Critical Review: TIER REIT (TIER) versus Corporate Office Properties Trust (OFC)
TIER REIT (NYSE: TIER) and Corporate Office Properties Trust (NYSE:OFC) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, risk, earnings, profitability, valuation and dividends.
Insider & Institutional Ownership
58.4% of TIER REIT shares are owned by institutional investors. 1.2% of TIER REIT shares are owned by insiders. Comparatively, 0.6% of Corporate Office Properties Trust shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
This table compares TIER REIT and Corporate Office Properties Trust’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Corporate Office Properties Trust||14.38%||5.89%||2.28%|
Volatility and Risk
TIER REIT has a beta of 0.94, meaning that its share price is 6% less volatile than the S&P 500. Comparatively, Corporate Office Properties Trust has a beta of 0.84, meaning that its share price is 16% less volatile than the S&P 500.
This is a breakdown of recent ratings and price targets for TIER REIT and Corporate Office Properties Trust, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Corporate Office Properties Trust||2||6||1||0||1.89|
TIER REIT presently has a consensus price target of $20.50, suggesting a potential upside of 3.43%. Corporate Office Properties Trust has a consensus price target of $34.17, suggesting a potential upside of 10.18%. Given Corporate Office Properties Trust’s higher probable upside, analysts clearly believe Corporate Office Properties Trust is more favorable than TIER REIT.
TIER REIT pays an annual dividend of $0.72 per share and has a dividend yield of 3.6%. Corporate Office Properties Trust pays an annual dividend of $1.10 per share and has a dividend yield of 3.5%. TIER REIT pays out 39.6% of its earnings in the form of a dividend. Corporate Office Properties Trust pays out 159.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. TIER REIT is clearly the better dividend stock, given its higher yield and lower payout ratio.
Valuation and Earnings
This table compares TIER REIT and Corporate Office Properties Trust’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|TIER REIT||$242.82 million||3.90||-$29.41 million||$1.82||10.89|
|Corporate Office Properties Trust||$574.33 million||5.38||$11.43 million||$0.69||44.94|
Corporate Office Properties Trust has higher revenue and earnings than TIER REIT. TIER REIT is trading at a lower price-to-earnings ratio than Corporate Office Properties Trust, indicating that it is currently the more affordable of the two stocks.
TIER REIT beats Corporate Office Properties Trust on 11 of the 16 factors compared between the two stocks.
TIER REIT Company Profile
TIER REIT, Inc. is a real estate investment trust. The Company’s business consists of owning, acquiring, developing, operating, investing in, and disposing of real estate assets. The Company’s business is conducted through Tier Operating Partnership LP (Tier OP). As of December 31, 2016, the Company owned interests in 29 operating office properties, one non-operating property and one development property located in 13 markets throughout the United States. It owns properties located in metropolitan cities and suburban markets in the United States. The Company’s office properties include The Terrace Office Park, Domain 3, Domain 4, 5950 Sherry Lane, Burnett Plaza, Loop Central, One BriarLake Plaza, Three Eldridge Place, Eisenhower I, Forum Office Park, 500 E. Pratt, Woodcrest Corporate Center and 111 Woodcrest. The Company’s properties are located in Austin, Dallas, Houston, Charlotte, Nashville, Atlanta and Denver.
Corporate Office Properties Trust Company Profile
Corporate Office Properties Trust is a fully-integrated and self-managed real estate investment trust (REIT). The Company owns, manages, leases, develops and acquires office and data center properties. The Company’s segments are Defense/IT Locations; Regional Office; operating wholesale data center, and other. As of December 31, 2016, the Company’s properties included 164 operating office properties totaling 17.2 million square feet, including 13 triple-net leased, single-tenant data center properties; 11 office properties under construction or redevelopment; 1,028 acres of land controlled for future development, and a wholesale data center with a critical load of 19.25 megawatts. The Company conducts all of its operations through Corporate Office Properties, L.P. (COPLP) and subsidiaries (collectively, the Operating Partnership). COPLP owns real estate both directly and through subsidiary partnerships and limited liability companies (LLCs).
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