Sky Harbor at LD Micro Main Event: Strategic Expansion and Financial Insights

On Tuesday, 21 October 2025, Sky Harbor Group Corp (NYSE:SKYH) presented its strategic vision at the LD Micro Main Event XIX Investor Conference. The aviation real estate platform outlined its ambitious expansion plans and financial strategies, aiming to establish a significant presence across 50 major U.S. airfields. While Sky Harbor’s growth outlook appears promising with a focus on high-net-worth clients and innovative financing methods, challenges remain in meeting construction and development targets.

Key Takeaways

• Sky Harbor plans to expand its presence to 50 airfields, leveraging its unique private hangar model.
• The company secured a $200 million facility with JPMorgan to fund construction and stabilization.
• Sky Harbor targets a return on equity of approximately 30% when paired with leverage.
• Nine operational campuses and nine in development highlight the company’s rapid growth trajectory.
• Tenant base is diversified, with a focus on high-net-worth individuals and corporations.

Financial Results

• Targeted stabilized yield on cost is in the mid-teens, with a return on equity close to 30%.
• Construction costs are estimated at $300 per square foot.
• Rental revenue is projected at $39 per square foot, supplemented by $5 to $6 in fuel sales.
• Operating costs, including payroll and maintenance, range from $3 to $4 per square foot.
• The municipal bond coupon rate on the first bond deal averages 4.18%.

Operational Updates

• Sky Harbor has signed 18 ground leases, each averaging a 50-year term, with some extending up to 75 years.
• Nine campuses are operational in Denver, Phoenix, and Dallas, with nine more in the pipeline.
• The company plans to sign five new ground leases in 2025, with a target of six to seven annually thereafter.
• Prototype hangar sizes have increased to 37,000 square feet, accommodating up to five super-heavy business jets.

Future Outlook

• Sky Harbor aims to establish a presence at 50 airfields, focusing on securing ground leases at key locations.
• The company anticipates a step function growth in revenue as new campuses stabilize.
• Sky Harbor plans to leverage its portfolio more aggressively as returns strengthen, enhancing efficiency in construction and development operations.

Q&A Highlights

• Sky Harbor differentiates itself from fixed-based operators by offering private hangars rather than focusing on throughput and fuel sales.
• The tenant base is primarily high-net-worth individuals (60%), charter operators/corporations (30%), and government entities (10%).
• Lease terms range from one to five years, with some extending to ten years, allowing flexibility amid anticipated land value inflation.

In conclusion, Sky Harbor’s presentation at the LD Micro Main Event highlighted its strategic initiatives and financial health. Readers are encouraged to refer to the full transcript for a detailed understanding of the company’s plans and performance metrics.

Full transcript - LD Micro Main Event XIX Investor Conference:

Andreas Frank, Assistant Treasurer, Sky Harbor: Thanks so much. Good morning to you all. Thank you for coming here first thing this morning. My name is Andreas Frank. I’m the assistant treasurer with Sky Harbor working mostly on the finance team and IR work as well.

If you’re new to this story, this is gonna be a good, introduction. And if you’ve, familiar with us, it’ll be a good recap, we’re gonna have some business updates at the end as well as time for q and a. So Sky Harbor, in essence, is an aviation real estate platform. And I’m gonna introduce the rest of our team here. Is our founder and CEO, Tal Kanan.

A bit of his backstory, Tal was born in The States, but, was joined the Israeli Air Force and served as an f sixteen pilot for eighteen years, as well as a combat air instructor. Came out of the military and started his own fund in Israel, and did well for himself. And in coming back to The States, Tal got a small plane, Beechcraft Baron, so two engine prop. It was based in the New York area and was looking for a place to store it. And the only hangar space that he could find was in Montauk, so on the edge of Long Island.

So a a three hour drive approximately from the city each way. And turns out that this was not just a problem in the New York Metro Area, but a nationwide problem that, hangar aviation hangar supply has not been constructed, systematically, and we’ll get into why that’s the case. The rest of the team, Francisco Gonzales, our CFO, twenty five year, Goldman veteran, working on the muni bond desk, came in to Sky Harbor in 2021 and restructured our financing, which we’ll also get into. And Tim Her, who’s our treasurer and senior VP of finance, who was, employee number one at the company, former naval aviator, and we actually have a lot of former military aviators at the company as well. My background, I’ve been with the company three years now, working primarily with the finance team.

Now moving along here, and I just wanna make a note that all the pictures you see in this presentation are of our constructed Sky Harbor campuses. So this is actually the office and lobby within a private hangar at our campus in Addison in, Dallas, Texas. So the big picture on Sky Harbor, as I mentioned, we’re an aviation real estate company and our business model is relatively simple. We secure key land at airfields at major metro centers across The US. We develop a campus of private hangars, and a hangar campus is typically gonna consist of around 200,000 square feet of hangar.

And then we are going to lease those hangars to private jet owners. And it’s who you imagine, high net worth individuals, fortune 500 companies, some charter operators as well. And then we’re actually gonna operate and manage those campuses. So it’s an end to end development and service operation. Now for a variety of reasons, we are able to get stabilized yield on cost in the mid teens.

And when we pair that with our leverage, we’re able to get close to 30% return on equity. The goals for the company in the near to midterm are 50 airfields. We’re thinking we’ll exceed that as our construction and development operation becomes more and more efficient. And we still remain the largest home basing solution and hangar developer in The U. S.

The team, as I mentioned, and as you’ve seen from the profiles, we have real estate acumen, aviation experience, and, on the capital market side, you know, experience and and sophistication there. Again, another picture of our, this is us, our our Dallas campus, and that is a Global 7,500, one of the most expensive and valuable, business jets on the market currently. So what are the macro drivers that are behind us? The business aviation fleet in The U. S.

Has grown dramatically in the last fifteen years. If you look at that chart on the right, that top line is total business jet fleet square footage. That bottom red part, which we’re interested in, is jets with tail heights above 24 feet. Now why is that important? While jets are getting bigger, more expensive, and more being produced, the legacy hangar supply that was built generations ago to accommodate that is being phased out of utility.

So those, those jets with tail heights above 24 feet can actually fit into the legacy hangar at a lot of airports. And on top of that, hangar supply is immensely constrained. This is some anecdotal, evidence that you can see in these, pictures on the right here, but these are mostly from Teterboro Airport in New York. It’s one of the best airports, private and business aviation airports in the country. You can see any jet that’s not actually fit into the hangar is completely crowded on that ramp space outside.

The legacy companies that have been operating in this space, they’re called FBOs, fixed based operators. And their business, and we’ll get into more of the specifics and dynamics, is primarily fuel sale. When an FBO is arrives at an airport or wants to construct there, they’re often mandated by the airport to build a minimum of hangar. They are rarely going to exceed that minimum in what they construct. They want to optimize how much ramp they can have so they can take more transient traffic that they can provide fuel to those aircraft.

But storing jets is not their business, and it works against their fueling operation. And the as you can imagine, the airport supply in The US, while The US has some of the, you know, biggest network of of airports of any country, it’s close to 3,000 airports in The US, the amount or the number that are in major metropolitan areas or, you know, major wealth centers are limited. You can’t build a new airport, say, in the New York area or the LA area. Where you’d want to build an airport, you can’t. And where you can build an airport, you wouldn’t want to.

It just wouldn’t make, you know, any economic sense, cost prohibitive. So looking at Sky Harbor and what we do, as I mentioned, our pipeline is acquiring land at key airfields in The US, developing our own hangars, leasing those out, and then operating those campuses. The mouth of that funnel is some of the more and most proprietary work that Sky Harbor does as a company. I just wanna highlight this map on the right here. And what you can see in these red dots, and I the bulk of them are actually occluded by where we already have campuses.

You can see those blue dots in the Northeast. Those red dots are each individual airports. And what we show there are, based on the size of the dot, it’s the number of business or private aircraft that are based there. And that kind of heat map or or the heat scale is what are the prevailing rents at that airfield. So we’re interested in targeting Yes.

Absolutely. So I I’ll I’ll get to the colors of the actual numbered dots. For the red dots, that’s essentially where business air aviation aircraft are are based. That’s where they’re home based. That’s where they’re located.

That’s where the highest, need for hangar space is actually at those airports. So what you can’t see here is actually in the in the Northeast, in the New York area, that’s completely red. And similarly, in LA, Bay Area, Miami, major metro centers with high concentrations of wealth, where, business, aircraft are are gonna be based. You can also see there there are airports across The US, at other cities that are gonna be within that, return profile that we’re looking for. But looking at our current operational footprint, at Sky Harbor, we have 18 ground leases signed, nine of which are operational.

And you can see those yellow dots are Denver, Phoenix and Dallas. Those are actually in the initial lease up stage. And nine more, sort of in the in the development pipeline. And on the site acquisition front, this is the most specialized work that Sky Harbor does. We are All these airports are publicly owned.

So it’s either municipal governments, county governments, state governments that actually own the airport. So the process of getting land at these airports is quite a protracted process. We, since the start of, this company five, six years ago, have contacted essentially every airport in The United States that we’re interested in. And these conversations, you know, you you arrive at the airport, you say, I I’d like this developable piece of land that, you know, we’ve we’ve already found. And what does the airport say?

We’re in the middle of a five year master plan. Come back later. Then we’re we’re gonna come back again. You know, we’re we’re very persistent. And through a variety of methods, you can see on the on the left here the kind of different methodologies we used to actually get on-site.

We work with each airport individually to get that parcel of land. The shortest time it’s taken is a matter of months. The longest time it’s taken, we still don’t know because, you know, the conversation that we started five, six years ago, is still in the process of of potentially bearing fruit. Yes? Sorry.

That that last part. So yes, on the site acquisition pipeline, we’re targeting now we’ve already kind of released guidance for the, 2025 that we’re going to sign another five ground leases. And we’re targeting six to seven ground leases a year as a pace going forward. The site that we’re actually looking at to build the Sky Harbor development, the acreage or total square footage of the of the land is gonna be depend on the actual location. Each campus fully phased and fully built out is gonna be around 200,000 square feet.

And that’s 200,000 square feet of hangar. So we we tend to measure things on a on a square foot basis, and and I’ll I’ll get into that shortly. I’m just gonna move along, and and we can sort of resume the the q and a towards the end. How we’re actually differentiating ourselves from an FBO is that a Sky Harbor campus is a private campus. We don’t deal with transient traffic, which is what FBOs are essentially designed for.

Right? They’re dealing with any and all aircraft that are come come in and land there and fuel and, base in the short term. Sky Harbor campuses, if you wanna think of it as a FBO as a as a hotel, we’re we’re condos. We’re condos for aircraft. And because of the privacy, because of the streamlined operations, because we’re not dealing with transient traffic, we’re offering a service to the private business aviation community that they can’t get anywhere else.

And they can’t get it at the FBOs. FBOs, as I said, optimized for throughput and fuel sale. Sky Harbor, we are in the business of clipping coupons on rent. And how does this work in our unit economics? This is sort of an illustrative scaling of how Sky Harbor is gonna look at at our various stages of development.

What you can see here, and I’ll go into the unit economics for an individual airfield just to bear this out. We want to think of a typical Sky Harbor development on a square foot basis. Our cost of construction is gonna be roughly $300 a square foot. That’s to, you know, the the ground lease process, it’s a public process. We’re gonna acquire that.

When we’re actually shovels in the ground and constructing until we’re actually completing and CO ing a campus, that it’s going to be $300 a square foot. On the revenue side, depending on the market, it’s going to vary, but a typical Sky Harbor market, can think of as around $39 in rental revenue and another $5 to $6 in fuel sale because we actually do provide fuel to our tenants and we get a margin from that. On our operating costs, the ground lease rates that we pay for each of these campuses is essentially underpriced. So we are paying roughly $3 a square foot for our ground rent to the airport. And in addition to that, for the operating cost at a campus, we’re going to pay in payroll and hangar maintenance and operation around $3 to $4 a square foot.

So you take that, dollars 45, subtract your operating cost and your ground rent, and you’re looking at roughly high 30s in NOI. And over your cost basis, we’re targeting NOI yields of around low to mid teens. When we scale that and pair it with our leverage, Sky Harbor is financed through tax exempt municipal bonds. So we, because we’re building on public infrastructure and at airports, can issue bonds through a provision called PABSS. They’re called private activity bonds.

These are our tax free municipal bonds that have a carve out for airports, marinas, highways, bridges and tunnels. So we’re pricing our debt roughly 200 basis points below what would otherwise be market. On our first bond deal, which was a thirty year, dollars 166,000,000, we have an average coupon of 4.18%. When we pair that leverage with our unit economics and exercise that at scale, the results are very powerful. As you can see in this chart right here or graph, what’s interesting here is that while our yield on later stage projects might be going down, The after, say, the twentieth, thirtieth, fortieth airport, we will be past the sort of Tier one targets that we’re looking at, and we’ll be building at maybe slightly less profitable airports on a uneconomic level.

We’ll also at that stage, the returns of our portfolio are going be robust enough that we’ll be able to lever higher and higher on that portfolio. And so while the yield might be going down, the actual impact of that leverage is going to be accretive to the equity and the at scale. Here’s a snapshot from Q2 of our economics. You can see the step function moving as we’re opening new campuses, and and those are stabilizing. Those revenues are are coming in.

And that is how we think about the projections going forward is that it will be a step function with each campus coming online and stabilizing. That’s when those revenues are coming in. If you’re looking at our historical financials, you’ll miss the picture because at Scott, we’re looking forward, and it is fundamentally about when we can sign more ground leases into the portfolio, when those can be constructed and developed and then leased out and operated and stabilized. And this is an illustrative graph that we think of internally as a proxy. And what we’re looking at here is the total developable square footage of the Sky Harbor portfolio times the market rents that we’re already observing in our market mapping, in our proprietary kind of data collection.

And what you can see here is the revenue potential of this portfolio built out at scale. In recent updates and back to the financing side, we, in August, secured a $200,000,000 drawdown facility with JPMorgan. This is sort of our next generation of financing at Sky Harbor. Different construct than our first bond deal. It’s a five year facility with structured as a warehouse that we’ll be able to add projects as and fund them during the construction and stabilization process.

And then we’ll likely do a sort of long bond deal similar to our first one at the end of this. A few reasons for doing this model. Just the current rate environment on the long side, think it’ll be worth it to wait. Interestingly, and we actually announced this last night, but we because of the current inverted yield curve on rate side, we are taking what was a floating rate of 80% of silver plus 200 basis points, and we’re actually going to swap that to fixed for the five year. So we’re looking at 4.75% for a fixed rate swap there.

So I do want to open it up to Q and A right now. But yes, see we have five minutes. So if anyone has any questions, please. So the economics of an FBO are going to look a little different. And if you think of it in sort of total basin cost, they are going to get a majority of their revenue actually from or not a majority, but roughly from fuel sale.

If you think of it as 80% fuel, 20% rent or other ancillary basin costs, Sky Harbor is going to be the flip side of that. So we’ll be 80%, 85% rent, maybe 15% fuel. The FBOs in the fuel sale business, more cyclical, right? In an economic downturn, the first thing an operator is going to do is probably stop flying so much. They’re still going to have to base their aircraft somewhere.

So, while they’re not pumping as much fuel, that that may hurt the FBO. It’s not gonna hit our economics as much. Yes?

Unidentified speaker: Is someone like NetJets the customer?

Andreas Frank, Assistant Treasurer, Sky Harbor: So yeah. They have their own handlers. Charter operators and, the sort of mini airlines. We have those types of customers as well. We do actually like them because they do they’re based with us, but they do pump a fair amount of fuel, which we are still getting a margin from.

So it it does create a good return. Park their planes? Yes. Yeah. And they park their planes.

And, you know, where where they can get hangar is is highly specific to the location. Right? So yeah.

Unidentified speaker: Would assume that chance.

Andreas Frank, Assistant Treasurer, Sky Harbor: Again, it it would depend on that location. I don’t wanna get too deep into our our tenant, role. But so yes, I would say it’s probably around 60% high net worth individuals because we’re also really a product for the biggest and most expensive aircraft. So 60% high net worth, probably 30% charter operator corporation as well. And then 10%, we actually have some government tenants as well.

Yes.

Unidentified speaker: Can you tell us what happens when the lease comes up?

Andreas Frank, Assistant Treasurer, Sky Harbor: Yes. So on the ground lease side, we are signing long term ground leases with airports. The portfolio average for us is around fifty years. Our longest goes out to, I believe, around seventy five. On the tenant side, we are staggering our tenant lease terms from one to three to five.

We have some out to ten years. We don’t actually like the long term tenant leases because we’re believers in the there’s going to be a lot of inflation on the value of this line. So we don’t want to lock up that value too early. And especially in the initial lease up stage, what we’ve seen from first generations to second generation leases is a significant bump above that escalator. So at least in initial stage of lease up, that’s a strategy we’re targeting.

Yeah. Not at at at too many. If anything, we’re trying to extend all of them. Again, you know, this is it’s it’s beachfront property. And but, yeah, we we usually it’ll it’ll be, you know, 50 leases or forty year leases, and we’ll have options to extend on top of that.

We’ll we’ll almost always exercise them, but that’s a question for probably forty years from now. So yeah. For the business aviation fleet? Yes. So just going back to this chart.

Yes. What we’ve seen in the last fifteen years is a huge boom on the overall size and an even proportionally bigger one in the super heavy kind of aircraft that, with, the largest tail heights, which are also our target, clients as well because, they’re they’re the ones kind of most in need of a private, hangar solution. Year over year, I mean, I’m I’m trying to interpolate it from this this graph, but, you know, roughly, I’d say 8%. Yeah. Yeah.

Not not a hard number. Don’t don’t quote me. Yeah. Yeah. Yeah.

Unidentified speaker: So

Andreas Frank, Assistant Treasurer, Sky Harbor: what we’ve, what we’ve found is we started out with around 16,000 square foot hangars. We have since 16,000 square foot hangars. We’ve changed our our prototype hangar now to be 37,000 square feet. And what we found is that the actual that is the shape that’s best optimized to stack or, you know, get as many planes in the hangar. So we can accommodate around five super heavy aircraft or heavy business jets in that configuration.

And a quick note on stacking as well is that while an airplane square footage may be measured in nose to tail and wingtip to wingtip, How we’re actually able to accommodate that square footage in a hangar is, you know, that that that’s all empty space between the wingtip and the tail. Right? So that’s where another nose of an aircraft is fitting in. So that’s effectively, you know, doubling the the rent on that on that space as well. Sorry.

I’m I’m told we have to we have to stop. Thank you so much. If you have any questions, please reach out to myself. We also have available meeting slots still today. So if you’re interested in in a kind of further follow-up, please schedule some time.

Thank you so much.

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