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Iron Mountain (IRM) Reaps $178M From Sale-Leaseback Deal With ICG

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Iron Mountain Incorporated (IRM - Free Report) has executed a sale-leaseback transaction with Intermediate Capital Group (ICG) for a portfolio of five industrial facilities located in the greater London area. The transaction enables the company to raise cash, while effectively maintaining long-term control of the facilities through long-term lease agreements and renewal options.

Iron Mountain has generated gross proceeds of roughly $178 million, based on current exchange rates by selling the 550,000-square-foot portfolio. Nonetheless, the company will continue to occupy these facilities per an initial 12-year lease term, with options to renew the lease for another 20 years.

Markedly, ICG is a global alternative asset manager with more than 30 years' history, providing capital to help companies grow. It has $56.2 billion of assets in private debt, credit, and equity, mainly in closed-end funds under management.

Remarkably, the transaction is in line with its focus on capital recycling, through which the company is monetizing non-core assets and using sale proceeds to redeploy in its faster-growing businesses, most notable being the data-center segment.

Management noted that on a leverage-neutral basis, $140 million of investable capital will be made available for use through the transaction.

Notably, in May, Iron Mountain announced its deal to dispose of the company’s Intellectual Property Management (“IPM”) business to NCC Group for gross proceeds of $220 million, in line with its capital-recycling efforts.

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.

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

The company is expanding its data-center footprint in London with the recent announcement of a new 27-megawatt built. In addition, Iron Mountain recently added 4 megawatts of new capacity at its LON-1 data center, bringing the total power capacity at the facility to 9.1 megawatts.

Iron Mountain’s second facility in London, LON-2, is located in the Slough Trading Estate. The three-story facility will offer new colocation opportunities, carrier-neutral connectivity options and easy access to preeminent global peering exchanges, global networks and cloud on-ramps.

However, higher reliance on non-paper-based technologies and slowdown in service activity are affecting the service segment’s performance.

Shares of this Zacks Rank #3 (Hold) company have gained 18% over the past three months, outperforming the industry’s rally of 14.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks Investment ResearchImage Source: Zacks Investment Research

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National Storage Affiliates Trust’s (NSA - Free Report) consensus estimate for current-year FFO per share has moved 2.6% north to $1.99 in a week’s time. Currently, the company carries a Zacks Rank of 2.

Braemar Hotels & Resorts Inc. (BHR - Free Report) holds a Zacks Rank of 2, at present. The consensus estimate for the ongoing year’s FFO per share has been revised 4.5% upward to 46 cents over the past month.

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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