Medalist Diversified REIT (NASDAQ:MDRR) vs. City Office REIT (NYSE:CIO) Critical Survey

City Office REIT (NYSE:CIO) and Medalist Diversified REIT (NASDAQ:MDRR) are both small-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their valuation, dividends, institutional ownership, analyst recommendations, risk, earnings and profitability.

Insider & Institutional Ownership

67.5% of City Office REIT shares are held by institutional investors. Comparatively, 17.4% of Medalist Diversified REIT shares are held by institutional investors. 4.3% of City Office REIT shares are held by insiders. Comparatively, 43.8% of Medalist Diversified REIT shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Earnings and Valuation

This table compares City Office REIT and Medalist Diversified REIT”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
City Office REIT	$163.80 million	1.71	-$17.68 million	($3.17)	-2.19
Medalist Diversified REIT	$9.73 million	1.52	$30,000.00	($1.81)	-7.38

Medalist Diversified REIT has lower revenue, but higher earnings than City Office REIT. Medalist Diversified REIT is trading at a lower price-to-earnings ratio than City Office REIT, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares City Office REIT and Medalist Diversified REIT’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
City Office REIT	-74.21%	-21.71%	-9.19%
Medalist Diversified REIT	-21.19%	-7.87%	-2.37%

Dividends

City Office REIT pays an annual dividend of $0.40 per share and has a dividend yield of 5.8%. Medalist Diversified REIT pays an annual dividend of $0.27 per share and has a dividend yield of 2.0%. City Office REIT pays out -12.6% of its earnings in the form of a dividend. Medalist Diversified REIT pays out -14.9% 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. City Office REIT has raised its dividend for 1 consecutive years and Medalist Diversified REIT has raised its dividend for 2 consecutive years.

Volatility and Risk

City Office REIT has a beta of 1.61, suggesting that its share price is 61% more volatile than the S&P 500. Comparatively, Medalist Diversified REIT has a beta of 0.46, suggesting that its share price is 54% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and price targets for City Office REIT and Medalist Diversified REIT, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
City Office REIT	1	1	0	0	1.50
Medalist Diversified REIT	1	0	0	0	1.00

Summary

Medalist Diversified REIT beats City Office REIT on 8 of the 15 factors compared between the two stocks.

About City Office REIT

City Office REIT is an internally-managed real estate company focused on acquiring, owning and operating high-quality office properties located predominantly in Sun Belt markets. City Office currently owns or has a controlling interest in 5.7 million square feet of office properties. The Company has elected to be taxed as a real estate investment trust for U.S. federal income tax purposes.

About Medalist Diversified REIT

Medalist Diversified REIT Inc. is a Virginia-based real estate investment trust that specializes in acquiring, owning and managing commercial real estate in the Southeast region of the U.S. The Company's strategy is to focus on commercial real estate which is expected to provide an attractive balance of risk and returns. Medalist utilizes a rigorous, consistent and replicable process for sourcing and conducting due diligence of acquisitions.