Self-Storage REITs Score Upgrade From BofA Analyst: 8% Decline In New Construction Helps Sector

Bank of America Securities analyst Jeffrey Spector is bullish on self-storage real estate investment trusts (REITs).

Sector demand will normalize and maintain current levels, which is positive given current macro uncertainties, he explained.

Spector also expects self‑storage REITs to benefit in 2025 from easier year‑over‑year comparisons, a return to typical seasonal trends, and an 8% decline in new construction starts.

Public Storage (NYSE:PSA): The analyst upgraded the company’s stock from Neutral to Buy and raised the price forecast from $349 to $368.

The upgrade reflects a more optimistic outlook for the self‑storage sector and recognition of PSA's strong balance sheet.

The analyst adds that the company has the lowest leverage ratio among peers, which can protect it if economic conditions deteriorate or capital markets tighten.

BAC storage card data indicates that spending in PSA's markets increased 1.7% year‑over‑year in the first quarter of 2025, up 0.1% in the first quarter of 2024.

The analyst raised the 2025 revenue growth estimates to +0.1% from -0.3%.

Public Storage plans to release quarterly results on April 30.

Extra Space Storage Inc (NYSE:EXR): Spector upgraded the company’s stock from Underperform to Neutral. He also increased the price forecast to $155 from $141.

The bullish stance reflects a preference for self‑storage over more macro‑sensitive sectors like industrial.

Recent channel checks in Chicago indicate that ECRI initiatives faced minimal resistance in the first quarter, which should support revenue growth in 2025, adds the analyst.

The analyst expects EXR to benefit from its single‑brand strategy, which is rebranding LSI facilities and continued cost savings in 2025.

Additionally, BAC credit and debit card data indicates improving consumer spending trends in EXR's markets, evidenced by a 1.8% year‑over‑year rise in average spending in the first quarter of 2025 (up from 0.6% in the prior year’s quarter), adds the analyst.

The analyst raised the 2025 revenue growth estimates to +0.5% from +0.3%.

The company plans to release quarterly results on April 29.

Price Action: EXR shares are up 2.63% at $141.83, and PSA stock surged 3.29% at $297.04 at the last check Tuesday.

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