Summary
- IRM is a high-yielding REIT with an attractive business model.
- IRM's shares are cheap compared to their history.
- IRM's core business growth is declining due to reduced hard document storage, but it is also essential and incredibly sticky, making its longevity considerably greater than most leases.
- Last quarter, IRM revised near-term expectations that significantly discounted market valuations and making IRM a more compelling investment.
- IRM is a trusted document custodian and brand whose newer digital endeavors may resonate well with the company's existing large clients.
Iron Mountain (IRM) is a global company dedicated to storing, protecting and managing information and assets. Iron Mountain’s market value declined earlier this quarter and appears to present a long-term value for REIT and income investors. Moreover, IRM's shares are currently trading around long-term support.
Iron Mountain's Business
Iron Mountain's core business involves collecting rent from customers for storage space for boxes of documents. Many businesses are required to maintain records for several years, while others choose to maintain certain documents, records and related assets indefinitely. In 2014, Iron Mountain received approval to operate as a real estate investment trust (“REIT”).
Iron Mountain’s core business model appears well-protected from recession and competition. The traditionally domestic business has grown internationally diverse. The company’s existing warehousing and routing infrastructure should provide it with operational efficiencies and capabilities that should provide competitive price protection.
(Source: IRM's 2019 NAREIT Conference slideshow)
Iron Mountain’s existing relationships are valuable. Iron Mountain has a long-standing reputation with large corporate clients that trust IRM with sensitive information. Customers are also reluctant to move a box of files unless they are required to do so, because it is a higher current expense.
