Q&A: How 10 Federal stacked $16 million in Q4

Bruce Goldberg
February 14, 2024

It’s been an impressive run for self-storage-centric 10 Federal. The Raleigh, NC-based company has raised a total of $16 million in Q4, its fourth such offering.

Overall the company, which has properties in 10 states, has garnered more than $96 million since its first offering in December 2022.

What drives the firm? Perhaps it’s the boost that creating its own software gives the company. Maybe it’s or the belief that you don’t necessarily need people behind the counter. 10 Federal has carved out a niche with its remotely-managed facilities that operate 24/7.

We talked about all this with Cliff Minsley, principal and co-founder.

Storage Beat: How is the current capital raise doing?

Cliff Minsley: The raise is going well. I understand capital raising has been a challenge for others in 2023. Despite that reality, 10 Federal had its most successful year of capital raising in 2023, as we successfully raised $96 million for our fourth value-add, self-storage fund.

How did you raise this much money so fast?

It’s hard to say. It was a goal we set for ourselves and I would consider that an accomplished goal. We had a lot of success in the recent liquidations of first and second storage funds, so I think that helped to propel our progress in 2023.

Beyond that, I think there are other factors at play. Investors widely accept that self-storage is a very stable and safe investment vehicle in good and bad markets.  We have a long history of being an operator of real estate, but our approach to self-storage is very unique and forward-thinking.

Give me an example, please.

We run all sites without a person in the store; our stores are remotely managed, but we also utilize proprietary data and technology in our financial underwriting when considering target markets and target acquisitions within those markets.

We’ve done very well; we’ve generated very robust returns for our investors.

We sold the remaining assets in our first fund on Feb. 17, 2022 to Nuveen. We sold the majority of remaining storage assets of the second fund on Aug. 31, 2022 to Brookfield Asset Management. We’re in the middle of the life cycle for Fund IV.

What are the pros and cons in creating your own software?

We’ve gotten used to developing technology in-house and are pretty good at it. It creates a lot of efficiencies on a number of levels. Through the development and implementation of technology, we’re always looking to eliminate waste and have improved business intelligence insights utilizing technology.

The downside to technology creation is at the end of the day, we are a real estate firm and creating novel technologies is not our core business. It takes a lot of time and resources to create technology.

One thing I’ve enjoyed about our industry recently is that more people are adopting our automated method of managing properties and as a result, more technology companies are creating products that are available to us ‘off the shelf.’ That means we don’t have to develop them ourselves. Rather, it allows us to implement new technologies quickly or we’re able to use those new products in new and creative ways.

How do you find potential investors?

We benefit a lot from word of mouth and we speak to our capital partners for referrals. Sometimes our retail investors will introduce us to potential partners, such as smaller institutions, syndicates that raise capital for such funds, or other high-net-worth individuals.

Where did you grow up and go to school? How do you think that has influenced you?

I grew up in Chapel Hill, NC and went to UNC-Chapel Hill and and the UNC Kenan-Flagler business school for college. Chapel Hill was a wonderful place to grow up and I couldn’t have asked to be raised in a better place. I think a happy start to life and having many life-long friends here in NC has given me a lot of confidence in what I’m doing professionally. It’s also nice putting my feet up to watch some Tar Heel basketball after a long day of work!

What professional accomplishments are you most proud of?

Raising $96 million for 10 Federal in 2023 is right up there. But having started it all in a moldy single room office back in 2010, I would say that having grown 10 Federal, DaVinci Lock and our other companies to where they are today is an immensely gratifying feeling. It’s been a challenging and wild ride that I wouldn’t trade for anything.

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