Story
Hut 8 Shares Climb After Securing $9.8 Billion AI Data Center Lease in Texas
Summary
Hut 8 Corp. announced a second major lease agreement valued at $9.8 billion at its Beacon Point data center in Texas, fully contracting the campus and bringing its total base-term contract value to $19.6 billion.
Shares of Hut 8 Corp. (HUT) rose approximately 6% in pre-market trading on Monday after the company announced it secured a second major lease at its Beacon Point data center campus in Nueces County, Texas. The new 15-year agreement with an existing high-investment-grade tenant is valued at $9.8 billion over its base term.
Deal Details
The agreement leases 352 megawatts (MW) of IT capacity, doubling the tenant's commitment at the site to a total of 704 MW. According to Hut 8, this transaction completes the commercialization of the Beacon Point campus against its 1,000 MW of secured utility capacity.
The lease is structured as a triple net lease with terms similar to the initial Phase 1 agreement, the company stated. The new facility will be an artificial intelligence data center designed to NVIDIA’s DSX reference architecture. The contract also includes a 3.0% annual base rent escalator.
Financial Implications
The second lease brings the total base-term contract value for the entire Beacon Point campus to $19.6 billion. Hut 8 provided the following financial projections based on the agreement:
Ad- The Phase 2 lease is expected to generate a cumulative net operating income (NOI) of $9.8 billion over the 15-year base term.
- This equates to an average annual NOI of $655 million from the second phase upon stabilization.
- The total average annual NOI for the fully leased 1,000 MW campus is projected to be $1.31 billion.
Each of the two leases includes three 5-year renewal options. If the tenant exercises all options, the potential campus-level contract value could increase to $50.2 billion, according to the company's announcement.
Project Timeline and Context
This deal underscores the significant demand for large-scale data center capacity to support the growing AI industry. Hut 8 confirmed that site preparation is already underway for the second facility, with long-lead critical equipment procured.
The company maintained its previously announced timeline, with initial energization for the campus scheduled for the first quarter of 2027. The initial delivery of the Phase 2 data hall is expected in the second quarter of 2028.
Read next
More on Stocks
China's Offshore Trust Tax Deadline Poses Risk to Individual Stocks, BofA Warns
A new Chinese tax rule on offshore trusts could force shareholders of some U.S. and Hong Kong-listed firms to sell stock to meet an October 22 payment deadline, according to BofA Securities.
RBA Governor Bullock Flags Upside Inflation Risks Ahead of Rate Decision
Reserve Bank of Australia Governor Michele Bullock warned that high energy prices and strong domestic demand pose significant upside risks to inflation, reinforcing a hawkish outlook as the central bank's next policy meeting approaches.
Alibaba Unveils V900 AI Chip, Signaling Major Demand for Domestic Foundries
Alibaba has introduced its Zhenwu V900 AI accelerator, described as China's most powerful, signaling a significant increase in manufacturing demand for domestic foundries like SMIC as the tech giant plans a massive data center expansion.
Luxury Sector Faces Deepening Slowdown as Brands Look to Fashion Weeks for a Boost
Major luxury brands are staging elaborate runway shows in Milan and Paris to combat a worsening sales slump and growing investor anxiety, driven by shifting consumer spending and economic pressures.