Reviewing Paramount Group (NYSE:PGRE) and Franklin BSP Realty Trust (NYSE:FBRT)

Paramount Group (NYSE:PGRE) and Franklin BSP Realty Trust (NYSE:FBRT) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, institutional ownership, dividends, profitability, valuation and analyst recommendations.

Volatility and Risk

Paramount Group has a beta of 1.25, indicating that its stock price is 25% more volatile than the S&P 500. Comparatively, Franklin BSP Realty Trust has a beta of 1.42, indicating that its stock price is 42% more volatile than the S&P 500.

Earnings and Valuation

This table compares Paramount Group and Franklin BSP Realty Trust’s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Paramount Group	$742.79 million	1.41	-$259.74 million	($1.16)	-4.16
Franklin BSP Realty Trust	$263.95 million	4.00	$145.21 million	$1.32	9.78

Franklin BSP Realty Trust has lower revenue, but higher earnings than Paramount Group. Paramount Group 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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Paramount Group	-27.96%	-5.15%	-2.64%
Franklin BSP Realty Trust	43.03%	11.96%	2.62%

Analyst Ratings

This is a summary of recent recommendations for Paramount Group and Franklin BSP Realty Trust, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Paramount Group	1	2	1	0	2.00
Franklin BSP Realty Trust	0	0	3	1	3.25

Paramount Group presently has a consensus target price of $4.88, suggesting a potential upside of 0.93%. Franklin BSP Realty Trust has a consensus target price of $15.25, suggesting a potential upside of 18.13%. Given Franklin BSP Realty Trust’s stronger consensus rating and higher probable upside, analysts clearly believe Franklin BSP Realty Trust is more favorable than Paramount Group.

Dividends

Paramount Group pays an annual dividend of $0.14 per share and has a dividend yield of 2.9%. Franklin BSP Realty Trust pays an annual dividend of $1.42 per share and has a dividend yield of 11.0%. Paramount Group pays out -12.1% of its earnings in the form of a dividend. Franklin BSP Realty Trust pays out 107.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Institutional and Insider Ownership

65.6% of Paramount Group shares are held by institutional investors. Comparatively, 59.9% of Franklin BSP Realty Trust shares are held by institutional investors. 13.5% of Paramount Group shares are held by insiders. Comparatively, 0.7% of Franklin BSP Realty Trust 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.

Summary

Franklin BSP Realty Trust beats Paramount Group on 13 of the 17 factors compared between the two stocks.

About Paramount Group

Paramount Group, Inc. ("Paramount" or the "Company") is a fully-integrated real estate investment trust that owns, operates, manages, acquires and redevelops high-quality, Class A office properties located in select central business district submarkets of New York and San Francisco. Paramount is focused on maximizing the value of its portfolio by leveraging the sought-after locations of its assets and its proven property management capabilities to attract and retain high-quality tenants.

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.