Transaction Highlights
- Lease Structure: Triple net (NNN) lease executed on substantially the same terms as the Phase 1 lease.
- Tenant Profile: High-investment-grade company; the Phase 1 tenant.
- Compute Architecture: Hut 8 to deliver a second 352 MW AI factory designed to NVIDIA’s DSX reference architecture for gigawatt-scale AI infrastructure supported by 500 MW of utility capacity.
- Base-Term Contract Value: $9.8 billion over a 15-year base lease term, inclusive of a 3.0% annual base rent escalator; base-term contract value for the full 1,000 MW campus rises to $19.6 billion.
- NOI Contribution: Expected cumulative NOI contribution of $9.8 billion over the base term, or an average of $655 million per year upon stabilization; average annual NOI for the full 1,000 MW campus rises to $1.31 billion.
- Upside Economics: Three 5-year renewal options per lease increase potential campus-level contract value to $50.2 billion if all options are exercised.
- Delivery Timeline: Initial Phase 2 data hall delivery expected in Q2 2028.
Full Commercialization Driven by Power-First Development Model
With the Transaction, Beacon Point becomes Hut 8’s first fully commercialized AI data center campus. The Company secured the site, contracted the campus in full with investment-grade cash flows, financed Phase 1 with investment-grade debt, and commenced construction. Together, these stages demonstrate structural features of the Company’s disciplined, power-first development model, from origination through delivery:
- Power-first underwriting preserves optionality across end markets: Initially underwritten on a speed-to-power thesis to serve Hut 8’s affiliated customer, American Bitcoin Corp., Beacon Point is now fully contracted under two 15-year AI leases to a high-investment-grade counterparty.
- First-principles approach to design and partnership supports efficient commercialization: Hut 8 has designed the campus around its tenant’s evolving requirements throughout development, including a redesign of the first data hall for Phase 1 to NVIDIA’s DSX reference architecture, enabling 57% more IT capacity within the same land and utility footprint. With this second lease, the tenant doubled its contracted capacity on substantially the same terms.
- Partnership-driven execution model mitigates execution risk: The campus’s full 1,000 MW of utility capacity is secured under an interconnection agreement with AEP Texas for electric delivery service, and no incremental capacity is required to serve the Phase 2 lease. Hut 8 will implement the partnership-driven model first implemented at River Bend and Beacon Point Phase 1 to deliver the site. Site preparation is underway, and long-lead critical equipment has been procured. Initial energization remains on schedule for Q1 2027.
Asher Genoot, CEO of Hut 8, said, “The real test of our power-first approach is what our partners are willing to commit against it. Our tenant at Beacon Point chose to double its footprint at the site, the strongest validation an asset can receive. We took this greenfield site from first lease to full commercialization in just months. That speaks to the quality of the sites we originate, the credibility of our delivery, and the long-term orientation of our partnerships. The opportunity ahead of us is to apply the same model across our development pipeline.”
Contracted Portfolio Highlights
- Contracted Capacity: Total contracted IT capacity across Hut 8’s AI data center portfolio of 949 MW, comprising 704 MW at Beacon Point and 245 MW at River Bend.
- Contract Value and NOI Contribution: Cumulative base-term contract value across Hut 8’s AI data center portfolio of $26.6 billion, with expected average annual NOI of more than $1.75 billion.
- Counterparty Credit: 100% of Hut 8’s AI data center portfolio is leased to or backstopped by investment-grade counterparties.
Stock Repurchase Program
On December 4, 2024, as part of its capital management strategy, the Company launched a $250.0 million stock repurchase program (the “Stock Repurchase Program”) with respect to its common stock, par value $0.01 per share (the “Common Stock”). Under the Stock Repurchase Program, the Company may repurchase up to 6,159,439 shares of Common Stock (representing 5.0% of the current issued and outstanding Common Stock) in the next twelve months. The Company expects that any repurchases will be made through the facilities of Nasdaq at prevailing market prices, in accordance with applicable securities laws.
Non-GAAP Financial Measures
This press release includes a non-GAAP financial measure, expected net operating income (NOI) contribution, which the Company defines as expected lease revenue for a particular lease less any non-reimbursable operating expenses attributable to the leased property. The Company’s management team uses expected NOI contribution to measure the expected operating performance of a particular lease. Operating income is the GAAP measure most directly comparable to expected NOI contribution. In evaluating expected NOI contribution, you should be aware that in the future the Company may incur non-reimbursable lease operating expenses that are not currently known.
The Company’s presentation of expected NOI contribution should not be construed as an inference that its future results will be unaffected by unusual or non-recurring items. Expected NOI contribution has important limitations as an analytical tool and you should not consider expected NOI contribution in isolation or as a substitute for analysis of results as reported under GAAP. For example, expected NOI contribution excludes the impact of selling, general and administrative expenses and depreciation and amortization, which have real economic effect and could materially impact the Company’s consolidated financial results.
Other companies, including Real Estate Investment Trusts, may calculate expected NOI contribution differently than the Company does and, accordingly, the Company’s expected NOI contribution may not be comparable to similar measures published by such companies. No reconciliation of expected NOI contribution is included in this press release because the Company is unable to quantify certain amounts that would be required to be included in operating income without unreasonable efforts as such quantification would imply a degree of precision that would be confusing or misleading to investors.
