Wells Fargo adjusted its ratings on two major self-storage REITs, moving Public Storage (NYSE: PSA) and SmartStop Self Storage REIT Inc (NYSE: SMA) to Equal Weight. The bank said this action reflects its view that the sector's share-price appreciation this year - roughly 9% so far - has outpaced the underlying operating fundamentals and that growth will decelerate in 2026.
Revised targets and expectations
The firm set a $295 price target on Public Storage and signaled downside risk to analyst estimates for same-store revenue and funds from operations. Wells Fargo projects same-store revenue for Public Storage to decline by about 1% in 2026, with FFO per share generally flat versus prior levels. The bank cited difficult move-in comparisons early in the year and specific local headwinds in Los Angeles as factors likely to weigh on results until conditions improve later in 2026.
SmartStop was also cut to Equal Weight with a $33 price target. Wells Fargo noted that move-in rates for SmartStop fell 10% to 11% in the second half of 2025 and warned that revenue growth is likely to slow sharply next year. The bank expects roughly 1% same-store revenue growth and forecast core FFO per share below Street consensus. It also highlighted that SmartStop's higher leverage, combined with a rising cost of equity, could limit the company’s ability to pursue acquisitions to expand its platform.
Sector dynamics and near-term outlook
Wells Fargo said the sector faces a trade-off between rental rates and occupancy as pricing has already started to soften. January web rates for major operators were down about 1% to 2% from a year earlier, a trend the bank interprets as pointing to flat same-store revenue growth across the sector in 2026 before a gradual improvement in 2027.
Although new supply growth is tapering as development costs rise, the bank noted that projects delivered in 2023 and 2024 are still being absorbed, particularly in markets such as Atlanta, Phoenix and West Florida. These market-level absorptions are tempering the broader supply picture but are not expected to fully offset the near-term headwinds.
Relative views within the sector
Wells Fargo maintained an Overweight rating on Extra Space Storage, indicating an expectation that growth will recover by 2027. The bank also described CubeSmart's valuation as relatively attractive, while cautioning that any recovery for CubeSmart is likely to be gradual.
Overall, Wells Fargo expects 2026 guidance from storage landlords to come in slightly below Street expectations and is recalibrating ratings and targets accordingly as it weighs near-term operating pressures against the sector’s recent price gains.