Critical Contrast: City Office REIT (CIO) & Highwoods Properties (HIW)
City Office REIT (NYSE: CIO) and Highwoods Properties (NYSE:HIW) are both finance companies, but which is the better business? We will compare the two companies based on the strength of their earnings, valuation, risk, institutional ownership, dividends, profitability and analyst recommendations.
Earnings & Valuation
This table compares City Office REIT and Highwoods Properties’ revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|City Office REIT||$90.65 million||4.60||$47.13 million||($0.13)||-105.92|
|Highwoods Properties||$683.61 million||7.87||$366.80 million||$1.24||42.01|
Highwoods Properties has higher revenue and earnings than City Office REIT. City Office REIT is trading at a lower price-to-earnings ratio than Highwoods Properties, indicating that it is currently the more affordable of the two stocks.
This table compares City Office REIT and Highwoods Properties’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|City Office REIT||3.70%||1.91%||0.51%|
City Office REIT pays an annual dividend of $0.94 per share and has a dividend yield of 6.8%. Highwoods Properties pays an annual dividend of $1.76 per share and has a dividend yield of 3.4%. City Office REIT pays out -723.1% of its earnings in the form of a dividend. Highwoods Properties pays out 141.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. City Office REIT is clearly the better dividend stock, given its higher yield and lower payout ratio.
Institutional & Insider Ownership
55.4% of City Office REIT shares are owned by institutional investors. Comparatively, 98.1% of Highwoods Properties shares are owned by institutional investors. 3.2% of City Office REIT shares are owned by insiders. Comparatively, 1.9% of Highwoods Properties shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.
Risk and Volatility
City Office REIT has a beta of 0.24, meaning that its share price is 76% less volatile than the S&P 500. Comparatively, Highwoods Properties has a beta of 0.89, meaning that its share price is 11% less volatile than the S&P 500.
This is a summary of recent ratings and recommmendations for City Office REIT and Highwoods Properties, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|City Office REIT||0||1||3||0||2.75|
City Office REIT currently has a consensus target price of $14.83, indicating a potential upside of 7.72%. Highwoods Properties has a consensus target price of $54.67, indicating a potential upside of 4.95%. Given City Office REIT’s stronger consensus rating and higher probable upside, equities research analysts clearly believe City Office REIT is more favorable than Highwoods Properties.
Highwoods Properties beats City Office REIT on 10 of the 16 factors compared between the two stocks.
About City Office REIT
City Office REIT, Inc. is a real estate investment trust. The Company is focused on acquiring, owning and operating office properties located primarily in metropolitan areas in the Southern and Western United States. It conducts its operations primarily through City Office REIT Operating Partnership, L.P. (the Operating Partnership). As of December 31, 2016, it owned 18 office complexes consisting of 37 office buildings with a total of approximately 4.4 million square feet of net rentable area (NRA) in the metropolitan areas of Boise, Dallas, Denver, Orlando, Phoenix, Portland and Tampa. Its properties include Park Tower, City Center, Intellicenter and Carillon Point in Tampa, Florida; Cherry Creek, Plaza 25, DTC Crossroads, Superior Pointe and Logan Tower in Denver, Colorado; Washington Group Plaza in Boise, Idaho; FRP Collection, Central Fairwinds and FRP Ingenuity Drive in Orlando, Florida; 190 Office Center and Lake Vista Pointe in Dallas, Texas, and SanTan in Phoenix, Arizona.
About Highwoods Properties
Highwoods Properties, Inc. is an office real estate investment trust (REIT). The Company’s primary business is the operation, acquisition and development of office properties. The Company’s segments include Office and Other. The Company owns, develops, acquires, leases and manages properties primarily in the best business districts (BBDs) of Atlanta, Greensboro, Memphis, Nashville, Orlando, Pittsburgh, Raleigh, Richmond and Tampa. The Company conducts its activities through Highwoods Realty Limited Partnership (the Operating Partnership). The Company offers a range of real estate services to its customers. The Company offers services, including asset management, construction management, design and space planning, and renovation and re-positioning. The Company provides its customers with services, such as build-to-suit construction and space modification, including tenant improvements and expansions.
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