Iron Mountain Targets 300MW Data Center Pipeline as ALM Growth Accelerates

Key Points

• Iron Mountain expects to maintain more than 300 MW of data center capacity in its rolling 18–24-month pipeline, despite leasing over 50 MW in Mumbai. The company has another 300+ MW of permitted land with utility commitments, while power-delivery constraints are lengthening in North America and Europe.
• Major cloud and AI hyperscalers account for more than 90% of data center leasing, typically through 10- to 15-year agreements. Iron Mountain is focusing on established and emerging hubs including Virginia, India, Europe and the Middle East.
• Asset lifecycle management is becoming a major growth driver: enterprise ALM revenue is expected to reach roughly $600 million this year, up from $30 million in 2021, supported by seven acquisitions and expanding data-center decommissioning services. Management reaffirmed its target of more than 10% annual AFFO-per-share growth and approximately 10% annual dividend growth.

Iron Mountain NYSE: IRM expects to maintain a substantial pipeline of powered and permitted data center capacity as it leases existing inventory, while continuing to expand its asset lifecycle management and digital businesses, executives said at a company news event.

Chief Executive Officer Bill Meaney said the company had leased more than 50 megawatts in Mumbai during the third quarter, reducing its currently available energized data center pipeline to about 325 megawatts that is expected to be energized over the next 18 to 24 months. He said the company remains comfortable with that level of available capacity and sees a broad customer pipeline for those assets.

Looking further ahead, Meaney said Iron Mountain has more than 300 additional megawatts of permitted land with utility commitments for energization after the current period. That includes 200 megawatts of additional capacity planned in Manassas, Virginia. The company aims to maintain more than 300 megawatts of available capacity on a rolling 18- to 24-month basis, he said.

Power Constraints Shape Data Center Expansion

Meaney said utility delivery timelines are lengthening in both North America and Europe as power availability becomes more constrained. He said the company’s disclosed energized pipeline represents capacity for which power has already been committed, while its land acquisition efforts extend beyond that nearer-term capacity.

In the U.S., Meaney said decades of relying on energy efficiency rather than building transmission and generation capacity have contributed to current constraints. Europe faces a similar dynamic, complicated by efforts to balance renewable power on the grid, he said.

Meaney said Iron Mountain’s Madrid data center campus operated as intended during a summer brownout and blackout. In India, meanwhile, he said government officials have been highly supportive of data center development, frequently asking the company how much land and power it requires.

Iron Mountain continues to focus on markets that can become or remain top-tier data center hubs, Meaney said. He pointed to the company’s expansion in Manassas and Richmond, Virginia, as examples of markets that have gained broader acceptance as powered and permitted land has become scarcer. Internationally, he cited India, major European markets, including the FLAP markets and Madrid, and the Middle East as areas of interest.

The company initially entered India through a joint venture in order to gain local support in navigating the market and acquiring land, Meaney said. Iron Mountain later took majority control by providing capital for growth and eventually bought out its partner. In the Middle East, the company has partnered with telecom operator Ooredoo to establish a regional footprint.

Hyperscalers Remain Core Data Center Customers

Meaney said Iron Mountain has not historically participated in large language model campuses, instead focusing on infrastructure used for AI inference and cloud deployments. More than 90% of the company’s data center leasing activity involves major cloud and AI providers, he said, with leases typically running 10 to 15 years.

Chief Financial Officer Barry Hytinen said the company expects the majority of future leasing to continue coming from high-investment-grade cloud hyperscalers. Iron Mountain has produced cash-on-cash unlevered returns of roughly 10% to 12% on data center deals signed over the past several years, he said.

Business with smaller customers, including neocloud providers and newer entrants, accounts for approximately 5% of the company’s portfolio, Hytinen said. He added that Iron Mountain has often opted to fully lease sites to single tenants on longer-duration agreements rather than operate them as enterprise colocation facilities.

ALM Growth Adds Another Expansion Avenue

Hytinen highlighted Iron Mountain’s asset lifecycle management, or ALM, business as a significant growth opportunity. The business helps enterprises manage IT equipment when it becomes obsolete or is due for replacement, including secure handling, chain of custody and data sanitization.

The enterprise ALM market represents a $35 billion annual total addressable market, with about 75% associated with corporate and large-enterprise customers, Hytinen said. Iron Mountain generated about $30 million in enterprise ALM revenue in 2021 and expects approximately $600 million this year, according to Hytinen.

The company is also expanding services for hyperscale data center decommissioning. Iron Mountain takes in retired server equipment, wipes data, certifies its sanitization, disassembles the equipment and sells components through a revenue-sharing model, Hytinen said. He estimated the addressable market for hyperscale data center decommissioning was $3.5 billion last year and could double to $7 billion over the next four years.

Hytinen said Iron Mountain has completed seven ALM acquisitions in the past three years, generally paying between five and 7.5 times trailing EBITDA and rapidly realizing synergies. The acquired companies were founder-led, and their founders have remained with Iron Mountain as part of earn-out arrangements, he said.

Management Reaffirms AFFO Growth Framework

Meaney said the company continues to target more than 10% annual growth in adjusted funds from operations per share, or AFFO per share. He said Iron Mountain’s growth businesses—ALM, data centers and digital—represented 15% of sales when the strategy began and now account for 35% of sales, with the mix potentially reaching 50% over time.

Those businesses are currently contributing 700 basis points of consolidated growth, Meaney said. While the segments have different margins and capital requirements, Hytinen said Iron Mountain’s core physical storage business continues to generate substantial cash flow with limited capital expenditures.

Hytinen said the company’s leverage stood just below five times, or about 4.8 times, compared with nearly six times seven years ago. Meaney said the company believes its cash generation and leverage profile allow it to fund growth without issuing equity, while supporting annual dividend growth of about 10%.

About Iron Mountain (NYSE:IRM)

Iron Mountain Incorporated NYSE: IRM is a global information management and data center services company. It helps organizations protect, manage and access physical and digital information, including business records, documents, backup media and other critical assets.

The company provides records storage and retrieval, secure shredding and destruction, information governance, digitization, document management and data migration services. Iron Mountain also operates data centers and offers colocation, hybrid cloud and related infrastructure services.

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