Financial Analysis: Brookfield Canada Office Properties (BOXC) and Government Properties Income Trust (GOV)

Brookfield Canada Office Properties (NYSE: BOXC) and Government Properties Income Trust (NASDAQ:GOV) are both small-cap financials companies, but which is the superior investment? We will compare the two companies based on the strength of their earnings, profitability, dividends, analyst recommendations, valuation, institutional ownership and risk.

Analyst Ratings

This is a summary of recent ratings and price targets for Brookfield Canada Office Properties and Government Properties Income Trust, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Brookfield Canada Office Properties 0 1 0 0 2.00
Government Properties Income Trust 2 1 2 0 2.00

Government Properties Income Trust has a consensus target price of $18.75, suggesting a potential upside of 1.90%. Given Government Properties Income Trust’s higher possible upside, analysts clearly believe Government Properties Income Trust is more favorable than Brookfield Canada Office Properties.

Volatility & Risk

Brookfield Canada Office Properties has a beta of 1.04, suggesting that its share price is 4% more volatile than the S&P 500. Comparatively, Government Properties Income Trust has a beta of 1.05, suggesting that its share price is 5% more volatile than the S&P 500.

Earnings & Valuation

This table compares Brookfield Canada Office Properties and Government Properties Income Trust’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Brookfield Canada Office Properties N/A N/A N/A $1.16 21.52
Government Properties Income Trust $258.18 million 7.07 $57.84 million $0.54 34.07

Government Properties Income Trust has higher revenue and earnings than Brookfield Canada Office Properties. Brookfield Canada Office Properties is trading at a lower price-to-earnings ratio than Government Properties Income Trust, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

20.1% of Brookfield Canada Office Properties shares are owned by institutional investors. Comparatively, 58.2% of Government Properties Income Trust shares are owned by institutional investors. 2.7% of Government Properties Income Trust shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Dividends

Brookfield Canada Office Properties pays an annual dividend of $0.97 per share and has a dividend yield of 3.9%. Government Properties Income Trust pays an annual dividend of $1.72 per share and has a dividend yield of 9.3%. Brookfield Canada Office Properties pays out 83.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Government Properties Income Trust pays out 318.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Brookfield Canada Office Properties and Government Properties Income Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Brookfield Canada Office Properties 7.64% 1.26% 0.65%
Government Properties Income Trust 15.30% 4.27% 1.66%

Summary

Government Properties Income Trust beats Brookfield Canada Office Properties on 11 of the 13 factors compared between the two stocks.

About Brookfield Canada Office Properties

Brookfield Canada Office Properties is a Canada-based real estate investment trust (REIT). The Company invests, develops and operates commercial office properties in Toronto, Ottawa, Calgary and Vancouver. The Company’s commercial-property portfolio consists of interests in approximately 25 properties totaling approximately 21.1 million square feet, including approximately 4.0 million square feet of parking and other. The Company’s development portfolio consists of the Brookfield Place Calgary East development site totaling approximately 1.4 million square feet in Calgary. The Company also invests in ongoing maintenance and capital improvement projects. The Company focuses on the markets, which include financial, government and energy sectors, which are primarily located in the cities of Toronto and Calgary. Its properties include 2 Queen Street East, Queen’s Quay Terminal, Exchange Tower, Bankers Hall Retail, Suncor Energy Centre, Jean Edmonds Tower and Royal Centre.

About Government Properties Income Trust

Government Properties Income Trust is a real estate investment trust (REIT). The Company operates through two segments: ownership of properties that are primarily leased to government tenants and its equity method investment in Select Income REIT (SIR). The Company’s properties are located in areas, including Alabama, Arizona, California, Colorado, District of Columbia, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, New Hampshire, New Jersey and New Mexico. As of December 31, 2016, the Company owned 73 properties (95 buildings). As of December 31, 2016, the Company’s properties were located in 31 states and the District of Columbia, and contained approximately 11.4 million rentable square feet.

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