Sky Harbour Group Details Hangar Expansion, Cost Cuts, and $350M Funding Plan at Conference

Sky Harbour Group NYSEAMERICAN: SKYH is building a national real estate platform focused on aviation infrastructure, with a strategy centered on securing long-term ground leases at airports, developing hangars for business aircraft, and leasing those facilities to aircraft owners and operators. In a company presentation and Q&A session, Treasurer Tim Herr outlined the business model, the demand backdrop for hangar space, the company’s approach to financing new developments, and recent steps taken to reduce construction costs and limit near-term equity dilution.

Business model: ground leases, hangar development, and services

Herr described Sky Harbour as a real estate company that develops hangars for business aviation across the U.S. Because airports are typically owned by local municipalities, the company generally cannot buy land outright; instead, it secures sites through long-term ground leases that often extend to 50 years. Sky Harbour then designs, constructs, and leases hangars to tenants, while also providing ancillary services such as fuel sales and towing aircraft in and out of hangars.

He said Sky Harbour’s tenants fall into three main categories:

• High-net-worth individuals who own and operate aircraft for business and personal use (the largest bucket)
• Corporate operators that run business aviation fleets
• Other users, including government tenants and charter operators (the smallest bucket)

Demand backdrop and differentiation from fixed base operators

Herr pointed to what he described as steady growth in the “footprint” of the U.S. business aviation fleet, noting that new aircraft tend to be larger than the planes they replace. He also cited a Honeywell analysis indicating that large jets are expected to outpace small and medium jets over time, which he said adds to the need for additional hangar square footage.

On the supply side, Herr said hangar development has not kept pace. He attributed part of the shortfall to the fact that municipalities often do not want to allocate taxpayer dollars—or the political capital—to build hangars. Historically, he said fixed base operators (FBOs) have been the legacy private partners that build hangars at airports, but typically only to required minimums because their primary revenue focus is fuel sales.

Sky Harbour positions itself differently, Herr said, calling the company a “Home Base Operator” that services only its own resident tenants rather than visiting traffic. According to Herr, this model enables more private and secure hangar campuses with fewer operations, less turnover, and services tailored to long-term users.

Portfolio growth and development pipeline

Herr said the company is in a growth phase and currently has ground leases at 23 airports, with an internal target of reaching 50+ airports over time. He described landing ground leases as the “hardest part” of the business and a key competency, given the scarcity of airport land and the fact that new airports are not being built in many of the areas Sky Harbour targets.

Sky Harbour obtains airport sites primarily by partnering directly with airports, responding to municipal requests for proposals (RFPs), or partnering with entities that hold master leases and subdivide parcels for development. Herr described the company’s portfolio map as including three stages: operating locations (constructed and open), sites under construction, and sites in pre-development stages such as permitting, environmental reviews, or design.

Construction costs, vertical integration, and unit economics

During Q&A, Herr said a common investor concern has been rising construction costs. He cited earlier projects that were built for less than $200 per rentable square foot, with some around $200 to $215–$220, and said the company is now aiming for about $300 per square foot for new construction.

To address this, Herr said Sky Harbour has internalized several functions, including bringing on its own architects and general contractor and acquiring a hangar manufacturing facility in Weatherford, Texas. He said the company continues to rely on local subcontractors due to its nationwide footprint, but identified a potential next step: establishing a national building erector team familiar with Sky Harbour’s specific hangar product to improve speed and efficiency.

Herr also provided representative stabilized unit economics on a per-square-foot basis (noting these are averages and can vary by region):

• Total construction costs: about $300/sq. ft. (approximately $250 hard costs plus soft costs)
• Hangar rent: about $40/sq. ft.
• Fuel sales contribution: about $5/sq. ft. (for total revenue of about $45/sq. ft.)
• Operating expenses: typically about $7–$9/sq. ft., and potentially up to about $10/sq. ft., including ground rent (about $2–$4/sq. ft.) and personnel/other costs (about $4–$5/sq. ft.)
• NOI: approximately $35–$37/sq. ft., translating into the “low to mid-teen” NOI yield on cost

He added that revenue varies more by market than expenses, with higher rents cited in regions such as the Northeast, South Florida, and Southern California.

Financing strategy, EBITDA trajectory, and dividend outlook

Herr said Sky Harbour targets low- to mid-teen NOI yields on projects and uses tax-exempt financing—private activity bonds (PABs)—to increase return on equity, citing a goal of ROEs in the 20%–30% range. He described the company as break-even on an EBITDA basis in the most recent quarter discussed, attributing progress to the step-up in revenue as projects move from ground lease to construction to completion and lease-up, a process he said can take two to three years. He cited upcoming construction completions including phase two at Miami-Opa Locka, phase two at Addison Airport, and phase one at Bradley International Airport, with additional projects extending into 2027.

On funding, Herr highlighted several recent financings:

• A first round of PAB issuance totaling $166 million, with a 33-year final maturity, 25-year average life, and a 4.18% cost of debt
• A $200 million debt facility announced with JPMorgan, which he described as functioning like a tax-exempt construction loan with a five-year maturity; it is a floating note that the company fixed at 4.73%
• A recently priced $150 million tax-exempt sub-debt bond issuance at 6%, which Herr said is intended to serve as the equity contribution for the JPMorgan facility (which he said is structured at 65% debt / 35% equity)

Herr said the combined capital—about $350 million across the JPMorgan facility and the sub-debt—should allow Sky Harbour to fund upcoming projects without needing to issue additional equity in the near term, though he stopped short of promising the company would never raise equity again, noting capital needs depend on growth pace.

When asked about dividends and the possibility of becoming a REIT, Herr said the company expects that “eventually” dividends could come, but not in the foreseeable future. He characterized the business as capital-expenditure heavy and said the company’s priority as cash flow turns positive is to retain cash and reinvest in additional high-yielding airport assets. He said a dividend would be more likely in a steadier-state phase when growth slows or availability of new airports becomes constrained.

About Sky Harbour Group NYSEAMERICAN: SKYH

Sky Harbour Group Inc is a U.S.-based real estate development and operating company focused on private aviation infrastructure. The company specializes in the acquisition, design and management of fixed-base operations (FBOs), aircraft hangarage and private terminals that serve business and general aviation operators. By providing expedited ground handling, concierge services and state-of-the-art facilities, Sky Harbour seeks to streamline the operations of private jet owners, fractional-ownership programs and charter operators while reducing congestion at major airports.

Through strategic leases and joint-venture partnerships, Sky Harbour has established a growing presence at key regional and metropolitan airports across the United States.

Featured Articles

• Five stocks we like better than Sky Harbour Group
• NEW LAW: Congress Approves Setup For Digital Dollar?
• ~$1.5T SpaceX IPO: Pre-IPO Opportunity
• “Fed Proof” Your Bank Account with THESE 4 Simple Steps
• What a Former CIA Agent Knows About the Coming Collapse
• Trade this between 9:30 and 10:45 am EST

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.

Should You Invest $1,000 in Sky Harbour Group Right Now?

Before you consider Sky Harbour Group, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Sky Harbour Group wasn't on the list.

While Sky Harbour Group currently has a Buy rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here