Critical Analysis: Alexandria Real Estate Equities (ARE) and Brookfield Canada Office Properties (BOXC)

Alexandria Real Estate Equities (NYSE: ARE) and Brookfield Canada Office Properties (NYSE:BOXC) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their profitability, dividends, valuation, risk, institutional ownership, analyst recommendations and earnings.

Risk and Volatility

Alexandria Real Estate Equities has a beta of 0.87, meaning that its share price is 13% less volatile than the S&P 500. Comparatively, Brookfield Canada Office Properties has a beta of 0.99, meaning that its share price is 1% less volatile than the S&P 500.

Insider & Institutional Ownership

20.1% of Brookfield Canada Office Properties shares are held by institutional investors. 1.5% of Alexandria Real Estate Equities shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Alexandria Real Estate Equities and Brookfield Canada Office Properties’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Alexandria Real Estate Equities $1.02 billion 10.94 $639.55 million $0.40 297.91
Brookfield Canada Office Properties N/A N/A N/A $1.16 21.52

Alexandria Real Estate Equities has higher revenue and earnings than Brookfield Canada Office Properties. Brookfield Canada Office Properties 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 Brookfield Canada Office Properties’ 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%
Brookfield Canada Office Properties 7.64% 1.26% 0.65%

Dividends

Alexandria Real Estate Equities pays an annual dividend of $3.44 per share and has a dividend yield of 2.9%. Brookfield Canada Office Properties pays an annual dividend of $0.97 per share and has a dividend yield of 3.9%. 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. 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. Brookfield Canada Office Properties has increased its dividend for 6 consecutive years. Brookfield Canada Office Properties is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Alexandria Real Estate Equities and Brookfield Canada Office Properties, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alexandria Real Estate Equities 0 0 3 0 3.00
Brookfield Canada Office Properties 0 3 0 0 2.00

Alexandria Real Estate Equities presently has a consensus price target of $126.00, suggesting a potential upside of 5.74%. Brookfield Canada Office Properties has a consensus price target of $29.50, suggesting a potential upside of 18.19%. Given Brookfield Canada Office Properties’ higher probable upside, analysts plainly believe Brookfield Canada Office Properties is more favorable than Alexandria Real Estate Equities.

About Alexandria Real Estate Equities

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.

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.




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