Innovative Industrial Properties (NYSE:IIPR) versus Whitestone REIT (NYSE:WSR) Critical Contrast

Innovative Industrial Properties (NYSE:IIPR) and Whitestone REIT (NYSE:WSR) are both small-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, analyst recommendations, institutional ownership, valuation, dividends, earnings and profitability.

Risk and Volatility

Innovative Industrial Properties has a beta of 1.47, indicating that its stock price is 47% more volatile than the S&P 500. Comparatively, Whitestone REIT has a beta of 0.81, indicating that its stock price is 19% less volatile than the S&P 500.

Profitability

This table compares Innovative Industrial Properties and Whitestone REIT’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Innovative Industrial Properties	45.80%	6.77%	5.40%
Whitestone REIT	28.16%	10.10%	3.89%

Institutional & Insider Ownership

70.6% of Innovative Industrial Properties shares are held by institutional investors. Comparatively, 69.5% of Whitestone REIT shares are held by institutional investors. 2.0% of Innovative Industrial Properties shares are held by insiders. Comparatively, 3.2% of Whitestone REIT shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Innovative Industrial Properties and Whitestone REIT”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Innovative Industrial Properties	$308.52 million	4.38	$161.66 million	$4.22	11.43
Whitestone REIT	$154.28 million	4.80	$36.89 million	$0.85	17.06

Innovative Industrial Properties has higher revenue and earnings than Whitestone REIT. Innovative Industrial Properties is trading at a lower price-to-earnings ratio than Whitestone REIT, indicating that it is currently the more affordable of the two stocks.

Dividends

Innovative Industrial Properties pays an annual dividend of $7.60 per share and has a dividend yield of 15.8%. Whitestone REIT pays an annual dividend of $0.54 per share and has a dividend yield of 3.7%. Innovative Industrial Properties pays out 180.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Whitestone REIT pays out 63.5% of its earnings in the form of a dividend. Innovative Industrial Properties has raised its dividend for 4 consecutive years and Whitestone REIT has raised its dividend for 5 consecutive years.

Analyst Ratings

This is a summary of recent recommendations for Innovative Industrial Properties and Whitestone REIT, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Innovative Industrial Properties	3	2	1	0	1.67
Whitestone REIT	0	0	5	0	3.00

Innovative Industrial Properties currently has a consensus price target of $68.20, suggesting a potential upside of 41.45%. Whitestone REIT has a consensus price target of $16.33, suggesting a potential upside of 12.60%. Given Innovative Industrial Properties’ higher probable upside, analysts clearly believe Innovative Industrial Properties is more favorable than Whitestone REIT.

Summary

Innovative Industrial Properties beats Whitestone REIT on 9 of the 17 factors compared between the two stocks.

About Innovative Industrial Properties

Innovative Industrial Properties, Inc. is a self-advised Maryland corporation focused on the acquisition, ownership and management of specialized properties leased to experienced, state-licensed operators for their regulated cannabis facilities. Innovative Industrial Properties, Inc. has elected to be taxed as a real estate investment trust, commencing with the year ended December 31, 2017.

About Whitestone REIT

Whitestone REIT (NYSE: WSR) is a community-centered real estate investment trust (REIT) that acquires, owns, operates, and develops open-air, retail centers located in some of the fastest growing markets in the country: Phoenix, Austin, Dallas-Fort Worth, Houston and San Antonio. Our centers are convenience focused: merchandised with a mix of service-oriented tenants providing food (restaurants and grocers), self-care (health and fitness), services (financial and logistics), education and entertainment to the surrounding communities. The Company believes its strong community connections and deep tenant relationships are key to the success of its current centers and its acquisition strategy.