Simon Property Group (SPG Quick QuoteSPG - Free Report) is slated to report second-quarter 2025 results on Aug. 4, after market close. The company’s quarterly results are likely to display a year-over-year rise in revenues and funds from operations (FFO) per share.

In the last reported quarter, this Indianapolis, IN-based retail real estate investment trust (REIT) delivered a surprise of 1.37% in terms of FFO per share. Results reflected an increase in revenues, backed by a rise in the base minimum rent per square foot and occupancy levels.

In the preceding four quarters, Simon Property’s FFO per share surpassed the Zacks Consensus Estimate on two occasions for as many misses, the average surprise being 0.82%. This is depicted in the graph below:

Simon Property Group, Inc. Price and EPS Surprise

Simon Property Group, Inc. price-eps-surprise | Simon Property Group, Inc. Quote

In this article, we will dive deep into the U.S. retail real estate market environment and the company's fundamentals and analyze the factors that may have contributed to its second-quarter 2025 performance.

U.S. Retail Real Estate Market in Q2 2025

Per a Cushman & Wakefield (CWK Quick QuoteCWK - Free Report) report, there has been a slight pullback in net absorption for the U.S. shopping center market, resulting in a negative shift in the second quarter. The national vacancy rate increased year over year, but remained low from 2017 to 2019. Asking rents for the U.S. shopping center market grew from the year-ago quarter.

The second quarter witnessed negative net absorption in the U.S. shopping center market, totaling 6.5 million square feet (msf) compared to negative 7.1 msf in the first quarter. Although this is a marginal improvement from the first quarter, it represents absorption being recorded as negative for the first time for two consecutive quarters in the post-pandemic era. The decrease was due to negative net absorption observed in all four regions of the country. According to Cushman & Wakefield Research, 56 of the 81 markets tracked experienced absorption declines.

The lack of new construction is also contributing to the scarcity, as only 4.6 msf of new shopping center space was delivered from the beginning of the year through July 14, 2025. As of the second quarter of 2025, there were only 10.9 msf under construction with an inventory of 4.30 billion square feet.

Although the national vacancy rate increased 50 basis points to 5.8% year over year, the vacancy rate remains lower than 6.4% in the 2017-2019 period.

The reversal in net demand led to easing pressure on asking rents. The asking rents for U.S. shopping centers increased 2.3% year over year to $24.99 per square foot in the second quarter.

Factors to Consider Ahead of SPG’s Q2 Results

Simon Property is expected to have capitalized on its portfolio of high-quality retail assets across the United States and internationally. As consumers returned to in-person shopping following the pandemic slowdown, demand for SPG’s properties is likely to have remained robust in the second quarter.

The company’s strategic focus on omnichannel integration and partnerships with leading retailers is expected to have driven meaningful gains. Additionally, Simon Property’s commitment to mixed-use developments — an increasingly popular concept combining residential, office, and leisure spaces — is likely to have enhanced growth opportunities in key markets. The company’s strong balance sheet is likely to have supported its ongoing expansion efforts and redevelopment initiatives throughout the quarter.

However, rising e-commerce penetration may have posed challenges, potentially weighing on occupancy or sales performance. Moreover, elevated interest expenses are expected to have impacted profitability during the period. Overall, while headwinds persist, SPG’s diversified strategy and premium asset base are likely to have provided resilience amid evolving retail dynamics.

Projections for SPG

The Zacks Consensus Estimate for second-quarter lease income is pegged at $1.39 billion, up from $1.32 billion reported in the year-ago quarter. The consensus mark for management fees and other revenues stands at $34.5 million, up from the prior-year quarter’s reported figure of $33.2 million.

In addition, the consensus estimate for quarterly revenues is presently pegged at $1.51 billion, which indicates an increase of 3.3% year over year.

However, the consensus mark for other income stands at $94 million, down from $109.3 million reported in the prior-year quarter.

We estimate total portfolio ending occupancy of 95.7% in the second quarter, down 20 basis points sequentially. We estimate a year-over-year increase of 4.5% in interest expenses for the second quarter.

Simon Property’s activities during the soon-to-be-reported quarter were inadequate to gain analysts’ confidence. The Zacks Consensus Estimate for second-quarter FFO per share has remained unchanged over the past two months at $3.04. However, it suggests a 4.8% increase year over year.

Here is What Our Quantitative Model Predicts for SPG

Our proven model does not conclusively predict a surprise in terms of FFO per share for Simon Property this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFO beat, which is not the case here.

Simon Property currently carries a Zacks Rank of 3 and has an Earnings ESP of -0.21%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Upcoming Earnings Release

Another retail REIT — The Macerich Company (MAC Quick QuoteMAC - Free Report) — is slated to report on Aug. 11.

The Zacks Consensus Estimate for Macerich’s second-quarter 2025 FFO per share has been revised a cent downward to 34 cents over the past two months. MAC currently has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.