Critical Contrast: Highlands REIT (OTCMKTS:HHDS) vs. Broadstone Net Lease (NYSE:BNL)

Broadstone Net Lease (NYSE:BNL) and Highlands REIT (OTCMKTS:HHDS) are both real estate companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, risk, valuation, earnings, profitability and institutional ownership.

Analyst Recommendations

This is a breakdown of current ratings for Broadstone Net Lease and Highlands REIT, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Broadstone Net Lease	0	4	7	0	2.64
Highlands REIT	0	0	0	0	0.00

Broadstone Net Lease presently has a consensus target price of $22.78, indicating a potential upside of 9.61%. Given Broadstone Net Lease’s stronger consensus rating and higher possible upside, analysts plainly believe Broadstone Net Lease is more favorable than Highlands REIT.

Volatility and Risk

Broadstone Net Lease has a beta of 0.91, meaning that its share price is 9% less volatile than the S&P 500. Comparatively, Highlands REIT has a beta of 22.44, meaning that its share price is 2,144% more volatile than the S&P 500.

Insider and Institutional Ownership

89.1% of Broadstone Net Lease shares are held by institutional investors. Comparatively, 0.0% of Highlands REIT shares are held by institutional investors. 1.0% of Broadstone Net Lease shares are held by insiders. Comparatively, 2.3% of Highlands REIT shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Broadstone Net Lease and Highlands REIT’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Broadstone Net Lease	30.61%	4.83%	2.54%
Highlands REIT	-31.82%	-6.18%	-3.61%

Valuation and Earnings

This table compares Broadstone Net Lease and Highlands REIT”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Broadstone Net Lease	$476.17 million	8.37	$96.50 million	$0.76	27.34
Highlands REIT	$37.41 million	0.38	-$11.10 million	($0.01)	-2.00

Broadstone Net Lease has higher revenue and earnings than Highlands REIT. Highlands REIT is trading at a lower price-to-earnings ratio than Broadstone Net Lease, indicating that it is currently the more affordable of the two stocks.

Summary

Broadstone Net Lease beats Highlands REIT on 12 of the 14 factors compared between the two stocks.

About Broadstone Net Lease

Broadstone Net Lease, Inc. (the Corporation) is a Maryland corporation formed on October 18, 2007, that elected to be taxed as a real estate investment trust (REIT) commencing with the taxable year ended December 31, 2008. Broadstone Net Lease, LLC (the Corporation’s operating company, or the OP), is the entity through which the Corporation conducts its business and owns (either directly or through subsidiaries) all of the Corporation’s properties. The Corporation is the sole managing member of the OP. The membership units not owned by the Corporation are referred to as OP Units or non-controlling interests. As the Corporation conducts substantially all of its operations through the OP, it is structured as what is referred to as an umbrella partnership real estate investment trust (UPREIT). The Corporation’s common stock is listed on the New York Stock Exchange under the symbol BNL.

About Highlands REIT

We are a self-advised and self-administered real estate investment trust (REIT) created to own and manage substantially all of the non-core investment properties previously owned and managed by our former parent, InvenTrust Properties Corp., a Maryland corporation (InvenTrust). On April 28, 2016, we were spun-off from InvenTrust through a pro rata distribution (the Distribution) by InvenTrust of 100% of the outstanding shares of our common stock to holders of InvenTrust's common stock. Prior to or concurrent with the separation, we and InvenTrust engaged in certain reorganization transactions that were designed to consolidate substantially all of InvenTrust's remaining non-core investment properties in Highlands.