Critical Comparison: Alexandria Real Estate Equities (ARE) vs. First Potomac Realty Trust (FPO)
Alexandria Real Estate Equities (NYSE: ARE) and First Potomac Realty Trust (NYSE:FPO) are both finance companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, risk, profitability, institutional ownership, analyst recommendations, earnings and valuation.
Insider & Institutional Ownership
93.2% of First Potomac Realty Trust shares are held by institutional investors. 1.6% of Alexandria Real Estate Equities shares are held by insiders. Comparatively, 2.1% of First Potomac Realty Trust shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.
Alexandria Real Estate Equities pays an annual dividend of $3.44 per share and has a dividend yield of 2.9%. First Potomac Realty Trust pays an annual dividend of $0.40 per share and has a dividend yield of 3.6%. Alexandria Real Estate Equities pays out 860.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. First Potomac Realty Trust pays out 58.0% of its earnings in the form of a dividend. Alexandria Real Estate Equities has increased its dividend for 6 consecutive years. First Potomac Realty Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.
Valuation & Earnings
This table compares Alexandria Real Estate Equities and First Potomac Realty Trust’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Alexandria Real Estate Equities||$1.02 billion||10.96||$639.55 million||$0.40||298.41|
|First Potomac Realty Trust||$154.33 million||4.23||$83.35 million||$0.69||16.12|
Alexandria Real Estate Equities has higher revenue and earnings than First Potomac Realty Trust. First Potomac Realty Trust is trading at a lower price-to-earnings ratio than Alexandria Real Estate Equities, indicating that it is currently the more affordable of the two stocks.
Volatility and Risk
Alexandria Real Estate Equities has a beta of 0.87, suggesting that its share price is 13% less volatile than the S&P 500. Comparatively, First Potomac Realty Trust has a beta of 0.8, suggesting that its share price is 20% less volatile than the S&P 500.
This is a breakdown of current ratings and recommmendations for Alexandria Real Estate Equities and First Potomac Realty Trust, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Alexandria Real Estate Equities||0||0||3||0||3.00|
|First Potomac Realty Trust||2||2||1||0||1.80|
Alexandria Real Estate Equities presently has a consensus price target of $126.00, suggesting a potential upside of 5.56%. First Potomac Realty Trust has a consensus price target of $11.03, suggesting a potential downside of 0.81%. Given Alexandria Real Estate Equities’ stronger consensus rating and higher probable upside, equities analysts clearly believe Alexandria Real Estate Equities is more favorable than First Potomac Realty Trust.
This table compares Alexandria Real Estate Equities and First Potomac Realty Trust’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Alexandria Real Estate Equities||9.45%||3.11%||1.49%|
|First Potomac Realty Trust||26.86%||8.96%||3.32%|
Alexandria Real Estate Equities beats First Potomac Realty Trust on 9 of the 17 factors compared between the two stocks.
Alexandria Real Estate Equities Company Profile
Alexandria Real Estate Equities, Inc. is a real estate investment (REIT). The Company is engaged in the business of providing space for lease to the life science and technology industries. It focuses on collaborative life science and technology campuses. It develops urban cluster campuses and ecosystems. As of December 31, 2016, the Company had 199 properties in North America. As of December 31, 2016, its asset base in North America consisted of 25.2 million square feet, including 19.9 million rentable square feet/foot (RSF) of operating properties, and development and redevelopment of under construction or pre-construction, as well as 5.3 million square feet of future ground-up development projects. Its properties are located in various areas, including Greater Boston, San Francisco, New York City, San Diego, Seattle, Maryland and Research Triangle Park. Its properties include Alexandria Technology Square, Alexandria Park at 128 and Alexandria Technology Center-Gateway.
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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