BofA upgrades Public Storage, Extra Space as it sees storage REITS defensive

Investing.comApr 22, 2025 6:06 PM

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Investing.com -- Bank of America upgraded Public Storage (NYSE:PSA) to Buy from Neutral and Extra Space Storage (NYSE:EXR) to Neutral from Underperform, citing a more positive outlook for the self storage sector relative to other REITs.

While BofA does not anticipate a significant uptick in demand, it expects normalization at current levels, which it views as supportive in a "heightened macro uncertainty" environment.

Analysts noted self storage REITs should benefit in 2025 from a combination of easing year-on-year comparisons, a return to typical seasonal trends, and an 8% decline in new development.

In the first quarter of 2025, Public Storage’s and Extra Storage’s markets posted year-over-year spend growth of 1.7% and 1.8%, respectively, according to BofA credit and debit card data, improving from 0.1% and 0.6% in the prior-year period.

The upgrade of Public Storage is supported by its "strong and flexible balance sheet," the lowest leverage among peers, and valuation, with shares trading at a forward AFFO multiple of 18.8x versus a long-term average of 21.3x.

BofA raised PSA’s price objective to $368 from $349.

Extra Storage’s upgrade reflects reduced pushback to ECRI initiatives and improved card spend data.

The price objective for EXR was raised to $155 from $141.

Disclaimer: The information provided on this website is for educational and informational purposes only and should not be considered financial or investment advice.

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