As brick-and-mortar stores fall out of style, Jim Cramer is getting worried about real estate investment trusts, or REITs, that run malls and shopping centers for the retail sector.
The "Mad Money" host said those REITs have two serious problems, the first being that bricks-and-mortar retailers are not doing well due to the growing popularity of e-commerce.
"As more and more retailers shut down underperforming locations, something that's become a common refrain when these companies report, the retail oriented REITs are going to see their occupancy rates plummet, and they'll have to lower the rent to entice in new tenants," Cramer said.
The other problem hitting retail REITs is the Federal Reserve's plans to continue hiking interest rates, and higher rates make the high-yielding investment trusts less attractive to investors.
"Of course, e-commerce has been crushing mall and shopping-center-based stores for ages. The thing is, that weakness is finally starting to hit their landlords, the retail REITs, which had been unscathed for years, and hitting them in a meaningful way," Cramer said.