Realterm closes fund, launches core-plus vehicle – Exclusive

Realterm has closed its latest value-added fund and is expanding into the core-plus space for its US logistics business, PERE has learned.

The Annapolis, Maryland-based firm launched Realterm Logistics Fund (RLF) II in April and closed it last week, garnering $240 million in commitments, Peter Lesburg, the firm’s director of capital markets, told PERE. Through the fund series, Realterm invests in high flow-through logistics and final mile industrial real estate across the US.

Realterm closed RLF I in December 2013 on its hard-cap of $200 million after about 18 months of fundraising. The investor base comprises a mix of endowments, foundations, public and private pensions and insurance companies, including the New Mexico Educational Retirement Board (ERB), which committed $25 million to both funds, according to its meeting minutes.

All of the investors in the predecessor vehicle committed to RLF II, and the firm added an additional investor, Lesburg said.

“It’s certainly a testament to the team, our strategy and the sector that we’re in,” he said, noting the “deep” investment opportunities in logistics.

RLF II has a low-to-mid teens net return target. The firm declined to share returns for RLF I, and the most recently available data from ERB showed the fund had an 18 percent net internal rate of return as of September 30, 2015.

As Realterm wrapped up fundraising for RLF II, it was also preparing to launch another vehicle. At the beginning of the year, the firm started raising capital for an open-ended, core-plus platform. Realterm does not have a target size for the vehicle, Realterm Logistics Income Fund, and Lesburg said the firm is looking to bring in new investors seeking core-plus, rather than value-added, returns in the space. The firm will target a high single digit to low double digit net return.

“It was a reflection of the enhanced deal flow we’re seeing in our space and finding the right structure in which to place those investments,” Lesburg said.

Realterm launched another open-ended fund, Realterm Airport Logistics Properties, to recapitalize its airport logistics portfolio in 2015 with a core-plus and develop-to-core strategy.

The firm’s most recent publicly available transaction was the December purchase of a 200,300 square foot warehouse occupied by Sports Authority in Denver, Colorado for $10.9 million, according to data provider Real Capital Analytics.

Realterm manages about $2.6 billion in assets, according to the firm. The firm also runs IndoSpace Logistics Parks, a closed-end, opportunistic fund series investing into warehouse and logistics real estate throughout the top industrial markets in India, with Singapore-based real estate fund manager Everstone Capital.