Critical Contrast: Chicago Atlantic Real Estate Finance (NASDAQ:REFI) vs. Net Lease Office Properties (NYSE:NLOP)

Net Lease Office Properties (NYSE:NLOP) and Chicago Atlantic Real Estate Finance (NASDAQ:REFI) are both small-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, dividends, analyst recommendations, risk, profitability, valuation and earnings.

Dividends

Net Lease Office Properties pays an annual dividend of $0.34 per share and has a dividend yield of 1.4%. Chicago Atlantic Real Estate Finance pays an annual dividend of $1.88 per share and has a dividend yield of 12.2%. Chicago Atlantic Real Estate Finance pays out 94.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Ratings

This is a summary of recent recommendations and price targets for Net Lease Office Properties and Chicago Atlantic Real Estate Finance, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Net Lease Office Properties	0	0	1	0	3.00
Chicago Atlantic Real Estate Finance	0	2	1	1	2.75

Net Lease Office Properties presently has a consensus target price of $46.00, suggesting a potential upside of 86.99%. Chicago Atlantic Real Estate Finance has a consensus target price of $17.33, suggesting a potential upside of 12.85%. Given Net Lease Office Properties’ stronger consensus rating and higher probable upside, equities analysts clearly believe Net Lease Office Properties is more favorable than Chicago Atlantic Real Estate Finance.

Earnings and Valuation

This table compares Net Lease Office Properties and Chicago Atlantic Real Estate Finance’s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Net Lease Office Properties	$176.31 million	2.06	-$131.75 million	N/A	N/A
Chicago Atlantic Real Estate Finance	$57.15 million	5.13	$38.71 million	$1.99	7.72

Chicago Atlantic Real Estate Finance has lower revenue, but higher earnings than Net Lease Office Properties.

Profitability

This table compares Net Lease Office Properties and Chicago Atlantic Real Estate Finance’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Net Lease Office Properties	N/A	N/A	N/A
Chicago Atlantic Real Estate Finance	62.74%	13.84%	10.74%

Insider & Institutional Ownership

58.3% of Net Lease Office Properties shares are held by institutional investors. Comparatively, 25.5% of Chicago Atlantic Real Estate Finance shares are held by institutional investors. 12.3% of Chicago Atlantic Real Estate Finance shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

Chicago Atlantic Real Estate Finance beats Net Lease Office Properties on 8 of the 13 factors compared between the two stocks.

About Net Lease Office Properties

Net Lease Office Properties (NYSE: NLOP) is a publicly traded real estate investment trust with a portfolio of 59 high-quality office properties, totaling approximately 8.7 million leasable square feet primarily leased to corporate tenants on a single-tenant net lease basis. The vast majority of the office properties owned by NLOP are located in the U.S., with the balance in Europe. The portfolio consists of 62 corporate tenants operating in a variety of industries, generating annualized based rent (ABR) of approximately $145 million. NLOP's business plan is to focus on realizing value for its shareholders primarily through strategic asset management and disposition of its property portfolio over time. Given WPC's extensive knowledge of the portfolio, NLOP is externally managed and advised by wholly owned affiliates of WPC to successfully execute on its business strategy. Over the course of its 50-year history, WPC has developed significant expertise in the single-tenant office real estate sector, including the operation, leasing, acquisition and development of assets through many market cycles, and has a proven track record of execution.

About Chicago Atlantic Real Estate Finance

Chicago Atlantic Real Estate Finance, Inc. operates as a commercial real estate finance company in the United States. The company engages in originating, structuring, and investing in first mortgage loans and alternative structured financings secured by commercial real estate properties. Its portfolio primarily includes offers senior loans to state-licensed operators in the cannabis industry. The company has elected to be taxed as a real estate investment trust (REIT) and would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. Chicago Atlantic Real Estate Finance, Inc. was incorporated in 2021 and is headquartered in Chicago, Illinois.