Spring Sale At Iron Mountain: Closing The Valuation Gap

Summary

• Two weeks ago, Iron Mountain announced Q4-17 and full-year results. The market sentiment was negative and shares fell 10%.
• As the company continues to shift its business mix to data centers, it will generate higher margins and the valuation gap should continue to narrow.
• I am upgrading Iron Mountain from Buy to Strong Buy, as I believe shares could return over 25% annually in 2018 and 2019.

I began covering Iron Mountain (NYSE:IRM) in 2012, when the company announced it was considering a REIT conversion. The CEO at the time said “a key element of our strategic plan is a disciplined capital allocation strategy to increase stockholder payouts and the REIT structure supports this plan.”

In December 2014, Iron Mountain announced that its registration statement was declared effective, and on January 20, 2015, the company held a special meeting for the purposes of voting on the REIT merger (between the company and Iron Mountain REIT). As I explained then:

“That's just a ‘rubber stamp’ though since Iron Mountain is already a REIT in many ways. The biggest hurdle for the Boston-based company was receiving a Private Letter Ruling (or PLR) from the IRS and specifically a ruling regarding the characterization of the company's steel racking structures as real estate. Earlier this summer Iron Mountain achieved IRS approval for REIT status retroactively as of January 1st, completing the process that began in 2012.”

By converting to a REIT, Iron Mountain was forced to pay out at least 90% of taxable income to investors, resulting in a substantially higher dividend than it previously paid. Also, in addition to the clarity with regard to the definition of steel racking as real estate, Iron Mountain is considered somewhat of a hybrid as it relates to its REIT peer classification.

Although Data Center REITs have racking systems (like Iron Mountain), the business model is entirely different from traditional data storage or self-storage because of the service component that is associated with Iron Mountain's integrated data management business.

Conversely, Iron Mountain rents out space in larger buildings that are comparable to Industrial REITs. So in terms of peer orientation, it does not trade at full real estate values, and that valuation gap is the topic of this article.

Two weeks ago, Iron Mountain announced Q4-17 and full-year results. The market sentiment was negative, and shares fell 10% since February 15^th.

Like most REITs, Iron Mountain shares have also pulled back aggressively year to date. As you can see below, the Vanguard Real Estate ETF (VNQ) is down-11.5%, compared to -16.11% for Iron Mountain.

Of course, for a value investor, it’s really easy to spot a “spring sale.” As Thomas Bohjalian, CFA, executive vice president at Cohen & Steers, explains:

“One of the things we find that some investors and the financial press consistently get wrong about REITs is the relationship with interest rates - that if rates are rising, you shouldn’t own REITs. This belief, however disconnected from historical evidence, often seems too ingrained to suggest otherwise.

Interest rates are part of the equation, and sudden moves in bond yields can create volatility. But REITs are not bonds. In an improving economy, landlords can raise rents as tenants fight for more space, potentially increasing cash flows to offset the effects of higher rates. In other words, it should matter why rates are rising, not simply that rates are rising.”

Iron Mountain is now trading at a wider margin of safety, and I see credible indications of value that this REIT should deliver strong shareholder returns in 2018 and 2019. In a few days, I will be releasing my annual March Madness in REIT-dom research (for Marketplace subscribers), and are there some real bargains. I’m sharing one of these with you today.

(Photo Credit)

Iron Mountain Deserves Shelf Space

Over 67 years ago, Herman Knaust purchased an underground storage facility to store mushrooms. The business was not profitable, so he decided to use the old mine to store personal records.

As his storage needs grew, Knaust decided to change the name of the business to Iron Mountain Atomic Storage, Inc. He opened a sales office to market the space inside the Empire State Building, and he even persuaded General Douglas MacArthur to visit the Iron Mountain storage site.

As companies saw the growing demand for storage, Knaust's business model evolved.

IRM continued to grow in the New York City market, expanding beyond the original facility into a depleted limestone mine closer to the city. It became the premier vital records protection company, including storage for high-volume paper records.

In 1978, the company opened its first above-ground records storage facility in New York, and later expanded beyond the New York City market in 1980, when it opened a site in New England to service the emerging need to protect computer backup data.

In 1983, it expanded further in New England with the purchase of New England Storage Warehouse in Boston. This was Iron Mountain's first acquisition, and it gave the company a strong entry into the medical and legal records management markets.

By the mid-1980s, Iron Mountain had accumulated all the product lines that comprise the foundation of the current company. It offered paper records storage and management services (including major operations in the medical and legal vertical markets), offsite data protection services and vital records protection services in the New York and New England markets.

Expansion continued to increase, and by 1995, the company had grown to exceed $100 million in annual revenue. Senior management felt the time was right for the records management industry to consolidate.

So, in February 1996, Iron Mountain became a public company, raising capital in part to initiate this consolidation. Then, as I stated above, it achieved IRS approval for REIT status retroactively as of January 1, completing the process that began in 2012.

Today, Iron Mountain is an industry leader in storage and information management services, serving 230,000 customers in 45 countries on six continents (with over 24,000 employees worldwide).

According to the company's website, it serves organizations in every major industry and of all sizes, including more than 95% of the Fortune 1000, which rely on Iron Mountain as their information management partner.

The company's business model is to provide integrated solutions to unify the management of both physical and electronic documents. As you see (below), storage rental remains IRM's core business (62% of revenue and 82% of profits), and service represents 38% of revenue (18% of profits).

Records & Information Management remains IRM's core business (75% of revenue), and the company also has Data Management (15% of rev.) and Shredding (10% of rev.) services. Iron Mountain has a well-balanced platform that consists of by more than 225,000 organizations around the world, with over 85 million square feet of real estate and over 1,400 facilities in over 50 countries.

This REIT Has Exceptional Shelf Life

One thing that distinguishes Iron Mountain's business from that of other REITs is the relative insensitivity to higher interest rates. IRM customers' storage needs are largely unaffected by interest rate movements, and the company's core storage NOI doesn't change with the value of the underlying real estate.

The REIT has an operating business, and that means it effectively controls real estate through long-term leases, with multiple lease extension options and direct ownership in strategic locations of about one-third of its properties. IRM controls 86 million square feet (27 million owned and 59 million leased), and the average building size is ~60K square feet.

In a rising rate environment, this structure reduces Iron Mountain's exposure to real estate value fluctuations compared with REITs that own their entire portfolios. Additionally, it should be noted that the company enjoys higher levels of real price increases during periods of greater inflation.

Since it owns less real estate (owns 27 million sq. ft. and leases 59 million sq. ft.), the operations drives the value for the company. Because IRM has hundreds of customers, it can pass through increases, and this means the REIT is less impacted by rising rates.

Also, it has only 2% customer turnover in a given year, and this means 50% of the boxes that were stored 15 years ago still remain. Now you know what I mean when I say, "This REIT has exceptional shelf life."

On the latest earnings call, Bill Meaney, Iron Mountain’s president and CEO, explained:

“I’d like to briefly note that whilst we’re disappointed with the market selloff of REITs in anticipation of increasing interest rates, it is important to recognize that those rate hikes are generally associated with inflationary pressure. Unlike many REITs, we have the ability to pass through inflation-based rental rate increases on an annual basis, and we see meaningful flow-through on those increases given the high-margin characteristics of our storage business.

In a nutshell, given our 75% storage gross margin, coupled with the ability to increase pricing in line with inflation, higher inflationary environments generally expand our margins and accelerate our cash generation well ahead of inflation. In a word, inflation helps us further helps us further outperform as a business, which is pretty unique in the world of income-oriented stocks.”

Iron Mountain’s Balance Sheet

The REIT is rated BB- by S&P and Ba3 by Moody’s:

The company prices in line with the bottom end of investment grade, and that validates the durability of the business model. I would like to see Iron Mountain become investment grade in the future; however, on January 10^th, the company closed on the acquisition of the $13 billion IO Data Centers transaction that moved its leverage ratio to the mid-5x EBITDAR.

Iron Mountain has over 80% of debt at fixed rates, with a weighted average interest rate at 5% (year-end). In addition, the company is continuing to extend its average maturity to 6.8 years with a well-laddered maturity schedule.

As noted, Iron Mountain expects its leverage ratio to be closer to the mid-5x EBITDAR for Q1-17 and remain there for most of the year, and then decline as the company begins recognizing growing cash flows from data centers, acquisition synergies and lease-up. The company remains on track with its plan to reduce the lease-adjusted leverage to about 5x by 2020.

For 2018, Iron Mountain expects to spend $150 million on core M&A transactions, as well as $100 million to acquire two Credit Suisse data centers. The bulk of the core activity is expected to be in higher-growth emerging markets, consistent with the company’s 2020 plan.

In addition, Iron Mountain expects to invest $185 million on data center development in Northern Virginia and expansion in Phoenix, which will come on-line and generate storage revenue beyond 2018 with stabilized double-digit NOI yields.

The company expects to fund these growth investments through a combination of cash from operations, debt, capital recycling from the sale of real estate as well as potential ATM issuances to fund the Credit Suisse data center acquisition.

It Boils Down To Predictable Profits

Iron Mountain is a real estate company generating more than 80% of gross profit from storage rental-related activity, and one unique feature is that it has the ability to pass through inflation in the form of upward-only, CPI-type escalators in its contracts. Typically, these are annual escalation provisions.

Also, rising interest rates don't have an impact on customer storage demand, and the net operating income doesn't change if the market value of the underlying real estate fluctuates.

Iron Mountain’s Q4-17 total revenues grew 6.1% over last year, or 4.1% on a constant-dollar basis. Internal storage rental revenue increased a strong 4.2% in the quarter, while internal service revenue declined 0.1% as the company cycled against a large entertainment services project a year ago.

The REIT’s gross profit margin improved by 130 bps year over year, primarily driven by synergies from the Recall acquisition reducing labor expenses and the flow-through of the revenue management program. Compared to a year ago, its adjusted EBITDA in Q4-17 increased over 10% to almost $327 million, leveraging growth of approximately 8% on a constant-dollar basis.

The company’s EBITDA margin increased 120 bps to 32.9% and Adjusted EPS for the quarter was $0.29 per share, inclusive of a $0.02 per share increase in amortization expense, reflecting a catch-up associated with an adjustment to the life of Recall’s customer relationship value. Adjusted EPS would have been $0.31 per share excluding this catch-up.

AFFO was $154 million in the fourth quarter, in line with the expectations, but down year over year due to timing of capital expenditures and cash expenses. Maintenance and non-real estate investments increased $28 million compared to a year ago, as the costs were more back-end weighted this year.

For the year, Iron Mountain’s results were generally in line with guidance discussed on the last quarter’s call. Revenue came in at $3.8 billion and just above the range as a result of strong internal storage revenue growth, driven by management efforts as well as currency translation benefits.

Adjusted EBITDA of $1.26 billion was in the middle of the range compared to the full-year 2016, the adjusted EBITDA margin improved 180 bps to 32.8%, with higher gross margins and lower SG&A as a percentage of revenues. AFFO came in at the higher end of the range due to efficiencies in capital maintenance projects following the acquisition of Recall.

The only negative result that I could determine related to recent earnings was Iron Mountain’s North American growth. In North America Data Management, adjusted EBITDA margins were down slightly year over year as the company continues to invest in more new product development than a year ago.

However, Iron Mountain is well on track to have a business mix that will structurally deliver north of 5% EBITDA growth before acquisitions, up from about 3.5% as of the end of 2017. The company achieved internal storage rental revenue growth of more than 4% in Q4-17, while internal service revenue growth was essentially flat, as expected, at minus 0.1%.

The company’s AFFO for the full year was up more than 12%, and as illustrated below, it is forecasting 11.2% annual AFFO growth through 2020.

At the midpoint and on a constant-currency basis, Iron Mountain expects total revenues to grow by 8%, adjusted EBITDA by 14% and AFFO to grow by 9% in 2018 compared with 2017.

2018 total revenue growth will be driven by internal storage revenue growth, which is expected to be between 3% and 3.5%, reflecting ongoing revenue management efforts in developed markets and volume growth in emerging markets.

For the full year, the company expects to see positive internal volume growth in Western Europe, while it anticipates lower income and volume from existing customers in North America, leading to a slight volume decline overall in developed markets.

Follow the Money

Iron Mountain’s cash available for distribution (or CAD) continues to fund the dividend as well as maintenance and core growth investments. As you can see below, on a compounded annual growth rate basis, the REIT anticipates revenue to grow by almost 7% from 2017 to 2020; adjusted EBITDA to grow by 11%, and AFFO to grow over 11%, or over 7% on a per share basis.

Iron Mountain expects a dividend per share growth rate of around 4%, as it expects an AFFO payout ratio in the mid-70s. The company said it was “excited to accelerate growth as it expands in the data center space and is confident in the value it will create for shareholders over time by the platform we've built.”

Now let’s compare Iron Mountain’s dividend with that of the peers:

As you can see, the company has the highest dividend in the peer group. Now take a look at the P/FFO multiple:

Again, Iron Mountain is cheap on this metric. Let’s examine the company’s FFO/share forecast:

Using AFFO/share, Iron Mountain is forecasted to grow by 4% in 2018, and this is a better indicator for growth (than FFO/share). However, I find this consistent with the peers above. This validates the fact that Iron Mountain is somewhat of a hybrid Industrial/Data Center REIT and should trade in a similar range.

However, there is one notable difference in that Iron Mountain’s “core business” is centered on its 75% storage gross margin, coupled with the ability to increase pricing in line with inflation (higher inflationary environments generally expand margins and accelerate cash generation well ahead of inflation).

In other words, inflation helps Iron Mountain outperform as a business, which is pretty unique in the world of income-oriented stocks.

Iron Mountain has underperformed Industrial REITs, Self-Storage REITs and most Data Center REITs year to date; however, the company is actually better equipped, as it structures its contracts with annual bumps. As the company continues to shift its business mix to data centers it will generate higher margins and the valuation gap should continue to narrow.

Bottom Line

I am upgrading Iron Mountain from Buy to Strong Buy, as I believe the shares could return over 25% annually in 2018 and 2019.

Note: Brad Thomas is a Wall Street writer, and that means he is not always right with his predictions or recommendations. That also applies to his grammar. Please excuse any typos, and be assured that he will do his best to correct any errors if they are overlooked.

Finally, this article is free, and the sole purpose for writing it is to assist with research, while also providing a forum for second-level thinking. If you have not followed him, please take five seconds and click his name above (top of the page).

Source: F.A.S.T. Graphs and IRM Investor Presentation.

Peers included: Terreno Realty Corp. (TRNO), First Industrial Realty Trust (FR), Prologis (PLD), CyrusOne (CONE), QTS Realty Trust (QTS), EastGroup Properties (EGP), Digital Realty Trust (DLR), CoreSite Realty Corp. (COR), Extra Space Storage (EXR), CubeSmart (CUBE), National Storage Affiliates Trust (NSA), Life Storage, Inc. (LSI).

Analyst’s Disclosure: I am/we are long ACC, AHP, APTS, ARI, BRX, BXMT, CCI, CHCT, CIO, CLDT, CONE, CORR, CUBE, DDR, DEA, DLR, DOC, EPR, EXR, FPI, FRT, GEO, GMRE, GPT, HASI, HTA, INN, IRET, IRM, JCAP, KIM, LADR, LAND, LMRK, LTC, MNR, NXRT, O, OFC, OHI, OUT, PEB, PEI, PK, PSB, QTS, REG, RHP, ROIC, SBRA, SKT, SPG, STAG, STOR, TCO, UBA, UMH, UNIT, VER, VTR, WPC. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Comments

[akamike]

Hi Brad,
I am a member. You have had a really bad year or so with your tips. I understand and agree with you on about 80% of them.
The market has been horrible.
I did not agree yet with IRM's data center investment and you have no evidence to present for this big strategic move. So I am not buying. My view is for them to JV with a big center.
I agree with other commentators that you should submit yourself to published performance metrics. Be brave. You are good enough too get over these over time and keep your reputation.
Consider that this time may be different becasue of interest rate moves for the first time in 25+ years.
Regards
Mike

[Frankj78]

This may be neither here nor there. I worked for a company that stored many of its records on site in a large room with concrete block walls and sprinkler pipes and heads above. Fireproof. But, during a nasty cold snap over the holidays when no one was present, pipes burst and water spewed down on all the nice cardboard boxes stored neatly on the shelves.

An outside outfit was called in to salvage what could be salvaged. So, penny wise and pound foolish. These records were not critical to the operation of the firm and could have been stored off site. People rarely went in to this area to retrieve stuff, but documents were added regularly. Yeah, it would have cost something to store off site, but the clean up was expensive and for what? To salvage material that was of little or no importance.

Long IRM and following it, considering adding. Thanks, Brad

[Technology Assessment Group]

Frank, That is a good story that illustrates one of IRM key use cases, and why you want professionals handling valueable data driving by Compliance. The water pipe scenario is an amateur hour mistake/example and that is one reason why IRM exists.

Cold storage is just another stage of tiered storage management. After living on cold storage for a while data will be discarded or......moved to IRM as the retrieval time requirement diminish. At the end of the day, there is need for IRM services, and they are a credible player in this space.

[Kershaw]

Like IRM in an oversold REIT environment. Looking at $28 to add. Very Long.

[lith]

Good article, i started a small position.

[User 48802935]

Brad always writes good articles. I do not necessarily always agree with his recommendations, but he consistently does a very thorough analysis and needs to get ample credit for that.

My only hesitation with IRM is that material goodwill they have on their balance sheet, which to me is a red flag for REITs to have such high goodwill (roughly 40% of total assets).

[Dr. LouX]

Methinks IRM is becoming too good to resist.

[Dr. LouX]

Started a small position in IRM this morning at $31.95.

[Technology Assessment Group]

I only understand part of IRM's business, and was talking to them a couple of months ago.
Cold Storage (such as provided by Amazon and Google) is a different business than Iron Mountain. In cold storage you will have powered down disk drives in racks holding data
that might need to be retrieved. Those racks have networks, power supplies and are managed by servers. They use SMR disks which store more data but have poor retrieval times. One part of IRM's business is storing tapes, where they store only the tape cartridge and don't have to incur the costs of the rack etc above, and don't power up the tape cartridges because they are stored in boxes. So it is really cheap from an operating expense perspective. While tape use is indeed in decline, it is not declining as fast as some people think. For customers with 75 year and 100 data retention policies, IRM is one of the few games in town. This is consistent with what a prior poster (banker) said. This is often used to store compliance data that you need to store, but hope you never have to retrieve.

[Brasada]

Curious the type of businesses with 75 and 100 year data retention policies....Seems like it would be limited but don't know and asking?

[Technology Assessment Group]

Big companies do 75 and 100 year data retention policies. Just saying that IRM is a strong player in this business, and is able to delivery a product with low operational cost, which is necessary to play. Also pointing out incorrect statements that the Cold Storage business is the same as IRM; they are not. They are very different with different use cases and cost structures

[Technology Assessment Group]

Well, it is limited. Only the largest companies in the world that have these types of policies, or can afford the equipment, process, and people to implement. Your small mom and pop, mid-range, and even large companies have no need for 75 - 100 year data retention policies. But the biggest companies in the world do.

[steven_perch]

Just made my first purchase of a little IRM last week at $31. Was tempted to buy more, but concerned that their business model is vulnerable to competition. They basically have little moat other than their large group of existing established customers. The future trend will tempt companies to store less and less paper, and transition to digital storage of scanned documents etc... While it sounds like IRM recognizes this future trend and is participating in it, there is less barrier to entry for competitors in the digital storage space. Do you agree ?

[stan11]

Steven- First of all, congratulations on our first purchase of IRM. You have made a wise investment decision. As I replied to rice above, I do not think that most corporations that have competition sensitive data will want to put that in the cloud with Google, Microsoft, or Amazon. They will go with the company that they have used for decades, and have that data scanned and accessible. Best of luck to your in your investment. We will do alright.

[Toofuzzy]

I imagine that there will be a distinction between bulk data storage and a data center that needs to sit on top of a communication node so data can flow in and out quickly.

[Guy at Work reading SA]

In the presentation it states Adjusted EPS fully diluted growth (-15%)-+2, and Brad states
using AFFO/share, Iron Mountain is forecasted to grow by 4% in 2018. Can someone explain why earnings per share is expected to be quite negative but AFFO/share is expected to be +4%? Is it from cost saving synergies? Is Revenue/share also decreasing? From what I can tell everything but AFFO/share is decreasing, am I missing something?

[DivvySam]

Brad, I appreciate all of your articles. However, I am on the other side of the fence on this one. I've been watching IRM for years and have not bought any of it, even with such a high recommendation. I'm still waiting for "real" improvement to its quarterly reports, i.e. including debt levels, credit rating, good will reduction. I just don't feel as warm and fuzzy about IRM as you do. IMHO, IRM should be a Speculative Buy at best. I am going to continue to watch...

[Other Side Of Trade]

From what I can see these guys have been raising the dividend regularly, with 'specials' to boot. The storage part of their business that meets NARA Federal standards seems a bit like a 'moat' to me. Like Macy's being killed by Amazon (didn't happen--could have doubled your money in 7 weeks) "THE CLOUD" is not making secure document storage obsolete. Like the 'end of shopping' and 'the end of oil' I think the market is mispricing 'the end of paper'. It took 2 hours to sign all the paperwork at my new broker last month. Was that just for fun?

[rlp2451]

Did you take all that paper to IRM to be stored or recycled?

If not, what you have is immaterial to the IRM business model.

[Other Side Of Trade]

So.

[gary 15]

Coincidence? Brad writes IRM is a strong buy today and the stock is up about 50 cents at noon today.

[stan11]

No, I don't think it's a coincidence. Brad knows his REITS and IRM is a good one to invest in.

[Other Side Of Trade]

Brad, thanks again for a well researched article on an interesting company. All the best

[shermantr]

There are two issues here that deserve more discussion. First, how much debt should IRM, or for that matter, most REITs carry. Some of the discussion reminds me of discussions that took place around KMI when it was trading in the 40s. Everything was great until investors started focusing on the amount of debt, how much it was increasing each year, and how it was being used to fund distributions. Also, some of us remember when debt was great, until it wasn't. For example, General Growth tried to grow by acquisitions funded by debt, and then couldn't refinance the debt. Frankly, 5x on the debt is a little scary for me.

Second is the entry into the data storage area. I really don't understand how this works in terms of this area and the interface with Amazon, Google and Microsoft. It seems to me that there are too many players in this market, and that it needs to consolidate in order to get efficiencies from scale. I see no mention of the management expertise that IRM has, or doesn't have in this area. Cleary it is much different than putting paper in storage and keeping it there for years.

I am sitting with some significant losses in IRM, and have been catching a falling knife with it for a while. Until I get more comfortable with the two issues I have raised, I am holding off putting more money into it. My concerns about debt, by the way, are not limited to IRM. The market is telling us that interest rates clearly are going up, and that financing is not going to be as easy as it has been over the past several years.

[ISTJ Investor]

Regarding data storage, I think the IRM pitch is to exploit their existing customer relationships and extend service from physical to digital storage. I can see the strategic attractions, but running digital data centers is clearly not their previous area of expertise.

I did an IT consulting gig about 15 years ago, for a 2nd/3rd tier oil company. They were in the process of digitizing a couple of warehouses full of paper records and migrating old data tapes - seismic, well log, production data, etc. - lots of records, lots of different formats. The data is quite valuable, and might be referenced 20 or 30 years later. But the migration / storage operation was very price sensitive.

So there is pure physical bulk storage, and there is records management (so you can efficiently find it again and access it), which might require some domain specific and value added knowledge.

Whether IRM can compete with Amazon on bulk storage (unlikely), or DLR on data center operation (maybe?) is unclear, at least to me. Seamless records management "solutions" which include both paper and digital might work for them, particularly with smaller clients. It would be interesting to see a detailed exposition on their strategy, but I doubt that's public.

I bought a very small initial position recently at $31. I think there may reasonable be a chance to buy at $25, which would provide a greater margin of safety.

[stan11]

Very thoughtful comment. My thoughts are IRM has the facilities and customers to make the transition from paper records to digital records. I've worked in the aero engineering field and my company has used IRM for decades, if not longer. IRM always produced the boxes of data within a day or 2 of putting in the request. Digitally, this will be much faster.

I do not think that most corporations that have competition sensitive data will want to put that in the cloud with Google, Microsoft, or Amazon. They will go with the company that they have used for decades, and have that data scanned and accessible.

Me, I'm long IRM.

[usiah]

Mr. Thomas:

Greatly appreciate your occasional updates on securities you cover.

After eyeballing it for some time, finally waded in and bought some IRM a few weeks ago. Plan on adding shares over time.

Retired income/dividend-growth investor

[darnoc111]

Brad do you have any thoughts on the amount of insider sales, since if they do not want shares why should others? Another question is do you think a 4% dividend growth rate will keep up with future inflation? Thanks for your thoughts.
http://bit.ly/2CZXhyd

[Scarlo]

Most of the insider sales are automatic sales of exercised options.

[User 48802935]

Brad, one thing I simply do not like about IRM is that, looking at their balance sheet, roughly 40% of their assets are goodwill. For a REIT to have such high intangibles is a no-go for me. I'm not saying that IRM won't turn out to be a good investment, but I am not comfortable with that facet, so I am staying away.

[Brad Thomas]

johnnybaiamonte - use AFFO:http://bit.ly/2FV1kP8

Thanks for reading and all the best. Brad

[Omiq7]

There was some discussion about IRM's way to present AFFO and FFO figures at recent IRM article by Sure Dividend - almost as if to misguide the reader. Also it was unclear how IRM's AFFO can be so much higher than its FFO. I'm new to REITs, so any insight is appreciated!
Bought my first position a few dollars higher and now tempted even more to buy second batch of share as the company and its performance is tempting.
Thank you for the article!

[johnnybaiamonte]

IRM payout ratio 110%. Not sustainable.

[stan11]

Iron Mountain is a 7% yielding REIT with a payout ratio of 77% using AFFO. Definitely worth considering.

[johnnybaiamonte]

Stan11, I try not to use AFFO. Payout 2.35/2.13 earnings = 110.03% payout ratio. Just my safer way if tough times hit.

[stan11]

Payout on earnings is more conservative for sure. But generally, AFFO is used for REITS. Sometimes being a little too conservative may lock you out of a good stock. Good luck to you.

[User 25572753]

rip2451
New to this space, from what I gather from investors, price drops do not mean much,
they focus on dividends. While I can't get my arms around that, this chart is interesting,
would like to see more of them.
Thanks for the info.

[Brad Thomas]

User 25572753 - Thanks for reading and all the best. Brad

[rlp2451]

Price of IRM when recommendations in articles from the author were posted:

Dec. 15, 2014: $39
Nov. 30, 2015: $27
Jan. 25, 2016: $29
May 12, 2016: $37
Aug. 16, 2016:$38
Nov. 3, 2016: $33
Mar. 27, 2017: $35
Jun. 29, 2017: $36
Aug. 7, 2017: $39
Nov. 2, 2017: $41
Nov. 29, 2017: $38
Jan. 10, 2017: $37
Mar. 5, 2017: $31.50

Total annualized return since first article, including dividends: 0.72% (2.3% total return in 3 1/4 years.

[Brad Thomas]

rlp2451 - Thank you....and to put this in context, I have added more shares in 16 and 17 (average price $38) and with shares now priced at $31.50 I am upgrading to STRONG BUY. All the best. Brad

[PaulTD]

@rip2451, thanks for taking time to post that, it tells me everything I need to know! Cheers.

[joe stock man]

Brad this also illustrates my point, don't you ever expect to need your capital, no stop loss for when you are wrong, I see you are no longer long on CBL? also wondering if you use a equal weighting on your holdings, each investor is differant and must follow his or her rules.

Thanks in advance.