Critical Survey: Franklin BSP Realty Trust (NYSE:FBRT) and American Assets Trust (NYSE:AAT)

Franklin BSP Realty Trust (NYSE:FBRT) and American Assets Trust (NYSE:AAT) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their dividends, valuation, risk, earnings, profitability, institutional ownership and analyst recommendations.

Analyst Ratings

This is a summary of current ratings for Franklin BSP Realty Trust and American Assets Trust, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Franklin BSP Realty Trust	0	0	5	2	3.29
American Assets Trust	0	2	0	0	2.00

Franklin BSP Realty Trust presently has a consensus target price of $15.30, suggesting a potential upside of 37.40%. American Assets Trust has a consensus target price of $21.00, suggesting a potential upside of 10.80%. Given Franklin BSP Realty Trust’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Franklin BSP Realty Trust is more favorable than American Assets Trust.

Profitability

This table compares Franklin BSP Realty Trust and American Assets Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Franklin BSP Realty Trust	45.56%	8.17%	1.70%
American Assets Trust	12.40%	4.98%	1.80%

Institutional and Insider Ownership

59.9% of Franklin BSP Realty Trust shares are owned by institutional investors. Comparatively, 90.4% of American Assets Trust shares are owned by institutional investors. 0.7% of Franklin BSP Realty Trust shares are owned by company insiders. Comparatively, 36.8% of American Assets Trust shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Franklin BSP Realty Trust and American Assets Trust”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Franklin BSP Realty Trust	$534.36 million	1.71	$95.88 million	$0.68	16.38
American Assets Trust	$455.77 million	2.54	$72.82 million	$1.27	14.92

Franklin BSP Realty Trust has higher revenue and earnings than American Assets Trust. American Assets Trust is trading at a lower price-to-earnings ratio than Franklin BSP Realty Trust, indicating that it is currently the more affordable of the two stocks.

Dividends

Franklin BSP Realty Trust pays an annual dividend of $1.42 per share and has a dividend yield of 12.8%. American Assets Trust pays an annual dividend of $1.36 per share and has a dividend yield of 7.2%. Franklin BSP Realty Trust pays out 208.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. American Assets Trust pays out 107.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Risk and Volatility

Franklin BSP Realty Trust has a beta of 1.07, meaning that its share price is 7% more volatile than the S&P 500. Comparatively, American Assets Trust has a beta of 1.13, meaning that its share price is 13% more volatile than the S&P 500.

Summary

Franklin BSP Realty Trust beats American Assets Trust on 9 of the 17 factors compared between the two stocks.

About Franklin BSP Realty Trust

Benefit Street Partners operates as a self-managed real estate investment trust (REIT). BSP earns income from investing in a leveraged portfolio of residential mortgage pass-through securities consisting almost exclusively of adjustable-rate mortgage (ARM) securities issued and guaranteed by government-sponsored enterprises, either Federal National Mortgage Association (Fannie Mae) or Federal Home Loan Mortgage Corporation (Freddie Mac) (together, the government-sponsored enterprises (GSEs)), or by an agency of the federal government, Government National Mortgage Association (Ginnie Mae). BSP’s investment strategy focuses on managing a portfolio of residential mortgage investments consisting almost exclusively of ARM Agency Securities. As of December 31, 2012, the Company’s securities consisted of Agency Securities classified as available-for-sale and Residential mortgage securities classified as held-to-maturity.

About American Assets Trust

American Assets Trust, Inc. is a full service, vertically integrated and self-administered real estate investment trust ("REIT"), headquartered in San Diego, California. The company has over 55 years of experience in acquiring, improving, developing and managing premier office, retail, and residential properties throughout the United States in some of the nation's most dynamic, high-barrier-to-entry markets primarily in Southern California, Northern California, Washington, Oregon, Texas and Hawaii. The company's office portfolio comprises approximately 4.1 million rentable square feet, and its retail portfolio comprises approximately 3.1 million rentable square feet. In addition, the company owns one mixed-use property (including approximately 94,000 rentable square feet of retail space and a 369-room all-suite hotel) and 2,110 multifamily units. In 2011, the company was formed to succeed to the real estate business of American Assets, Inc., a privately held corporation founded in 1967 and, as such, has significant experience, long-standing relationships and extensive knowledge of its core markets, submarkets and asset classes.