News

Aug 02, 2023

DXD Capital Raises Over $130 Million Equity In Self Storage Investment

Data-driven real estate and private equity firm DXD Capital has revealed that it has raised more than $130 million in equity for two funds and individual investments in just three years since it was

Data-driven real estate and private equity firm DXD Capital has revealed that it has raised more than $130 million in equity for two funds and individual investments in just three years since it was founded. This demonstrates DXD's expertise in identifying key investment opportunities through data, as well as the vibrant investment potential of the self storage market.

DXD Capital was founded in March 2020 by veterans of the self storage and real estate industries. Founding principal Drew Dolan has raised over $600 million and placed over $2 billion in debt for real estate investments, while Cory Sylvester, who leads DXD's site selection, investment committee, and technology architecture, is also a founder of Radius+, the preeminent data source for the self storage industry.

The company now has a team 30-strong, with offices in Albuquerque, Denver, Philadelphia Metro, and New York City Metro. Today, the firm has around 30 active self storage investments across the United States from Rhode Island to Hawaii. Most of the team members have extensive prior experience in the self storage industry, and together, they have developed more than 200 self storage facilities nationwide.

As a data-driven company, DXD Capital uses proprietary technology tools that it has created, allowing it to choose the most underserved markets, where demand outstrips supply, intended to generate outsized investor returns. It currently has two facilities that are operational, and it has seen the demand for leases exceed its expectations two-fold at its Phoenix site. Meanwhile, its Las Vegas site has demand surpassing projections by more than three and a half times, having achieved 46% occupancy since opening in March of this year. Another facility in Las Vegas is expected to open in the next month, while several more around the country are under construction. It uses only REIT operators to manage its facilities to ensure that they have the highest quality management.

“We want to be in areas with high barriers to entry because we know that's where demand most often exceeds supply; where we can command the highest rental rates; and where we can best mitigate competition. While there are headwinds for developers everywhere, like the limited availability of construction debt combined with rising interest rates and greater depository requirements, we are still able to provide excellent returns, thanks to a very strong network of relationships and banks that have worked with our people for many years. We are staying the course and know that everything we do today will do very well in the future because it will have less competition,” says Drew Dolan, DXD Capital Principal and Fund Manager.

According to DXD Capital, self storage is now one of the most lucrative commercial real estate investments, outperforming many other types of real estate. Over the past three decades, self storage had the highest cumulative returns of any real estate investment category. The industry continues to grow, with an all-time high of nearly 14.5 million, or 11.1% of total US households, using self storage facilities in 2022.

“It has been an important milestone for DXD to raise more than $130 million in equity for projects across the United States, surpassing our initial fundraising goals. We expect that DXD will continue to attract investment in no small part due to the strength of the self storage business model and superior return profile as well as the institutionalization of the asset class. Our overarching strategy, using data and technology to become orders of magnitude more efficient than our competitors, helps us identify the best locations for investment,” Martha Hargrove, DXD Managing Director, Investor Relations says.