Financial Review: Arbor Realty Trust (NYSE:ABR) and Net Lease Office Properties (NYSE:NLOP)

Arbor Realty Trust (NYSE:ABR) and Net Lease Office Properties (NYSE:NLOP) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their analyst recommendations, risk, profitability, dividends, valuation, institutional ownership and earnings.

Profitability

This table compares Arbor Realty Trust and Net Lease Office Properties’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Arbor Realty Trust	24.59%	15.75%	2.68%
Net Lease Office Properties	N/A	-30.98%	-17.28%

Insider and Institutional Ownership

57.3% of Arbor Realty Trust shares are owned by institutional investors. Comparatively, 58.3% of Net Lease Office Properties shares are owned by institutional investors. 3.7% of Arbor Realty Trust shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Arbor Realty Trust and Net Lease Office Properties, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arbor Realty Trust	2	2	2	0	2.00
Net Lease Office Properties	0	0	1	0	3.00

Arbor Realty Trust currently has a consensus price target of $14.25, suggesting a potential downside of 6.77%. Net Lease Office Properties has a consensus price target of $46.00, suggesting a potential upside of 51.47%. Given Net Lease Office Properties’ stronger consensus rating and higher probable upside, analysts clearly believe Net Lease Office Properties is more favorable than Arbor Realty Trust.

Valuation and Earnings

This table compares Arbor Realty Trust and Net Lease Office Properties”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Arbor Realty Trust	$683.14 million	4.22	$371.43 million	$1.61	9.49
Net Lease Office Properties	$172.53 million	2.60	-$131.75 million	N/A	N/A

Arbor Realty Trust has higher revenue and earnings than Net Lease Office Properties.

Dividends

Arbor Realty Trust pays an annual dividend of $1.72 per share and has a dividend yield of 11.3%. Net Lease Office Properties pays an annual dividend of $0.34 per share and has a dividend yield of 1.1%. Arbor Realty Trust pays out 106.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Arbor Realty Trust has increased its dividend for 12 consecutive years. Arbor Realty Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Arbor Realty Trust beats Net Lease Office Properties on 10 of the 14 factors compared between the two stocks.

About Arbor Realty Trust

Arbor Realty Trust, Inc. invests in a diversified portfolio of structured finance assets in the multifamily, single-family rental, and commercial real estate markets in the United States. The company operates through Structured Business and Agency Business segments. It primarily invests in bridge and mezzanine loans, including junior participating interests in first mortgages, and preferred and direct equity, as well as real estate-related joint ventures, real estate-related notes, and various mortgage-related securities. In addition, the company offers bridge financing products to borrowers who seek short-term capital to be used in an acquisition of property; financing by making preferred equity investments in entities that directly or indirectly own real property; mezzanine financing in the form of loans that are subordinate to a conventional first mortgage loan and senior to the borrower’s equity in a transaction; junior participation financing in the form of a junior participating interest in the senior debt; and financing products to borrowers who are looking to acquire conventional, workforce, and affordable single-family housing. Further, it underwrites, originates, sells, and services multifamily mortgage loans through conduit/commercial mortgage-backed securities programs. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. Arbor Realty Trust, Inc. was incorporated in 2003 and is headquartered in Uniondale, New York.

About Net Lease Office Properties

Net Lease Office Properties (NYSE: NLOP) is a publicly traded real estate investment trust with a portfolio of 59 high-quality office properties, totaling approximately 8.7 million leasable square feet primarily leased to corporate tenants on a single-tenant net lease basis. The vast majority of the office properties owned by NLOP are located in the U.S., with the balance in Europe. The portfolio consists of 62 corporate tenants operating in a variety of industries, generating annualized based rent (ABR) of approximately $145 million. NLOP's business plan is to focus on realizing value for its shareholders primarily through strategic asset management and disposition of its property portfolio over time. Given WPC's extensive knowledge of the portfolio, NLOP is externally managed and advised by wholly owned affiliates of WPC to successfully execute on its business strategy. Over the course of its 50-year history, WPC has developed significant expertise in the single-tenant office real estate sector, including the operation, leasing, acquisition and development of assets through many market cycles, and has a proven track record of execution.