that we can maintain the required debt service coverage ratios. Additionally, potential tax gains and the impact to our overall liquidity needs to be considered. Disposition opportunities have been limited in this challenging sales market. Given these obstacles, we are happy to report that we currently have three properties, two that are encumbered, totaling 762,000 sq ft under agreement to sell for an aggregate sales price of $65.3 million. We hope to continue to improve our financial position with additional disposition opportunities. We expect activity to be limited in the short term. I'll now turn the call over to Brian. Thank you, Yael, and good morning, everyone. Starting with our consolidated financial results for the second quarter of 2023, normalized Funds From Operations was flat on a sequential basis of $0.12 per share and declined compared to the prior year quarter, primarily as a result of our higher interest expense incurred under our floating rate debt instruments. Cash available for distribution in Q2 was $9.8 million and adjusted EBITDA was $81.3 million for the quarter. Our leasing activity generated increases in cash rents for our comparable portfolio of $1.8 million or 2% per year-over-year. However, our rent growth was partially offset by operating expense increases, which resulted in a net 50 basis point increase in total portfolio, the same property, cash basis NOI for the second quarter. Comparisons of same-property GAAP NOI were negatively impacted by a $3.4 million write-off, below market lease liability in the prior year quarter related to a lease termination. Interest expense increased $24.6 million compared to the prior year quarter, excluding the impact of the amortization of bridge loan costs recognized in the prior year. This quarter, we executed on a cash out refinancing within our consolidated joint venture. We entered a new $91 million fixed- rate, interest-only loan secured by four properties that bears interest at 6.25% and used part of the proceeds to repay four amortizing loans with a total principal balance of $35.9 million. As a result, our current estimated quarterly interest expense run rate is approximately $73 million, consisting of $60 million of cash interest expense and $13 million of non-cash amortization of financing costs, including existing interest rate caps. Turning to our balance sheet. Including extension options, ILPT's weighted average debt maturity is 5.5 years, with no maturities until 2027. As of June 30th, our total debt either carried a fixed rate or was fixed through interest rate caps for a total weighted average interest rate of 5.46%. As Yael mentioned, we have three wholly- owned properties under agreement for sale for $65.3 million. Assuming those transactions close, $42 million of the proceeds from two of the properties will be used to repay a portion of the $1.2 billion floating rate CMBS loan. The amount to release a property from the collateral pool under this loan is the greater of 115% of the allocated loan value under our debt agreement or the net sales proceeds. We also need to maintain the overall debt- service- coverage ratio that was in place when the loan was underwritten. For these dispositions, ILPT can transact without needing to contribute additional cash to maintain the loan covenants. Though we currently have $71.7 million of cash on hand, as well as $138.7 million of restricted cash in our consolidated joint venture, we continue to look for opportunities to build our cash reserves. Accordingly, the proceeds from the sale of the one unencumbered asset will be held to further enhance our liquidity. In closing, our portfolio remains strong with an exceptional tenant roster, near-full occupancy and rising rents across our portfolio, and we expect that ILPT will continue to benefit from industry demand for high-quality industrial real estate. That concludes our prepared remarks. Operator, please open the line for questions. Thank you. We'll now begin the question-and-answer session. To ask a question, you may press star then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. Please hold while we collect questions. The first question comes with Bryan Maher with B. Riley Securities. Please go ahead. Thank you. Good morning, Yael and Brian. Just a couple from me this morning. You know, when we think about the asset sales and building cash reserves and paying down some debt, how big of an opportunity do you think that that is over the next couple to few quarters? Good morning, Bryan. I think we're reviewing, you know, opportunities as they come. Two of these — two of the properties on the disposition list or came through our leasing efforts. One of the properties is vacant and the other soon to be vacant. We haven't launched a formal, you know, disposition campaign, and so we're continuing to evaluate pricing and our portfolio and see what other opportunities we have. I don't have, you know, a number for you to project. I suspect that when you chip away at this debt with some asset sales over the next, let's say, 12 months-15 months before the first extensions would be due on some of your, you know, variable rate debt, that that's going to potentially lower the cost of future caps needed to get those extensions done. Maybe, Brian, you can talk about for a second, you know, if we were to sit here today and have to redo those caps to get the extensions, you know, what the cost might be relative to what you had to pay last year? Just some broad stroke ideas. Sure, Bryan. Thanks. You know, I think we talked about this last quarter, it's, you know, buying an interest rate cap, it's a very volatile instrument. The pricing changes, you know, week to week, day to day. You know, I think last quarter, I might have quoted something around $50 million. You know, we consult with their various experts on this, that, the deal on caps and, you know, our current estimate today, you know, on the $1.4 billion floating rate debt, could it be anywhere from $17 million-$20 million if we were to buy that same cap. Again, it changes with the wind, so it's very important for us to continue to build cash reserves. To your other point, yes, if we were to chip away at the debt and repay, you know, meaningful amounts, the cost of that cap would also decline because it's based on the principal, you know, the notional amount of principal debt that you're taking or that you're capping. Just maybe two more quick ones for me. On the rent roll-ups, I mean, those are pretty, you know, juicy roll-ups for the second quarter. You know, Yael, what do you think it would be for the full year? When we look back at 1Q and we think about 2Q, do you have something in your mind for what you think it is for all of 2023? I think we're hoping that it's, you know, somewhere between 25%-30% for the year on a GAAP basis. Okay, just my last question. The Blackstone deal to sell $3.1 billion in warehouses and industrial assets to Prologis. When you look at that transaction, does it seem like more of a one-off on the part of Blackstone to raise capital relative to, you know, some of the capital, you know, that's been called away from them in SREIT, et cetera? Is there something else going on there as it relates to demand for assets? That's all for me. Thanks. You know, I think industrial, in general, along with multifamily, is probably the most in- favor asset class. If investors are looking to deploy capital, I think it's in one of those categories. I think it's promising for the industrial landscape. I think, that deal, you know, was a huge deal. You know, in speaking with brokers, they're seeing that, you know, more one-off deals are coming into the market, but they haven't seen the bigger portfolio. I think time will tell, and I think everybody's kind of looking for, you know, September to get here and see what that brings, 'cause, you know, generally the summer is slow. Okay. Thank you. Thank you. Next question comes with Mitch Germain with JMP Securities. Please go ahead. Hi, good morning. I'm trying to understand some of the puts and takes in your same-property growth. Despite some of these pretty, you know, healthy rent spreads that you are getting on these leases, your revenues are only up from prior year, about less than 1%, but your operating expense is up significantly more. I'm just trying to understand kind of when does this upswing in rents begin to materialize and have a meaningful impact on your rental income? Yeah. Good morning. You know, I think some of these roll-ups, we've had this historically. We're not seeing the cash impact right away because we're doing deals ahead of lease expiration. You know, for the activity we've done so far this year, I think almost 2/3 will be in the later half of the year and into 2024. I think that's impacting some of the growth, and we're not seeing it, you know, this quarter. I think also, you know, as far as the expenses go, I think we have some very sophisticated tenants that when they negotiate their leases, they put caps in for how much expenses can get passed back for maintenance and repairs. I think there is a little bit of leakage on the expense side. Okay. With regards to your expirations in the back half of the year, is there anything of note that we should be aware of? I mean, you've had almost a 90% retention rate so far. Is there any kind of planned move-outs that we should be aware of? We know of two known vacates in the second half of the year. Both of those properties actually have pretty good activity on them. One has a signed LOI and the other, I think we've traded a couple proposals with prospective tenants, so there isn't anything that should be a needle- mover. Great. Okay, cool. I appreciate the extra color in terms of kind of suggest, you know, kind of where mark-to-market is going. How should we think about that, though, if we, like, bifurcate mainland versus Hawaii? Yeah. You know, as you know, Hawaii's always been really strong for us, and so I think, you know, 30%-40% roll-ups in Hawaii going forward would not be surprising. I think, you know, 30% on the conservative side. On the mainland, we had, you know, really good leasing results this quarter. You know, they're almost 40% on the mainland from a GAAP perspective, and even on the cash perspective, it was 30%. I think it really depends market to market. I think we have some areas like, you know, Memphis, South Carolina, that we've been seeing huge roll-ups in rent and others that have been, you know, single -digits. I think 10% is probably a good estimate for the mainland. Thank you. Thank you. Thank you. The next question comes with Camille Bonnel with Bank of America. Please go ahead. Hi, good morning. Just following up on, Yael, your response to an earlier question about how, like, the leasing spread impact, you'll see that start to follow through in the back half of this year. Can you just speak to why, like, you think tenants are willing to renew their leases so far in advance? I think in some cases you've been signing leases like 18 months plus, which really differs from some of the peers' strategies in the market currently. Yeah. I think in Hawaii, generally, the tenants are more of, they kind of wait till the last minute, generally because they're smaller tenants and they're, you know, just, they're kind of running their business, and they don't have, you know, a whole team focused on their leasing efforts. I think for the mainland, you know, these are large properties that are very important to the tenant's business. You know, they need to make sure that if they're going to not be able to do a renewal with us and we can't come to terms, they're gonna have to move their operations. You know, if you're 1 million sq ft, it's really hard to wait six months out if you have to, you know, relocate and build all the infrastructure again. That is, I think, generally why we're starting negotiations early. We also wanna have an indication. If a tenant's not gonna renew, we wanna limit our downtime, because, you know, by the time you hire a broker, start marketing it, if you need to do any work to, you know, multi-tenant the property, potentially that takes time, and we're trying to limit our downtime. That's helpful. What are you seeing in terms of market rent growth, particularly in the mainland U.S.? About 10%. Again, it depends market to market. You know, some are higher, some are a little bit lower, but we're continuing to, you know, we've been able to continue to push rent. Has that changed? Because I think that 10% is on an annual basis. Have you seen any change sequentially? No, I think. You know, what we've been seeing more is that tenants are taking a little longer to make a decision. I don't know if that's just the impact of the summer. You know, people generally, this is a slow time for leasing because people are on vacation. No, we haven't seen it, you know, tenants pushing back. All right. Lastly, do you have any update on the interest around the space in Hawaii that Home Depot was gonna take in 2024? Yeah. we've officially launched it at the beginning of the month, and we've gotten a lot of inbound calls, mostly from mainland, tenants looking to kind of have a presence in Hawaii. we feel optimistic that we'll be able to get that re-leased ahead of the March 2024 lease expiration. Thank you. Thank you. The next question comes with Michael Carroll with RBC Capital Markets. Please go ahead. Yeah, can you quickly touch on your financing strategies? I guess, what's the reasoning for issuing the $90 million of secured debt and repaying the smaller balances that are outstanding? That, I think it was, like, $30 million that you repaid. It looked like that $30 million was going to expire, what, in 2020 or in 2030 timeframe? It was just a way for you to get more cash. Was that the whole goal of that and the reason why you're willing to give up that lower interest rate debt? Hey, Michael, thanks for the question. Yeah, that's exactly right. It was an opportunity to actually improve our cash flow. You know, the coupon and the interest expense, you know, our income statement will go up because of the rate differential — a gain, it's not. The new loan is interest only, versus amortizing principal payments over those other mortgages. It was a way to capture some cash as well as improve ongoing cash flow, available to the company. You know, that was the thought process there. Okay. On the asset sales that you announced, I guess how much NOI from those properties were generated in 2Q? I know you said one was vacant and one was soon to be vacant, when we're looking at our models, I mean, I guess, what was the trailing cap rate on those assets that we can assume kind of flows out of the run rate estimate going forward? One of the properties is our development project in Mesquite, Texas. That also had no cash flow associated with it. The other one, as I mentioned, was a small property that was formerly leased to FedEx that was also not cash flowing. The other one is in Indiana. It was a bigger property, 535,000 sq ft, that was scheduled to be vacant in June of 2024, and we had about $3 million in NOI for that property. Is that an annualized number or annually? Yes. Okay. Yes, annualized. Yep. Yael, when you start looking at potential asset sales, I know you said earlier that you haven't started a process yet to sell properties. I mean, do you need to start thinking about pursuing something like that before the interest rate caps expire? Are you willing to kind of continue to kick the can down the road, waiting for a better market before you even think about bringing properties to market, to sell? We have no urgency. You know, we feel that we have the cash reserve to buy the caps, with what we have today, you know, the cash on hand today. I think we'll be patient until we get a better sense that the capital sales markets have really opened. We wanna make sure we actually de-lever, with any transaction, as we sort of outlined in our prepared remarks, there are multiple considerations before we're willing to actually pursue a transaction. E valuation is everything. What do you have to see for you willing to bring assets to the market? I mean, do you need to see interest rates stabilize, or do you need to see them actually start to tick lower from this point? I think it's more just to understand what the market is. I think there's still price discovery. I know, you know, the Blackstone deal was a big one, but it was also a one-off, and so I think we're kind of waiting to just get more data. Okay. All right. Thank you. Thank you. Thank you, all. This concludes our question and answer session. I would like to turn the conference back over to Yael Duffy for any closing remarks. Please go ahead. Thank you for joining us on the call today, and hope to speak with many of you soon. This conference is now concluded. Thank you for attending today's presentation. You may now disconnect.