Why One Fund Has a $200 Million Bet on This Struggling Warehouse REIT

In an SEC filing released on Friday, California-based Darlington Partners Capital Management reported that it bought 1.6 million shares of Lineage during the quarter ended September 30, boosting its stake by approximately $44.8 million.

What Happened

Darlington Partners Capital Management increased its investment in Lineage (NASDAQ:LINE) during the third quarter, according to a filing with the Securities and Exchange Commission (SEC) released on Friday. The fund added 1.6 million shares, bringing its total holding to 5.1 million shares worth $198.3 million as of September 30. The position now accounts for 6.7% of the fund’s $3 billion in reportable U.S. equity assets.

What Else to know

Top holdings after the filing:

• NASDAQ: WMG: $408.6 million (13.8% of AUM)
• NYSE: FOUR: $392.6 million (13.2% of AUM)
• NYSE: CRM: $296.7 million (10% of AUM)
• NASDAQ: TPG: $283.2 million (9.6% of AUM)
• NYSE: TKO: $272.7 million (9.2% of AUM)

As of Monday's market close, shares of Lineage were priced at $33.66, down 47% over one year—far below the S&P 500's nearly 14% gain in the same period.

Company Overview

Company Snapshot

• Lineage provides temperature-controlled warehousing and integrated cold-chain logistics solutions, generating revenue primarily through its Global Warehousing and Global Integrated Solutions segments.
• The company operates as an industrial real estate investment trust (REIT), earning income from leasing temperature-controlled storage facilities and offering specialized cold-chain services.
• Its customer base includes food producers, distributors, and retailers that require reliable, large-scale cold storage and logistics support.

Lineage is a leading industrial REIT specializing in temperature-controlled warehousing and cold-chain logistics. The company's scale and integrated service offerings position it as a key infrastructure provider for the global food supply chain. Its focus on specialized cold storage solutions and end-to-end logistics enables it to serve a broad base of food industry clients, supporting both operational efficiency and supply chain reliability.

Foolish Take

Darlington’s latest move seems like another instance of the fund leaning into depressed valuations where it believes quality and scale will ultimately prevail. Lineage went public in July 2024, and its post-IPO drawdown—down nearly 50% year over year despite revenue growth and resilient demand—creates the kind of dislocation Darlington tends to underwrite when it’s building multiyear positions. The fund also doubled down on a bet on struggling payments stock Shift4 last quarter.

Lineage's latest earnings underscore that dynamic: Revenue rose 3.1% to $1.38 billion, and adjusted EBITDA climbed 2.4% to $341 million. Management also reaffirmed full-year guidance, albeit at the low end, citing softer U.S. occupancy and tariff-related volume pressure.

Within the portfolio, the expanded Lineage position now sits behind only Warner Music and Shift4 in size—a meaningful signal given Darlington’s preference for concentrated, high-conviction holdings. For investors, the purchase highlights a thesis centered on Lineage’s scale, essential infrastructure footprint, and long-term demand tailwinds tied to global food supply chains. Near-term headwinds remain very real, but Darlington’s doubling down suggests it views cyclical pressure as temporary rather than structural.

Glossary

13F reportable assets: Assets that institutional investment managers must disclose quarterly to the SEC, detailing certain U.S. equity holdings.
AUM (Assets Under Management): The total market value of investments managed on behalf of clients by a fund or firm.
Dividend yield: The annual dividend payment divided by the stock price, expressed as a percentage.
Trailing twelve months (TTM): The 12-month period ending with the most recent quarterly report.
Net loss: When a company’s total expenses exceed its total revenues over a specific period.
REIT (Real Estate Investment Trust): A company that owns, operates, or finances income-producing real estate and distributes most earnings to shareholders.
Cold-chain logistics: The transportation and storage of temperature-sensitive products through a supply chain using refrigerated facilities and vehicles.
Integrated solutions: Combined services or products designed to work together, often streamlining operations for clients.
CAGR (Compound Annual Growth Rate): The average annual growth rate of an investment over a specified time period, assuming profits are reinvested.
Top holdings: The largest investments in a fund’s portfolio, typically ranked by market value.
Industrial REIT: A REIT specializing in owning and managing industrial properties like warehouses and distribution centers.
Reportable U.S. equity assets: U.S. stock investments that must be disclosed in regulatory filings by institutional managers.

Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Salesforce and Shift4 Payments. The Motley Fool recommends TKO Group Holdings. The Motley Fool has a disclosure policy.