KKR Real Estate Finance Trust (NYSE:KREF – Get Free Report) and Highlands REIT (OTCMKTS:HHDS – Get Free Report) are both small-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, valuation, dividends, institutional ownership, risk, earnings and analyst recommendations.
Insider and Institutional Ownership
70.2% of KKR Real Estate Finance Trust shares are owned by institutional investors. Comparatively, 0.0% of Highlands REIT shares are owned by institutional investors. 1.6% of KKR Real Estate Finance Trust shares are owned by insiders. Comparatively, 3.7% of Highlands REIT shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.
Analyst Recommendations
This is a summary of current ratings for KKR Real Estate Finance Trust and Highlands REIT, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| KKR Real Estate Finance Trust | 0 | 1 | 4 | 0 | 2.80 |
| Highlands REIT | 0 | 0 | 0 | 0 | N/A |
Profitability
This table compares KKR Real Estate Finance Trust and Highlands REIT’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| KKR Real Estate Finance Trust | -4.82% | 10.59% | 2.01% |
| Highlands REIT | -33.24% | -4.51% | -3.04% |
Risk & Volatility
KKR Real Estate Finance Trust has a beta of 0.96, meaning that its stock price is 4% less volatile than the S&P 500. Comparatively, Highlands REIT has a beta of 26.66, meaning that its stock price is 2,566% more volatile than the S&P 500.
Valuation & Earnings
This table compares KKR Real Estate Finance Trust and Highlands REIT’s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| KKR Real Estate Finance Trust | $175.22 million | 3.87 | -$30.85 million | ($0.78) | -12.53 |
| Highlands REIT | $30.98 million | 2.10 | -$10.30 million | ($0.01) | -9.00 |
Highlands REIT has lower revenue, but higher earnings than KKR Real Estate Finance Trust. KKR Real Estate Finance Trust is trading at a lower price-to-earnings ratio than Highlands REIT, indicating that it is currently the more affordable of the two stocks.
Summary
KKR Real Estate Finance Trust beats Highlands REIT on 8 of the 13 factors compared between the two stocks.
About KKR Real Estate Finance Trust
KKR Real Estate Finance Trust Inc., a mortgage real estate investment trust, focuses primarily on originating and acquiring transitional 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 real estate loans. 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.
About Highlands REIT
We are a self-advised and self-administered real estate investment trust (REIT) created to own and manage substantially all of the non-core investment properties previously owned and managed by our former parent, InvenTrust Properties Corp., a Maryland corporation (InvenTrust). On April 28, 2016, we were spun-off from InvenTrust through a pro rata distribution (the Distribution) by InvenTrust of 100% of the outstanding shares of our common stock to holders of InvenTrust's common stock. Prior to or concurrent with the separation, we and InvenTrust engaged in certain reorganization transactions that were designed to consolidate substantially all of InvenTrust's remaining non-core investment properties in Highlands.
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