BofA cuts storage REITS, Public Storage, Extra Space and Americold

Investing.com -- Self-storage and cold-storage real estate investment trusts may struggle to sustain recent share gains as demand catalysts remain limited and operating conditions stay constrained.

Public Storage was downgraded to Neutral from Buy at Bank of America. Its price target was cut to $310 from $336.

BofA sees a lack of near-term operational catalysts despite indications that fundamentals have bottomed.

Rental revenue growth is expected to remain subdued in 2026, partly due to pricing restrictions linked to wildfire impacts in Los Angeles, a market representing about 16% of the company’s same-store net operating income.

The cautious outlook reflects broader macro pressures affecting the storage sector. Housing turnover, a key demand driver for self-storage usage, remains weak. Existing home sales totaled about 4.35 million in December 2025, roughly 16% below long-term averages and about 20% below pre-pandemic levels.

Elevated borrowing costs are continuing to weigh on housing mobility, with mortgage rates hovering near 6% while the 10-year Treasury yield remains above 4%, limiting prospects for a near-term rebound in storage demand.

Bank of America also downgraded Extra Space Storage to Underperform from Neutral, lowering its price target to $143 from $163.

While company fundamentals appear to have stabilised, analysts said visible demand recovery remains elusive.

The firm noted that improvements in new-customer pricing trends may take time to translate into overall revenue gains, raising the risk of guidance disappointments. Historical performance has also shown instances where initial outlooks were revised lower, reinforcing caution around earnings visibility.

Meanwhile, the brokerage cut Americold Realty Trust to Underperform from Buy, trimming its price target to $13 from $14. Inventory data from the U.S. Department of Agriculture indicates continued contraction in stored food volumes, suggesting limited demand growth visibility for temperature-controlled storage assets through 2026. Bank of America lowered its valuation multiple assumptions to reflect expectations for only modest improvement in supply-demand dynamics.

The downgrades come despite a recent rally in storage REIT shares, which have outperformed the broader REIT sector following housing affordability policy developments. Bank of America cautioned that the sector’s relative outperformance may prove difficult to sustain without clearer signs of housing market recovery or stronger demand indicators.

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