Seeking Alpha

Iron Mountain may need more than REIT status

  • "Our proprietary survey highlighting a dramatic decline in paper storage intentions is concerning," write Jefferies' Dan Dolev and Trevor Young, warning about the long-term outlook for Iron Mountain (IRM -2%) even if it is allowed to convert to a REIT. "Data centers are a step in the right direction, but to ensure long-term viability, IRM needs a comprehensive plan to diversify away from storing paper."
  • "REIT status does not affect fundamentals," they say, but surely the stock would get a short-term respite from a doubling in the dividend. "Only the IRS knows if IRM would become a REIT."
Comments (1)
  • MutualFundMonday
    , contributor
    Comments (107) | Send Message
     
    As I mentioned in the comments section of the Barron's article regurgitating this analyst report: Another incompetent analyst report. 1) REIT status does affect fundamentals. Saving $120M in taxes and being valued on an FFO/AFFO basis completely changes the valuation of the company. 2) Paper will never disappear. While there is a marginal decline in the U.S., it will especially take longer in the international markets like S.A. that IRM has expanded into. In addition, data tape storage is a current and growing business of IRM. 3) Analysts know nothing about REITs. IRM can convert to a REIT even without IRS approval. It just makes the conversion cleaner in case of an audit.
    17 Dec 2013, 05:27 PM Reply Like
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