Iron Mountain IncorporatedIRM recently boosted its financial position by closing an amended and refinanced secured revolving facility. The move offers greater flexibility to the company as it offers a $1,750-million senior secured loan and another $250-million term loan A.
Amendments have been made in the funded term-loan component, as well as the revolving component of the credit facility.The restated loan has enabled the company to stretch debt maturities from June 2022 to June 2023.
Notably, the company can withdraw funds in different currencies like U.S. dollars, Canadian dollars, British pounds sterling and Euros, among other. Moreover, borrowings under the revolving line of credit will be used for general corporate purposes.
The amended loan reduces the interest rate margins on the revolver and term loan by 25 basis points (bps). Depending on the company's leverage ratio, currency used and type of loan opted, interest rate margins for the facility will be in the 25-175 bps band.
The decrease in interest rate is anticipated to reduce the company's annualized interest expense significantly. The move will improve the company's cash flow and alleviate its bottom-line pressure as well. This reduction will strengthen Iron Mountain's balance sheet.
Nonetheless, per the term loan B of the credit agreement, including terms-related maturity, amortization and interest rate will remain unchanged. The company has a $700-million term loan B under the existing credit agreement.
The amendment, which boosts the company's financial flexibility and future investment activities, highlights lenders' confidence in the company. Extending maturities provide the company ample scope for deploying capital for long-term growth opportunities and carrying out acquisition initiatives.
In fact, as the company plans to grow its dividend by another 7% to $2.35 by 2018 and 4% annually beyond 2018, the refinancing will enable managing to meet these goals and reward shareholders with higher returns.
This Zacks Rank #3 (Hold) company has underperformed its industry in the past three months. Shares of Iron Mountain have risen 6.3% compared with the industry's gain of 7.6%.
Stocks Worth a Look
A few better-ranked stocks from the same space are Arbor Realty Trust ABR , Lamar Advertising Company LAMR and Prologis, Inc. PLD . While Arbor Realty sports a Zacks Rank of 1 (Strong Buy), the other two stocks carry a Zacks Rank of 2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Arbor Realty Trust's Zacks Consensus Estimate for 2018 FFO per share has risen 14.4% to $1.03 in a month's time. Its shares have returned 14.5% over the past year.
Lamar's FFO per share estimates for the current year remained unchanged at $5.34 in the past month. Its shares have gained 1.8% in a year's time.
Prologis' FFO per share estimates for 2018 have inched up 0.7% to $2.98 over the past month. Its shares have appreciated 16.9% over the past year.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) - a widely used metric to gauge the performance of REITs.
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