Summary
One thing that distinguishes Iron Mountain’s business from other REITs is the relative insensitivity to higher interest rates.
Iron Mountain has only 2% customer turnover in a given year. This means 50% of the boxes that were stored 15 years ago still remain.
Iron Mountain is certainly no “blue chip” REIT, but given the durability of the business model, I am somewhat perplexed as to why shares have been so volatile.
Iron Mountain has under-performed our expectations year-to-date; we are maintaining a STRONG BUY.
This idea was discussed in more depth with members of my private investing community, Intelligent REIT Investor.
I began covering Iron Mountain (IRM) over six years ago and in my first research article I explained:
“By converting to a REIT structure, Iron Mountain enhances its strategy to extend and sustain the long-term durability of the business model. This storage-driven sector is comprised of multiple operations that are comprised of record centers, DP vaults, shred facilities, underground facilities, and fulfillment centers.”
At the time, Iron Mountain was not a REIT. The company was a c-corp and was hoping to convert to a REIT like some of its peers at time, namely Equinix (EQIX) and Cincinnati Bell (CBB) through its spin of CyrusOne (CONE).
One of the key hurdles for Iron Mountain was to obtain an IRS private letter ruling (or PLR) agreement regarding the characterization of the company's steel racking structures as real estate.
