March 5, 2015: Five 9s Digital
If your corporation owns a data center, chances are you have been involved in the perpetual conversation of what must we do next to meet the company’s growing need for data storage, network, disaster recovery, IT staff, and the need for updated and more efficient data center infrastructure. As the CFO, you are in the middle of trying to manage the ROI with the CIOs IT strategy and CEOs expectations.
The bad news: You can’t make the cost go away. The good news: There are a lot of good options today not seen even 5 years ago. Your team can go the hybrid model by augmenting your existing data center growth through the multitude of cloud offerings, the team can go down the path of upgrading your data center to create a more efficient use of space and reduce operating costs, or go full-on third party cloud and migrate out of data center ownership. These are not simple decisions.
All options come with monetary and IT strategy risks, however, the conversations will continue and it becomes very difficult to budget for future costs and determine how best to manage them.
One solution that is gaining popularity is a sale-leaseback of the company’s data center assets. Once considered an untouchable asset due to the mission critical nature of the corporate data center, corporations are seriously considering this option as a way to unleash the capital and utilize the proceeds to enhance the data center infrastructure or use the proceeds to address other financial needs.
Today, a number of highly qualified landlords specifically focused on data center real estate allow a company to have the confidence in not owning the asset, while still maintaining control of the operations and IT strategy for the long term.
The sale-leaseback buyer serves as a capital source today and potentially for future expansions and upgrades, with both parties motivated to reach a mutually agreeable price vs. lease structure.
A number of successful data center sale-leaseback examples have occurred in the US market in the past year exceeding well over $700M in transactional value. Some examples can be seen in the 2014 EOY Data Center Real Estate Acquisitions Report.
As CFOs work to manage their ever growing IT budget and needs, the Data Center Sale-Leaseback concept is a worthy consideration.
If you have interest in considering a sale-leaseback of your data center, please let us know and we can provide you some recent market comparable transactions. We can be reached at 704-651-2210 or Steve@Five9sDigital.
More information can be obtained on our website at www.five9sdigital.com.