What happened

Shares of Extra Space Storage (EXR -0.05%) plunged 25% in the first half of 2022, according to data provided by S&P Global Market Intelligence. The self-storage-focused real estate investment trust's (REIT) performance was a little worse than the S&P 500, which tumbled almost 21% in the first half of the year. 

Here's a closer look at what has been weighing down the self-storage REIT this year. 

So what

Extra Space Storage got 2022 off to an exceptional start. The REIT produced $2.01 per share of core funds from operations (FFO) in the first quarter, up 34% year over year. The company benefited from a 21.7% rise in same-store revenue, driven mainly by its ability to increase rental rates. It also continued to expand its platform. Extra Space acquired 14 stores in the first quarter for $225 million while adding another 37 locations to its third-party management platform.  

The company's growing FFO enabled Extra Space to continue increasing its dividend. The REIT boosted its payout by 20% in the first quarter and 50% over the past year. 

However, one potential concern was that occupancy dipped from 95.3% in Q1 2021 to 94.5% in the first quarter of 2022. That could suggest that demand for self-storage space is slowing down due to rising rental rates or concerns about the economy. 

Those economic concerns led several analysts to downgrade their view of Extra Space's stock. For example, Jefferies analyst Jonathan Peterson lowered that firm's price target from $228 to $184 a share while keeping a hold rating on the stock. The analyst made the move because the REIT could underperform in a recession. Meanwhile, Morgan Stanley analyst Ronald Kamdem reduced the investment bank's price target due to concerns about demand. The analyst thinks rents might be too high given the current supply, which could weigh on growth. 

Now what

Shares of Extra Space Storage cooled off this year following a blistering run in 2021 that saw the self-storage REIT's stock price nearly double due to strong demand. With demand for self-storage space potentially cooling off, the REIT's FFO likely won't grow as fast. 

However, Extra Space has an excellent track record of increasing shareholder value over the long term. As a result, this year's sell-off looks like an attractive opportunity -- especially for income-seeking investors -- given the REIT's current yield of around 3.5%.