First Potomac Realty Trust (NYSE: FPO) and Liberty Property Trust (NYSE:LPT) are both commercial reits – nec companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, earnings, profitability, risk, dividends, institutional ownership and valuation.

Volatility & Risk

First Potomac Realty Trust has a beta of 0.8, meaning that its stock price is 20% less volatile than the S&P 500. Comparatively, Liberty Property Trust has a beta of 0.87, meaning that its stock price is 13% less volatile than the S&P 500.

Valuation and Earnings

This table compares First Potomac Realty Trust and Liberty Property Trust’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
First Potomac Realty Trust N/A N/A N/A $0.69 16.14
Liberty Property Trust $746.71 million 8.92 $356.81 million $2.37 19.07

Liberty Property Trust has higher revenue and earnings than First Potomac Realty Trust. First Potomac Realty Trust is trading at a lower price-to-earnings ratio than Liberty Property Trust, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

93.1% of First Potomac Realty Trust shares are owned by institutional investors. Comparatively, 90.4% of Liberty Property Trust shares are owned by institutional investors. 2.1% of First Potomac Realty Trust shares are owned by company insiders. Comparatively, 1.5% of Liberty Property Trust shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings for First Potomac Realty Trust and Liberty Property Trust, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
First Potomac Realty Trust 2 2 1 0 1.80
Liberty Property Trust 0 4 3 0 2.43

First Potomac Realty Trust presently has a consensus target price of $11.03, indicating a potential downside of 0.99%. Liberty Property Trust has a consensus target price of $43.40, indicating a potential downside of 3.96%. Given First Potomac Realty Trust’s higher possible upside, analysts plainly believe First Potomac Realty Trust is more favorable than Liberty Property Trust.

Dividends

First Potomac Realty Trust pays an annual dividend of $0.40 per share and has a dividend yield of 3.6%. Liberty Property Trust pays an annual dividend of $1.60 per share and has a dividend yield of 3.5%. First Potomac Realty Trust pays out 58.0% of its earnings in the form of a dividend. Liberty Property Trust pays out 67.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. First Potomac Realty Trust has increased its dividend for 2 consecutive years. First Potomac Realty Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares First Potomac Realty Trust and Liberty Property Trust’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%
Liberty Property Trust 47.78% 11.41% 5.69%

Summary

Liberty Property Trust beats First Potomac Realty Trust on 8 of the 14 factors compared between the two stocks.

First Potomac Realty Trust Company Profile

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.

Liberty Property Trust Company Profile

Liberty Property Trust (the Trust) is a self-administered and self-managed Maryland real estate investment trust (REIT). The Trust’s assets are owned directly or indirectly, and substantially all of the Trust’s operations are conducted directly or indirectly, by its subsidiary, Liberty Property Limited Partnership (the Operating Partnership). The Company’s segments include Carolinas/Richmond; Chicago/Milwaukee; Florida; Houston; Lehigh/Central PA; Minnesota; Philadelphia; Southeastern PA; United Kingdom, and Other, which includes Arizona; Atlanta; Cincinnati/Columbus/Indianapolis; Dallas; DC Metro; New Jersey; Southern California, and other. The Company owns and operates industrial properties nationally and owns and operates office properties in a focused group of office markets. Additionally, the Company owns certain assets in the United Kingdom. As of December 31, 2016, the Company owned and operated 450 industrial and 55 office properties totaling 86.0 million square feet.

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