Critical Survey: Acadia Realty Trust (AKR) versus Pennsylvania Real Estate Investment Trust (PEI)

Acadia Realty Trust (NYSE: AKR) and Pennsylvania Real Estate Investment Trust (NYSE:PEI) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, valuation, profitability, institutional ownership, analyst recommendations, dividends and risk.

Dividends

Acadia Realty Trust pays an annual dividend of $1.04 per share and has a dividend yield of 3.5%. Pennsylvania Real Estate Investment Trust pays an annual dividend of $0.84 per share and has a dividend yield of 7.5%. Acadia Realty Trust pays out 162.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Pennsylvania Real Estate Investment Trust pays out -64.1% of its earnings in the form of a dividend. Acadia Realty Trust has raised its dividend for 4 consecutive years and Pennsylvania Real Estate Investment Trust has raised its dividend for 5 consecutive years. Pennsylvania Real Estate Investment Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

Acadia Realty Trust has a beta of 0.6, meaning that its share price is 40% less volatile than the S&P 500. Comparatively, Pennsylvania Real Estate Investment Trust has a beta of 1.25, meaning that its share price is 25% more volatile than the S&P 500.

Profitability

This table compares Acadia Realty Trust and Pennsylvania Real Estate Investment Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Acadia Realty Trust 23.63% 2.50% 1.37%
Pennsylvania Real Estate Investment Trust -18.13% -9.06% -2.66%

Earnings and Valuation

This table compares Acadia Realty Trust and Pennsylvania Real Estate Investment Trust’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Acadia Realty Trust $251.17 million 9.94 $140.01 million $0.64 46.64
Pennsylvania Real Estate Investment Trust $392.34 million 2.00 $217.76 million ($1.31) -8.56

Pennsylvania Real Estate Investment Trust has higher revenue and earnings than Acadia Realty Trust. Pennsylvania Real Estate Investment Trust is trading at a lower price-to-earnings ratio than Acadia Realty Trust, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

99.0% of Pennsylvania Real Estate Investment Trust shares are owned by institutional investors. 1.7% of Acadia Realty Trust shares are owned by company insiders. Comparatively, 4.4% of Pennsylvania Real Estate Investment Trust shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings for Acadia Realty Trust and Pennsylvania Real Estate Investment Trust, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Acadia Realty Trust 0 1 3 0 2.75
Pennsylvania Real Estate Investment Trust 1 6 0 0 1.86

Acadia Realty Trust currently has a consensus target price of $33.50, indicating a potential upside of 12.23%. Pennsylvania Real Estate Investment Trust has a consensus target price of $14.08, indicating a potential upside of 25.52%. Given Pennsylvania Real Estate Investment Trust’s higher possible upside, analysts plainly believe Pennsylvania Real Estate Investment Trust is more favorable than Acadia Realty Trust.

Summary

Pennsylvania Real Estate Investment Trust beats Acadia Realty Trust on 9 of the 16 factors compared between the two stocks.

About Acadia Realty Trust

Acadia Realty Trust is a real estate investment trust. The Company is focused on the ownership, acquisition, development and management of retail properties located in the United States. It operates through three segments: Core Portfolio, Funds and Structured Financing. Core Portfolio and Fund properties primarily consist of street and urban retail, and dense suburban shopping centers. Funds holds primarily retail real estate in which it co-invests with institutional investors. Structured Financing consists of earnings and expenses related to notes and mortgages receivable, which are held within the Core Portfolio or the Funds. As of December 31, 2016, it had ownership interests in 182 properties within its core portfolio. In the Core Portfolio segment, the Company owned an interest in a 311,000 square foot shopping center, a 28,000 square foot retail and an interest in an 87,000 square foot retail property, among others, as of December 31, 2016.

About Pennsylvania Real Estate Investment Trust

Pennsylvania Real Estate Investment Trust (PREIT) is a self-managed and self-administered real estate investment trust (REIT). The Company’s primary business is owning and operating retail shopping malls, which it does primarily through operating partnership, PREIT Associates, L.P. (PREIT Associates). The Company is engaged in the ownership, management, leasing, acquisition, redevelopment, development and disposition of shopping malls. The Company has a primary investment focus on retail shopping malls located in the eastern half of the United States, primarily in the Mid-Atlantic region. As of December 31, 2016, the Company owned interests in 30 retail properties, of which 26 are operating properties and four are development or redevelopment properties. As of December 31, 2016, the Company’s 26 operating properties included 22 shopping malls and four other retail properties, had a total of 21.7 million square feet and were located in nine states.

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