Iron Mountain (IRM) Taps Debt Market to Fund Acquisition

Iron Mountain Inc.’s IRM wholly-owned subsidiary, Iron Mountain Information Management Services recently upsized its private placement of 5.000% senior notes due 2032 to $750 million from the previously announced $500 million.

Iron Mountain plans to use the net proceeds to fund the acquisition of ITRenew. Further, IRM intends to pay the related fees and expenses, and use the same for general corporate purposes. This includes repaying a portion of the outstanding borrowings under IRM’s revolving credit facility and other short-term debt.

The acquisition of ITRenew is expected to close in the first quarter of 2022. Iron Mountain expects the deal to be immediately accretive to 2022 adjusted funds from operations (FFO).

Upon closure of the transaction, Iron Mountain will acquire 80% of the outstanding shares of ITRenew on a cash- and debt-free basis for roughly $725 million of cash. The other 20% will be acquired within three years of the closing for a minimum enterprise value of $925 million.

The purchase of ITRenew will help Iron Mountain capitalize on the large and growing IT asset disposition market. Moreover, it will boost IRM’s platform strength.

The upsized debt offering will enhance the flexibility of Iron Mountain. IRM had total liquidity of $1.6 billion as of Sep 30, 2021, including cash and cash equivalents of $161.4 million and a weighted-average maturity of 6.7 years. With this latest move, Iron Mountain will have ample financial flexibility to meet its near-term debt obligations and other capital commitments, while pursuing growth opportunities.

In the past three months, shares of this currently Zacks Rank #3 (Hold) player have appreciated 10%, outperforming the industry's 3% growth. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Stocks to Consider

Some better-ranked stocks from the REIT sector are OUTFRONT Media OUT, Cedar Realty Trust CDR and CubeSmart CUBE.

The Zacks Consensus Estimate for OUTFRONT Media’s 2021 fund from operations (FFO) per share has been raised 13.8% over the past two months. OUT’s 2021 FFO per share is expected to increase 45.71% from the year-ago quarter’s reported figure.

OUTFRONT Media flaunts a Zacks Rank of #1 (Strong Buy) at present. Shares of OUT have rallied 5.3% in the past six months.

The Zacks Consensus Estimate for Cedar Realty’s current-year FFO per share has been raised 2.6% to $2.36 in the past two months. Over the last four quarters, CDR’s FFO per share surpassed the consensus mark twice and missed the same in the other two, the average surprise being 6.4%.

Currently, CDR sports a Zacks Rank of 1. Shares of Cedar Realty have appreciated 46.9% in the past six months.

CubeSmart carries a Zacks Rank #2 (Buy) at present. Over the last four quarters, CUBE’s FFO per share surpassed the consensus mark on all occasions, the average surprise being 7.10%.

The Zacks Consensus Estimate for CubeSmart’s 2021 FFO per share has been revised 2.4% upward in the past month to $2.10. Shares of CUBE have appreciated 18.6% in the past six months.

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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OUTFRONT Media Inc. (OUT) : Free Stock Analysis Report

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