Critical Comparison: PS Business Parks (PSB) versus Global Net Lease (GNL)

PS Business Parks (NYSE: PSB) and Global Net Lease (NYSE:GNL) are both commercial reits – nec companies, but which is the better stock? We will contrast the two businesses based on the strength of their dividends, profitability, risk, analyst recommendations, valuation, earnings and institutional ownership.

Dividends

PS Business Parks pays an annual dividend of $3.40 per share and has a dividend yield of 2.5%. Global Net Lease pays an annual dividend of $2.13 per share and has a dividend yield of 9.9%. PS Business Parks pays out 113.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Global Net Lease pays out 434.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. PS Business Parks has increased its dividend for 3 consecutive years.

Profitability

This table compares PS Business Parks and Global Net Lease’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
PS Business Parks 39.78% 16.95% 7.69%
Global Net Lease 12.65% 2.29% 1.06%

Analyst Ratings

This is a breakdown of current ratings for PS Business Parks and Global Net Lease, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
PS Business Parks 1 1 0 0 1.50
Global Net Lease 0 2 0 0 2.00

PS Business Parks currently has a consensus price target of $107.00, suggesting a potential downside of 19.92%. Global Net Lease has a consensus price target of $25.23, suggesting a potential upside of 17.71%. Given Global Net Lease’s stronger consensus rating and higher probable upside, analysts plainly believe Global Net Lease is more favorable than PS Business Parks.

Volatility and Risk

PS Business Parks has a beta of 0.57, indicating that its share price is 43% less volatile than the S&P 500. Comparatively, Global Net Lease has a beta of 0.68, indicating that its share price is 32% less volatile than the S&P 500.

Insider and Institutional Ownership

72.6% of PS Business Parks shares are owned by institutional investors. Comparatively, 42.6% of Global Net Lease shares are owned by institutional investors. 1.6% of PS Business Parks shares are owned by insiders. Comparatively, 0.2% of Global Net Lease shares are owned 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.

Earnings and Valuation

This table compares PS Business Parks and Global Net Lease’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
PS Business Parks $387.39 million 9.40 $128.02 million $3.01 44.39
Global Net Lease $214.17 million 6.73 $47.14 million $0.49 43.73

PS Business Parks has higher revenue and earnings than Global Net Lease. Global Net Lease is trading at a lower price-to-earnings ratio than PS Business Parks, indicating that it is currently the more affordable of the two stocks.

Summary

PS Business Parks beats Global Net Lease on 12 of the 16 factors compared between the two stocks.

About PS Business Parks

PS Business Parks, Inc. is a self-advised and self-managed real estate investment trust (REIT). The Company owns, operates and develops commercial properties, primarily multi-tenant flex, office and industrial parks. It focuses on owning concentrated business parks. PS Business Parks, L.P. (the Operating Partnership) is a California limited partnership, which owns directly or indirectly substantially all of its assets and through, which the Company conducts substantially all of its business. PSB is the partner of the Operating Partnership and, as of December 31, 2016, owned 77.9% of the common partnership units. The remaining common partnership units are owned by Public Storage (PS). As of December 31, 2016, the Company owned and operated 28.1 million rentable square feet of commercial space, comprising 99 business parks, in the states, including California, Texas, Virginia, Florida, Maryland and Washington. It also manages 684,000 rentable square feet on behalf of PS.

About Global Net Lease

Global Net Lease, Inc. is a real estate investment trust. The Company’s business consists of owning, managing, operating, leasing, acquiring, investing in and disposing of real estate assets. It owns and invests in commercial properties principally in the United States, the United Kingdom and continental Europe that are then leased to companies. It was formed to primarily acquire a portfolio of commercial properties, with an emphasis on sale-leaseback transactions involving single tenant net-leased commercial properties. As of December 31, 2016, it owned 310 properties consisting of 22 million rentable square feet. As of December 31, 2016, its owned 310 properties, including 241 properties located in the United States and Puerto Rico, 43 properties located in the United Kingdom and 26 properties located across continental Europe. It may also originate or acquire first mortgage loans secured by real estate. Its business is conducted through Global Net Lease Operating Partnership, L.P.

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