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Extra Space Storage has projected full-year adjusted funds from operations below market expectations as demand for self-storage units weakens and competition intensifies in key markets. The company reported a decline in annual same-store occupancy for 2025, while inflation and higher operating costs continued to pressure margins. Although fourth-quarter earnings slightly exceeded analyst estimates, revenue growth remained modest. The forecast signals continued challenges for the self-storage segment, which had previously benefited from strong demand during the pandemic period but is now adjusting to oversupply and softer customer growth.
Extra Space Storage has projected full-year adjusted funds from operations (FFO) below analyst estimates, reflecting continued pressure on demand across its self-storage portfolio. The real estate investment trust, headquartered in Salt Lake City, Utah, is facing softer occupancy levels as new operators enter key markets, leading to higher supply. Advertisement
The company's same-store occupancy for 2025 declined to 92.6 percent from 93.3 percent a year earlier. Management indicated that demand has softened in a weaker macroeconomic environment, while competitive pricing and discounting have increased across several regions. Inflation has also slowed new customer acquisitions, even as operating costs remain elevated.
For the full year, the REIT expects adjusted FFO in the range of USD 8.05 to USD 8.35 per share. The midpoint of this guidance stands slightly below the USD 8.21 per share reported in 2025 and is also below analysts projection of USD 8.29 per share, according to data compiled by London Stock Exchange Group.
In the fourth quarter ended December 31, the company reported adjusted FFO of USD 2.08 per share, ahead of analyst estimates of USD 2.04. Total same-store revenues for the quarter rose marginally year-on-year to USD 664.2 million, indicating limited growth despite pricing adjustments.
The self-storage sector had witnessed strong demand during the pandemic period, supported by relocations and lifestyle changes. However, industry-wide expansion over the past few years has resulted in oversupply in certain urban markets. Rising interest rates and cautious consumer spending have further moderated demand, affecting occupancy and rental growth across operators.
Extra Space Storage remains one of the largest self-storage REITs in the United States, but the current outlook suggests that near-term performance will continue to depend on stabilising occupancy levels and managing operating costs effectively.
Source Reuters
5th Jun, 2025
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