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Iron Mountain Inks Expansion Lease With U.S. Federal Agency

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Zacks Equity Research
·4 min read
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Iron Mountain Incorporated IRM recently informed that one of its tenants — an U.S. Federal government civilian agency — is expanding its existing footprint to the company’s data centers in Manassas, VA and Denver, CO. In fact, the agency will lease additional 5 megawatts of power capacity at Iron Mountain’s colocation data centers to facilitate its IT transformation initiatives.

Specifically, the agency intends to migrate from its current proprietary — on-premise data center — to a 4-megawatt space at Iron Mountain’s new Northern Virginia data center, VA-2. Moreover, via expansion of its disaster recovery space, the agency will shift from the current 1.5-megawatt space leased at Iron Mountain’s Boyers, PA-based data center to a 2.5-megawatt space at the company’s Denver DEN-1 facility. The lease is anticipated to begin in second-quarter 2021.

Notably, Iron Mountain’s data center campus in Virginia spans 83 acres. The campus’ location in the center of the world’s largest and fastest-growing data center market has likely attracted the tenant to lease space at the facility. The VA-1 data center was unveiled in September 2017. The 12.4-megawatt facility is fully leased and offers carrier-neutral connectivity and convenient access to carriers, clouds, as well as IT service providers. VA-2 was opened in early July with 4 megawatts of initial capacity and has 24 megawatts of capacity at full build-out.

Moreover, DEN-1 is strategically located in the core of downtown Denver, which is one of the lowest disaster-risk areas in the United States. It offers more than 11 megawatts of IT capacity and carrier-neutral connectivity, and has access to 12 native carriers as well as numerous public cloud on-ramps.

Markedly, data-center REITs are experiencing a market boom with growth in cloud computing, IoT and big data, along with an increasing number of companies opting for third-party IT infrastructure. The growth rates for the AI, autonomous vehicle and virtual/augmented reality markets will remain robust over the next five to six years. Moreover, data centers are poised to benefit from the rising reliance on technology in the wake of the coronavirus pandemic. 

Hence, Iron Mountain is focusing on the global data center portfolio through acquisitions. In fact, data-center wins and a robust leasing pipeline indicate the company’s solid data-center platform that offers a long growth runway.

In fact, strong demand for connectivity, interconnection and the colocation space is driving leasing. Specifically, in first-half 2020, it signed 39 megawatts of new and expansion leases. With the additional 5-megawatts lease with the agency, the company is well poised to meet its full-year leasing outlook of 45-50 megawatts. Such efforts will diversify the company’s revenue mix and improve adjusted EBITDA margins.

In fact, Iron Mountain's global data center platform comprises 15 operational facilities across 13 markets and can support more than 350 megawatts of capacity at full build-out.

Shares of this Zacks Rank #3 (Hold) company have gained 5.5% over the past three months against the industry’s 1.2% decline.

Stocks to Consider

Duke Realty Corporation’s DRE Zacks Consensus Estimate for 2020 FFO per share has been revised 3.5% upward to $1.49 over the past month. The company currently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Sabra Healthcare REIT, Inc.’s SBRA FFO per share estimates for the ongoing year has been revised 4.3% upward to $1.71 over the past month. The company currently carries a Zacks Rank of 2.

Stag Industrial, Inc.’s STAG FFO per share estimates for 2020 has been revised 1.1% upward to $1.86 over the past month. It currently carries a Zacks Rank of 2.

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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Iron Mountain Incorporated (IRM) : Free Stock Analysis Report
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