Reviewing Arbor Realty Trust (NYSE:ABR) and Franklin BSP Realty Trust (NYSE:FBRT)

Arbor Realty Trust (NYSE:ABR) and Franklin BSP Realty Trust (NYSE:FBRT) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their analyst recommendations, risk, profitability, valuation, dividends, institutional ownership and earnings.

Volatility & Risk

Arbor Realty Trust has a beta of 1.37, meaning that its share price is 37% more volatile than the S&P 500. Comparatively, Franklin BSP Realty Trust has a beta of 1.01, meaning that its share price is 1% more volatile than the S&P 500.

Insider and Institutional Ownership

57.3% of Arbor Realty Trust shares are held by institutional investors. Comparatively, 59.9% of Franklin BSP Realty Trust shares are held by institutional investors. 3.8% of Arbor Realty Trust shares are held by company insiders. Comparatively, 1.4% of Franklin BSP Realty Trust shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Dividends

Arbor Realty Trust pays an annual dividend of $1.20 per share and has a dividend yield of 9.9%. Franklin BSP Realty Trust pays an annual dividend of $1.42 per share and has a dividend yield of 12.7%. Arbor Realty Trust pays out 131.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Franklin BSP Realty Trust pays out 144.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Arbor Realty Trust	20.75%	12.26%	2.26%
Franklin BSP Realty Trust	53.36%	7.26%	1.54%

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Arbor Realty Trust and Franklin BSP Realty Trust, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arbor Realty Trust	1	2	1	0	2.00
Franklin BSP Realty Trust	0	0	4	2	3.33

Arbor Realty Trust currently has a consensus target price of $13.50, indicating a potential upside of 11.66%. Franklin BSP Realty Trust has a consensus target price of $14.8750, indicating a potential upside of 33.23%. Given Franklin BSP Realty Trust’s stronger consensus rating and higher possible upside, analysts clearly believe Franklin BSP Realty Trust is more favorable than Arbor Realty Trust.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Arbor Realty Trust	$1.17 billion	1.99	$264.64 million	$0.91	13.29
Franklin BSP Realty Trust	$210.45 million	4.37	$95.88 million	$0.98	11.39

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

Summary

Franklin BSP Realty Trust beats Arbor Realty Trust on 9 of the 17 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 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.