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

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.

What Happened

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.

What Else to Know

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.

Company Overview

Company Snapshot

• 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.

Foolish Take

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.

Glossary

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.

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.