During the September 8 episode of Mad Money, a caller inquired if they should buy Simon Property Group, Inc. (NYSE:SPG), and here’s what Jim Cramer had to say:
Oh my god, Simon Property’s 4.25% yield. It is so great. I’ll give you two: I also like Federal Realty. Both of them are excellent. Federal Realty is shopping centers.
Simon Property’s Mall Growth
As per Simon Property Group, Inc.’s second-quarter results, real estate funds from operations (FFO) per share rose 7.9% year over year, while U.S. malls and Premium Outlets were 96% occupied as of June 30. Retailer sales per square foot increased 13.9% to $838 over the trailing 12 months. It raised its 2026 real estate FFO guidance to $13.20-$13.30 per share. At Simon’s September 8 closing price of $211.88, the midpoint of that guidance implies a forward price-to-FFO multiple of approximately 16x. The company had approximately $28.7 billion of mortgages and unsecured indebtedness at June 30, but also reported approximately $9.3 billion of liquidity.
Federal Realty Gets a Lift From Strong Leasing Demand
Federal Realty Investment Trust (NYSE:FRT) offers a different retail exposure through shopping centers. Second-quarter core FFO increased 6.8% year over year to $1.88 per share. Portfolio occupancy was 93.8%, while the leased rate was 96.1%. Additionally, comparable leases signed during the quarter carried rent increases of 15% on a cash basis and 28% on a straight-line basis. Management raised 2026 Core FFO guidance to $7.48-$7.56 per share. At FRT’s September 8 closing price of $117.09, the midpoint of its guidance implies a forward price-to-FFO multiple of approximately 15.6x.
Furthermore, CEO Don Wood said in an August Mad Money interview that Federal Realty serves affluent customers whose wealth allows them to continue buying what they want. On the second-quarter earnings call, Wood said, “there’s been no new supply that’s been added over the last 15-20 years” and that there is “always ample demand for that space.”
Higher Interest Rates Remain the Biggest Risk for SPG and FRT
The biggest risk for both REITs is a prolonged period of elevated interest rates. A September 9 Reuters poll found that 56% of economists expected the Federal Reserve to keep rates unchanged for the rest of 2026, down from 80% in recent months. Higher rates might increase refinancing costs and make dividend-paying real estate less attractive relative to bonds. Simon Property Group, Inc. also carries substantially more debt, with approximately $28.7 billion of mortgages and unsecured indebtedness as of June 30. Meanwhile, Federal Realty Investment Trust had $3.7 billion of fixed-rate debt and $1.1 billion of variable-rate debt as of the same date.
Hedge Funds Pull Back From SPG While FRT Holds Steady
As per Insider Monkey’s data, in Q2, 34 hedge funds held SPG, down from 48 in Q1, while FRT had 30 holders in both quarters. Meanwhile, SPG’s short interest was approximately 2.7%-3% of its public float, while FRT’s was roughly 4%-4.1% of its float.
Both stocks face the same broad risk from sustained higher rates, but their operating profiles differ. Simon Property Group, Inc. offers greater scale and a higher yield, while Federal Realty Investment Trust has maintained stable hedge-fund ownership and continues to post strong leasing results.
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