Iron Mountain Shares Soar After Company Announces Conversion REIT

Shares of records management and document storage company Iron Mountain Inc. (IRM: Charts, News) shot up in after hours trading Tuesday, after the company announced it would convert into a real estate investment trust. Shares of the company had closed at $28.40, up +0.99 or +3.61 percent in NYSE trading, but traded as high as $33 or almost +15 percent higher in after-hours trading when the news came out.

The decision to convert to a REIT comes one year after a major investor in the company - Elliot Management - approached Iron Mountain's management to make the conversion. The conversion is planned to take effect on January 1st, 2014. Daily Chart
Boston, MA based Iron Mountain Inc. is a component of the S&P 500 and provides data backup, records management and document storage services to over 120,000 customers in Asia, North America, Latin America and Europe. Iron Mountain stores information in 64 million square feet of real estate all over the world. The company, which started as a storage facility for documents in an abandoned iron mine in 1951 in the event of a nuclear war, expanded buying real estate worldwide. The company manages warehouses for the storage and safekeeping of important physical documents for many corporations. The decision to convert to a REIT was overseen by current CEO, Richard Reese, who replaced former CEO Bob Brennan. In a statement after the news, Reese explained, "A key element of our strategic plan is a disciplined capital allocation strategy to increase stockholder payouts and the REIT structure supports this plan. Additionally, a REIT conversion will have virtually no impact on our customers. They will experience no change in the people, procedures or industry-leading chain-of-custody they have come to trust with Iron Mountain." He continued, "The quality and diversity of our customers are at the center of this opportunity - supporting a very durable rental income stream, with stable, high occupancy levels, strong retention and low tenant turnover costs. These characteristics of our business are strikingly similar to those of many real estate and related service companies, and by some measures, even more attractive." The conversion will include the distribution of between $1 billion and $1.5 billion to its shareholders from earnings and profits previously accumulated. In addition, Iron Mountain also increased its quarterly dividend payment by 8 percent to $0.27 per share. The dividend will be paid on July 13th to holders of the stock on record June 22nd. As a REIT, the company will have to pay out 90 percent of its profits to shareholders, nevertheless, the conversion might not go through, as CEO Reese noted, "We have done the work necessary to feel comfortable that we can operate as a REIT; however, there are a number of hurdles yet to be cleared that are out of our control and there can be no assurances we will be successful in our planned conversion," those hurdles have to do with the U.S. IRS and technical tax issues which may impede the conversion. Other News About IRM Iron Mountain going back to roots in storage services Company considers selling its archiving and online backup and recovery businesses. Iron Mountain Incorporated Announces 8% Increase to Quarterly Dividend Company raises quarterly dividend. Other Stocks in the News RIM shares drop again; technicals weak Blackberry maker's stock drops below $10 per share. Starbucks shares drop after bakery deal Stock drops after company announces it will buy Bay Bread and La Boulange bakery brands. Copyright 2012 by, Inc. InvestorGuide has no control over the sites we link to, is not affiliated with these sites, and cannot take responsibility for their quality or suitability. The news, analysis, commentary and profile information is not meant to be comprehensive, and the data provided is not guaranteed to be accurate. WebFinance Inc., the publisher of this newsletter, is not a registered investment advisor or a broker/dealer. This is not a stock recommendation newsletter but rather a source for investment ideas, and we encourage you to fully research any company before considering investing. The opinions expressed herein are those of the author and do not necessarily represent the views of nor are they endorsed by WebFinance Inc. No employee of WebFinance has owned or currently owns any shares in the company described above. The above is neither an offer nor solicitation to buy or sell any securities. The trading of securities may not be suitable for all potential readers of this newsletter, and the purchase of stocks mentioned in this newsletter may result in the loss of some or all of any investment made. We recommend that you consult a stockbroker or financial advisor before buying or selling securities or making investment decisions. We are not responsible for claims made by advertisers and sponsors. Anyone who makes decisions based on what they read here does so at their own risk and cannot hold WebFinance Inc. (DBA, Inc.) or its employees responsible.

Published on Jun 6, 2012
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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