AI Data Center Developers: What We Heard Back Following Our Initiation

Research evidence excerpt

AI Data Center Developers: What We Heard Back Following Our Initiation

r the potential for attractive deal terms at Corsicana, where there is sizable leasing potential

at a very well-located site.

No agreed upon valuation framework. Investors are valuing these stocks with many approaches:

EV/secured MW, stabilized NOI multiples, and AFFO-based DCFs. Nearly everyone acknowledged

that there is little consensus on the right way to approach valuation. Our AFFO/DCF approach was

received as differentiated and appreciated, given our background in real estate and traditional data

centers. The most consistent pushback on our approach being that contracted power should be

valued separately from speculative pipeline and that our risk matrix to derive a cost-of-equity is

open to subjectivity.

The capital base is broadening. Several REIT PMs (long-only and hedge funds) are conducting due

diligence on the group, with eventual REIT conversion as the structural catalyst. CORZ, WULF, and

CIFR screen as the most likely first converters as they are closer to sizable stabilized real estate

cash flows; however, we wouldn't expect any announcement until the end of 2027 at the earliest.

Hedge fund engagement remains heavy with a mix of longer-term investors and those investing

around leasing catalysts. Retail ownership also remains high, adding to daily volumes and volatility.

The near-term catalysts. CORZ's Pecos and Muskogee sites, RIOT's Corsicana site, and WULF's

Jonathan Petersen * | Equity AnalystKentucky site are the next leasing opportunities the buy-side is watching, and any lease signings or

(212) 284-1705 | jpetersen@jefferies.com

slippage on these will set the tone in the coming months.

Jan Aygul * | Equity Associate

Loose threads.