Head-To-Head Review: Government Properties Income Trust (GOV) & RAIT Financial Trust (RAS)

Government Properties Income Trust (NYSE: GOV) and RAIT Financial Trust (NYSE:RAS) are both financials companies, but which is the better business? We will contrast the two companies based on the strength of their dividends, valuation, institutional ownership, earnings, profitability, risk and analyst recommendations.

Dividends

Government Properties Income Trust pays an annual dividend of $1.72 per share and has a dividend yield of 9.5%. RAIT Financial Trust pays an annual dividend of $0.20 per share and has a dividend yield of 37.4%. Government Properties Income Trust pays out -76.1% of its earnings in the form of a dividend. RAIT Financial Trust pays out -13.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Analyst Ratings

This is a breakdown of current ratings for Government Properties Income Trust and RAIT Financial Trust, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Government Properties Income Trust 2 1 1 0 1.75
RAIT Financial Trust 1 2 0 0 1.67

Government Properties Income Trust presently has a consensus price target of $18.75, suggesting a potential upside of 3.19%. RAIT Financial Trust has a consensus price target of $1.43, suggesting a potential upside of 166.36%. Given RAIT Financial Trust’s higher possible upside, analysts clearly believe RAIT Financial Trust is more favorable than Government Properties Income Trust.

Profitability

This table compares Government Properties Income Trust and RAIT Financial Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Government Properties Income Trust 4.64% 5.16% 0.55%
RAIT Financial Trust -99.46% 0.98% 0.15%

Earnings and Valuation

This table compares Government Properties Income Trust and RAIT Financial Trust’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Government Properties Income Trust N/A N/A N/A ($2.26) -8.04
RAIT Financial Trust $58.82 million 0.85 -$143.38 million ($1.54) -0.35

Government Properties Income Trust has higher revenue, but lower earnings than RAIT Financial Trust. Government Properties Income Trust is trading at a lower price-to-earnings ratio than RAIT Financial Trust, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

59.8% of RAIT Financial Trust shares are held by institutional investors. 1.3% of RAIT Financial Trust shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Risk & Volatility

Government Properties Income Trust has a beta of 1.04, indicating that its stock price is 4% more volatile than the S&P 500. Comparatively, RAIT Financial Trust has a beta of 1.66, indicating that its stock price is 66% more volatile than the S&P 500.

Summary

RAIT Financial Trust beats Government Properties Income Trust on 7 of the 13 factors compared between the two stocks.

About Government Properties Income Trust

Government Properties Income Trust is a real estate investment trust (REIT). The Company operates through two segments: ownership of properties that are primarily leased to government tenants and its equity method investment in Select Income REIT (SIR). The Company’s properties are located in areas, including Alabama, Arizona, California, Colorado, District of Columbia, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, New Hampshire, New Jersey and New Mexico. As of December 31, 2016, the Company owned 73 properties (95 buildings). As of December 31, 2016, the Company’s properties were located in 31 states and the District of Columbia, and contained approximately 11.4 million rentable square feet.

About RAIT Financial Trust

RAIT Financial Trust (RAIT) is a real estate investment trust (REIT). The Company focuses on providing commercial real estate (CRE) financing throughout the United States. The core of its business is a full service CRE lending platform focused on first lien loans. It offers customized lending solutions to meet borrower needs and internal credit goals. It offers personalized middle-market financing solutions and a complement of lending products for CRE. The Company may also offer mezzanine loans and preferred equity interests in limited circumstances to support first lien loans. It is engaged in floating rate securitization programs and has access to multiple sources of funding, including senior debt, convertible securities, preferred securities and common securities. The Company also owns and manages a portfolio of CRE properties, and manages real estate assets for third parties. The Company is engaged in lending, owning and managing CRE assets throughout the United States.

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