Brookfield Canada Office Properties (NYSE: BOXC) and Seritage Growth Properties (NYSE:SRG) are both small-cap commercial reits – nec companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, earnings, dividends, risk, institutional ownership, profitability and valuation.

Dividends

Brookfield Canada Office Properties pays an annual dividend of $0.97 per share and has a dividend yield of 3.9%. Seritage Growth Properties pays an annual dividend of $1.00 per share and has a dividend yield of 2.5%. Brookfield Canada Office Properties pays out 83.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Seritage Growth Properties pays out -71.9% of its earnings in the form of a dividend.

Institutional & Insider Ownership

20.1% of Brookfield Canada Office Properties shares are held by institutional investors. Comparatively, 75.0% of Seritage Growth Properties shares are held by institutional investors. 9.8% of Seritage Growth Properties shares are held by 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.

Risk and Volatility

Brookfield Canada Office Properties has a beta of 1.04, indicating that its stock price is 4% more volatile than the S&P 500. Comparatively, Seritage Growth Properties has a beta of 1.06, indicating that its stock price is 6% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Brookfield Canada Office Properties and Seritage Growth Properties, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Brookfield Canada Office Properties 0 1 0 0 2.00
Seritage Growth Properties 1 1 0 0 1.50

Seritage Growth Properties has a consensus target price of $43.00, indicating a potential upside of 6.70%. Given Seritage Growth Properties’ higher possible upside, analysts plainly believe Seritage Growth Properties is more favorable than Brookfield Canada Office Properties.

Profitability

This table compares Brookfield Canada Office Properties and Seritage Growth Properties’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Brookfield Canada Office Properties 7.64% 1.26% 0.65%
Seritage Growth Properties -17.97% -3.33% -1.67%

Valuation and Earnings

This table compares Brookfield Canada Office Properties and Seritage Growth Properties’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Brookfield Canada Office Properties N/A N/A N/A $1.16 21.52
Seritage Growth Properties $248.67 million 5.74 -$51.55 million ($1.39) -28.99

Brookfield Canada Office Properties has higher revenue, but lower earnings than Seritage Growth Properties. Seritage Growth Properties is trading at a lower price-to-earnings ratio than Brookfield Canada Office Properties, indicating that it is currently the more affordable of the two stocks.

Brookfield Canada Office Properties Company Profile

Brookfield Canada Office Properties is a Canada-based real estate investment trust (REIT). The Company invests, develops and operates commercial office properties in Toronto, Ottawa, Calgary and Vancouver. The Company’s commercial-property portfolio consists of interests in approximately 25 properties totaling approximately 21.1 million square feet, including approximately 4.0 million square feet of parking and other. The Company’s development portfolio consists of the Brookfield Place Calgary East development site totaling approximately 1.4 million square feet in Calgary. The Company also invests in ongoing maintenance and capital improvement projects. The Company focuses on the markets, which include financial, government and energy sectors, which are primarily located in the cities of Toronto and Calgary. Its properties include 2 Queen Street East, Queen’s Quay Terminal, Exchange Tower, Bankers Hall Retail, Suncor Energy Centre, Jean Edmonds Tower and Royal Centre.

Seritage Growth Properties Company Profile

Seritage Growth Properties (Seritage) is a self-administered and self-managed real estate investment trust. The Company is engaged in the acquisition, ownership, development, redevelopment, management and leasing of diversified retail real estate throughout the United States. Its assets are held by and its operations are primarily conducted through, directly or indirectly, Seritage Growth Properties, L.P. (Operating Partnership). As of December 31, 2016, the Company’s portfolio included approximately 42.2 million square feet of gross leasable area (GLA), consisting of 235 owned properties totaling over 36.8 million square feet of GLA across 49 states and Puerto Rico, and interests in 31 joint venture properties totaling over 5.4 million square feet of GLA across 17 states. As of December 31, 2016, it included over 3,000 acres of land or approximately 13 acres per site for its owned properties. Its properties are primarily located in areas, including in California, Florida and Texas.

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