Iron Mountain Incorporated (IRM - Free Report) is constructing its second data center in Manassas with an aim to strengthen its campus in Prince William County, VA, per an article by Washington Business Journal. The announced project, slated to be completed in the first quarter of 2020, will require funding of $225 million.
The project would provide jobs to 50 employees. Prior to this, in 2017, the company had completed the construction of its first phase of campus worth $100 million, located at 11680 Hayden Road. According to management, with this addition, Iron Mountain will provide purpose-built, enterprise-class data center capacity to address clients’ growing IT architecture challenges.
Iron Mountain has been trying to supplement its storage segment’s performance with the faster-growing Adjacent Businesses segment, most notably data centers. In fact, data-center wins and a robust leasing pipeline indicate Iron Mountain’s solid data-center platform, which offers a long growth runway. In the first nine months of 2019, the company leased 15 megawatts of capacity.
Notably, with growing popularity of cloud computing, IoT and big data, as well as the use of third-party IT infrastructure by several companies, data-center REITs have been witnessing a boom. Additionally, the estimated growth rates for AI, autonomous vehicle and virtual/augmented reality markets will remain robust over the next five to eight years. This will significantly propel growth of data-centers, helping Iron Mountain, Digital Realty Trust, Inc. (DLR - Free Report) , Equinix, Inc. (EQIX - Free Report) , CyrusOne Inc. (CONE - Free Report) and others to excel.
To tap the growing potential of the data-center market, in September, Iron Mountain expanded its presence in Asia-Pacific region by unveiling a multi-tenant data-center facility in Serangoon, Singapore. Also, in the same month, the REIT had announced the successful development of approximately four megawatts of turn-key data-center capacity in Amsterdam and London.
However, given the data-center real estate market’s solid growth potential, competition is expected to intensify from both existing and new players. Amid all these, an aggressive pricing pressure is expected in the data-center market.
Moreover, Iron Mountain has a highly-leveraged balance sheet. Also, the company needs huge investments to fund its efforts to shift revenue mix to faster-growing businesses and markets. This might worsen its risk profile, going forward.
This Zacks Rank #4 (Sell) company has underperformed its industry in the past six months. Shares of Iron Mountain have recorded a decline of 4.9% against the industry’s growth of 2.4%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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