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Investing.com -- As the self storage sector approaches earnings season, Wells Fargo has identified three standout companies positioned for strong performance. Despite varying market conditions, these storage operators demonstrate resilience through strategic growth initiatives and operational efficiencies.
Extra Space Storage
Extra Space Storage (NYSE:EXR) emerges as Wells Fargo’s top pick heading into earnings. The company maintains slight positive momentum in move-in rates during Q3, with occupancy continuing to improve year-over-year. A significant growth driver remains the opportunity to align legacy Life Storage properties with Extra Space’s higher rate structure following their merger. Additionally, the expansion of ancillary businesses, including bridge loans and third-party management services, is expected to support FFO per share growth toward the upper end of guidance. Looking ahead to 2026, Wells Fargo anticipates industry-leading growth of nearly 3% in same-store revenue and over 4% in FFO per share, justifying Extra Space’s slight premium multiple.
In recent developments, Extra Space Storage entered into a $4.5 billion amended credit agreement. The company also received varied analyst ratings, including an upgrade to Overweight from Wells Fargo and a downgrade to Neutral from Goldman Sachs.
Public Storage
Public Storage (NYSE:PSA) shows more mixed signals according to Wells Fargo’s analysis. Through August, operational updates indicate performance slightly trailing guidance targets, with move-in rates down 6-7% year-to-date, making a same-store guidance increase unlikely. However, the company’s accretive acquisition activity and non-same-store NOI contribution are expected to support FFO per share growth in 2025 and 2026. An additional tailwind should emerge in early 2026 with the expiration of Los Angeles rent restrictions, potentially boosting performance in that key market.
Public Storage reported second-quarter earnings per share of $1.76, which was below analyst expectations, though revenue met forecasts. The company also completed a €425 million senior notes offering.
SmartStop Self Storage REIT
SmartStop Self Storage REIT is anticipated to report higher Q3 same-store revenue growth compared to Q2, driven by several factors. These include easier comparable periods in the second half of 2025 for effective rent per occupied square foot, slightly higher year-over-year move-in rate growth from modest Q3 2024 asking rates, and declining rent concessions (down 25-30% year-over-year). While this year’s rental season performed marginally better than last year, June results were weaker than expected. However, management has indicated July showed signs of improvement, with occupancy trending in line with expectations. Wells Fargo notes that below-average delinquency rates provide encouragement regarding effective rent per occupied square foot trends for the remainder of the year.
As these storage operators prepare to report earnings, investors will be closely monitoring how each company navigates the current market environment and positions for growth in the coming quarters.
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