Critical Review: Franklin BSP Realty Trust (NYSE:FBRT) versus KKR Real Estate Finance Trust (NYSE:KREF)


Franklin BSP Realty Trust (NYSE:FBRT – Get Rating) and KKR Real Estate Finance Trust (NYSE:KREF – Get Rating) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, risk, profitability, earnings, institutional ownership, valuation and dividends.

Risk and Volatility

Franklin BSP Realty Trust has a beta of 1.32, meaning that its share price is 32% more volatile than the S&P 500. Comparatively, KKR Real Estate Finance Trust has a beta of 0.73, meaning that its share price is 27% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Franklin BSP Realty Trust and KKR Real Estate Finance Trust, as provided by MarketBeat.com.

Sell ​​Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating
Franklin BSP Realty Trust 0 0 2 0 3.00
KKR Real Estate Finance Trust 0 0 3 0 3.00

Franklin BSP Realty Trust currently has a consensus price target of $16.00, suggesting a potential upside of 6.31%. KKR Real Estate Finance Trust has a consensus price target of $23.33, suggesting a potential upside of 21.15%. Given KKR Real Estate Finance Trust’s higher probable upside, analysts plainly believe KKR Real Estate Finance Trust is more favorable than Franklin BSP Realty Trust.

Dividends

Franklin BSP Realty Trust pays an annual dividend of $1.42 per share and has a dividend yield of 9.4%. KKR Real Estate Finance Trust pays an annual dividend of $1.72 per share and has a dividend yield of 8.9%. Franklin BSP Realty Trust pays out -46.4% of its earnings in the form of a dividend. KKR Real Estate Finance Trust pays out 90.5% 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 is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

54.5% of Franklin BSP Realty Trust shares are owned by institutional investors. Comparatively, 78.7% of KKR Real Estate Finance Trust shares are owned by institutional investors. 0.3% of Franklin BSP Realty Trust shares are owned by company insiders. Comparatively, 1.3% of KKR Real Estate Finance Trust shares are owned by company 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.

Valuation and Earnings

This table compares Franklin BSP Realty Trust and KKR Real Estate Finance 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 $160.81 million 7.84 $25.70 million ($3.06) -4.92
KKR Real Estate Finance Trust $165.51 million 8.06 $137.18 million $1.90 10.14

KKR Real Estate Finance 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 KKR Real Estate Finance Trust, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Franklin BSP Realty Trust and KKR Real Estate Finance Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Franklin BSP Realty Trust -47.93% 14.45% 1.97%
KKR Real Estate Finance Trust 48.10% 7.74% 1.68%

Summary

KKR Real Estate Finance Trust beats Franklin BSP Realty Trust on 10 of the 15 factors compared between the two stocks.

About Franklin BSP Realty Trust

(Get Rating)

Franklin BSP Realty Trust, Inc., a real estate finance company, originates, acquires, and manages a portfolio of commercial real estate debt secured by properties located in the United States. The company also originates condo loans; and invests in commercial real estate securities, as well as owns real estate acquired through foreclosure and deed in lieu of foreclosure, and purchased for investment. In addition, it invests in commercial real estate debt investments, which includes first mortgage loans, mezzanine loans, bridge loans, and other loans related to commercial real estate. 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. The company was formerly known as Benefit Street Partners Realty Trust, Inc. Franklin BSP Realty Trust, Inc. was incorporated in 2012 and is headquartered in New York, New York.

About KKR Real Estate Finance Trust

(Get Rating)

KKR Real Estate Finance Trust Inc., a mortgage real estate investment trust, focuses primarily on originating and acquiring senior loans secured by commercial real estate (CRE) assets. It engages in the origination and purchase of credit investments related to CRE, including leveraged and unleveraged commercial mortgage loans, and commercial mortgage-backed securities. The company has elected to be taxed as a real estate investment trust and would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. KKR Real Estate Finance Trust Inc. was incorporated in 2014 and is headquartered in New York, New York.



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