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Realterm set to hit hard-cap on biggest ever raise

The Annapolis, Maryland-based logistics specialist will pursue distressed assets as one area of focus with its latest vehicle.

Realterm has closed on $610 million in capital commitments for the fourth fund in its signature value-add logistics fund series.

The Annapolis, Maryland-based industrial and logistics specialist manager has been in the market with Realterm Logistics Fund IV since late Q4 2021. The fund will mark the firm’s largest and quickest raise ever when it is complete, Edward Brickley, managing director and senior fund manager, told PERE. The firm is confident it will hit the fund’s $630 million hard-cap in a couple of months, once a final investor completes due diligence.

Realterm retained all the investors from its previous funds, Brickley said. Limited partners include the New Mexico Educational Retirement Board, which committed to the first three funds per PERE data. The firm is expected to have a total of 23 investors in Fund IV, predominantly made up of global pension funds, foundations and endowments, Brickley said.

Realterm will continue its high flow-through logistics strategy, which focuses on properties intended to hold inventory for short periods of time. Some properties are also used as truck terminals or parking facilities for vehicles in the supply chain, such as trucks and delivery vans.

Realterm has historically acquired and redeveloped assets within its target property set but started looking at development opportunities with Fund III. Brickley said this will likely continue in Fund IV, given how competitive the wider industrial sector is. Another area of focus is distressed assets that could be coming to market from overleveraged borrowers. Inflation could temper consumer spending which in turn could lead to reduced demand for some assets, Brickley said.

“The clouds on the horizon suggest demand could wane,” Brickley said, adding that some of the more aggressive loans taken on industrial properties could create opportunities for rescue capital.

Geographically, Realterm is sticking to the lower 48 states of the US. The firm favors properties close to major consumer markets. Development opportunities are likely to be limited to the premium industrial markets such as New Jersey, Southern and Northern California, Chicago, Seattle, Miami and Atlanta, said Brickley.

“As a value-added fund, we don’t say we have a specific allocation to a geography or strategy,” Brickley said. “We look for the best opportunities on a risk-adjusted basis.”