Should You Retain Extra Space Storage Stock in Your Portfolio Now?

Extra Space Storage EXR is well-positioned to gain from its high brand value, geographically diversified portfolio and presence in key cities in the United States. The self-storage industry’s need-based and recession-resilient nature shields it from market volatility and assures stable revenues. The company’s focus on store expansion through accretive buyouts, mutually beneficial joint venture partnerships and third-party management services bodes well for long-term growth. However, Extra Space Storage is likely to face headwinds from lower new customer rates. The elevated supply of self-storage units in many markets has curbed pricing power.What’s Aiding EXR?Extra Space Storage is the largest operator of self-storage properties in the United States. As of June 30, 2025, the U.S. market share by square footage of EXR is 15.3%, which is ahead of Public Storage’s PSA 10.7% and CubeSmart’s CUBE 5.4%. Extra Space Storage has significantly expanded its business in recent years, growing its branded store count from 1,029 in 2013 to 4,179 as of June 30, 2025, in 43 states and Washington, D.C. With a geographically diversified portfolio and significant scale, the company is poised for long-term growth. We expect a year-over-year rise of 3.8% in the company’s total revenues in 2025.The self-storage industry continues to benefit from favorable demographic changes. Further, demand for self-storage space has increased in the flexible working environment. Amid this, EXR is focused on consistently growing its business and achieving geographical diversity through accretive acquisitions, mutually beneficial joint venture partnerships and third-party management services. Extra Space Storage is focused on improving its balance sheet, reducing secured debt and increasing the size of its unencumbered pool. As of June 30, 2025, the company's net debt to EBITDA was 5.3X. The percentage of unencumbered asset value to total asset value was 83.8%. With solid balance sheet strength, the company is well-poised to capitalize on external growth opportunities. Furthermore, the industry is characterized by fragmented ownership. Per the company’s September presentation, the top six self-storage companies in the United States, including Public Storage and CubeSmart, operated roughly 40% of the total U.S. stores by square footage. This creates ample scope for consolidation at some level in the future, and with a solid scale, decent balance sheet strength and technology advantage, Extra Space Storage remains well-poised to compete for acquisitions.Solid dividend payouts are arguably the biggest enticement for REIT investors, and Extra Space Storage remains committed to increasing shareholders’ wealth. In the past five years, the company has increased its dividend six times, and the five-year annualized dividend growth rate is 10.02%. Moreover, EXR enjoys sector-leading dividend growth, with a 20-year CAGR of dividends of 10.3%, exceeding that of Public Storage’s 8.2% and CubeSmart’s 3.4%. With a robust operating platform and a healthy financial position, we expect the dividend payout to be sustainable in the upcoming period. Check Extra Space Storage dividend history.What’s Hurting EXR?Extra Space Storage operates in a highly fragmented market in the United States, with intense competition from numerous private, regional and local operators. In addition, there has been a development boom of self-storage units in many markets in recent years. This high supply has fueled competition, affecting its power to raise rents and turn on more discounting. Though new supply is moderating to some extent, any significant turnaround is unlikely in the near term. Particularly, the company continues to see new customer price sensitivity and, therefore, is likely to face headwinds from lower new customer rates in the near term. As such, the reacceleration in revenue growth is expected to be challenging until the company regains pricing power with new customers. Reflecting this environment, the company’s full-year 2025 guidance assumes negative 0.50% to 1.00% growth in same-store revenues. Same-store net operating income (NOI) is projected in the band of negative 2.75% to flat growth.Self-storage spaces are leased on a month-to-month basis. Tenants have the flexibility to vacate the properties in times of distress. #1 Semiconductor Stock to Buy (Not NVDA)The incredible demand for data is fueling the market's next digital gold rush. As data centers continue to be built and constantly upgraded, the companies that provide the hardware for these behemoths will become the NVIDIAs of tomorrow.One under-the-radar chipmaker is uniquely positioned to take advantage of the next growth stage of this market. It specializes in semiconductor products that titans like NVIDIA don't build. It's just beginning to enter the spotlight, which is exactly where you want to be.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Public Storage (PSA): Free Stock Analysis Report Extra Space Storage Inc (EXR): Free Stock Analysis Report CubeSmart (CUBE): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks