City Office REIT (CIO) & TIER REIT (TIER) Critical Comparison

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

Insider and Institutional Ownership

57.5% of City Office REIT shares are owned by institutional investors. Comparatively, 57.5% of TIER REIT shares are owned by institutional investors. 3.2% of City Office REIT shares are owned by insiders. Comparatively, 1.2% of TIER REIT shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Dividends

City Office REIT pays an annual dividend of $0.94 per share and has a dividend yield of 7.3%. TIER REIT pays an annual dividend of $0.72 per share and has a dividend yield of 3.6%. City Office REIT pays out -552.9% of its earnings in the form of a dividend. TIER REIT pays out 39.6% 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 is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of current ratings and price targets for City Office REIT and TIER REIT, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
City Office REIT 0 1 3 0 2.75
TIER REIT 0 0 2 0 3.00

City Office REIT presently has a consensus target price of $14.67, indicating a potential upside of 14.40%. TIER REIT has a consensus target price of $20.50, indicating a potential upside of 2.35%. Given City Office REIT’s higher probable upside, research analysts plainly believe City Office REIT is more favorable than TIER REIT.

Valuation and Earnings

This table compares City Office REIT and TIER REIT’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
City Office REIT $72.46 million 5.35 -$840,000.00 ($0.17) -75.41
TIER REIT $242.82 million 3.95 -$29.41 million $1.82 11.01

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

Volatility & Risk

City Office REIT has a beta of 0.22, indicating that its stock price is 78% less volatile than the S&P 500. Comparatively, TIER REIT has a beta of 0.94, indicating that its stock price is 6% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
City Office REIT 3.65% 1.91% 0.46%
TIER REIT 40.68% 12.86% 5.60%

City Office REIT Company Profile

City Office REIT, Inc. is a real estate investment trust. The Company is focused on acquiring, owning and operating office properties located primarily in metropolitan areas in the Southern and Western United States. It conducts its operations primarily through City Office REIT Operating Partnership, L.P. (the Operating Partnership). As of December 31, 2016, it owned 18 office complexes consisting of 37 office buildings with a total of approximately 4.4 million square feet of net rentable area (NRA) in the metropolitan areas of Boise, Dallas, Denver, Orlando, Phoenix, Portland and Tampa. Its properties include Park Tower, City Center, Intellicenter and Carillon Point in Tampa, Florida; Cherry Creek, Plaza 25, DTC Crossroads, Superior Pointe and Logan Tower in Denver, Colorado; Washington Group Plaza in Boise, Idaho; FRP Collection, Central Fairwinds and FRP Ingenuity Drive in Orlando, Florida; 190 Office Center and Lake Vista Pointe in Dallas, Texas, and SanTan in Phoenix, Arizona.

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.

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