Critical Review: RLJ Lodging Trust (NYSE:RLJ) and Sila Realty Trust (NYSE:SILA)

Sila Realty Trust (NYSE:SILA) and RLJ Lodging Trust (NYSE:RLJ) are both small-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their valuation, dividends, analyst recommendations, risk, profitability, institutional ownership and earnings.

Dividends

Sila Realty Trust pays an annual dividend of $1.60 per share and has a dividend yield of 6.8%. RLJ Lodging Trust pays an annual dividend of $0.60 per share and has a dividend yield of 7.8%. Sila Realty Trust pays out 231.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. RLJ Lodging Trust pays out 1,200.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. RLJ Lodging Trust has raised its dividend for 3 consecutive years. RLJ Lodging Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares Sila Realty Trust and RLJ Lodging Trust”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sila Realty Trust	$193.38 million	6.70	$42.66 million	$0.69	34.07
RLJ Lodging Trust	$1.37 billion	0.84	$68.02 million	$0.05	153.10

RLJ Lodging Trust has higher revenue and earnings than Sila Realty Trust. Sila Realty Trust is trading at a lower price-to-earnings ratio than RLJ Lodging Trust, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Sila Realty Trust and RLJ Lodging Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sila Realty Trust	19.86%	2.80%	1.89%
RLJ Lodging Trust	2.48%	1.78%	0.69%

Analyst Ratings

This is a breakdown of current recommendations and price targets for Sila Realty Trust and RLJ Lodging Trust, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sila Realty Trust	0	3	1	0	2.25
RLJ Lodging Trust	3	3	2	1	2.11

Sila Realty Trust currently has a consensus target price of $26.67, suggesting a potential upside of 13.43%. RLJ Lodging Trust has a consensus target price of $9.08, suggesting a potential upside of 18.66%. Given RLJ Lodging Trust’s higher probable upside, analysts clearly believe RLJ Lodging Trust is more favorable than Sila Realty Trust.

Volatility and Risk

Sila Realty Trust has a beta of -0.02, suggesting that its stock price is 102% less volatile than the S&P 500. Comparatively, RLJ Lodging Trust has a beta of 1.13, suggesting that its stock price is 13% more volatile than the S&P 500.

Institutional and Insider Ownership

92.4% of RLJ Lodging Trust shares are held by institutional investors. 0.8% of Sila Realty Trust shares are held by company insiders. Comparatively, 2.6% of RLJ Lodging Trust shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

RLJ Lodging Trust beats Sila Realty Trust on 11 of the 18 factors compared between the two stocks.

About Sila Realty Trust

Sila Realty Trust, Inc., headquartered in Tampa, Florida, is a net lease real estate investment trust with a strategic focus on investing in the large, growing, and resilient healthcare sector. The Company invests in high quality healthcare facilities along the continuum of care, which, we believe, generate predictable, durable, and growing income streams. Our portfolio comprises high quality tenants in geographically diverse facilities, which are positioned to capitalize on the dynamic delivery of healthcare to patients. As of June 30, 2024, the Company owned 137 real estate properties and two undeveloped land parcels located in 64 markets across the U.S.

About RLJ Lodging Trust

RLJ Lodging Trust is a self-advised, publicly traded real estate investment trust that owns primarily premium-branded, high-margin, focused-service and compact full-service hotels. The Company's portfolio currently consists of 96 hotels with approximately 21,200 rooms, located in 23 states and the District of Columbia and an ownership interest in one unconsolidated hotel with 171 rooms.