Analyzing Starwood Property Trust (NYSE:STWD) and First Industrial Realty Trust (NYSE:FR)

First Industrial Realty Trust (NYSE:FR) and Starwood Property Trust (NYSE:STWD) are both mid-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, earnings, profitability, risk, institutional ownership, analyst recommendations and dividends.

Risk & Volatility

First Industrial Realty Trust has a beta of 1.08, indicating that its share price is 8% more volatile than the S&P 500. Comparatively, Starwood Property Trust has a beta of 1.7, indicating that its share price is 70% more volatile than the S&P 500.

Institutional & Insider Ownership

99.8% of First Industrial Realty Trust shares are held by institutional investors. Comparatively, 49.8% of Starwood Property Trust shares are held by institutional investors. 0.9% of First Industrial Realty Trust shares are held by insiders. Comparatively, 5.4% of Starwood Property Trust shares are held 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.

Valuation and Earnings

This table compares First Industrial Realty Trust and Starwood Property Trust”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Industrial Realty Trust	$651.33 million	10.94	$274.82 million	$2.33	23.11
Starwood Property Trust	$1.06 billion	6.44	$339.21 million	$1.17	17.25

Starwood Property Trust has higher revenue and earnings than First Industrial Realty Trust. Starwood Property Trust is trading at a lower price-to-earnings ratio than First Industrial Realty Trust, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current ratings for First Industrial Realty Trust and Starwood Property Trust, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Industrial Realty Trust	1	4	7	0	2.50
Starwood Property Trust	0	3	5	1	2.78

First Industrial Realty Trust currently has a consensus price target of $57.83, indicating a potential upside of 7.40%. Starwood Property Trust has a consensus price target of $22.25, indicating a potential upside of 10.23%. Given Starwood Property Trust’s stronger consensus rating and higher probable upside, analysts plainly believe Starwood Property Trust is more favorable than First Industrial Realty Trust.

Profitability

This table compares First Industrial Realty Trust and Starwood Property Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First Industrial Realty Trust	47.34%	11.53%	5.93%
Starwood Property Trust	18.82%	9.93%	1.00%

Dividends

First Industrial Realty Trust pays an annual dividend of $1.48 per share and has a dividend yield of 2.7%. Starwood Property Trust pays an annual dividend of $1.92 per share and has a dividend yield of 9.5%. First Industrial Realty Trust pays out 63.5% of its earnings in the form of a dividend. Starwood Property Trust pays out 164.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. First Industrial Realty Trust has increased its dividend for 11 consecutive years.

Summary

First Industrial Realty Trust beats Starwood Property Trust on 10 of the 18 factors compared between the two stocks.

About First Industrial Realty Trust

First Industrial Realty Trust, Inc. (NYSE: FR) is a leading U.S.-only owner, operator, developer and acquirer of logistics properties. Through our fully integrated operating and investing platform, we provide high quality facilities and industry-leading customer service to multinational corporations and regional firms that are essential for their supply chains. Our portfolio and new investments are concentrated in 15 target MSAs with an emphasis on supply-constrained, coastally oriented markets. In total, we own and have under development approximately 68.5 million square feet of industrial space as of December 31, 2023.

About Starwood Property Trust

Starwood Property Trust, Inc. operates as a real estate investment trust (REIT) in the United States and internationally. The company operates through Commercial and Residential Lending, Infrastructure Lending, Property, and Investing and Servicing segments. The Commercial and Residential Lending segment originates, acquires, finances, and manages commercial first mortgages, non-agency residential mortgages, subordinated mortgages, mezzanine loans, preferred equity, commercial mortgage-backed securities (CMBS), and residential mortgage-backed securities, as well as other real estate and real estate-related debt investments, include distressed or non-performing loans. The Infrastructure lending segment originates, acquires, finances, and manages infrastructure debt investments. The Property segment engages primarily in acquiring and managing equity interests in stabilized commercial real estate properties, such as multifamily properties and commercial properties subject to net leases, that are held for investment. The Investing and Servicing segment manages and works out problem assets; acquires and manages unrated, investment grade, and non-investment grade rated CMBS comprising subordinated interests of securitization and re-securitization transactions; originates conduit loans for the primary purpose of selling these loans into securitization transactions; and acquires commercial real estate assets that include properties acquired from CMBS trusts. The company qualifies as a REIT for federal income tax purposes and would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was incorporated in 2009 and is headquartered in Greenwich, Connecticut.