Oracle's rent notice reprices $18 billion of data center debt

Oracle has served a force majeure notice on development partner Stack Infrastructure seeking to delay full rent payments at Project Jupiter, its 1,400-acre New Mexico campus, Bloomberg first reported Thursday. Reuters reported the same day that the project already sits a year behind because of trouble securing power, and The Wall Street Journal reported the development team had to pivot its power strategy after local opposition to plans for gas turbines and diesel generators.

The notice turns a construction update into a credit event, because Blue Owl, which owns Stack, put up $3 billion of equity beneath an $18 billion debt commitment from a bank consortium, and pieces of that debt now trade below 90 cents on the dollar — a Journal-reported implied loss for one seller of $1.8 billion or more. Oracle, Blue Owl and Bloom Energy, which has agreed to power the campus with its fuel cells, each fell more than 3% Thursday.

Force majeure is a clause Oracle cannot invoke on its own: under the reported terms, full rent payments can be pushed back three years if the opening slips past its 2028 projection and both companies agree the cause was beyond their control. The consent requirement does more work than the timeline, because it converts a scheduling dispute into an argument about causation — and the lender clock does not pause while two counterparties negotiate what counts as an act of God.

The causation record is awkward: the delay traces to power, after the team dropped gas turbines and diesel generators in response to local objections, and local opposition sits outside a developer's control. Fuel selection and the politics of clearing a siting fight land closer to the other column, so the notice is likelier to settle as a numbers negotiation than as a clean invocation of the clause: a shorter deferral, a rent schedule rebuilt around a later energization date, some allocation of the carry.

A single notice travels because of what Jupiter is: a 2.4-gigawatt campus, leased as part of Oracle's nationwide build-out of computing capacity for OpenAI under the Stargate initiative, which the White House introduced in the first week of the second Trump term. A load that size gets energized on a grid queue's timetable rather than a developer's, and this year Oracle has drawn growing concern over the debt attached to its pipeline relative to other Big Tech companies — the same schedule risk surfacing on the tenant's side of the lease as well as the landlord's.

Sean McDevitt, a partner at Arthur D. Little, told Reuters that the financing side of the AI build-out has begun asking harder questions than the demand side, focused less on whether demand exists than on how risk is allocated.

Data center capital now competes on permits and grid access, with the binding constraint off land and onto the energization calendar and the statehouse count, and a Brookings paper in September put the AI capital program at $10.3 trillion and assumed 227 gigawatts of proposed capacity never gets built. Jupiter is what that assumption looks like a year before it becomes a write-off: a one-year slip, a rent notice, and a ten-point discount on $18 billion of bank paper.

The September argument was that data center CMBS trades the wrong risk — the gap between its spreads and office acknowledges a difference in collateral without deciding how different. The loan market has now produced its first real observation, and it is a delay number. Ninety cents prices a slip into 2029 or 2030, not a three-year deferral on a campus whose power strategy has yet to clear local opposition; on those terms the cash flow servicing the debt does not begin on any date the coverage supplies.

The harder question is which side of the structure is mispriced. Oracle's shares falling 3% on a contractual notice reads as counterparty anxiety, the bonds at 90 read as collateral anxiety, and both readings of the same project cannot hold at once. The debt is the more generous of the two, because a consent fight that resolves against the developer damages a construction loan more durably than a 3% move damages a Big Tech balance sheet.

For Blue Owl, the notice lands mid-program: the firm's September data center REIT seed — a $6.5 billion vehicle we described at the time as a pricing event — and the rumored $25 billion Stack transaction, identified in our reporting as exclusive talks over the Asia Pacific portfolio, describe a sponsor running both ends of one trade: vehicles that sell income to yield buyers, and construction exposure carried through its ownership of the developer. Jupiter is where the second leg gets marked, and the Stack sale talks, if they price, will price against a book that now includes a campus whose rent clock may have just gotten longer.

The event is Stack's answer to the notice. The clause requires both companies to agree the cause was beyond their control, and whichever version of that agreement emerges — a shorter deferral, a rent schedule rebuilt around a later energization date, or no agreement at all — will show up in the price of that debt before it shows up anywhere else.