Extra Space Storage Earnings: Management Lowers FFO Guidance as Demand for Self-Storage Cools

No-moat-rated Extra Space Storage reported lackluster results as demand for self-storage starts to moderate. The firm reported core funds from operations, or FFO, of $2.06 per share, 3.3% lower than the $2.13 per share FFO during the second quarter of 2022. Management has revised the outlook for the back half of the year due to lower-than-expected new customer rates in recent months. The company's updated 2023 full-year core FFO guidance is $8.15-$8.35 per share, representing a 2.4% decline at the midpoint when compared with previous guidance. We note that the results of the company are worse than its peer Public Storage. We are reducing our fair value estimate for Extra Space Storage to $165 per share from $177 as we slightly moderate our long-term expectations for the sector.