Baron Capital, an investment management company, released its Q4 2025 letter for its “Baron Real Estate Income Fund”. A copy of the letter can be downloaded here. In 2025, the Fund appreciated 3.74% (Institutional Shares), exceeding the 1.68% gain for the MSCI US REIT Index (the REIT Index). In Q4 2025, the Fund declined modestly by 0.40%, outperforming the Index’s 1.99% decline. In contrast to the substantial double-digit growth delivered in 2023 and 2024, the Fund’s modest performance in 2025 can be attributed to a variety of factors, such as stronger relative growth in several sectors outside of real estate, ongoing interest rate headwinds, and specific REIT subcategory headwinds. As of December 31, 2025, the Fund’s net assets are as follows: REITs (71.2%), non-REIT real estate companies (25.0%), and cash and cash equivalents (3.8%). Also, the Fund currently has investments in 13 REIT categories. Heading into 2026, the Firm is optimistic about the prospects for the stock market and the Baron Real Estate Income Fund. Please review the Fund’s top five holdings to gain insights into their key selections for 2025.
In its fourth-quarter 2025 investor letter, Baron Real Estate Income Fund highlighted stocks like Extra Space Storage Inc. (NYSE:EXR). Extra Space Storage Inc. (NYSE:EXR) is a leading self-storage real estate investment trust. On April 1, 2026, Extra Space Storage Inc. (NYSE:EXR) closed at $132.49 per share. One-month return of Extra Space Storage Inc. (NYSE:EXR) was -10.18%, and its shares lost 8.10% over the past 52 weeks. Extra Space Storage Inc. (NYSE:EXR) has a market capitalization of $29.22 billion.
Baron Real Estate Income Fund stated the following regarding Extra Space Storage Inc. (NYSE:EXR) in its fourth quarter 2025 investor letter:
“During the quarter, we reacquired shares in best-in-class self storage REIT Extra Space Storage Inc. (NYSE:EXR), which owns or operates a portfolio of over 4,200 properties in the U.S., with 14% total market share by square footage. We have been cautious about the prospects for self-storage REITs due to a multi-year period of flat to negative growth, but more recently we have become incrementally bullish as our due diligence suggests that a positive fundamental inflection may be on the horizon and growth may begin to reaccelerate in 2026 as demand and rents stabilize while supply deliveries decline.
We are optimistic about our investment in Extra Space for several reasons: 1. Potential growth inflection on the horizon. In addition to benefitting from a potential improvement for the broader self-storage industry, Extra Space may see a more pronounced growth inflection as the company laps several discrete headwinds that weighed on 2025 performance, coupled with ongoing accretive capital allocation towards acquisitions and bridge lending opportunities…” (Click here to read the full text)
Extra Space Storage Inc. (NYSE:EXR) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 27 hedge fund portfolios held Extra Space Storage Inc. (NYSE:EXR) at the end of the fourth quarter, compared to 33 in the previous quarter. While we acknowledge the risk and potential of Extra Space Storage Inc. (NYSE:EXR) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Extra Space Storage Inc. (NYSE:EXR) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Extra Space Storage Inc. (NYSE:EXR) and shared the list of most profitable real estate stocks. In addition, please check out our hedge fund investor letters Q4 2025 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
