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Iron Mountain Sells Consumer Storage Business to MakeSpace

Zacks Equity Research

Iron Mountain Incorporated IRM sold the full-service, valet consumer storage business — Stashable — to storage company MakeSpace. Further, it will offer $30 million as funding for MakeSpace’s expansion plans.

This partnership enabled Iron Mountain to strengthen consumer offering and leverage on MakeSpace’s technology platform that was needed for expanding operations.

Further, facilities and operational efficiencies of Iron Mountain will enable MakeSpace to provide best-in-class, scalable technology in new markets, with opportunities to penetrate other markets in the long term. Moreover, MakeSpace will likely witness efficiencies at existing locations in Chicago, New York City, Washington, DC and Los Angeles.

In fact, Iron Mountain’s robust network of storage, transportation and logistics operations will help MakeSpace to immediately expand offering in 20 new markets, including San Francisco, Boston, San Diego, Seattle, Philadelphia and Toronto. This brings MakeSpace’s total footprint to 24 markets. Moreover, MakeSpace will become a customer for Iron Mountain by initially delivering 2.1 million cubic feet of consumer storage.

Per Iron Mountain’s management, its scale and expertise in managing valuable assets combined with MakeSpace’s prominent brand value and front-end customer platform will enable to deliver higher value across Iron Mountain’s storage network.

MakeSpace’s CEO, Rahul Gandhi noted that Iron Mountain’s significant global storage footprint combined with MakeSpace’s proprietary technology offers it a competitive edge over peers to capture consumer demand for hassle-free storage.

In fact, going by statistics, one out of 10 Americans presently use self-storage facilities. As urban apartment sizes shrink and a higher number of Americans shift between cities, the demand for storage space is expected to continually increase. Hence, leveraging this favorable trend, this partnership looks promising.

Encouragingly, Iron Mountain has witnessed growth in storage rental revenues at a CAGR of 15.7% over the past 29 years. The company’s initiatives to expand the core storage business will likely lead to sustained top-line growth over the long term.

However, the company’s Service revenues remain modest due to falling activity rates as stored records are becoming less active. Continued fall in service revenue activity level is expected to impact organic growth in the upcoming quarters.

Over the past three months, shares of this Zacks Rank #3 (Hold) company have gained 15%, underperforming the industry’s rally of 20.2%.

Stocks to Consider

Investors can consider some better-ranked stocks from the same space like Terreno Realty Corporation TRNO, Cousins Properties Incorporated CUZ and Boston Properties, Inc. BXP, currently carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

The Zacks Consensus Estimate for Terreno Realty’s 2019 funds from operations (FFO) per share remained unchanged at $1.42 over the past month. Further, it has a long-term growth rate of 8.40%.

Cousins Properties’ Zacks Consensus Estimate for 2019 FFO per share was revised 12.7% upward to 73 cents over the past month. Also, it has a long-term growth rate of 3.2%.

Boston Properties’ 2019 FFO per share estimates for the ongoing year were revised marginally north to $6.92 in 30 days’ time. Additionally, it has a long-term growth rate of 6.20%.

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