Kilroy Realty Corporation (KRC) and RAIT Financial Trust (RAS) Critical Analysis
Kilroy Realty Corporation (NYSE: KRC) and RAIT Financial Trust (NYSE:RAS) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, earnings, valuation, risk, dividends, analyst recommendations and institutional ownership.
This is a summary of recent recommendations for Kilroy Realty Corporation and RAIT Financial Trust, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Kilroy Realty Corporation||0||5||4||0||2.44|
|RAIT Financial Trust||1||2||0||0||1.67|
Kilroy Realty Corporation presently has a consensus target price of $77.50, suggesting a potential upside of 8.97%. RAIT Financial Trust has a consensus target price of $1.43, suggesting a potential upside of 95.21%. Given RAIT Financial Trust’s higher probable upside, analysts plainly believe RAIT Financial Trust is more favorable than Kilroy Realty Corporation.
This table compares Kilroy Realty Corporation and RAIT Financial Trust’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Kilroy Realty Corporation||21.75%||4.11%||2.24%|
|RAIT Financial Trust||-99.46%||0.98%||0.15%|
Kilroy Realty Corporation pays an annual dividend of $1.70 per share and has a dividend yield of 2.4%. RAIT Financial Trust pays an annual dividend of $0.20 per share and has a dividend yield of 27.4%. Kilroy Realty Corporation pays out 122.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. RAIT Financial Trust pays out -13.0% of its earnings in the form of a dividend. RAIT Financial Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.
Earnings and Valuation
This table compares Kilroy Realty Corporation and RAIT Financial Trust’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Kilroy Realty Corporation||$691.90 million||10.10||$400.80 million||$1.39||51.17|
|RAIT Financial Trust||$58.82 million||1.16||-$143.38 million||($1.54)||-0.47|
Kilroy Realty Corporation has higher revenue and earnings than RAIT Financial Trust. RAIT Financial Trust is trading at a lower price-to-earnings ratio than Kilroy Realty Corporation, indicating that it is currently the more affordable of the two stocks.
Insider & Institutional Ownership
99.7% of Kilroy Realty Corporation shares are held by institutional investors. Comparatively, 59.9% of RAIT Financial Trust shares are held by institutional investors. 2.3% of Kilroy Realty Corporation shares are held by company insiders. Comparatively, 1.3% of RAIT Financial Trust shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Risk & Volatility
Kilroy Realty Corporation has a beta of 0.75, suggesting that its share price is 25% less volatile than the S&P 500. Comparatively, RAIT Financial Trust has a beta of 1.68, suggesting that its share price is 68% more volatile than the S&P 500.
Kilroy Realty Corporation beats RAIT Financial Trust on 11 of the 15 factors compared between the two stocks.
About Kilroy Realty Corporation
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.
About RAIT Financial Trust
RAIT Financial Trust (RAIT) is a real estate investment trust (REIT). The Company focuses on providing commercial real estate (CRE) financing throughout the United States. The core of its business is a full service CRE lending platform focused on first lien loans. It offers customized lending solutions to meet borrower needs and internal credit goals. It offers personalized middle-market financing solutions and a complement of lending products for CRE. The Company may also offer mezzanine loans and preferred equity interests in limited circumstances to support first lien loans. It is engaged in floating rate securitization programs and has access to multiple sources of funding, including senior debt, convertible securities, preferred securities and common securities. The Company also owns and manages a portfolio of CRE properties, and manages real estate assets for third parties. The Company is engaged in lending, owning and managing CRE assets throughout the United States.
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