Currently in the Design Phase: Applied Digital's Form 8-K on a Third Datacenter Lease

On August 28, 2025, a subsidiary of Applied Digital Corporation entered into a lease for a data center that, by the company's own account, was still to be built. The company reported it in a Form 8-K with a date of report of August 28, 2025, signed on August 29. The tenant already held two leases at the same campus, and this third one, the filing says, "brings the total capacity leased by" the tenant there to 400 MW.

A building still in design

The lease began with an option. In the first fiscal quarter of 2025, the filing says, the tenant "exercised its option for an additional" 150 MW "of hosting capacity at" the company's campus in Ellendale, North Dakota. The lease that followed covers "the full capacity of Building 4," which the filing describes as a 150 MW data center "to be constructed by the Company."

At the time, the building was still being designed. "Building 4 is currently in the design phase and is expected to be service-ready in mid 2027," the 8-K says. The press release attached to it as Exhibit 99.1 says the new lease "is anticipated to be at full capacity and ready for service in mid 2027." Expected, and anticipated.

The same terms, and a guarantee

The lease "has substantially the same terms and conditions as the two other datacenter leases" between the company and the tenant at the campus, which an earlier Form 8-K, filed on June 2, 2025, describes. That earlier report is not reported here. The total contract value for "the initial approximately fifteen (15)-year term" of the lease "is expected to be approximately $4.0 billion."

The company's side of the lease is a subsidiary, and its parent stands behind it. "The Company has guaranteed the obligations of" its subsidiary "under the Building 4 Lease." The filing's own description of the lease "does not purport to be complete," and the lease itself, it says, "will be filed as Exhibit 10.1 to an amendment to this Current Report on Form 8-K."

The parent stands behind its subsidiary's obligations under the lease. For a tenant or a lender, the next question is what those obligations are, and the filing leaves that to a lease it says will be filed later.

A warrant for the tenant

The lease came with something more. In connection with it, the company issued the tenant a warrant "to acquire up to 8,393,611 shares" of its common stock "at an exercise price of $10.75 per share, subject to adjustment in accordance with the terms and conditions set forth in the Building 4 Warrant." The warrant "is subject to certain limitations in order to comply with Nasdaq Listing Rules."

A company that gives its tenant the right to buy its shares ties the two together beyond the lease. A reader weighing the lease's value would weigh the warrant beside it.

Under its heading on forward-looking statements, the filing warns that "if underlying assumptions prove inaccurate or known or unknown risks or uncertainties materialize, actual results could vary materially from the Company’s expectations and projections." Among the risks it lists are "our ability to complete construction of Polaris Forge 1" and "our ability to obtain financing of the datacenter leases with" the tenant, "including the Building 4 Lease, on acceptable financing terms, or at all."