Whitestone REIT (NYSE: WSR) and Seritage Growth Properties (NYSE:SRG) are both small-cap commercial reits – nec companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, analyst recommendations, risk, institutional ownership, dividends, valuation and earnings.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Whitestone REIT and Seritage Growth Properties, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Whitestone REIT 1 1 2 0 2.25
Seritage Growth Properties 1 1 0 0 1.50

Whitestone REIT presently has a consensus price target of $14.67, indicating a potential upside of 1.29%. Seritage Growth Properties has a consensus price target of $43.00, indicating a potential upside of 5.44%. Given Seritage Growth Properties’ higher possible upside, analysts plainly believe Seritage Growth Properties is more favorable than Whitestone REIT.

Insider and Institutional Ownership

44.9% of Whitestone REIT shares are held by institutional investors. Comparatively, 75.0% of Seritage Growth Properties shares are held by institutional investors. 5.3% of Whitestone REIT shares are held by company insiders. Comparatively, 9.8% of Seritage Growth Properties shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Dividends

Whitestone REIT pays an annual dividend of $1.14 per share and has a dividend yield of 7.9%. Seritage Growth Properties pays an annual dividend of $1.00 per share and has a dividend yield of 2.5%. Whitestone REIT pays out 633.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Seritage Growth Properties pays out -71.9% of its earnings in the form of a dividend.

Valuation & Earnings

This table compares Whitestone REIT and Seritage Growth Properties’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Whitestone REIT $104.44 million 5.34 $7.93 million $0.18 80.44
Seritage Growth Properties $248.67 million 5.80 -$51.55 million ($1.39) -29.34

Whitestone REIT has higher revenue, but lower earnings than Seritage Growth Properties. Seritage Growth Properties is trading at a lower price-to-earnings ratio than Whitestone REIT, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Whitestone REIT and Seritage Growth Properties’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Whitestone REIT 5.77% 2.22% 0.72%
Seritage Growth Properties -17.97% -3.33% -1.67%

Summary

Whitestone REIT beats Seritage Growth Properties on 8 of the 15 factors compared between the two stocks.

Whitestone REIT Company Profile

Whitestone REIT is a real estate investment trust. The Company is engaged in owning and operating commercial properties in culturally diverse markets in various metropolitan areas. The Company’s acquisition targets are located in densely populated, culturally diverse neighborhoods, primarily in and around Austin, Chicago, Dallas-Fort Worth, Houston, Phoenix and San Antonio. As of December 31, 2016, the Company owned or held interests in 69 commercial properties, including 15 properties in Houston, five properties in Dallas-Fort Worth, three properties in San Antonio, four properties in Austin, 27 properties in the Scottsdale and Phoenix, Arizona metropolitan areas, and one property in Buffalo Grove, Illinois, a suburb of Chicago. As of December 31, 2016, the Company’s properties included Heritage Trace Plaza, Headquarters Village, La Mirada, The Marketplace at Central, Mercado at Scottsdale Ranch, Paradise Plaza, Parkside Village North, Pima Norte and Quinlan Crossing.

Seritage Growth Properties Company Profile

Seritage Growth Properties (Seritage) is a self-administered and self-managed real estate investment trust. The Company is engaged in the acquisition, ownership, development, redevelopment, management and leasing of diversified retail real estate throughout the United States. Its assets are held by and its operations are primarily conducted through, directly or indirectly, Seritage Growth Properties, L.P. (Operating Partnership). As of December 31, 2016, the Company’s portfolio included approximately 42.2 million square feet of gross leasable area (GLA), consisting of 235 owned properties totaling over 36.8 million square feet of GLA across 49 states and Puerto Rico, and interests in 31 joint venture properties totaling over 5.4 million square feet of GLA across 17 states. As of December 31, 2016, it included over 3,000 acres of land or approximately 13 acres per site for its owned properties. Its properties are primarily located in areas, including in California, Florida and Texas.

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