Winthrop Resources Sealing Deals with Sale-Leasebacks
by Josh Anderson
CHICAGO, IL – We love to share stories about how firms help their clients to adapt to and adopt bourgeoning data center technology. So we were very glad to hear Mike Krelitz, Sales Director, Central Region & Managing Director, Midwest Region at Winthrop Resources Corp., share a story just like that a recent CapRE event – about sale-leasebacks.
“We’ve been mostly seeing the big spend projects,” Krelitz hinted. “The ERP projects. The unbudgeted security project. That’s one of my favorites that tends to pop up. And the large handhelds where there is lots of distributed technology and things that were unplanned. We’re also seeing a lot of data center transactions where they’re bringing you to in-house or colocation, but they’re large spends. These are hyper converged server stacks and the like.”
Krelitz says that one of the unique things that he’s been trying to do as his clients go through this journey is offer a way to do a sale leaseback on their existing infrastructure. “Because a lot of times the resistance to moving forward to a colocation or true cloud solution is the deep investment that you’ve already made in investing infrastructure, and they’re going to wait it out rather than take a book loss,” he explains.
“So we’ll come in and offer to purchase – do a sale-leaseback on the existing infrastructure,” he continues. “Flip the balance sheet back over, and allow them to have the capital to make the investment in their new strategy, and become a tenant in that colocation or data center faster, and take advantage of the multitude of alleyways that they can use that technology.”
Krelitz admits that it may sound a bit self-defeating, if you think about it, from his perspective, what he is doing to help them to get out of the on-premise computing. “But what we have found is that there is still so many local technologies,” he qualified. “Retailers have point of sale. Distribution companies have data collection equipment and on-board computing for their trucking and delivery. But what happens is that once you change that mindset – to a technology-consuming mindset, they can start to apply it to desktops and laptops and all of these phone systems and things that are local.”
“So really, providing a funding model allows the mind to open up to the fact that there possibilities here, rather than just thinking that “We own it, so I have to stay here,” he concludes. “I know that’s a long way around the question, but I’m sticking to it.”
For more insider reports featuring commentary and analysis from Mike Krelitz and his Chicago and Midwestern data center colleagues, check out the following: