Why One Fund Just Put $12.2 Million Into This Beaten-Down Multi-Family Apartment REIT

New York City-based Argosy-Lionbridge Management disclosed a new position in Independence Realty Trust, reporting the addition of 744,935 shares worth an estimated $12.2 million during the third quarter.

What Happened

According to a filing with the Securities and Exchange Commission (SEC) dated November 14, Argosy-Lionbridge Management initiated a new position in Independence Realty Trust (NYSE:IRT). The fund reported holding 744,935 shares valued at $12.2 million as of September 30, reflecting a new allocation equal to 8% of its reportable assets.

What Else to Know

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 Independence Realty Trust were priced at $16.45, down 22.5% over the past year and well underperforming the S&P 500, which is up 12% in the same period.

Company Overview

Company Snapshot

• Independence Realty Trust owns and operates multifamily apartment properties, generating revenue primarily from rental income across non-gateway U.S. markets.
• The company operates as a real estate investment trust (REIT), focusing on portfolio management and capital appreciation to deliver consistent distributions to shareholders.
• It targets residents seeking amenity-rich living in submarkets with quality schools, retail, and employment centers, primarily in cities such as Atlanta, Louisville, Memphis, and Raleigh.

Independence Realty Trust, Inc. is a large-scale residential REIT with a portfolio concentrated in high-demand, non-gateway U.S. markets. The company’s strategy centers on scaling within amenity-rich submarkets to drive operational performance and deliver attractive risk-adjusted returns. Through disciplined management and a focus on stable rental income, IRT aims to provide consistent value to its shareholders.

Foolish Take

Buying into a beaten-down residential REIT seems like the type of move motivated by a belief that fundamentals — and not sentiment — will ultimately drive returns. That’s the backdrop for Argosy-Lionbridge’s new position in Independence Realty Trust, a multifamily operator delivering modest but steady operating gains even as the stock trades far below its 2022 highs. Same-store NOI rose 2.7% in the third quarter, portfolio occupancy held above 95%, and value-add renovations generated an average 14.8% return, according to the company’s latest earnings release.

IRT’s footprint across non-gateway markets — Atlanta, Raleigh, Louisville, Memphis — may appeal to investors looking for demographic tailwinds and lower supply risk as compared with coastal markets. Management reaffirmed full-year core funds from operations guidance and highlighted improving bad debt trends and accretive acquisitions in Orlando, another mark of operational discipline.

For long-term investors, the key question is whether stable occupancy, improving operating margins, and disciplined capital recycling can outweigh broader valuation pressure — and create an attractive entry point at depressed levels.

Glossary

13F reportable assets: Assets that institutional investment managers must disclose quarterly to the SEC, showing their equity holdings.
Assets under management (AUM): The total market value of investments managed on behalf of clients by a fund or firm.
Position: The amount of a particular security or investment held by an individual or institution.
Dividend yield: Annual dividends paid by a company divided by its share price, expressed as a percentage.
Real estate investment trust (REIT): A company that owns, operates, or finances income-producing real estate and distributes most income to shareholders.
Non-gateway markets: Cities or regions outside of the largest, most established U.S. metropolitan areas, often with lower costs and growth potential.
Submarkets: Smaller geographic areas within a larger market, often with distinct characteristics or demographics.
Risk-adjusted returns: Investment returns evaluated in relation to the amount of risk taken to achieve them.
Capital appreciation: The increase in the value of an asset or investment over time.
Distributions: Payments made by a fund or company to its investors, often from profits or income.
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.