Why a Major Fund Cut Its Stake in This REIT Still Down 70% Since 2007

• New York City-based Argosy-Lionbridge Management sold 372,132 shares of Veris Residential in the third quarter.

• The net position change from quarter to quarter was about $5.5 million.

• Following the transaction, Argosy-Lionbridge reported holding 265,413 VRE shares valued at about $4 million.

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New York City-based Argosy-Lionbridge Management disclosed a sale of 372,132 shares of Veris Residential (VRE), reducing its position by $5.5 million in the third quarter, according to a November 14 SEC filing.

According to a Securities and Exchange Commission (SEC) filing dated November 14, Argosy-Lionbridge Management reduced its holding in Veris Residential (NYSE:VRE) by 372,132 shares during the third quarter. The updated position stands at 265,413 shares valued at $4 million as of September 30.

The Veris Residential stake now represents 2.7% of Argosy-Lionbridge’s reportable AUM.

Top holdings after the filing:

• NYSE: REXR: $24.9 million (16.4% of AUM)

• NYSE: AIV: $23.1 million (15.2% of AUM)

• NYSE: ELME: $21.5 million (14.1% of AUM)

• NYSE: FR: $20.8 million (13.7% of AUM)

• NYSE: LEN: $19.6 million (12.9% of AUM)

As of Monday, shares of Veris Residential were priced at $14.18, down 19% over the past year and well underperforming the S&P 500, which is up 12% in the same period.

• Veris Residential owns, operates, acquires, and develops Class A multifamily residential properties with a focus on sustainability and environmentally conscious features.

• The company serves residents seeking sustainability-conscious lifestyle needs.

• It caters primarily to urban and suburban renters in markets with high demand for eco-friendly living environments.

Veris Residential, Inc. is a real estate investment trust specializing in Class A multifamily properties, emphasizing sustainability and positive community impact. The company leverages a disciplined operational approach and strong corporate governance to drive value for shareholders. Its strategy centers on meeting the evolving lifestyle needs of residents while maintaining a competitive edge through environmentally responsible practices.

Veris is delivering cleaner fundamentals — sequential occupancy gains, 3.9% blended rental growth, and increased full-year guidance for funds from operations — yet the stock remains deeply discounted, down more than 70% from 2007 and still lagging the S&P 500. For a fund overweight industrial and multifamily names with steadier balance sheets, trimming a smaller, more levered position fits the pattern: Veris still carries 10x normalized net debt-to-EBITDA and is leaning heavily on asset sales to delever.

Even so, Veris’ third-quarter numbers were solid. Net income swung to $0.80 per diluted share (from a loss of $0.10 per share a year earlier), and management closed or contracted on $542 million of non-strategic dispositions, using the proceeds to retire $394 million of debt and drop interest costs. Occupancy climbed to 94.7%, and the company reaffirmed healthy same-store revenue growth of 2.2% to 2.7% for this year.

For long-term investors, the key question is whether Veris can execute its plan fast enough to close that valuation gap — or whether balance-sheet risk continues to justify a smaller weighting compared with the fund’s top holdings.

13F reportable assets under management (AUM): Assets that institutional investment managers must report quarterly to the SEC on Form 13F.
Assets under management (AUM): The total market value of investments managed on behalf of clients by a fund or firm.
Stake: The amount of ownership or interest an investor holds in a company or asset.
Top holdings: The largest investments in a fund’s portfolio, typically ranked by market value or percentage of AUM.
Class A multifamily residential properties: High-quality, newer apartment buildings in desirable locations, often with premium amenities.
Real estate investment trust (REIT): A company that owns, operates, or finances income-producing real estate, often paying dividends to shareholders.
Disciplined operational approach: A management style focused on strict processes and controls to maximize efficiency and performance.
Corporate governance: The system of rules and practices by which a company is directed and controlled.
TTM: The 12-month period ending with the most recent quarterly report.

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Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Lennar. The Motley Fool has a disclosure policy.

Why a Major Fund Cut Its Stake in This REIT Still Down 70% Since 2007 was originally published by The Motley Fool