New York REIT (NYRT) & First Potomac Realty Trust (FPO) Critical Review

New York REIT (NYSE: NYRT) and First Potomac Realty Trust (NYSE:FPO) are both small-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, institutional ownership, profitability, dividends, analyst recommendations, risk and valuation.

Analyst Ratings

This is a summary of recent ratings and target prices for New York REIT and First Potomac Realty Trust, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
New York REIT 0 1 1 0 2.50
First Potomac Realty Trust 2 1 1 0 1.75

New York REIT currently has a consensus price target of $8.38, indicating a potential upside of 70.57%. First Potomac Realty Trust has a consensus price target of $11.29, indicating a potential upside of 1.32%. Given New York REIT’s stronger consensus rating and higher possible upside, equities research analysts clearly believe New York REIT is more favorable than First Potomac Realty Trust.

Institutional & Insider Ownership

70.4% of New York REIT shares are owned by institutional investors. Comparatively, 93.1% of First Potomac Realty Trust shares are owned by institutional investors. 0.2% of New York REIT shares are owned by insiders. Comparatively, 2.1% of First Potomac Realty Trust shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Risk and Volatility

New York REIT has a beta of 0.68, meaning that its share price is 32% less volatile than the S&P 500. Comparatively, First Potomac Realty Trust has a beta of 0.8, meaning that its share price is 20% less volatile than the S&P 500.

Valuation & Earnings

This table compares New York REIT and First Potomac Realty Trust’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
New York REIT $160.27 million 5.14 -$82.52 million ($0.50) -9.82
First Potomac Realty Trust N/A N/A N/A $0.69 16.14

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

Dividends

First Potomac Realty Trust pays an annual dividend of $0.40 per share and has a dividend yield of 3.6%. New York REIT does not pay a dividend. First Potomac Realty Trust pays out 58.0% of its earnings in the form of a dividend. First Potomac Realty Trust has raised its dividend for 2 consecutive years.

Profitability

This table compares New York REIT and First Potomac Realty Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
New York REIT N/A -1.95% -0.86%
First Potomac Realty Trust -7.99% -2.35% -0.94%

Summary

New York REIT beats First Potomac Realty Trust on 7 of the 13 factors compared between the two stocks.

New York REIT Company Profile

New York REIT, Inc. is a real estate investment trust. The Company owns a portfolio of commercial real estate. The Company’s business is primarily conducted through New York Recovery Operating Partnership, L.P. As of December 31, 2016, the Company owned 19 properties, which aggregated 3.3 million rentable square feet. The Company holds interests in properties of various types, such as office, retail, hotel, parking and storage. The Company’s properties include Design Center, 416 Washington Street, 50 Varick Street, 1440 Broadway, One Worldwide Plaza, 256 West 38th Street, 229 West 36th Street, 333 West 34th Street, 367-387 Bleecker Street, 33 West 56th Street (garage) and 350 West 42nd Street.

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.

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