🚨Fermi REIT, co-founded by former U.S. Energy Secretary Rick Perry, raised $682.5 M in an upsized IPO, valuing the pre-revenue developer at ~$12.5B. Shares opened 19% above issue, reflecting outsized investor appetite for AI-driven digital infrastructure. The REIT plans to build an 11 GW energy-integrated data center campus in Amarillo, Texas, starting with 1 GW online by late 2026. While equity markets are rewarding the growth story, underwriters must note that execution hinges on phased delivery, power infrastructure build-out, and tenant pre-leasing before scaling further.
IPO Proceeds: $682.5 M raised, 32.5M shares at $21 — [Source: Reuters].
Market Valuation: ~$14.8 B implied after first-day trade — [Source: Reuters].
Campus Scale: 1 GW by 2026; 11 GW target by 2038 — [Source: Reuters].
Data Center Cap Rates: ~5% powered shell; ~6% turnkey, Q2 2025 — [Source: Avison Young].
Loan Performance. No cash flow near-term; debt should include 24+ months interest reserves. Equity-rich IPO cushion lowers initial lender risk but cost overruns could erode coverage.
Demand Dynamics. AI/cloud hyperscalers likely anchor tenants; long-term leases critical. Risk if chip efficiency dampens demand or oversupply hits late 2020s.
Asset Strategies. Phase-gate deployment; avoid speculative build. Prioritize anchor tenant MOUs before advancing beyond 1 GW.
Capital Markets. Equity euphoric; debt cautious. Expect construction loans only once leases secure. Dual listing (Nasdaq/LSE) opens global investor pools.
Equity markets rewarding AI infrastructure stories, even pre-revenue.
Hyperscale tenant demand could sustain absorption; execution risk remains high.
Conservative debt, phased underwriting, and tenant pre-commitments are essential.
Cap rate spreads (5–6%) provide benchmarks but must underwrite higher yields.
🛠 Operator’s Lens
Refi. Little near-term; must stabilize phase 1 NOI before accessing debt markets.
Value-Add. Tenant-specific buildouts likely; structure leases for cost recovery.
Development. Nuclear/gas/solar infrastructure introduces multi-layered permitting risks; build contingencies into pro formas.
Lender POV. Require hard equity, phase-by-phase collateralization, and step-in rights given pre-revenue profile.
Anchor tenant signings by 2026 are pivotal.
Capex deployment and permitting progress will drive investor confidence.
Oversupply or regulatory delays (nuclear) could derail long-term narrative.
Reuters — “Fermi REIT raises $682.5M in IPO, targets Texas AI megacampus” (Oct 2025). https://www.reuters.com Avison Young — “U.S. Data Center Market Cap Rate Report” (Q2 2025). https://www.avisonyoung.us
