An Albuquerque-based private equity firm — focused on the self-storage industry — is gearing up to deploy millions of dollars in capital on projects that span from Hawaii to Rhode Island.
DXD Capital — founded in 2020 — has five projects under construction with five additional starts scheduled in the next 120 days. DXD’s first five facilities will be operated by Public Storage. DXD expects to have 80% of its first, full discretionary fund — Fund I — deployed by the end of 2022 in projects located across the U.S.
The firm partners with Radius+, a tech hub that aggregates nationaldata around supply, population density and average income. That information then influences the self-storage site selection process, whether it's for existing properties or new construction. DXD has also built its own proprietary tools.
“When I saw the operational fundamentals of storage, especially the ability to have an inflation hedge, I was incredibly attracted to it (self-storage),” Drew Dolan, DXD principal and fund manager, said. “It’s the only asset class that has a 50% increase in the number of people that are using it over the last 15 years.”
Martha Hargrove, executive vice president for DXD, said the firm is creating new investment opportunities for New Mexicans. She said Fund I had 96 investors, and more than half were New Mexicans. Hargrove said nearly a third of that group has already reinvested in a second fund.
“New Mexico is benefitting from us running a private equity company out of Albuquerque," she said. "We’re able to offer that access to lots of people in New Mexico who wouldn’t necessarily be able to invest at or with a private equity company at this high level."
This week, DXD announced the close of its second fund, Self Storage Fund II, which is structured as a general partner (GP) fund. Essentially, that means all the fund investors have a seat at the table with DXD. Though, DXD is ultimately charged with deciding how the money is allocated.
DXD's Fund II had a goal to raise $25 million; it closed at $28.2 million on June 22. The firm will now continue to raise money until it reaches a hard cap of $35 million.
“The economy is slowing into a recession; this is when self-storage performance shines compared to other assets.” Dolan said in a news release.
An earlier version of this article stated that DXD's general fund partners help to decide how capital is allocated. That is incorrect. DXD decides how the money is deployed. The article has been updated to reflect the change.
