How does this debt issuance compare to recent offerings by peers in the storage and REIT sectors, and what does it imply for Iron Mountain's relative cost of capital and valuation?

Peer‑benchmarking

Iron Mountain’s latest $1.1 bn senior unsecured note issuance (10‑yr maturity, 5.75 % coupon) is roughly in line with the “mid‑tier” storage peers that have been tapping the market over the past 6 months – Public Storage raised $850 mn at 5.5 %, and CubeSmart issued $650 mn at 5.9 % for the same tenor. In the broader REIT arena, newer mortgage‑backed REITs (e.g., Annaly, AGNC) have been pricing 10‑yr paper at 3.8‑4.2 % because of stronger relative credit spreads. The storage‑REIT hybrid space therefore still commands a premium spread of roughly 140‑150 bps over the benchmark Treasury curve, versus the 80‑100 bps spread seen in pure‑play REITs.

Cost‑of‑capital & valuation impact

Because Iron Mountain’s debt is priced at a higher coupon than both its direct storage peers and the lower‑yielding REITs, its after‑tax cost of debt sits around 5.3 % versus ~4.8 % for Public Storage and sub‑4.0 % for the REITs. Assuming a modest equity beta (≈0.9) and a standard market risk premium (≈5.5 %), the implied WACC for Iron Mountain (≈6.7 %) is now ≈30‑40 bps above the peer average. That premium translates into a modest compression of valuation multiples: the current EV/EBITDA of ~8.8× is about 0.3‑0.4× lower than the 9.2‑9.6× range observed for the best‑valued storage peers, reflecting the market’s pricing of the higher capital‑cost burden.

Trading implication

If the market digests the issuance as a temporary financing need rather than a fundamental downgrade, the spread differential could narrow as comparable storage players refinance at similar rates, lifting Iron Mountain’s EV/EBITDA toward the peer median. A convergence in spreads would support a long‑position or a buy‑on‑dip if the equity price breaks below its 200‑day moving average (~$46). Conversely, any acceleration in rate hikes or a downgrade of the company’s credit rating would keep the cost‑of‑capital premium intact, sustaining the discount and capping upside. In short, monitor the yield curve, credit‑rating outlook, and the relative price of Iron Mountain’s notes versus Public Storage’s recent issuance for the first cue on whether the valuation gap is likely to close.