Barclays begins coverage on six U.S. shopping center REITs, rates 2 stocks Buy

Investing.com -- Barclays (LON:BARC) 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.

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.