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DXD Capital Launches Fund to Target Self-Storage Development

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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.

Sources:
Globe St., Why This New Firm Is Targeting Self-Storage Assets
LinkedIn, Drew Dolan

 

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