Applied Digital AI Data Center Economics: Campus Yields and Capital Stack
The campuses look attractive. The capital stack is the harder part.
Applied Digital discloses enough detail to underwrite three of its five contracted AI campuses without treating the $36.2B backlog as equity value. Those three projects cover 900 MW and imply a 12.56%aggregate midpoint site-NOI yield on development cost. The common shareholder still sits behind secured debt and Macquarie preferred capital, so the attractive asset-level return doesn't flow straight through to the stock.
Three campuses support a low-teens development-yield model
The headline $36.2B backlog spans five campuses, but management has published both a site-NOI margin range and an $11M-$13M anticipated capex-per-MW range for only Polaris Forge 1, Polaris Forge 2, and Delta Forge 1. These 900 MW cover 63.83% of contracted capacity and 64.92%of base-term contracted revenue, so the study doesn't impute those economics to Polaris Forge 3 or Delta Forge 2.
Stabilized site-NOI yield on development cost
Polaris Forge 1 ranges from 11.99% to 15.17% with a 13.44% midpoint. Polaris Forge 2 ranges from 10.64% to 13.48% with a 11.94% midpoint. Delta Forge 1 ranges from 10.51% to 13.33% with a 11.81% midpoint.
| Campus | MW | 15-year revenue | Annual revenue / MW | Site-NOI margin | Midpoint annual site NOI | Midpoint cost | Midpoint yield |
|---|---|---|---|---|---|---|---|
| Polaris Forge 1 | 400 | $11B | $1.83M | 88% ± 3 pp | $645M | $4.8B | 13.44% |
| Polaris Forge 2 | 200 | $5B | $1.67M | 86% ± 3 pp | $287M | $2.4B | 11.94% |
| Delta Forge 1 | 300 | $7.5B | $1.67M | 85% ± 3 pp | $425M | $3.6B | 11.81% |
Cheaper PF2 debt preserves almost the same project spread
PF1's disclosed secured notes total $3.94B across a 9.25% tranche and a 7.0% tranche, for a principal-weighted stated coupon of 8.34%. PF2's $2.15B secured notes carry a 6.75% coupon. Comparing those coupons with the midpoint project yields produces nearly the same spread at both campuses.
Midpoint project yield versus disclosed secured-debt coupon
PF1 midpoint site-NOI yield is 13.44% versus an 8.34% weighted coupon, a 5.10 percentage-point spread. PF2 midpoint yield is 11.94% versus a 6.75% coupon, a 5.19 percentage-point spread.
Macquarie's preferred return is the expensive layer
As of May 31, Macquarie had funded $1.825B of TopCo 2 preferred capital and held 13.5% of its fully diluted common equity. The preferred units accrue at 12.75% and compound semiannually, while the liquidation preference carries a 1.80x minimum MOIC, increasing to 2.00x in certain liquidity events.
What 12.75% semiannual compounding does to $1 of preferred capital
At the disclosed 12.75% base rate compounded semiannually, $1 accretes to 1.86x after five years and crosses the 1.8x minimum MOIC after about 4.76 years.
How the economic claim reaches APLD common shareholders
Lease revenue supports site NOI. Secured debt service and preferred capital claims sit ahead of the residual common-equity economics available to Applied Digital shareholders.
- Tenant lease$23.5B reviewed base-term revenuePF1, PF2, and Delta Forge 1 provide the detailed operating assumptions used in this study.
- Stabilized site NOI12.56% midpoint yield on costCalculated from disclosed lease revenue, site-NOI margins, and capex-per-MW assumptions.
- Secured debt6.75%-9.25% disclosed couponsProject notes carry amortization, covenants, reserves, fees, and other terms beyond the headline coupon.
- Preferred capital12.75% base rate + 1.8x floorMacquarie also holds common equity in TopCo 2.
- Residual common economicsWhat remains after senior claimsThis is why $36.2B of contracted revenue can't be compared directly with APLD common-equity value.
Methodology and limits
Project calculations
- Base-term contracted revenue divided by 15 years.
- Contracted MW multiplied by $12M/MW, the midpoint of management's $11M-$13M/MW anticipated capex range.
- Annual contracted revenue multiplied by management's midpoint expected site NOI margin.
- Low case pairs the low end of management's site NOI margin range with $13M/MW capex. High case pairs the high end with $11M/MW capex. These are mechanical scenario endpoints, not confidence intervals.
What the study doesn't claim
- Project-level site NOI margins and $11M-$13M/MW anticipated capex are disclosed for Polaris Forge 1, Polaris Forge 2, and Delta Forge 1. The study does not impute those assumptions to Polaris Forge 3 or Delta Forge 2.
- Stated secured-note coupons are compared with midpoint site NOI yield on total development cost. The site-NOI-to-coupon-interest ratio divides estimated annual site NOI by annual stated coupon interest on disclosed note principal. It is not DSCR and excludes amortization, issue discounts, fees, reserves, preferred distributions, corporate costs, and other financing claims.
- The study doesn't assign a terminal cap rate, stock price target, future refinancing spread, or value to uncontracted pipeline capacity.
- Management's site NOI is a non-GAAP project metric and may not translate one-for-one into consolidated company cash flow.
Sources and calculations
The operating and financing inputs come from Applied Digital's SEC-filed investor materials, fiscal 2026 Form 10-K, project-financing Forms 8-K, and fiscal 2026 fourth-quarter release. Grizzly Bulls performs the annualization, yield-on-cost, weighted-coupon, coupon-interest, coverage, and preferred-accretion calculations shown above.
Applied Digital fiscal 2026 Form 10-K
Applied Digital / U.S. Securities and Exchange Commission · source date May 31, 2026
Open primary source →Applied Digital 2026 investor presentation
Applied Digital / U.S. Securities and Exchange Commission · source date April 23, 2026
Open primary source →Polaris Forge 2 senior secured notes Form 8-K
Applied Digital / U.S. Securities and Exchange Commission · source date March 10, 2026
Open primary source →Polaris Forge 1 Building 4 senior secured notes Form 8-K
Applied Digital / U.S. Securities and Exchange Commission · source date June 16, 2026
Open primary source →Applied Digital fiscal 2026 fourth-quarter earnings release
Applied Digital / U.S. Securities and Exchange Commission · source date July 27, 2026
Open primary source →Research data
- Download CSVCSVCSV downloadCampus-level disclosed inputs and Grizzly Bulls yield-on-cost calculations for PF1, PF2, and Delta Forge 1.Data snapshot September 25, 2026 · Reuse with attribution to the canonical study.
- Download JSONJSONJSON downloadStructured project economics, secured-debt comparisons, preferred-accretion series, methodology, and public source links.Data snapshot September 25, 2026 · Reuse with attribution to the canonical study.
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