Simon Property Group (SPG Quick QuoteSPG - Free Report) owns a diversified portfolio of premium retail assets in some of the key markets across the United States and globally. Solid retail real estate demand in the upcoming quarters is likely to drive healthy demand for its properties, aiding leasing activity, occupancy levels and rent growth.

A focus on supporting omnichannel retailing and developing mixed-use assets is encouraging. Also, accretive buyouts and redevelopment efforts augur well for long-term growth. A healthy balance sheet is likely to aid growth endeavors.

However, growing e-commerce adoption and high debt burden raise concerns for Simon. Macroeconomic uncertainty can result in strain on retailers' balance sheets, leading to bankruptcies.

Last month, Simon Property reported second-quarter 2025 real estate FFO per share of $3.05, which surpassed the Zacks Consensus Estimate of $3.04. This also compared favorably with the real estate FFO per share of $2.93 a year ago. Results reflected an increase in revenues, backed by a rise in the base minimum rent per square foot and occupancy levels. Simon Property raised its guidance for 2025 real estate FFO per share at the midpoint.

What’s Supporting SPG Stock?

Simon Property enjoys a wide exposure to retail assets across the United States. In an improving leasing environment, the retail REIT is poised to benefit from its superior assets at premium locations. During the six months ended June 30, 2025, it signed 526 new leases and 997 renewal leases (excluding mall anchors and majors, new development, redevelopment and leases with terms of one year or less) with a fixed minimum rent across its U.S. Malls and Premium Outlets portfolio. This comprised roughly 5.7 million square feet, of which 4.3 million square feet were related to consolidated properties.

Simon Property’s adoption of an omnichannel strategy and successful tie-ups with premium retailers have paid off well in recent years. Particularly, the company’s online retail platform, woven with an omnichannel strategy, augurs well for its long-term growth. Also, the mixed-use development option has gained immense popularity in recent years as it helps catch the attention of people who prefer to live, work, play and shop in the same area. In 2025, Simon Property expects to begin the development of four to five mixed-use destinations with an estimated expenditure of $400-$500 million.

The company has been restructuring its portfolio, aiming at premium acquisitions and transformative redevelopments. In June 2025, Simon Property purchased Swire Properties’ stake in Brickell City Centre’s open-air shopping center and will now wholly own and manage the asset. With more than 90 retail stores, including the likes of Apple, Zara, and Coach and more than 15 premium dining and entertainment locations, the center will act as a major footfall driver for Simon Property. In February 2025, SPG announced that it would launch a multimillion-dollar redevelopment at Smith Haven Mall, which it plans to begin this summer and complete in 2026.

Simon Property is making efforts to bolster its financial flexibility. This enabled the company to exit the second quarter of 2025 with $9.2 billion of liquidity. As of June 30, 2025, Simon Property’s total secured debt to total assets was 16%, while the fixed-charge coverage ratio was 4.6, ahead of the required level. Moreover, the company enjoys a corporate investment-grade credit rating of A- (stable outlook) from Standard and Poor's and a senior unsecured rating of A3 (stable outlook) from Moody’s. With solid balance sheet strength and available capital resources, it remains well-poised to tide over any mayhem and bank on growth opportunities.

Solid dividend payouts are the biggest enticements for REIT investors, and Simon Property is committed to boosting shareholder wealth. The retail REIT has increased its dividend 13 times in the past five years, and its payout has grown 11.69% over the same period. This spate of dividend increases brings additional relief to investors and reaffirms confidence in this retail landlord.

What’s Hurting SPG Stock?

While mall foot traffic has seen a strong recovery since the pandemic, the convenience of online shopping is expected to keep it a preferred option for many consumers. As a result, brick-and-mortar retailers, and by extension, retail REITs like Simon Property, are likely to continue to face pressure on market share.

Moreover, macroeconomic uncertainty, along with the potential effects of fiscal policies such as tariffs, presents risks to the retail real estate market and can result in strain on retailers' balance sheets, leading to bankruptcies.

Despite the Federal Reserve announcing rate cuts late in 2024, the interest rate is still high and is a concern for Simon Property. The company has a substantial debt burden, and its share of total debt as of June 30, 2025, was approximately $31.45 billion. For 2025, our estimate implies a year-over-year rise of 2.4% in the company’s interest expenses.

Over the past three months, shares of this Zacks Rank #3 (Hold) company have risen 10.9%, well ahead of the industry’s growth of 0.3%.

Image Source: Zacks Investment Research

Stocks to Consider

Some better-ranked stocks from the broader REIT sector are American Healthcare REIT, Inc. (AHR Quick QuoteAHR - Free Report) and Terreno Realty (TRNO Quick QuoteTRNO - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for AHR’s 2025 FFO per share has been moved northward over the past month to $1.65.

The consensus estimate for TRNO’s 2025 FFO per share has been revised upward marginally to $2.61 over the past month.

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.