Can the tenant’s lenders take security over the lease, and what protects them if the tenant defaults?
Fermi’s 99-year ground lease from Texas Tech lets the tenant mortgage the lease and the improvements without the landlord’s consent. Once a mortgagee gives notice, it must get a copy of every default notice, and it has 30 days more than the tenant to cure a rent default and 60 days more for anything else, longer if it is diligently curing. The landlord cannot terminate before those periods run out. The mortgagee may foreclose, take possession or appoint a receiver, and sell the lease to an assignee meeting the lease’s test without consent. In Nscale’s Cedarvale lease, the landlord waives its lien on the tenant’s trade fixtures and equipment, and any leasehold mortgage sits behind the landlord’s own mortgage.
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What the filed contracts say
Contract
What the filed wording says
Fermi Texas Tech ground lease
The tenant may mortgage the lease and the improvements without the landlord’s consent.
Fermi Texas Tech ground lease
A mortgagee gets 30 days more than the tenant to cure a rent default and 60 days more for other defaults.
Fermi Texas Tech ground lease
The landlord cannot terminate before the mortgagee’s cure periods expire.
Fermi Texas Tech ground lease
The mortgagee may foreclose, take possession, appoint a receiver and sell the lease on.
Ionic Digital lease to Nscale
The landlord waives its lien on the tenant’s trade fixtures and equipment, so GPU lenders can take security.
Ionic Digital lease to Nscale
A leasehold mortgage is subordinate to the landlord’s own mortgage.
The filed wording
Section 15.01 Right to Mortgage. Tenant shall have the right from time to time, without the consent of Landlord, to hypothecate, mortgage, grant or pledge its right, title or interest under this Lease and/or its interest in any Improvements at the Premises to any party (as such mortgage may be amended, modified, replaced and/or assigned from time to time, a “Mortgage”).
Fermi 99-year ground lease with the Texas Tech University System for its Amarillo data centre and power campus, section 15.01 · Fermi S-11, Exhibit 10.9
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.
