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Iron Mountain (IRM) to Sell IPM Business to NCC Group for $220M

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In line with its capital-recycling efforts, Iron Mountain Incorporated (IRM - Free Report) has struck a deal to dispose of its Intellectual Property Management (“IPM”) business to NCC Group for gross proceeds of $220 million.

Net of taxes and fees, subject to adjustments, proceeds will amount to $165 million. The transaction is anticipated to close in early June 2021, conditional on customary closing norms.

The sale reiterates Iron Mountain’s strategy to focus on its core businesses and invest in innovative products, services and solutions to ride on the growth curve over the long term.

Management noted that the transaction will “represent another source of capital to fund our strategic growth areas, including our data center development pipeline.”

In fact, the company is monetizing non-core assets, and entering joint ventures and sale-leaseback transactions, using sale proceeds to fund the development pipeline. Proceeds from such efforts have aggregated $475 million in 2020. Such efforts are likely to continue in 2021, with the company’s expectation of capital-recycling proceeds of $125 million. 

Particularly, Iron Mountain remains focused on the expansion of its faster-growing businesses, most notable being the data center segment. The company is making organic growth efforts on the back of expansion projects and developments.

Moreover, in April, it closed a joint venture with Web Werks to expand Iron Mountain’s reach to India, particularly in Mumbai, Pune and Delhi NCR. Given the anticipated robust growth in the India data-center market, the move is a strategic fit. Such moves will enable the company to capitalize on the strong demand for connectivity, interconnection and colocation space, and drive leasing activity.

However, we expect the sale to result in lost revenues and, consequently, be dilutive to near-term earnings. Markedly, for the year ended Dec 31, 2020, IPM generated revenues and adjusted EBITDA of nearly $33 million and $22 million, respectively.

Shares of this Zacks Rank #3 (Hold) company have gained 31% over the past three months compared with the industry's growth of 8.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

 

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OUTFRONT Media Inc.’s (OUT - Free Report) Zacks Consensus Estimate for 2021 FFO per share has moved marginally north to 89 cents over the past month. The company currently carries a Zacks Rank of 2.

Braemar Hotels & Resorts Inc. (BHR - Free Report) has a Zacks Rank of 2 at present. The Zacks Consensus Estimate for the ongoing year’s FFO per share has been revised around 38% upward in a week to 44 cents.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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