Zone Frontier Inc. Signs Long-Term Ground Lease with Purchase Option for more than 4,000 Acres in Potter County, Texas
Land rent is tied to construction rather than lease signing, while the Texas campus remains in the tenant and development stage.
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Rhea-AI Summary
Zone Frontier (ZONE) secured a ground lease through a subsidiary for approximately 4,077 acres in Potter County, Texas.
The land is for its West Texas data center campus, being developed with HST Technologies. Zone may designate 200 to 800 acres for data center facilities and at least 1,800 acres for solar generation, battery storage and related infrastructure. The lease runs 30 years, with two 10-year extension options. Base rent on each area starts when construction begins there; Zone currently plans to begin construction after securing a tenant. The agreement includes a long-term water supply agreement and an option to buy the data center site, subject to conditions.
Zone sizes the campus for an initial 200 MW, with potential to exceed 500 MW. It is advancing tenant discussions, permitting and power studies while assessing financing. Its Minnesota campus has a 10-year colocation agreement with Cerebras Systems (CBRS); construction is progressing, and Zone expects revenue beginning in the first half of 2027.
Positive
- Minor pointApproximately 4,077 acres secured under a ground lease for Zone’s West Texas campus.
- Minor point. Forward-looking: it has not happened yet and may not happen.200 to 800 acres may be designated for data center facilities and related infrastructure.
- Minor point. Forward-looking: it has not happened yet and may not happen.At least 1,800 acres may be designated for solar generation, battery storage and supporting infrastructure.
- Minor point30-year initial lease includes two 10-year extension options.
- Minor point. Forward-looking: it has not happened yet and may not happen.Base rent on each area starts only when construction begins there.
6 minor points
- Minor pointLong-term water supply agreement runs alongside the lease.
- Minor pointPurchase option gives Zone a conditional right to buy the data center site.
- Minor point. Forward-looking: it has not happened yet and may not happen.Initial 200 MW campus is sized with potential to expand beyond 500 MW.
- Minor pointMinnesota campus construction is making material progress.
- Minor pointCerebras Systems agreement covers an initial 10 years, with two potential 10-year extensions.
- Minor point. Forward-looking: it has not happened yet and may not happen.First-half 2027 revenue remains Zone’s expectation for the Minnesota campus, consistent with prior guidance.
Negative
- Minor point. Forward-looking: it has not happened yet and may not happen.Texas construction is currently planned to begin only after Zone secures a tenant.
- Minor pointTexas permitting and power studies are still being advanced.
- Minor pointTexas financing remains under evaluation with potential equity partners and project finance lenders.
- Minor pointMinnesota project financing remains under discussion.
Key Figures
- Leased land
- approximately 4,077 acres
- Potter County, Texas ground lease
- Data center development area
- 200 to 800 acres
- Facilities and related infrastructure
- Solar and battery area
- at least 1,800 acres
- Generation, storage and supporting infrastructure
- Initial lease term
- 30 years
- Two 10-year extension options
- Initial campus size
- 200 MW
- Texas campus
- Potential campus capacity
- over 500 MW
- Potential expansion
Historical Context
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Closed $100 million raise designated for AI infrastructure including West Texas campus
24h Move is the share-price change in the day after each event; other market factors may also have contributed.
Key Terms
ground lease financial
interconnection technical
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- Base rent for each site area does not commence until the start of construction on that area, which Zone currently plans to begin after securing a tenant
- Lease has an initial term of 30 years, with two 10-year extension options
- Site allows for up to 800 acres of data center development with potential to be over 500 megawatts
- Opportunity to build a faster path to first power with a large-scale on-site solar and battery plant
- Supported by a long-term water supply agreement and an option to purchase the data center site
Under the lease, Zone may designate between 200 and 800 acres for data center facilities and related infrastructure, and at least 1,800 acres for solar generation, battery storage and supporting infrastructure. The property surrounds Southwestern Public Service Company's (an Xcel Energy company) existing
The lease has an initial term of 30 years, with two 10-year extension options. Base rent for each site area begins only upon the start of construction on that area, aligning land costs with development milestones. The agreement also grants Zone an option to purchase the data center site, subject to the satisfaction of certain conditions, and includes a long-term water supply agreement, co-terminous with the lease, drawing on the water rights appurtenant to the property.
The site is also in close proximity to two major natural gas pipelines and the Company believes it is well suited for a large-scale solar and battery plant that could add significant power capacity to the region. Additionally, the Company believes the site has favorable access to fiber services.
"This agreement gives Zone what matters most in AI infrastructure: land at scale, a faster path to power, and water, all secured under one long-term agreement with tremendous option value," said Tyler Hassen, Chief Executive Officer of Zone Frontier. "The attractive lease structure allows us to advance tenant acquisition, power and permitting work in a disciplined sequence, without committing any significant capital before the key pieces are in place. We appreciate working with the landowner and local community, and look forward to building a flagship campus in the Texas Panhandle. With this campus, we'll continue to invest in the local tax base, hiring, and the community more broadly."
"We are now focused on securing tenants, advancing permitting, and completing power and interconnection studies for the site," continued Hassen. "As tenant discussions progress, we will concurrently evaluate financing options with both co-investment equity partners and project finance lenders. We are also focused on ensuring this project delivers lasting benefits for the local community."
The
Zone's portfolio also includes its
The Company continues to actively evaluate additional development opportunities across rural and industrial areas of
For more information, visit www.zonefrontier.com.
About Zone Frontier Inc.
Zone Frontier Inc. (NYSE American: ZONE) is helping to build the critical infrastructure that powers the AI economy. Through a growing pipeline of projects, the Company aims to help meet the increasing demand for compute capacity, power, and digital infrastructure required by the world's leading AI companies.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, but are not limited to, statements regarding the development, scale, power supply, water supply and timing of the Company's Texas data center campus, the Company's exercise of any purchase or extension options under the ground lease, the Company's business strategy and pipeline of projects, and the Company's expected transition to an AI infrastructure business. Forward-looking statements are generally identified by words such as "anticipates," "believes," "expects," "intends," "plans," "may," "will," "could," "should," "estimates," "projects," "potential," "focused on," "aims," "expand," "expected," "look forward," and similar expressions. These forward-looking statements are based on management's current expectations and assumptions as of the date of this press release and are subject to significant risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied. Such risks and uncertainties include, but are not limited to: the Company's ability to secure tenants for its Texas data center campus; the Company's ability to obtain sufficient power, grid interconnection, water, and other utility inputs on acceptable terms and timelines; the adequacy, availability and enforceability of the water rights appurtenant to the property; the Company's ability to satisfy its obligations under the ground lease and related agreements; including rent commencement triggers, development conditions, and maintenance of the water supply agreement; risks related to the Company's ability to exercise the purchase option or extension options under the ground lease, including satisfaction of applicable conditions; the highly speculative and uncertain nature of the Company's AI critical infrastructure business; the Company's continued ability to successfully transition its business model from cleaning services; the Company's lack of operating history in the data center or computing infrastructure industry; the Company's limited experience in the data center and AI infrastructure industries; the Company's ability to obtain project-level debt financing on acceptable terms or at all; the status of the Company's operations, results of operations, growth strategy and liquidity; and general economic, financial, capital market and industry conditions.
For a more complete discussion of risks and uncertainties, please refer to the Company's filings with the SEC, including the "Risk Factors" section of the Company's most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. All forward-looking statements are qualified in their entirety by this cautionary statement.
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SOURCE Zone Frontier Inc. (NYSE AMERICAN: ZONE)
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