Investing.com -- Barclays has initiated coverage on six U.S. real estate investment trusts (REITs) in the shopping center and mall/outlet sectors, assigning Overweight ratings to Kimco Realty (NYSE:KIM) and Federal Realty Investment Trust (NYSE:FRT).
The remaining four names—Regency Centers Corporation (NASDAQ:REG), Phillips Edison & Co (NASDAQ:PECO), Simon Property Group (NYSE:SPG), and Tanger Inc (NYSE:SKT)—are rated Equal Weight.
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The move highlights Barclays’ preference for companies with strong balance sheets and improving free cash flow profiles.
"We are less excited about companies accelerating funds from operations (FFO) growth through M&A, given significant market cap rate compression in shopping centers broadly and therefore reduced prospective investment returns," the analysts wrote.
Kimco is Barclays’ top pick, described as a “large cap, high-quality, diversified ‘proxy’ for grocery-anchored shopping centers.”
The analysts note the stock “screens cheaply against its peers despite above-average FFO per share growth in 2025 (+5%), strong blended leasing spreads, and a stabilizing free cash flow profile.”
“We believe the stock will re-rate positively relative to peers over the next 12 months, bringing KIM closer to its historical average of a modest sector premium,” they added.
Federal Realty is also rated Overweight, with Barclays expecting it to “generate above-average FFO per share growth, relative to the peer set, for the next two years (~4% to 5%).”
While the stock has underperformed due to a mix of coastal market concerns and costly developments, Barclays sees its shift toward lower-risk capital allocation and possible share repurchases as potential catalysts.
For the four stocks rated Equal Weight, Barclays sees more limited upside. Simon and Tanger are both exposed to tariff-sensitive apparel retailers, while PECO and Regency benefit from grocery-anchored portfolios but appear fairly valued.
On Simon, the analysts caution that “the headwinds within the apparel-dominated mall sector are real,” and note that despite the quality of its assets, valuation pressure could persist without tariff clarity.
Barclays maintains a Neutral view on the broader retail REIT sector, citing balanced risks and opportunities.
“Absent full clarity on the tariff front especially, we do not foresee a significant near-term catalyst for Retail to re-rate against other REITs,” the report states.
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