AI Selloff Exposes Data Center Boom Risks

[00:00:00] Speaker 1: jolena i want to start with you i mean this is as nina said as she was walking in here the perfect timing for for you and it really is given what we saw happen in the united states this week does it change your outlook at all for how quickly you can get data centers up and running in the united states [00:00:19] Jolene: you know what absolutely there's you know we've all uh witnessed the blue wave some headlines are calling it the blue tsunami i think we had some constraints going into this power being one of them uh we we also had chips you know being another constraint capital was a constraint now we're hearing permits could be a constraint with permits coming before that capital piece so i think it's going to be you know with the risks infused into the ai data center build market this week we're going to see capital uh financing terms extending in terms of how quickly you can get financing with the risks infused we're going to see financing and debt positions become a little bit like i said harder to achieve a little bit longer and a little bit more expensive until this balances out we feel like this is a short-term impact we believe in the in the ai market and um ai is not going anywhere but we feel that you know after this week with two and a half trillion dollars of value wiped out in the market there's there's no way there that can't have an impact and we're ready for it we feel well prepared [00:01:22] Speaker 3: with our anchor site and our anchor tenant jolene thank you for joining us i'm wondering you just um recently acquired a site in texas for your first data center how do you approach the the potential of [00:01:33] Jolene: more moratoriums going forward yeah in in that site you know uh it's and it's part of our business models that we we call ourselves a right size developer so that 45 to 90 megawatts our our perspective or our uh angle is that you know these types of data centers will attract uh fall below some of those moratorium levels and attract less of that uh evaluation and scrutiny that you're seeing in in or caught in in some of the in some of the parts of texas and just wondering in terms of [00:02:05] Speaker 3: financing you mentioned the the potential increases in financing costs that we're seeing um as we've seen a lot of demand uh from companies raising capital in the debt markets you are still working through your financing i'm wondering sort of how do you see that coming together it's going like i said [00:02:23] Jolene: it's going to take a little bit longer it's going to be a little bit expensive more expensive and it's going to be a little bit harder ultimately because what you're financing is that contracted revenue you're caught you're financing the strength of that tenant our tenant being nebbius you know very financeable strong credit backed uh lease that's what's financeable so we don't feel our position has changed in terms of being able to get financing we are going to have to work through you know the different levels of risk and you know uh working closely with with who we partner with to bring that comfort is it going to be uh include extra layers of security potentially and we're just working through those dynamics right now but because we're so well positioned with such a strong tenant and such a strong financeable lease we we still have feel that we are so well positioned to move forward who are your tenants right now our anchor tenant our flagship location is nebius which is a global neocloud a global [00:03:23] Speaker 1: neocloud that's been under a lot of pressure this week are you concerned about that [00:03:29] Jolene: who i i would say like to say no of course everybody's concerned with what's going on in the ai ai market but nebius has you know i'm not going to comment too much but they're in a very strong position their lease is very financeable you know i would be more concerned if i had maybe a different tenant you know that is under different layers of scrutiny so have you had conversations with nebius back and [00:03:51] Speaker 4: forth this week i'm just curious it's been a crazy week we know and i'm just curious what you need to hear maybe from them that makes you feel confident about the future certainly with them and with that [00:04:00] Jolene: exposure to them predominantly you know we've had several conversations you know we are moving ahead we're on track you know full steam ahead our project is well positioned in terms of where we're at in design where we're at in our financing life cycle where we're at in terms of having the power the interconnection so you know we're on track of course you know paying attention very closely to what's happening in the ai market but you know we're not uh we're not letting it stop uh stop our momentum [00:04:31] Speaker 3: or halt what we're doing um jolene your stock is down about um 90 this year i'm wondering with the route that we saw yesterday in the markets like what is your sense of of where this is headed um what's [00:04:42] Jolene: your your take on on what we saw yesterday sense is you know this is is a temporary adjustment into the market you know do fundamentally do you believe in ai and and where the ai industry is going it's not going to be a smooth journey there's going to be bumps there's going to be hiccups and when you have ai stocks uh contributing to half of the market cap in in the s p 500 any hiccup in the ai sector is going to reverberate so we are you know we're bracing for you know relatively short term and and bracing for you know i don't think it's going to be overnight we've seen a bit of recovery today uh but we're projecting that this blip is somewhat short-lived and just wondering of course we've seen a lot of [00:05:28] Speaker 3: commentary today about what this route yesterday what that means for the um upcoming anthropic ipo whether it means potentially lower valuation for anthropic i'm wondering how you're thinking about the impact of that ipo for the broader ecosystem and for companies like yours and jolene just got [00:05:44] Jolene: about 30 40 seconds here i don't know if i was just listening did you ever think we would hear the words of value as low as 1.1 but it's not 1.4 1.5 yeah i i like that you know i like when i hear words of you know what comes along with an ipo is transparency i think some of the problems with the industry is a lack of knowledge and with a lack of knowledge comes fear so when you have a major player like anthropic going public there's those ever extra layers of transparency i think can do nothing but good for exposure and for people to evaluate our industry in a different way.