We are ready to begin with our next presentation, so please give a warm welcome to the stage, the CFO of AIB Data Centers, Jolienne Halisky.
Thank you, Kendall. It is a pleasure to be here to chat with everybody today and discuss what is going on with AIB Data Centers. I will get started.
In the AI economy, power is scarce. AIB has it. Scalable, secured, built for what is next. AIB, the power, the people, the pipeline.
I am going to spend the next 20 minutes or so talking about just that, our people, our power, and our pipeline. I am also going to talk a little bit about our progress and the potential of what we have going on and what our future looks like. First of all, just as a company overview, we call ourselves a right-sized developer. We stay in that 40-90 MW zone in terms of our developments. We do not chase anything hyperscaler, anything to do with hyperscalers. We have found that our sweet spot is within that under 100 MW, and usually between 50 MW and 75 MW. There are a few reasons for that. It is a simpler lease negotiation. There is an easier supply chain to develop and navigate. You are not buying 3,000 of something. You are not buying 3,000 generators. You are buying 300 generators.
That type of scale makes that supply chain that much easier to navigate. We also find as well that there is a lot of, it is well known in our geopolitical environment, there is a lot of pushback on certain types of data center developments. We find that at this size, we are embraced by the communities that we go into. We very much pride ourselves on becoming part of the communities where our developments are built, and that we engage with that community, and we support that community as they support us. Just to reiterate, we are power first. We do not even look at a piece of land unless there is going to be power there within 12 months.
We make sure that we have those utility agreements in place. There is a lot of what our CEO calls fake power, where it is a maybe power.
We are only securing sites where power is assured within the next 12 months. We have contracted demand in terms of we sell our capacity to creditworthy customers under long-term agreements. We will talk a little bit about the agreement that we just signed with Nebius in the slides that are upcoming. Then we look at our project level funding and financing. We structure our financing to have reliance upon the equity into the development and not fully reliant on raising common stock equity to fund our projects, and we will talk about that as well in the slides to come. On the other side of the slide, on the right-hand side, is the portfolio at a glance. Right now we have 120 MW under contract of power, and that is secured. It is either under ESA or an FEA type agreement.
Right now, we have contracted with a tenant at 50 MW of critical IT load. That agreement is a 12-year term with two renewals. We have five other sites currently under evaluation. I am going to talk for a minute about what is shaping the demand in this AI space that we have. You can see from this graph on the right-hand side, it is talking about the global demand for data center power in gigawatts. Right now, 2025, we are sitting at 82 GW. By 2030, that is expected to jump up and balloon up to 220 GW. Of that, you can see also within that, the dark blue space is the AI workloads utilizing that data center capacity is expected to grow up to 70% of that entire global data center space.
In full market context, data center electricity expected to be used worldwide by 2030 is around 945 TW, against right now, where we are at 415. 70% of that capacity is expected to be used by AI-related utilizations, AI-related workloads. Also, as part of that, there is $1.7 trillion expected in development, CapEx going into AI data centers through 2030. Actually, Goldman Sachs has projected $1.4 trillion by the end of 2028. There is a lot of speculation in terms of the investment, and those numbers move, but you can clearly see the trajectory here. AI, we are just at the beginning of what is happening in this space. We are in a space as well, I am going to talk about three of the constraints that we have. Power being one of them, and we have talked about that. We secure our sites with power availability.
There is lots of land out there. You just have to know where to look and how to find it and what you are looking for. There is also chips. That is another constraint within our industry. That is not our issue. We do not do anything with hardware. That would be at Nebius or our off-takers. That would be their constraint. The third constraint that has recently arisen is capital. We are now competing for capital. With an off-taker like Nebius, which we will talk about more, we feel that the risk, an off-taker like Nebius with the terms of the lease that we have secured, financing, we do not anticipate to be an issue for this project.
When you look at here, power being scarce, and we look at the data center vacancy, because we monitor different markets, Northern Virginia, Atlanta, Dallas, Fort Worth, and Chicago, and you can clearly see these low levels of vacancy. When you have queues of 4+ years average wait time per new grid connection, that is a real constraint. That 88% of capacity at this point is actually pre-leased, even it is before construction in most markets. You have the grid time as a constraint, and once you actually have your power secured, then you move on to equipment procurement. Timelines can create a problem and permitting. That can be a constraint as well. Where we fit in the AI infrastructure in our food chain or our ecosystem, so to speak. Land and power is the primary input.
We come in as a developer to secure that land and power, and then we begin our design. We begin the construction of our facility, the building, the electrical infrastructure, and the cooling systems. Then we sell that contracted critical IT capacity under long-term agreements. We really do not start construction until those long-term agreements are in place, because we do not have to. You really can not, because that lease, depending on the off-taker you have, that is the piece of the project that is financeable. Then our customer becomes in the next link in the chain. They install and run their own GPUs, and for us, that is Nebius as our anchor tenant. Then you have the end market users as AI developers and different enterprises that are training and running the AI models as part of their compute solution.
Like I said, we own the building, the power infrastructure, the cooling systems. The customer owns the servers and the GPUs. Then how we are generating revenue and monetizing is we contract out that space and lease it out. We also have cash flows during our construction. In this case, for example, Nebius has contracted us to build out their white space. They fund the build, but they pay us to build out their white space. This project will probably start generating operational cash flow in month three. What we like most about our model, and this is what we call our rinse and repeat, so it is a repeatable sequence that we have set ourselves up for. In just taking you through the steps, number one is to secure the power. We have that complete.
We have a 15-year ESA signed at our anchor site in South Carolina. We have the customer capacity contracted with Nebius. That part is complete as well. These lease negotiations take anywhere from three to six months. Because we are in that smaller footprint at a smaller megawatt size, our data centers, for example, are the size of a Home Depot, and we use less water than an Olive Garden for our data centers. So much easier to negotiate those leases. At this point, those two steps are done. Now we are working very diligently on securing our project funding. That has been underway for months. We have been working with several banks. You really cannot kick off the process, though, until you have that signed lease in hand, because that is the financeable piece of the project.
Afterwards, there is also the permitting that we talked about, the procurement, and the phased construction. We understand at this point we have a modular build. We have two data halls planned for our first project. Data hall one is due within 10 months. The other 25 MW, data hall two, is due four months later. We are in that step right now, and we understand how critically important it is to be on time and on budget. From there, it is generating the long-term revenue streams. In our piece, we have a property manager hired to run the data center. It is a gross modified lease. Power is a complete pass-through, so we have no risk in power in terms of fluctuating rates, because that is a complete pass-through to the tenant. We are responsible for the property management, the property taxes, and the insurance.
I am going to talk a little bit, I am going to dive a little bit deeper into our anchor tenant and our contract. As I mentioned, our first development will be with Nebius. It is a contracted utility power load of 65 MW, contracted IT load of 50 MW, and that is just the utilization efficiency, because there are megawatts used to run the site. Not all of the megawatts go into that critical IT load. The initial term is 12 years with two five-year renewals. As I mentioned, there is the phased delivery, so we can start cash flowing on that first data hall at 25 MW, and then the other data hall will come on within three months.
Also important to note is part of our funding, and we will talk a little bit more about the cap stack in detail, but the customer prepayments, as soon as the lease is signed, prepayments are due, which is usually one to two years of rent. Those are due upon signing, and we are going to utilize those funds as it is really pulling the equity forward on the project, and we are using those funds to actually be a source of capital for the construction phase. A little bit more on our anchor lease economics. In terms of confidentiality, I cannot disclose every term of the commercial contract, but this gives you a feeling for where that agreement is penciling and where we fit in this scale. Typical contracts are $1.8 million-$2.1 million. Our contract that was signed is above that, just outside of that range.
When we look at some other, what that translates into over the life of the contract, it is well over the $1 billion mark. These figures are just to, like I said, provide the range. I cannot disclose every commercial term, but it is illustrative in terms of where our contract is situated and what the revenue-generating capacity is of this contract. Moving on to our cap stack and how we expect to fund this project. We have three different layers currently. We have the customer prepayment that I mentioned. Typically what happens is, as I mentioned, the customer provides one to two years of prepaid rent. You are in that $100 million-$200 million range for prepayments. That money goes into an escrow account, and there are permitted uses, which is basically anything required to build out the data center.
We will be utilizing those funds to start the construction. We have project-level debt that is anticipated to come in by mid-December, early January. We are working diligently on securing those debt lenders. We have extremely favorable feedback from the banks that we have been working with. There is no anticipated hang-ups or hold-ups with the financing of this project. I do not say that is because of us, I say that is because of the tenant that we were able to sign, and the strength of the credit backing that Nebius brings with them, and this lease, and the terms of the lease. Then we also plan to inject a level of preferred equity. That preferred equity could sit at the project level. Each of our projects is in its own SPV, or it could be at the platform level.
There is a holdco that sits between Pubco and the SPV, so it could be more of a platform level preferred equity position. This equity will be really structured as an equity in terms of there could be a member interest position at the SPV. I will say it, again, we were able to, with our follow-on offering in June, we raised $63 million. That money has been put to good use and already is contributing equity to the project in the terms of site work, the preorders and deposits on the long lead time equipment, and actually securing other pieces of land. For this project, at this point, we are not anticipating requiring to do any additional common equity raise or releases, and to have to enter into Capital Equity markets at the Pubco level.
I am going to talk for a minute about our site portfolio and the other pieces of land that we are working on to develop as well. We have our CLT One project that we have spent a bunch of time talking about. We also have a piece of land, DFW One. We have bought that. We purchased that land. That closed in September. That land is under our control. There are 15 MW that are energized now with 40 MW under FEA coming online in early 2028. We have started the lease out process of that, and that will be our next development. I would expect construction for that project to start sometime in Q1. We have DFW Two is under exclusive LOI. We would expect that one, if it is going to close, to close in the next 45 days. We have GSO One.
We have that one under exclusive LOI and the right to purchase that land. MSP One is also under exclusive LOI. Altogether, on top of the 65 MW that we have under development already, there is another 280 MW. It just kind of lays out in the columns next to the megawatts is what we would expect for annual revenue from each of those developments, and the entire illustrative contract value that we would expect to have in place for each of those properties. You can see a total gist of what is not developed right now is the $546 million with a $6.5 billion total contract value of what is to be developed, excluding the CLT One site. I am going to talk about people for a minute, as this is critically important as well. It is having the people to execute.
It is not just the people that sit on our org chart. It is the vendors that we partner with. It is our GC that is going to be step by step in this project with us. It is the engineers that we work with to pull this project together and bring it to life. So it is the expanded team around us as well. There is Jerry Tang, he is our CEO. He developed and built our first data center. Jerry is an engineer with a degree from Columbia. He has lived in New York for the last 20 years, and I call him a bit of a unicorn because of the skill set that he brings forward. He has that engineering background. He has the finance background. He worked in banking for 14 years. He has closed over $40 billion of deals.
He knows how to finance and put the structure in place for these type of agreements and these type of deals to come together. He also understands commercial real estate from his background in banking, and very expert in the commercial real estate sector. He also understands power, which is obviously a very tricky commodity to navigate in our space. There is myself as the CFO. I have worked with Jerry for the last two and a half years. I brought the company public, and that is how I entered the ecosystem and started working with Jerry, and it has been very exciting every step of the way. Never a dull moment. We have Gary, he is our VP of Sales, and he works on our lease negotiations. We have Chris Iannacone.
He has built over 3 GW of data centers with AWS, so we have a lot of confidence in the skill set that he brings forward, and the project management team that he has pulled together. We also have Alex Ocello. He has 20+ years of industry experience in a variety of settings, including Digital Realty and Switch, and he has been an integral member of our team in terms of guiding our land acquisition, helping negotiate leases, and helping with that procurement and construction process. This is one of our favorite slides because it is, I am hoping, a slide that we won't have to ever have into our deck as the months unfold, and this is our valuation gap.
The way a lot of our counterparts or common metric in this sector is to look at the market cap per megawatt under contract, and right where we are sitting is less than $1 million compared to all our counterparts. You can see the range is anywhere from $10 million of market cap per megawatt from Core Scientific and all the way up to HIVE. We have Wulf on there, Cipher, Hut 8, and Applied Digital. We often like to refer to ourselves as the Applied Digital three or four years ago. We understand where we are at. We are new to the public markets.
We are new to this space. We understand that execution is critical, and that is the only thing that is going to close our valuation gap, and it is being on time, on budget, and we understand that those are the critical pieces to move forward.
Just to close off, we have talked about the power, we have talked about the people, we have talked about the pipeline. We have talked about our potential, in terms of where we are at, and we have signed our anchor tenant. Just to reiterate and to close off is the potential of the progress we have, and what we are excited about, and the passion that we have for building this data center. We have been validated by being able to sign that long-term lease contract with a tenant the caliber of Nebius. We have created this repeatable, this rinse-and-repeat business model, and we are working diligently on securing our debt funding for this project. Does anybody have any questions? Yes.
You spoke about the commercial terms of that lease. Could you just touch on what that looks like from a yield on cost perspective, or what you expect it to look like?
Yep.
Yep, for sure. There are pieces still moving. I just had a meeting yesterday with our procurement team, and we are talking about PDUs and how we can take PDUs out of the equation because of the GPUs being put into place and some of the hardware specifications afterwards. So that is a $23 million touch. I just want to appreciate or lay out the appreciation that these numbers are still moving as design specs are still being finalized. But we are expecting a yield on cost in the low double digits. Yes.
I apologize if you already mentioned this, but just talk about the new data centers that you are very excited about bringing online.
Yeah. So we have another piece of land that we have purchased in Texas, so we are very excited to get started on that project. That too will be a phased-out build, as there is 15 MW energized right now, 40 MW to come online in early 2028, and we do expect a single tenancy contract for that site as well. We are working on another piece of land we have under exclusive LOI, and that would be also to come online. If we close that one, that would be a 16 MW addition. The other two that we are working on could be a little bit longer lead time, but we expect these next three in our queue to move quite a bit quicker. Yes.
So the one in Texas, do you have the appropriate, I guess, regulatory approval yet?
Yes. You are referring to ERCOT and their restrictions. Their restrictions are for developments over 75 MW, and our developments are underneath or below that 75 MW level. Yeah.
Will you need to raise any equity to complete any of the LOIs that you have got moving?
At this point, we are not planning to raise any equity, for obvious reasons. The cost of that equity, Capital Equity, would be just too dilutive, and the cost would just be too high. I would be happy if I never had to sell one more share and to recover some of the dilution that potentially we experienced on our first raise. Our first raise was excellent, but the dilution, like in any raise, there is that dilution factor that you want to recapture, and you want to generate that shareholder value before you go ahead and do another raise, do potentially more dilution, or infuse more dilution into the mix. At this point, we have nothing planned in terms of a common equity raise.
Between the debt and the preferred equity and the escrow funds, the customer prepayments, we feel we have it appropriately modeled that we should be in a space where we do not need to reach into capital markets and to public markets at this time. Yes.
Is there any clause within your contract that enables your customers to potentially cancel it if it gets delayed or if there's an issue?
There is. There's a 30-day grace period. We have a 10-month time clock for the first data hall, then 14 months for the second one, and there's a 30-day grace period, and there is termination optionality if that was to exceed six months, if we were six months delivery delayed. There's factors within that as well. There's Force Majeure provisions where it would have to be something that is AIB related or that those measures would kick in. Is there any other questions?
You talked about you're going to do. What's your megawatt range that you're comfortable with?
We seek or we typically are interested in pieces of land under 100 MW, and definitely under 100 MW, and our sweet spot is between 50 MW and 75 MW.
Bigger.
Bigger.
Yep.
Who do you think you compete with in that kind of lower 50 and under megawatt range?
In terms of market cap or in terms of valuation gaps? Sorry, I didn't-
We also follow Digi Power, DGXX. Like I said, we like to refer to ourselves as the Applied Digital. It is an interesting space because we do not so much experience competition from another AI data center space because there is so much demand. But where we experience competition is on land acquisition and now competition for capital.
Where was Jerry last? What was his last gig before here?
He worked at Natixis. He was a banker at Natixis. He led their U.S. commercial lending operations.
How much land and power generation sites do you typically look at put into a pipeline versus the one you actually need?
How much megawatts do we like to have in our pipeline at any given time? Is that what you're asking?
How much do you typically submit for versus what you actually need in terms of capacity to have those?
Well, in terms of we like to have. We target for a PUE of 1.3, and if we could even hit 1.2, 1.25, it all depends on the design and the specification and the tenant needs in terms of what you'll hit for a PUE. So a 65-MW site would turn into a critical IT load of 50 MW. Is that what you're asking? You're asking about our macro pipeline in terms of what we'd like to
It's more about macro.
Oh, macro. Okay. Yep.
Yeah.
To give you a flavor, we'll typically evaluate maybe 20 pieces of land before one turns into an actual definitive agreement because there's so many considerations that go into it. It's a very heavy due diligence process before we'd move forward. I think we would like to have, Jerry wants to have by the end of the year, 200-300 MW under contract. So that kind of gives you a feeling of where we're headed. I think we're out of time, but it's been an absolute pleasure to discuss AIB and what we're doing and the potential ahead of us. Thank you very much.