First Potomac Realty Trust (NYSE: FPO) and Kilroy Realty (NYSE:KRC) are both commercial reits – nec companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, profitability, valuation, analyst recommendations, dividends, earnings and institutional ownership.
Institutional and Insider Ownership
93.1% of First Potomac Realty Trust shares are held by institutional investors. Comparatively, 97.7% of Kilroy Realty shares are held by institutional investors. 2.1% of First Potomac Realty Trust shares are held by company insiders. Comparatively, 2.2% of Kilroy Realty shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
First Potomac Realty Trust has a beta of 0.8, indicating that its share price is 20% less volatile than the S&P 500. Comparatively, Kilroy Realty has a beta of 0.79, indicating that its share price is 21% less volatile than the S&P 500.
First Potomac Realty Trust pays an annual dividend of $0.40 per share and has a dividend yield of 3.6%. Kilroy Realty pays an annual dividend of $1.70 per share and has a dividend yield of 2.3%. First Potomac Realty Trust pays out 58.0% of its earnings in the form of a dividend. Kilroy Realty pays out 111.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. First Potomac Realty Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.
This table compares First Potomac Realty Trust and Kilroy Realty’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|First Potomac Realty Trust||-7.99%||-2.35%||-0.94%|
This is a breakdown of recent recommendations and price targets for First Potomac Realty Trust and Kilroy Realty, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|First Potomac Realty Trust||2||1||1||0||1.75|
First Potomac Realty Trust presently has a consensus target price of $11.29, suggesting a potential upside of 1.32%. Kilroy Realty has a consensus target price of $77.63, suggesting a potential upside of 3.99%. Given Kilroy Realty’s stronger consensus rating and higher possible upside, analysts plainly believe Kilroy Realty is more favorable than First Potomac Realty Trust.
Earnings and Valuation
This table compares First Potomac Realty Trust and Kilroy Realty’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|First Potomac Realty Trust||N/A||N/A||N/A||$0.69||16.14|
|Kilroy Realty||$642.57 million||11.43||$293.78 million||$1.52||49.11|
Kilroy Realty has higher revenue and earnings than First Potomac Realty Trust. First Potomac Realty Trust is trading at a lower price-to-earnings ratio than Kilroy Realty, indicating that it is currently the more affordable of the two stocks.
Kilroy Realty beats First Potomac Realty Trust on 11 of the 14 factors compared between the two stocks.
About First Potomac Realty Trust
First Potomac Realty Trust (First Potomac) is engaged in ownership, management, redevelopment and development of office and business park properties in the greater Washington, D.C. region. The Company’s segments include Washington, D.C., Maryland, Northern Virginia and Southern Virginia. The Company conducts its business through First Potomac Realty Investment Limited Partnership, its operating partnership. The Company’s portfolio consist a mix of single-tenant and multi-tenant office properties, and business parks. The office properties are single-story and multi-story buildings that are primarily for office uses, and business parks consists of buildings with office features combined with some industrial property space. As of December 31, 2016, the Company owned properties totaling 6.7 million square feet and had a non-controlling ownership interest in properties totaling an additional 0.9 million square feet through five unconsolidated joint ventures.
About Kilroy Realty
Kilroy Realty Corporation is a real estate investment trust (REIT). The Company operates through the office properties segment. It operates in office and mixed-use submarkets along the West Coast. It owns, develops, acquires and manages real estate assets, consisting primarily of Class A properties in the coastal regions of Los Angeles, Orange County, San Diego County, the San Francisco Bay Area and Greater Seattle. It owns its interests in all of its real estate assets through Kilroy Realty, L.P. (Operating Partnership) and the Kilroy Realty Finance Partnership, L.P. (Finance Partnership). Its stabilized portfolio includes all of its properties with the exception of development and redevelopment properties under construction or committed for construction, lease-up properties, real estate assets held for sale and undeveloped land. As of December 31, 2016, its stabilized portfolio of operating properties included 108 stabilized office properties and a stabilized residential property.
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