Sky Harbour Group (SKYH) 15th Annual LD Micro Invitational 2025 summary

Business model and operations

• Secures long-term ground leases (40-50 years) at airports, focusing on land development for hangar construction and leasing to business jet owners and operators.

• Provides ancillary services such as towing, fueling (for clients only), and water service, but does not serve transient aircraft or offer maintenance.

• Revenue is primarily from rent (85%) and fuel sales to clients (15%), with potential for future third-party service partnerships.

• Average client lease term is 3.5 years, with flexibility for shorter or longer agreements.

• Operates five campuses, with three more coming online soon and a total of 17 ground leases secured, aiming for 23 by year-end.

Market dynamics and growth

• Business aviation fleet size and average aircraft dimensions are increasing annually, driving demand for more and larger hangar space.

• Chronic underinvestment in hangar infrastructure due to public ownership and lack of political will, as well as FBOs focusing on fuel rather than hangar development.

• Company fills the gap by focusing on real estate development and leasing, not acting as a traditional FBO.

• Site acquisition is the most challenging aspect, involving direct negotiations, RFPs, or acquiring existing ground leases.

• Revenue grows in step functions as new campuses become operational and are leased up.

Financial performance and strategy

• Targets stabilized yield on cost in the low to mid-teens (12%-14%), enabled by low land acquisition costs and efficient financing.

• Uses federally tax-exempt private activity bonds for low-cost, long-term debt (first issuance: $166M at 4.18%; next expected at ~5.5%).

• Maintains a leverage ratio of about 70%, pairing new debt with recent $75M PIPE equity raise for expansion.

• Expects to be cash flow positive from operations by year-end as new campuses lease up.

• Rental rates average $45/sq ft with OpEx of $7–$8/sq ft, generating NOI yields of 12%-14%.