Sky Harbour Group (SKYH) investor relations material

Business overview and market dynamics

• Focuses on developing and operating aviation hangar campuses across the U.S. to address chronic shortages of hangar space at major metropolitan airports.

• Operates on long-term ground leases (up to 50 years) with public airport authorities, enabling access to tax-exempt municipal debt for development.

• Vertically integrated construction and manufacturing, including ownership of Stratus Building Systems and in-house general contracting, to reduce costs.

• Serves high-net-worth individuals, corporate fleets, charter companies, and some government clients, with most leases spanning three to five years.

• Business aviation fleet size and average aircraft size are both increasing, while hangar development lags due to limited airport land and FBOs focusing on fuel sales rather than hangar expansion.

Operations, expansion, and differentiation

• Currently controls 23 ground leases nationwide, with operational, under-construction, and pre-construction sites spanning major U.S. markets.

• Differentiates as a "home-base operator" offering privacy, security, and dedicated hangar space, unlike FBOs that prioritize transient fuel sales.

• Internalized design, manufacturing, and general contracting functions to standardize hangar prototypes and drive down unit costs.

• Achieved economies of scale in operations, with OpEx per square foot decreasing as campuses expand.

• Lease renewal rates average 85–90%, while rent increases on re-leasing average over 20%.

Financial strategy and performance

• Utilizes tax-exempt debt for project financing, with recent innovations including sub-debt to minimize equity requirements and boost ROE.

• First debt round (2021): 70/30 debt-to-equity, 33-year term at 4.18%. Second round: 65/35, five-year JPMorgan facility at 4.73%, plus $150M sub-debt at 6%.

• Sub-debt structure increased leverage to 90/10, driving project-level ROEs from the 20s to the 60s.

• Maintenance CapEx is currently low (1–2% of sales), with most spend focused on expansion; cash flow positive at the consolidated level expected this year.

• Plans to fund future growth (up to 50 campuses by decade's end) primarily through internally generated cash flows and selective equity issuance.