Q&A: How to raise over $50 million for storage development

Sharpen your funding pitch and you could end up like DXD Capital, which hoped to raise $50 million in its first round of funding but went above and beyond, hitting $53 million before closing the round.

“What I learned this time is that the more finite focus and strategy you have, the more groups are interested in hearing what you have to say,” said Drew Dolan, principal and fund manager at DXD Capital, based in Albuquerque. , NM.

“Of the groups that said no, some of them can’t do real estate or the timing didn’t work out. Very few said they didn’t like our strategy or weren’t interested in self-storage.

DXD has invested $10.1 million in the development of fully air-conditioned facilities in Las Vegas, NV and Phoenix, AZ. Overall, the fund has 12 approved investments in multiple states, including Florida, New Jersey, and Rhode Island.

We chatted with Dolan about the first ride, self-storage and more.

Storage Beat: What did you learn from this increase?

Dolan: We entered this fund at the start of COVID, the darkest and most uncertain days of COVID. There’s been an election, a recession, and a pandemic, and here we are, starting a new business and raising capital.

But some of the benefits were that we could show up in San Antonio or Denver, and everyone wanted to meet us. They were tired of being locked up in their homes.

The election was over and there was some certainty, and that made our world easier. The stock market rebounded. There was a vaccine. The economy has recovered. We have come out of the recession.

Self-service storage performance showed up and it was amazing to see how well the asset performed during COVID. Serious headwinds have become serious tailwinds.

Who were your buyers?

Mainly high net worth and small to medium sized family offices. The commonality for most was that every investor had a story about self-storage. They used it, or their parents used it when they moved into a seniors’ residence. Our story resonated about how this was going to be successful.

How has the pandemic affected your efforts?

In the end, the self-storage worked very well. People have moved furniture from the bedroom and created a home office or a home gym. Highest rate (nearly 50%) of 18-29 year olds living at home since the 1930s. Parents had to move stuff, into storage.

How was self-storage more efficient?

If you have an office building and 10 tenants, and one tenant isn’t renewing because they’ve been hit by the recession, you’ve just lost 10% of your revenue. In self-storage, the average of our installations is 1,000 units; you never really see a dramatic decrease in occupancy… Self-storage was never mentioned in the same breath as office or industrial. But the asset’s performance in good and bad times made institutions realize they needed it.

About Joel Simmons

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