First Potomac Realty Trust (NYSE: FPO) and Inland Real Estate (NYSE:IRC) are both small-cap commercial reits – nec companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, earnings, risk, analyst recommendations, dividends, institutional ownership and profitability.

Analyst Ratings

This is a breakdown of recent ratings for First Potomac Realty Trust and Inland Real Estate, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
First Potomac Realty Trust 2 2 1 0 1.80
Inland Real Estate 0 0 0 0 N/A

First Potomac Realty Trust currently has a consensus target price of $11.03, indicating a potential downside of 0.99%. Given First Potomac Realty Trust’s higher probable upside, analysts plainly believe First Potomac Realty Trust is more favorable than Inland Real Estate.

Earnings & Valuation

This table compares First Potomac Realty Trust and Inland Real Estate’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
First Potomac Realty Trust N/A N/A N/A $0.69 16.14
Inland Real Estate N/A N/A N/A $0.10 106.10

First Potomac Realty Trust is trading at a lower price-to-earnings ratio than Inland Real Estate, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

93.1% of First Potomac Realty Trust shares are held by institutional investors. 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 company is poised for long-term growth.

Dividends

First Potomac Realty Trust pays an annual dividend of $0.40 per share and has a dividend yield of 3.6%. Inland Real Estate pays an annual dividend of $0.57 per share and has a dividend yield of 5.4%. First Potomac Realty Trust pays out 58.0% of its earnings in the form of a dividend. Inland Real Estate pays out 570.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares First Potomac Realty Trust and Inland Real Estate’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
First Potomac Realty Trust -7.99% -2.35% -0.94%
Inland Real Estate -0.49% -2.46% -0.06%

Summary

First Potomac Realty Trust beats Inland Real Estate on 7 of the 10 factors compared between the two stocks.

About First Potomac Realty Trust

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.

About Inland Real Estate

IRC Retail Centers, Inc., formerly Inland Real Estate Corporation, is a real estate investment trust (REIT). The Company owns, operates and develops open-air neighborhood, community and power shopping centers and single tenant retail properties located throughout the Central and Southeastern United States. Through its subsidiaries, Inland Commercial Property Management, Inc. (ICPM) and Inland TRS Property Management, Inc., the Company manages all properties it owns interests in and properties for certain third parties and related parties. The Company owns investment properties located in the States of Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Minnesota, Missouri, Nebraska, New York, North Carolina, Ohio, Oklahoma, South Carolina, Texas, Virginia and Wisconsin. The Company owns interests in approximately 130 investment properties, including those owned through its unconsolidated joint ventures.

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