Financial Contrast: City Office REIT (NYSE:CIO) vs. Apollo Commercial Real Estate Finance (NYSE:ARI)

City Office REIT (NYSE:CIO) and Apollo Commercial Real Estate Finance (NYSE:ARI) are both small-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, dividends, earnings, profitability, valuation and risk.

Dividends

City Office REIT pays an annual dividend of $0.40 per share and has a dividend yield of 7.3%. Apollo Commercial Real Estate Finance pays an annual dividend of $1.40 per share and has a dividend yield of 13.7%. City Office REIT pays out -142.9% of its earnings in the form of a dividend. Apollo Commercial Real Estate Finance pays out -179.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Apollo Commercial Real Estate Finance is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility & Risk

City Office REIT has a beta of 1.93, meaning that its stock price is 93% more volatile than the S&P 500. Comparatively, Apollo Commercial Real Estate Finance has a beta of 1.75, meaning that its stock price is 75% more volatile than the S&P 500.

Institutional & Insider Ownership

67.5% of City Office REIT shares are held by institutional investors. Comparatively, 54.4% of Apollo Commercial Real Estate Finance shares are held by institutional investors. 3.9% of City Office REIT shares are held by insiders. Comparatively, 0.7% of Apollo Commercial Real Estate Finance shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of recent ratings and price targets for City Office REIT and Apollo Commercial Real Estate Finance, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
City Office REIT	0	1	0	0	2.00
Apollo Commercial Real Estate Finance	1	4	0	0	1.80

Apollo Commercial Real Estate Finance has a consensus target price of $10.25, suggesting a potential upside of 0.49%. Given Apollo Commercial Real Estate Finance’s higher possible upside, analysts plainly believe Apollo Commercial Real Estate Finance is more favorable than City Office REIT.

Profitability

This table compares City Office REIT and Apollo Commercial Real Estate Finance’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
City Office REIT	-4.02%	-1.06%	-0.46%
Apollo Commercial Real Estate Finance	-28.20%	5.88%	1.38%

Earnings and Valuation

This table compares City Office REIT and Apollo Commercial Real Estate Finance’s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
City Office REIT	$175.37 million	1.25	-$2.68 million	($0.28)	-19.50
Apollo Commercial Real Estate Finance	$332.85 million	4.36	$58.13 million	($0.78)	-13.08

Apollo Commercial Real Estate Finance has higher revenue and earnings than City Office REIT. City Office REIT is trading at a lower price-to-earnings ratio than Apollo Commercial Real Estate Finance, indicating that it is currently the more affordable of the two stocks.

Summary

Apollo Commercial Real Estate Finance beats City Office REIT on 9 of the 15 factors compared between the two stocks.

About City Office REIT

City Office REIT is an internally-managed real estate company focused on acquiring, owning and operating high-quality office properties located predominantly in Sun Belt markets. City Office currently owns or has a controlling interest in 5.7 million square feet of office properties. The Company has elected to be taxed as a real estate investment trust for U.S. federal income tax purposes.

About Apollo Commercial Real Estate Finance

Apollo Commercial Real Estate Finance, Inc. operates as a real estate investment trust (REIT) that originates, acquires, invests in, and manages commercial first mortgage loans, subordinate financings, and other commercial real estate-related debt investments in the United States, the United Kingdom, and Europe. It is qualified as a REIT under the Internal Revenue Code. As a REIT, it would not be subject to federal income taxes, if the company distributes at least 90% of its REIT taxable income to its stockholders. Apollo Commercial Real Estate Finance, Inc. was incorporated in 2009 and is based in New York, New York.