KeyBanc Downgrades Self Storage Stocks Extra Space Storage (EXR) and Public Storage (PSA) to Underweight

May 5, 2009 7:30 AM EDT
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Price: $72.65 --0%

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KeyBanc downgrades Self Storage Stocks Extra Space Storage (NYSE: EXR) and Public Storage (NYSE: PSA) from Hold to Underweight.

KeyBanc analyst says, "Extra Space Storage reported 1Q09 results that were weaker than expected and pointed to a sharper deterioration across the self storage sector, as full year guidance was meaningfully reduced. In addition, the Company had little good news to announce on the capital raising front to act as a counterbalance to the weaker than anticipated core. This fundamental weakness has come on top of a recent runup in EXR's share price of 43% since the end of March vs. a 37% appreciation in the MSCI US REIT index over the same period. We are downgrading shares of EXR to UNDERWEIGHT, to reflect the downside surprise and likelihood of further deterioration, as well as the less attractive valuation. We are also downgrading shares of Public Storage to UNDERWEIGHT, for similar reasons, as the stock remains the most expensive in the self storage sector and will likely see a similar erosion in core operating performance when it reports later this week. We are establishing a downside price target of $6.50/share for Extra Space, and we are establishing a downside price target of $56 for Public Storage."

Extra Space Storage Inc. is a self-administered and self-managed real estate investment trust (REIT) formed to own, operate, manage, acquire, develop and redevelop professionally managed self-storage facilities.

Public Storage (the Trust) is a real estate investment trust. The business activities of the Trust include the acquisition, development, ownership and operation of self-storage facilities, which offer storage spaces for lease, generally on a month-to-month basis, for personal and business use.

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