A licence, not a lease: the facility lender comes first
If the data centre’s own lender enforces, does the colocation contract survive?
A colocation agreement is usually a licence, not a lease, and it ranks behind the data centre’s mortgage. Enovum’s contract says Nscale has no real property interest and is automatically subordinate to any financing of the facility. Vernon’s is subordinate too, but the customer must attorn to a foreclosing lender if asked and sign a non-disturbance agreement in that lender’s form. Without non-disturbance, a foreclosure can end the space a GPU loan depends on.
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What the filed contracts say
Contract
What the filed wording says
Enovum / Nscale MSA
Nscale is a licensee, not a tenant, with no real property interest in the facility.
Enovum / Nscale MSA
The contract is automatically subordinate to any ground lease or financing of Enovum or its affiliates.
Vernon colocation MCSA
The contract is subordinate to the facility’s mortgages and ground leases; the customer attorns to a foreclosing lender at that lender’s option and signs its form of non-disturbance agreement within 15 business days.
Vernon colocation MCSA
The customer gives estoppel certificates within ten business days, which buyers and lenders of the facility may rely on.
Vernon colocation MCSA
The provider may hand over operation of the facility only to a qualified data centre operator.
The filed wording
Customer acknowledges and agrees that it does not have, has not been granted, and will not hold any real property interest in the Facility or the Licensed Space and that Customer is a licensee and not a tenant or lessee of the Facility or the Licensed Space.
Each extract is quoted from the contract as filed with the SEC, checked against the filed text when it was added; “…” marks words left out. Filers redact commercial terms, so a [***] or [*] is the filer's, not ours. The summaries describe the wording, not how a court would read it, and each contract's defined terms and other clauses can change the effect. General information drawn from public filings. It is not legal advice on any transaction, and using this page does not create a lawyer-client relationship. Views are personal.
InfraCompute Weekly
The week in compute finance, read from the filings.
Deals, terms and the clauses behind them, for the people financing data centres, GPU clouds and the power behind them. By Randeep Bubbra.
