Industrial Logistics Properties Trust

Susan Jordan - Director, Investor Relations Michael Landy - President and Chief Executive Officer Eugene Landy - Chairman Kevin Miller - Chief Financial Officer

Paul Adornato - BMO Capital Markets Craig Kucera - Wunderlich Securities Jon Petersen - MLV & Company Michael Boulegeris - Boulegeris Investments

Thank you very much, operator. In addition to the 10-Q that we filed with the SEC yesterday, we have filed an unaudited first quarter supplemental information presentation.

This supplemental information presentation along with our 10-Q are available on the company’s website at mreic.com. I would like to remind everyone that certain statements made during this conference call, which are not historical facts, may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

The forward-looking statements that we make on this call are based on our current expectations and involve various risks and uncertainties. Although the company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, the company can provide no assurance that its expectations will be achieved.

The risks and uncertainties that could cause actual results to differ materially from expectations are detailed in the company’s first quarter 2015 earnings release and filings with the Securities and Exchange Commission. The company disclaims any obligation to update its forward-looking statements.

Having said that, I would like to introduce management with us today; Eugene Landy, Chairman; Kevin Miller, Chief Financial Officer; and Michael Landy, President and Chief Executive Officer. It is now my pleasure to turn the call over to Monmouth’s President and Chief Executive Officer, Michael Landy.

Thank you, Susan. Good morning, everyone and thanks for joining us.

We are pleased to report our results for the first quarter ended December 31, 2014. It was a very productive quarter for Monmouth and represents an excellent start for fiscal 2015.

During the quarter, we acquired five new Class A built-to-suit properties. These acquisitions contain a total of 1.2 million square feet and were purchased in an aggregate cost of $68.3 million.

Two of the properties are net leased to FedEx Ground and the remaining three to Jim Beam Brands, Bunzl Distribution and BE Aerospace respectively. The lease terms range from 7 to 15 years with a weighted average term of 10.5 years.

Because four of these five new acquisitions were negotiated well before these developments were completed, the returns we have been able to achieve are much more favorable than what is available in the industrial market today. The cap rates for these five acquisitions average 7.1% compared to the 5% to 6% cap rates that we currently see in the market for comparable properties.

From a run-rate standpoint, we expect these five properties to generate a combined total of approximately $4.9 million in annual rent. We financed four of these properties with a total of $44.5 million in mortgage financing at an average interest rate of 4.75% and an average debt maturity of 11.5 years.

At the end of the first quarter, our gross leasable area was approximately 12.4 million square feet representing an increase of 10% since our fiscal year end. Our portfolio now consists of 87 properties situated across 28 states.

At quarter end, our property portfolio was 96.3% occupied, representing a 40 basis point increase over the prior quarter. Our weighted average lease maturity at quarter end was 7.1 years as compared with 6.8 years in the prior year period.

Subsequent to quarter end, we leased up the remaining 127,000 square feet at our facility in St. Joseph, Missouri to Altec Industries.

Altec is a leading provider of products and services to the electric utility and telecommunications industry. The 3-year lease is scheduled to commence on February 1 and will result in annual rent of approximately $350,000 or $2.75 per square foot.

As a result Monmouth’s current occupancy rate is now 97.4%. In fiscal 2015, 6% of our gross leasable area representing six leases totaling approximately 780,000 square feet was scheduled to expire.

I am pleased to report that all six of these leases have already been renewed. These renewed leases have an average term of 3.8 years and an average GAAP lease rate of $5.06 per square foot and a cash lease rate of $4.95 per square foot.

This represents an increase of 6.3% on a straight line GAAP basis and an increase of 1% on a cash basis. I would like to thank Rick Molke, our Vice President of Asset Management and Allison Viscardi, our Senior Property Manager for helping us achieve 100% tenant retention rate for fiscal 2015.

We are very excited about our best in class acquisition pipeline which grew over the quarter. We have entered into agreements to acquire a total of nine new built-to-suit properties containing 2.8 million total square feet representing $267 million in total acquisitions scheduled to close over the next seven quarters.

Once again in keeping with our business model all of these future acquisitions consist of well located brand new built-to-suit projects currently under construction. These projects contain long-term net leases primarily to investment grade tenants.

These properties are situated near major airports, major transportation hubs and manufacturing plants that are integral to the tenants operations. Approximately 68% of our acquisition pipeline consists of deals with FedEx, while the remaining 32% consists of leases with ULTA Cosmetics and Fragrances and UGN Inc.

ULTA is the largest beauty retailer in the U.S. and UGN is the high end supplier to the automotive industry.

The cap rates on these nine deals average 6.8% and have a weighted average lease maturity of 12.9 years. Subject to satisfactory due diligence, we anticipate closing these transactions upon completion and occupancy.

We have already locked in very favorable financing for five of these acquisitions totaling 1.7 million square feet with an aggregate cost of $135 million. The combined financing terms for these five acquisitions consists of $90.5 million in proceeds representing 67% of total cost with weighted average debt maturity of 15 years and/or at a weighted average interest rate of 3.77%.

This will result in a 16.1% return on equity for these five acquisitions. During the quarter, we completed a 62,000 square foot expansion of our building leases to NF&M International located in Monaca, Pennsylvania.

This increased NF&M’s total space from 112,000 square feet to 174,000 square feet. This expansion was completed for a cost of approximately $4.5 million and resulted in a new 10-year lease which extended the current lease expiration date from September 30, 2018 to December 31, 2024.

In addition, effective January 1 of this year, the expansion resulted in an increase in annual rent from $382,000 or $3.39 per square foot to $831,000 or $4.75 per square foot. Following numerous property expansions that we have done for FedEx over the past several years, we currently have three FedEx property expansions in progress consisting of two building expansions and one parking lot expansion.

Total expansion costs are expected to be approximately $10 million. Upon completion of the three expansions annual rent will be increased by approximately $1.1 million.

The two building expansions will provide 87,000 additional square feet and will result in a new 10-year lease extension from the date of completion for each building being expanded. With regards to the U.S.

industrial property market, 2014 marks one of the strongest years in decades. Fourth quarter net absorption came in at 45 million square feet marking the second quarter in a row with over 40 million square feet of demand.

In total, the industrial sector absorbed over 150 million square feet in 2014. The national average vacancy rate continues to come down and is currently 7.8% marking a new cyclical low.

Average asking rents have continued to increase and are now at $5.28 per square foot, representing a 2.4% increase from 1 year ago. Following 6 years of very muted levels of new construction, new industrial development has been increasing recently with 128 million square feet currently under construction.

The ISM Manufacturing Index has been in solid expansion mode for 6 years now. And with most economists calling for stronger GDP growth this year, demand for industrial space in the United States is expected to continue to strengthen.

And now, Kevin will provide you with greater detail on our results for the first quarter of fiscal 2015.

Thank you, Michael. Core funds from operations for the first quarter of fiscal 2015 were $8.5 million or $0.15 per diluted share.

This compares to core FFO for the same period 1 year ago of $6.7 million or $0.15 per diluted share. Excluding securities gains realized during the quarter, core FFO was $8.1 million or $0.14 per diluted share as compared to $6.6 million or $0.15 per diluted share 1 year ago.

Adjusted funds from operations, or AFFO, which excludes securities gains or losses and excludes lease termination income, were $0.14 per diluted share for the quarter compared to $0.15 per diluted share in the prior year period. On a sequential basis, AFFO per share increased 17% over the prior quarter.

Our per share results for the quarter reflect the possible impact of our recent equity offering completed in the second half of fiscal 2014 for which the proceeds from this offering are still being deployed. As a result of our substantial recent acquisition activity as well as our large acquisition pipeline, we anticipate continuing to meaningfully grow our AFFO per share going forward.

Rental and reimbursement revenues for the quarter were $17.7 million compared to $15.7 million or an increase of 13% from the previous year. Net operating income, or NOI, which we define as a recurring rental and reimbursement revenues, less property taxes and operating expenses, was $14.7 million for the quarter, reflecting a 14% increase from the comparable period a year ago.

Net income was $5.4 million for the first quarter compared to $4.3 million in the previous year’s first quarter, representing a 26% increase. With respect to our properties, end of period occupancy for the first quarter remains relatively unchanged at 96.3% as compared to 96.4% in the prior year period.

Our average lease maturity as of the end of the quarter was 7.1 years as compared to 6.8 years, representing an increase of 4%. Our average annual rent per square foot was relatively unchanged at $5.45 as of the quarter end as compared to $5.43 1 year ago.

As Michael mentioned, subsequent to quarter end, as a result of leasing up the remaining 127,000 square feet at our facility in St. Joseph, Missouri, our current occupancy rate is now 97.4%.

As of the end of the quarter, our capital structure consisted of approximately $365 million in debt, of which $325 million was property level fixed rate mortgage debt and $40 million were loans payable. 94% of our debt is fixed rate with the weighted average interest rate of 5.2% as compared to 5.3% in the prior year period.

We also have $111 million in perpetual preferred equity at quarter end. Combined with an equity market capitalization of $640 million, our total market capitalization was approximately $1.1 billion at quarter end.

From a credit standpoint, we continue to be conservatively capitalized with net debt to total market capitalization at 31%, fixed charge coverage at 2.3 times and our net debt-to-EBITDA at 5.9 times for the quarter. From a liquidity standpoint, we ended the quarter with $15.3 million in cash and cash equivalents.

We also had $25 million available from our credit facility as well as an additional $20 million potentially available from the accordion feature. In addition, we held $51.5 million in marketable REIT securities, representing 5.7% of our undepreciated assets.

And now, let me turn it back to Michael before we open up the call for questions.

Thanks, Kevin. To summarize, following the substantial growth achieved in fiscal 2014, our first quarter represents continued progress on several fronts.

From an acquisition standpoint over the recent quarter, we added 1.2 million square feet of new Class A industrial properties, all leased to very strong tenants. Our 12.4 million total rentable square feet represents a 16% increase over the prior year period and a 10% increase on a sequential basis.

As Kevin mentioned, per share AFFO is up 17% from the prior quarter and the positive yield spreads we have generated on our recent transactions will result in continued per share earnings accretion as we benefit from the full run-rate effect. Our fiscal 2015 lease expirations have already all been renewed.

Our 100% tenant retention rate for 2015 reflects the combination of the high-quality of our properties and the strong relationships we maintain with our tenants. Our recent acquisitions with the addition of Jim Beam, Bunzl and BE Aerospace have resulted in excellent new additions to our high-quality tenant base.

Our major tenant, FedEx, has been performing exceptionally well and we are very pleased that they continue to expand at our existing locations. Looking forward and keeping with our business model, we have a 2.8 million square foot acquisition pipeline comprised of 9 new Class A built-to-suit buildings currently being developed in strong locations and all leased long-term primarily to investment grade tenants.

We anticipate that these acquisitions will be coming online over the next 7 quarters. And lastly, as a result of leasing up 127,000 square feet of vacant space subsequent to quarter end, our occupancy rate is now a very strong 97.4% and again is reflective of the strength of our tenant base and the quality of our assets.

The company remains very focused on continuing to deliver positive results and we look forward to building upon the substantial growth that has been achieved. We would now be happy to take your questions.

Well, just to follow-up on Mike’s last question, over the years we have been separating the two REITs, UMH Properties and Monmouth, there is no longer of shared employees. Now, they are separate real estates, separate leases.

When we are small, it was efficient to have some overlap. And now the company is – each company is respectively grown to the size that they are completely independent and we are speaking to you from our new conference room and it’s a good sign over our 47-year history that we are now operating completely autonomously from UMH.

Having said that, only other thing I would add is our new annual report, it’s now available. It’s hot off the presses.

And if anybody is interested in receiving one, just contact Susan and we will FedEx one out to you if you haven’t already received one. With that, I would like to thank everyone for joining us on the call and for the continued support and interest in Monmouth.

As always, Kevin, Gene and I are available for any follow-up questions and we look forward to reporting back to you after our second quarter. Thank you.