Baron’s Storage Bet Signals Hopes for a 2026-27 Rebound

Baron Capital restarted positions in Public Storage and CubeSmart in 2026, betting that self-storage growth may strengthen in 2026 and 2027. Its second-quarter strategy letter said the firm had become more positive after years of flat or declining growth.

The firm’s self-storage holdings made up 6.4% of the strategy’s portfolio. Baron also kept a position in Extra Space Storage, signaling that its renewed interest extends beyond Public Storage, which trades as PSA.

Baron describes storage as a business with a long record of growth, inflation protection and relatively low capital needs. Those traits can appeal to investors seeking steady property income, but the firm’s recovery case depends on operating conditions improving.

Public Storage’s latest results show why the timing matters. In the second quarter, revenue at established facilities fell 0.6% from a year earlier, while net operating income, or property revenue after operating costs, declined 2.2%.

The company raised its 2026 forecast, but still expects same-store net operating income to fall between 0.3% and 2.0% for the year. It now projects core funds from operations of $16.75 to $17.05 per share, a measure commonly used to track REIT performance.

Public Storage is also expanding through acquisitions. It completed its all-stock merger with National Storage Affiliates in July, bringing its branded portfolio to more than 4,500 locations and 327 million square feet. It also agreed to buy Public Storage Canada for $1.2 billion.

Investors will look for improving rents and occupancy in upcoming results to test Baron’s recovery thesis. For Public Storage, acquisition-driven expansion is already underway; a sustained rebound in established-facility earnings has yet to show up in the latest quarterly figures.