Update 1/14/22 – DXD Capital has closed its inaugural fund targeting self-storage development after raising $53 million, exceeding its goal. Thus far, the company has invested $10.1 million, with projects underway in Las Vegas and Phoenix. The fund has 12 approved investments across several states, including Florida, New Jersey and Rhode Island, according to a press release. It’s also purchased land in Honolulu through a joint venture with InSite Property Group, a development and real estate firm that operates the SecureSpace Self Storage brand.
“Over the past several years, we’ve seen the growth of mainstream investment in self-storage. We are in the early stages of self-storage being an institutionally accepted asset class like office or retail, just better performing,” Dolan said. “Exceeding our fundraising goal in this initial fund confirms the belief in our strategy and the asset class.”
“As inflation persists, consistent cash flow and ability to track and adjust rates make self-storage an increasingly attractive investment,” Dolan added. “We invest using proprietary, technology-driven efficiency tools. Our decisions are further supported by strong market fundamentals in major U.S. markets and submarkets that we expect will allow us to deliver outsized returns to our investors.”
9/24/21 – DXD Capital has broken ground on its development in Las Vegas. The project at the corner of South Monte Cristo Way and West Sahara will ultimately comprise 1,100 units. Expected to open in fall 2022, the multi-story facility was designed by Studio Level 1, with ARCO/Murray Design Build serving as general contractor.
2/2/21 – DXD Capital, an Albuquerque, N.M.-based real estate and private-equity firm that leverages data technology to make opportunistic investments, has launched DXD Self Storage Fund I to pursue self-storage development. Aiming to raise $50 million for ground-up projects, the fund will initially target 10 deals, according to the source.
Its first will be a multi-story facility on a 1.7-acre property in Las Vegas. Expected to break ground in late winter, it’ll be complete in the first quarter of next year and managed by self-storage real estate investment trust Public Storage Inc.
The self-storage industry’s continued growth in past economic downturns was a driver to establishing the new fund. The pandemic also created opportunities, according to Drew Dolan, principal fund manager, who co-founded DXD Capital in September. “Pre-COVID, there were many diverse demands for premier land sites like retail, restaurant and office. Those uses are no longer viable in the current economy,” he said. “They will come back, but not all land sellers have the ability to wait for a market to recover. We are finding excellent self-storage sites that were just unavailable for self-storage development pre-COVID.”
The self-storage rental market also continues to be favorable when compared to other real estate asset classes. “The rental market for self-storage has traditionally been very seasonal, ramping up in spring and tailing off after summer,” Dolan said. “We should be seeing the lowest annual rents this time of year as demand drops off, but instead we are seeing rents that resemble the peak summer months.”
Dolan links this to “sustained changes in personal and business behaviors compounded by the secular growth the sector has seen coming for the last 15 years.” Consumer spending has also been consistent during the pandemic, which creates demand for self-storage.
By the end of this year, DXD Capital will have evaluated more than 35,000 deals, according to the company website. In addition to Dolan, a previous president of Titan Development, its principals include Gary Delaney, who has developed more than 120 self-storage facilities nationwide, and Cory Sylvester, who’s also a founding principal of Union Realtime LLC, a technology-services company that specializes in self-storage development data.
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