Reviewing Arbor Realty Trust (NYSE:ABR) and Highwoods Properties (NYSE:HIW)

Arbor Realty Trust (NYSE:ABR) and Highwoods Properties (NYSE:HIW) are both mid-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, profitability, valuation, risk, dividends and earnings.

Dividends

Arbor Realty Trust pays an annual dividend of $1.72 per share and has a dividend yield of 11.3%. Highwoods Properties pays an annual dividend of $2.00 per share and has a dividend yield of 5.7%. Arbor Realty Trust pays out 106.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Highwoods Properties pays out 163.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Arbor Realty Trust has increased its dividend for 12 consecutive years. Arbor Realty Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares Arbor Realty Trust and Highwoods Properties”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Arbor Realty Trust	$683.14 million	4.19	$371.43 million	$1.61	9.42
Highwoods Properties	$829.97 million	4.50	$148.71 million	$1.22	28.90

Arbor Realty Trust has higher earnings, but lower revenue than Highwoods Properties. Arbor Realty Trust is trading at a lower price-to-earnings ratio than Highwoods Properties, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent recommendations for Arbor Realty Trust and Highwoods Properties, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arbor Realty Trust	2	2	2	0	2.00
Highwoods Properties	1	5	1	0	2.00

Arbor Realty Trust presently has a consensus target price of $13.92, indicating a potential downside of 8.26%. Highwoods Properties has a consensus target price of $27.86, indicating a potential downside of 21.00%. Given Arbor Realty Trust’s higher probable upside, equities research analysts clearly believe Arbor Realty Trust is more favorable than Highwoods Properties.

Profitability

This table compares Arbor Realty Trust and Highwoods Properties’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Arbor Realty Trust	24.59%	15.75%	2.68%
Highwoods Properties	18.30%	6.33%	2.53%

Institutional & Insider Ownership

57.3% of Arbor Realty Trust shares are held by institutional investors. Comparatively, 96.3% of Highwoods Properties shares are held by institutional investors. 3.7% of Arbor Realty Trust shares are held by insiders. Comparatively, 1.6% of Highwoods Properties shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Risk & Volatility

Arbor Realty Trust has a beta of 2.06, meaning that its share price is 106% more volatile than the S&P 500. Comparatively, Highwoods Properties has a beta of 1.26, meaning that its share price is 26% more volatile than the S&P 500.

Summary

Arbor Realty Trust beats Highwoods Properties on 12 of the 16 factors compared between the two stocks.

About Arbor Realty Trust

Arbor Realty Trust, Inc. invests in a diversified portfolio of structured finance assets in the multifamily, single-family rental, and commercial real estate markets in the United States. The company operates through Structured Business and Agency Business segments. It primarily invests in bridge and mezzanine loans, including junior participating interests in first mortgages, and preferred and direct equity, as well as real estate-related joint ventures, real estate-related notes, and various mortgage-related securities. In addition, the company offers bridge financing products to borrowers who seek short-term capital to be used in an acquisition of property; financing by making preferred equity investments in entities that directly or indirectly own real property; mezzanine financing in the form of loans that are subordinate to a conventional first mortgage loan and senior to the borrower’s equity in a transaction; junior participation financing in the form of a junior participating interest in the senior debt; and financing products to borrowers who are looking to acquire conventional, workforce, and affordable single-family housing. Further, it underwrites, originates, sells, and services multifamily mortgage loans through conduit/commercial mortgage-backed securities programs. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. Arbor Realty Trust, Inc. was incorporated in 2003 and is headquartered in Uniondale, New York.

About Highwoods Properties

Highwoods Properties, Inc., headquartered in Raleigh, is a publicly-traded (NYSE:HIW), fully-integrated office real estate investment trust (REIT) that owns, develops, acquires, leases and manages properties primarily in the best business districts (BBDs) of Atlanta, Charlotte, Dallas, Nashville, Orlando, Raleigh, Richmond and Tampa. Highwoods is in the work-placemaking business. We believe that by creating environments and experiences where the best and brightest can achieve together what they cannot apart, we can deliver greater value to our customers, their teammates and, in turn, our stakeholders.