Why Storage? Why Now?

Self storage demand is, and we believe will continue to be, elevated by younger generations who continue to use it more frequently and for longer rental periods than previous generations did at their age.

Across the U.S., incomes lagged housing costs, seemingly forcing Millennials and Gen Z to downsize their living environments. Trends show that renters are choosing one-bedroom units over larger layouts, while homebuyers are purchasing smaller homes, often sacrificing garages and in-home storage space.

This downsizing is forcing Millennials and Gen Z to use self storage as an extension of their homes. It appears that self storage has become a part of their lifestyle.

There has been a 70% decline in new self storage construction since 2023.

Self storage is particularly vulnerable to oversupply, meaning that new construction typically dictates market performance. Market factors such as high interest rates, pullback in bank lending, and sidelined equity have driven a historic decline in new construction of self storage.

Of all the tailwinds of Why Storage Why Now, this is the most significant factor.

Source: SSA Self Storage Demand Study 2025.

Every year, statistics are showing that more Americans use self storage. With the historic decline in new construction of self storage that we are experiencing today, we expect demand to outpace supply, driving rates higher.

● 2005–2011

81% decline in new construction, 13% annualized.

● 2017–2022

31% decline in new construction, 10% annualized.

● 2023–2026

74% decline in new construction, 24% annualized.

| IN CERTAIN MARKETS, CONSTRUCTION COSTS HAVE ACTUALLY DECLINED

The slowdown in commercial real estate construction is reminiscent of the Great Financial Recession of 2009–2011. We believe that today's slowdown in new construction is a once-in-a-cycle phenomenon. Further, studies show that subcontractors and general contractors offer reduced profit margins to remain competitive. Tariffs have a negligible effect on construction prices.

We can take advantage of reduced construction pricing. While not every location is experiencing decreases in construction pricing, none of the markets DXD is currently developing in are experiencing construction price increases. Most notably, Florida and Texas have seen the most competitive construction bids, as evidenced by the following DXD investments in those locations:

| EVIDENCE

DXD Ground Up Development in Sarasota, FL.

● $215 psf total development cost based on prices for multiple GCs in Q2 2024.
● $191 psf total development, 2025 contract execution price. In Q2 of 2025.

DXD Ground Up Development in Texas

● $201 psf total development cost based on prices for multiple GC’s in Q4 2024.
$164 total development cost, 2025 contract execution price in Q1 2026.

As interest rates decline, construction activity is expected to pick up, which should result in cost increases in both materials and labor over the next five years. However, we are likely 6–18 months away from this occurring, and, as such, we believe the cost advantage is now.

On average, a DXD development is 16 months from land LOI to construction start. To capitalize on today's lower construction costs, deals need to already be in the pre-development pipeline for months, if not years. DXD has a pipeline of 5+ developments to capitalize on what we believe to be a once-in-a-cycle situation.

Note: All data and numerical information herein are approximate and unaudited and based upon certain assumptions and information available as of the date herein. Past performance is not indicative of future results and there can be no assurance that any prices or results will be achieved. Source: DXD Capital.

| DEVELOPERS WHO ARE ACTIVE HAVE AN EDGE

Developers who are actively purchasing land have what we believe to be unprecedented leverage to acquire land at prices and on extended timeframes that would have been considered laughable in 2021–2022. We see development opportunities every day in which a seller has reached the end of their ability to hold land and is forced to sell at a price below expectations. For example, DXD was approached by an inexperienced developer who spent three years entitling, designing, and permitting a 66,750 net rentable SF storage project in Scottsdale. The site is located just off the 101 Freeway, but the developer did not have the financial strength to raise equity and secure debt. His local knowledge and relationships enabled him to secure full site entitlement and approval, but he was stuck without a plan to execute.

The land price in 2022 was $4.5 million. DXD ultimately purchased the land in 2024 for $2.935 million, allowing for an attractive basis.

DXD used the approved entitlements and construction drawings to commence construction within 6 months of the LOI, while the previous developer had already invested 3 years in the project. We believe this unique edge for active developers is temporary, and as the real estate market gains momentum, these opportunities will be far fewer and further between.

When homebuyers and sellers return to the market, we expect there will be a significant uptick in home sales, creating storage demand.

Many homeowners are locked into historically low mortgage rates on their current homes. Many potential homebuyers are priced out of new homes due to steep home value increases over the last five years and higher mortgage rates. As mortgage rates decline, as is expected, mobility should increase, unlocking a wave of new homebuyers and sellers.

| HOME SALES APPEAR TO BE REBOUNDING FROM 2024 LOWS

Extra Space statistics estimate that 35% of home buyers and sellers use self storage when they move. The decrease in home sales we have seen has a tangible impact on rentals. This impact is estimated to be 4-6% of the total renter pool, who are not in the market for self storage. As the market adjusts, we expect that there will be a significant uptick in home sales among people who want to move but have been financially constrained by their current situation.

| ABOUT DXD CAPITAL

DXD Capital is a fund investment manager that utilizes proprietary data and tech tools to evaluate self storage development and acquisition opportunities across the United States. Our team searches for the largest imbalances of supply and demand in high barrier to entry markets to build or reposition self stroage assets.

Since its inception in 2020, DXD has successfully raised over $300 million through funds and direct investments that have been exclusively invested in the self storage real estate sector. This singular focus enables the firm to achieve economies of scale and develop market-leading insights into the self storage industry. DXD strategically focuses on sourcing and seizing high-quality opportunities in the self storage sector.