Analyzing Alexandria Real Estate Equities (NYSE:ARE) & Lexington Realty Trust (LXP)

Alexandria Real Estate Equities (NYSE: ARE) and Lexington Realty Trust (NYSE:LXP) are both mid-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, analyst recommendations, earnings, risk, valuation, profitability and institutional ownership.

Analyst Recommendations

This is a summary of current recommendations for Alexandria Real Estate Equities and Lexington Realty Trust, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alexandria Real Estate Equities 0 0 4 0 3.00
Lexington Realty Trust 1 4 1 0 2.00

Alexandria Real Estate Equities presently has a consensus price target of $125.50, suggesting a potential upside of 4.57%. Lexington Realty Trust has a consensus price target of $10.50, suggesting a potential upside of 8.02%. Given Lexington Realty Trust’s higher possible upside, analysts clearly believe Lexington Realty Trust is more favorable than Alexandria Real Estate Equities.

Valuation & Earnings

This table compares Alexandria Real Estate Equities and Lexington Realty Trust’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Alexandria Real Estate Equities $1.02 billion 11.02 $639.55 million $0.40 300.03
Lexington Realty Trust $393.09 million 5.95 $316.72 million $0.14 69.43

Alexandria Real Estate Equities has higher revenue and earnings than Lexington Realty Trust. Lexington Realty Trust is trading at a lower price-to-earnings ratio than Alexandria Real Estate Equities, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Alexandria Real Estate Equities and Lexington Realty Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Alexandria Real Estate Equities 9.45% 3.11% 1.49%
Lexington Realty Trust 9.80% 2.92% 1.13%

Risk & Volatility

Alexandria Real Estate Equities has a beta of 0.86, meaning that its stock price is 14% less volatile than the S&P 500. Comparatively, Lexington Realty Trust has a beta of 0.96, meaning that its stock price is 4% less volatile than the S&P 500.

Institutional and Insider Ownership

73.1% of Lexington Realty Trust shares are owned by institutional investors. 1.6% of Alexandria Real Estate Equities shares are owned by insiders. Comparatively, 3.1% of Lexington Realty Trust shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Dividends

Alexandria Real Estate Equities pays an annual dividend of $3.44 per share and has a dividend yield of 2.9%. Lexington Realty Trust pays an annual dividend of $0.70 per share and has a dividend yield of 7.2%. Alexandria Real Estate Equities pays out 860.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Lexington Realty Trust pays out 500.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Alexandria Real Estate Equities has raised its dividend for 6 consecutive years and Lexington Realty Trust has raised its dividend for 6 consecutive years. Lexington Realty Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Alexandria Real Estate Equities beats Lexington Realty Trust on 9 of the 16 factors compared between the two stocks.

Alexandria Real Estate Equities Company Profile

Alexandria Real Estate Equities, Inc. is a real estate investment (REIT). The Company is engaged in the business of providing space for lease to the life science and technology industries. It focuses on collaborative life science and technology campuses. It develops urban cluster campuses and ecosystems. As of December 31, 2016, the Company had 199 properties in North America. As of December 31, 2016, its asset base in North America consisted of 25.2 million square feet, including 19.9 million rentable square feet/foot (RSF) of operating properties, and development and redevelopment of under construction or pre-construction, as well as 5.3 million square feet of future ground-up development projects. Its properties are located in various areas, including Greater Boston, San Francisco, New York City, San Diego, Seattle, Maryland and Research Triangle Park. Its properties include Alexandria Technology Square, Alexandria Park at 128 and Alexandria Technology Center-Gateway.

Lexington Realty Trust Company Profile

Lexington Realty Trust is a real estate investment trust (REIT). The Company owns a portfolio of equity and debt investments in single-tenant commercial properties. As of December 31, 2016, the Company had equity ownership interests in approximately 195 consolidated real estate properties, located in 40 states and containing an aggregate of approximately 43.3 million square feet of space, approximately 96.0% of which was leased. The Company conducts its operations either directly or indirectly through property owner subsidiaries and lender subsidiaries, which are single purpose entities; an operating partnership, Lepercq Corporate Income Fund L.P. (LCIF), in which the Company is the sole unit holder of the general partner and the sole unit holder of the limited partner that holds a majority of the limited partner interests; Lexington Realty Advisors, Inc. (LRA), a subsidiary of the Company, and investments in joint ventures.

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