BMO Capital upgraded Extra Space Storage (NYSE: EXR) to Outperform from Market Perform on Tuesday, replacing CubeSmart as the brokerage’s top self-storage pick. The firm set a $170 price target for the REIT, implying roughly 9% upside from the prior session’s close of $144.09.
The upgrade followed Extra Space Storage’s second-quarter results, which exceeded Wall Street expectations. Adjusted earnings came in at $1.25 per share, ahead of the $1.16 estimate, while revenue reached $874.15 million compared with the $863.62 million projection. Core funds from operations rose 4.9% year-over-year to $2.15 per share.
BMO noted that the company’s full-year outlook was raised following the results, driven by improvements in same-store revenue and profit trends. The brokerage also raised its estimates for the REIT for the second consecutive quarter, aligning with broader sector upgrades.
BMO cited improving supply conditions as the primary driver behind the upgrade, describing the recovery as spreading geographically, including the Sunbelt, where conditions are expected to inflect in 2027. Demand remains steady but modest, with housing activity flat to down and move-in rates growing tepidly, below inflation levels.
Sector-wide, BMO raised its 2026 same-store revenue and net operating income forecasts to match Street estimates and exceed REIT guidance. KeyBanc data for July showed U.S. self-storage pricing trends improving, with average spend per transaction rising 2.3% year-over-year—a 160-basis-point acceleration from the prior month.
Extra Space Storage, with a market capitalization of $31.79 billion, maintains a 23-year track record of consistent dividend payments and offers a 4.5% yield. Its forward P/E stands at 31.89.
BMO downgraded SmartCentres REIT to Market Perform, citing caution on its Canadian exposure, which accounts for 9.4% of its net operating income.
