Higher Interest Rates and Slowing Demand for Self-Storage Will Affect Extra Space Storage in 2023

No-moat-rated Extra Space Storage ended the year with modest results as the firm reported core funds from operations, or FFO, of $2.09 per share, 9.4% higher than the $1.91 per share FFO during the fourth quarter of 2022. As we have highlighted previously, the self-storage sector has started to moderate after two strong years of growth. The company gave 2023 full-year core FFO guidance of $8.30 to $8.60 per share, representing flattish growth at the midpoint when compared with 2022 core FFO of $8.44. We are maintaining our $173 fair value estimate for the company as we incorporate fourth-quarter results.