Head to Head Survey: Alexandria Real Estate Equities (ARE) and Empire State Realty Trust (ESRT)

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

Analyst Ratings

This is a summary of current ratings and price targets for Alexandria Real Estate Equities and Empire State Realty Trust, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alexandria Real Estate Equities 0 0 3 0 3.00
Empire State Realty Trust 0 3 1 0 2.25

Alexandria Real Estate Equities presently has a consensus price target of $126.00, indicating a potential upside of 5.91%. Empire State Realty Trust has a consensus price target of $21.75, indicating a potential upside of 5.89%. Given Alexandria Real Estate Equities’ stronger consensus rating and higher probable upside, analysts clearly believe Alexandria Real Estate Equities is more favorable than Empire State Realty Trust.

Dividends

Alexandria Real Estate Equities pays an annual dividend of $3.44 per share and has a dividend yield of 2.9%. Empire State Realty Trust pays an annual dividend of $0.42 per share and has a dividend yield of 2.0%. 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. Empire State Realty Trust pays out 107.7% 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. Alexandria Real Estate Equities is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

83.5% of Empire State Realty Trust shares are owned by institutional investors. 1.6% of Alexandria Real Estate Equities shares are owned by company insiders. Comparatively, 11.8% of Empire State Realty Trust shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Alexandria Real Estate Equities and Empire State 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%
Empire State Realty Trust 17.70% 5.76% 3.27%

Earnings & Valuation

This table compares Alexandria Real Estate Equities and Empire State Realty Trust’s top-line 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 10.92 $639.55 million $0.40 297.43
Empire State Realty Trust $691.49 million 4.71 $329.91 million $0.39 52.67

Alexandria Real Estate Equities has higher revenue and earnings than Empire State Realty Trust. Empire State 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.

Volatility and Risk

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, Empire State Realty Trust has a beta of 1.01, meaning that its share price is 1% more volatile than the S&P 500.

Summary

Alexandria Real Estate Equities beats Empire State Realty Trust on 9 of the 17 factors compared between the two stocks.

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 Empire State Realty Trust

Empire State Realty Trust, Inc. is a real estate investment trust. The Company owns, manages, operates, acquires and repositions office and retail properties in Manhattan and the greater New York metropolitan area, including the Empire State Building. The Company operates through two segments: Real Estate and Observatory. The Real Estate segment includes all activities related to the ownership, management, operation, acquisition, repositioning and disposition of its real estate assets. The Observatory segment operates the 86th and 102nd floor observatories at the Empire State Building. As of December 31, 2016, its portfolio consisted of 14 office properties and six standalone retail properties totaling approximately 10.1 million rentable square feet. The Company’s properties include One Grand Central Place, 1400 Broadway, 111 West 33rd Street, 250 West 57th Street, 1359 Broadway and 1333 Broadway.




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