IRM - Iron Mountain: Sustainable Capital Allocation Amid Data Center Consolidation

• In this high inflation environment where the cost of borrowing is expected to rise through the central bank's actions, it is important to assess the outlook for indebted REITs like Iron Mountain.
• For this purpose, I found that its diversification into data centers has not necessarily translated into higher debt issuance.
• It is also growing more rapidly and generating more returns than a larger incumbent, with the latest acquisition pointing towards more synergistic growth with other larger revenue segments.
• Thus, I value the company by taking into consideration the sales metric, which shows that a 13% upside is possible.
• The risk as seen on Friday when the stock suffered from a 1% downside is volatility following uncertainty about the way the Fed seems to be fighting inflation.

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