I joined our founder, Tal Keinan, at a business school as he was getting Sky Harbour started. Also in attendance here today is our CFO, Francisco Gonzalez, a former muni banker and now our CFO. At a high level, we look very much like a real estate company. There are three main parts of our business. One is securing land at airports around the country. You typically cannot own airport land because it is publicly owned. Even large, international airports, it is not federally owned. Very few are state owned and operated. Almost all of them are locally owned and operated by the municipality or county that the airport is located in. You cannot own the airport land.
We get the land in the form of long-term ground leases, typically in the range of 40-50 years. Once we have the ground lease, we design and finance the hangars that you saw in the previous picture. That was our development at Nashville. This one you see in the picture on the right here is our campus at Sugar Land Regional Airport in the Houston area. We design, construct and construct the hangars that you see there. We lease them and operate them. We lease them to business jet owners and operators. Those tend to be kind of one of three main categories. One is high-net-worth individuals, who use their airplanes for, a mix of business and personal use. The second is corporate entities.
Actually, the Gulfstream G650 you see in the picture there is Chevron Corporation's 650, and they base with us in our Sugar Land campus in Houston. That's kind of the second flavor. The third flavor is, I'll call it kind of an other group. It's Part 135 operators, which are charter operators. We have some government tenants, that, you know, that's kind of the, you know, only a handful of those types. That's kind of the third category of tenants. We operate the campuses as well. You know, our general manager, this is our general manager, Dan, in the red there on the right-hand side.
We do aircraft towing, aircraft fueling, water service, all the other kind of ancillary services on the ground that, that the jet owners need to get the aircraft out of the hangars and into the air. That's the business at a high level. It's conceptually simple. You know, sometimes, you know, a little more, a little more complicated in actuality. It looks very much just like real estate, land acquisition, construction, and operation. Our return goals are the kind of low to mid-teen, stabilized yield on cost. We're able to do that because our land acquisition costs are effectively zero. Yes, it's sweat equity in getting the ground leases from the airports, but there's no upfront payment like you would in a fee simple transaction for acquiring real estate.
Our only cost is actually the, you know, the construction of the actual hangars themselves. And then we use a, kind of a unique form of federally tax-exempt municipal bond, for our debt financing. I'll get into that a little bit later. It's a very low cost of debt capital for us that drives our high equity returns. All right. Let me start at the macro level and then I'll go down into what the, w hat the company actually does. This chart on the right-hand side explains our business, in kind of a half slide. It's the fact that every year the size, and it's not just the number of aircraft that are increasing, but the size of the business aviation fleet in the United States is growing every year.
If you think of an aircraft as length times wingspan, that square footage is, you know, and then you add up all the business jets in the United States, that total square footage is increasing every year. There are a couple main factors for that. One is retirements are slowing. Older aircraft are extending their useful lives. More importantly, new aircraft, one, there are more of them coming out every year. Also, the average size of those new aircraft is increasing every year. The length and the wingspan of the average aircraft is increasing every year. You have more aircraft that are on average bigger, and that total square footage is just increasing every year. One note on, so that is kind of on the demand side.
On the supply side, there's been a chronic underinvestment in hangars around the country, for two main reasons. One is they're publicly owned and operated, as I previously mentioned, by the local, you know, city or county municipality that the airport is located in. And frankly, those municipalities don't have the political will to spend significant capital on what's seen as rich people's, s torage for their, for their jets. The airport sponsors themselves don't invest a lot of capital in hangar construction. The FAA provides money for other types of airport maintenance like runway resurfacing, taxiway, taxiway repairs, that sort of thing. But no money's actually spent on hangar infrastructure itself. The airport sponsors have essentially farmed out the responsibility for hangar infrastructure to companies called FBOs, which are fixed-base operators.
You can think of them as the gas stations on an airport. They're the ones who sell fuel to based and transient aircraft at an airport. Of a minimum amount of hangar space. But remember, FBOs are in the fuel business. They're not in the hangar business. So they kind of spend the minimum of what's necessary, and don't, don't build beyond that because they're, you know, the vast majority of their revenues are in fuel. You can't fuel an aircraft in a hangar. Again, they build hangars because they have to, not necessarily because they want to. That, those two factors kind of on the public and then on the private side has just led to a chronic underinvestment in hangar space around the country. That's kind of where we've stepped in.
Sky Harbour is, we're not an FBO. We do sell fuel to our clients, you know, our own clients, but we don't service transient aircraft, meaning aircraft that come to the airport and visit an airport and get fuel. That's still serviced by the FBOs that I mentioned earlier. We very much focus on the real estate side of things, so the hangar development. And then we do have a small fuel component with just our own clients. How do we get onto these airfields? First, the map on the right, this is where we currently have ground leases. We actually just announced our 17th ground lease last week at Boeing Field in Seattle. We're in operation in five campuses now.
That's Sugar Land I mentioned, Nashville International, Miami-Opa Locka, Camarillo Airport in the LA area, and San Jose International in California. We're opening up in the Dallas area, Denver, and Phoenix area airports this month. Then we have a number of other ground leases in various stages of pre-development around the country. We're adding airports every week. It's the site acquisition part, essentially getting those ground leases. That's the most difficult part of our business. There's, you know, I won't get into them too deeply, but the kind of the three primary ways we get on airports are either, one is going direct to the airport sponsor, that's going to the airport saying, "Hey, you know, we've done market research on this airport. We like it.
We wanna come develop." The fact that we're not an FBO is an advantage a lot of the times, because we're increasing the, you know, the size of the airport in terms of the number of aircraft that can be based there. Airports like us a lot, in that respect. You know, a lot of times we can just go straight to the airport as long as our development kind of fits in with their FAA-approved master plan. A lot of times they just go into direct talks with us. You know, these talks can sometimes last years. It's not necessarily easy. There's various ways to, you know, to get to the actual decision-makers. It's one we've had a lot of success with.
Sometimes when we go to an airport, we trigger an RFP, which is a request for proposal. That is where politically the airport deems that it has to go out to other potential. Airports are not required to do it, just a lot of times it is political. Transactions where actually, we are negotiating directly with another business, who already has the ground lease, and so it can be a lot simpler and a lot faster than dealing with the airport sponsor themselves. That is on site acquisition. Again, this is probably the hardest part of our business. It is, you know, kind of our area of expertise because getting the ground leases is the most difficult part of the entire business. Oops. Okay. We just announced Q4 results a few weeks ago.
You can kind of see, w here our revenues are a step function. Each new airport that we bring into operation here just translates to a direct increase in revenues as we start leasing them up. S ometimes it can, you know, it takes, it can take a year or two to actually get a campus from ground lease through permitting, through construction, and then through leasing. Once those airports come online and once our airport campuses come online and we start leasing them up, then we see the step function in our revenues, as we fill up each of those hangars with business jet owners.
The next step function I mentioned, the three that are coming online, it's Deer Valley in Phoenix, Centennial in Denver, and Addison Airport in Dallas. Those are just starting their lease-up process, as we speak. You'll start to see the next step-up function in revenues, happening this year, as we lease those up. We're projecting by the end of this year, we're gonna be cash flow positive from an operating perspective once those hangars are leased up, because, you know, we still have kind of corporate SG&A expenses. We're reaching kind of a critical mass where the number of properties in operation will start generating positive cash flow for us on an operating basis.
Even though, w e'll still spend a significant amount in investment capital as we, a s we continue building out the additional ground leases that we have, and future ground leases that we'll obtain. I mentioned revenues. This is how we, this is how we think about the business. It's once you sign the ground lease, that's the hard part. Yes, we need to execute on construction and leasing, but kind of the market capture is already there. W e now have 17 ground leases announced. We're guiding to an additional six airports, so 23 total by the end of this year. All of that potential revenue will start being recognized over the next few years as they get constructed and put into operation.
I mentioned, we're, we are a capital-intensive business. One of the ways we, we raise capital is through the debt markets. We use a, a type of federally taxed municipal bond, that I mentioned earlier. It's called a private activity bond where certain types of infrastructure qualify for that federal tax exemption. One of those, importantly, is on airports. New construction at airports qualifies us for this, for this tax exemption, and we can just raise very attractive debt capital. We did our, our first issuance a few years ago, $166 million in debt at 4.18%, a yield of 4.18%. Very, very low cost of debt, that can drive our equity returns higher. It's long-term debt. It's 33.
Year final with a, and it travels, it's assumable, meaning it travels with the company even if there's a change of control. It kind of looks like a funky home mortgage. It's just very, very attractive, debt capital. We use a leverage ratio of about 70%. We're gearing up to issue our next tranche of these bonds this summer to fund kind of the airports that you see in blue here. The initial funds we issued kind of funded the green and the yellow ones that we have in the map here. Our next issuance will be for the blue airfields that you see here that are in various stages of permitting and design. I mentioned our revenue streams.
We, k ind of our breakdown right now is 85% in rent revenue and, you know, call it 15% in fuel revenue. We do fuel our own clients. Having the real estate on the airport is a really powerful tool. We think there are other areas of business aviation that we may be able to enter. Maybe not ourselves, but becoming kind of a, you know, we'll have preferred third parties that have access to our high-value tenants. We can, you know, we can kind of offer services to our clients through those third parties at attractive rates for them and then additional revenue for us. This is just kind of a current snapshot of our cash. Plenty of cash on the balance sheet.
That's the fund, you know, kind of our initial airport, the kind of the yellow airports that I highlighted in the previous slide, as well as equity for the next round of bonds that we're gonna issue this year. You know, you can kind of see our bond finance, our bonds have been trading kind of in the low to mid 5%. Yes, interest rates have risen from when we issued our bonds a few years ago, but we're gearing up for our next issuance this summer, probably in the five and a half range. I mentioned this earlier. We raised $75 million in a PIPE at the end of last year.
That's gonna be the equity that we pair with the debt that we're gonna raise this summer for the construction of those new airfields. We're looking at approximately $150 million in debt issuance, again, looking to close this year or the summer. All right. Next 12 months, big focus is still on site acquisitions. It's trying to get land at the best airports around the country. That's typically, you know, major metropolitan areas with a high concentration of business jets, and a lack of associated hangar space. That's still our main goal. We're also now very much focused on, you know, construction, leasing and operation as well. We have a lot of new fields.
Those blue fields that I talked about kind of coming on, you know, coming online, those are gonna start construction later this year into 2026. It's kind of gearing up our construction team to be able to handle, you know, multiple fields in construction at one time and then leasing multiple fields at one time. I mentioned kind of the three that are coming online this month. Leasing has started there in earnest, and then maintaining kind of our safe operations at the ones currently in operation and adding our new team members in operations at the three new fields. All right. Why don't I end it there, open the floor to questions, and, sir.
Yeah. You were showing that list of other services that you might provide in the future.
Yep.
Considering that you are not an FBO, are there services you cannot provide or just selling fuel to people who are not clients?
It is pretty much just selling fuel to transient aircraft. It does depend a little bit. Certain airports have, or all airports have something called minimum standards, which if you are classified as a certain type of business, you may not be able to do one or two things. Like we would, you know, as we are currently constructed, we would not provide maintenance right now on aircraft. It is not necessarily the airport prohibiting that. You are right. The big thing is we cannot sell fuel at our airports to transient aircraft, meaning the aircraft that come visit the airport. We are just allowed to sell fuel to our clients.
Just real quick on, on the, with the clients you have, how long are the leases that they sign for?
Yeah. About an average term length of, of three and a half years. Kind of our sweet spot is that, that three to five year range. We do have a few that are longer than that, like up to 10 years for, for the right client. We have a couple that are shorter, call it one to two years. That's a way to, you know, kind of get maybe a high-value tenant in for a year, get them used to the service. Because we are quite different from an FBO, just a much higher level of service than the FBO because we have so, so many fewer operations than they do.
So, you know, we sometimes will tend shorter to, you know, to get someone in, get them used to, used to our offering and then, and then, sign them up for a longer term. But three and a half years is the average. Yep.
You showed very high IRRs. Can you talk about what the specific unit economics are on your longest duration stores right now, or basis? However, how long they've been open, what the revenue base, what the revenue and OpEx looks like, NOI, you know?
Yeah. So, let's use Miami as an example. Actually, Miami, and Miami was actually constructed with pre-COVID prices, so maybe, maybe not a great, great example, now. But kind of on average, what we're constructing right now is, we're constructing, we construct at $300 a sq ft. So that's hard and soft costs.
We lease on average for about $45 per sq ft. These are all annualized numbers. Our OpEx is, call it, you know, $7-$8 per sq ft. That is generating NOI of $38 per sq ft. If you do the 38 over the 300, that is kind of the 12%-14% yield on cost, NOI yields that we are looking to generate. Miami is in right around that area. It is just above $45 per sq ft on average.
I am trying to back into the map that I just looked at. It showed you doing $4 million a quarter of rental revenue. Is that correct?
Correct. Yes.
How does that with 16 centers and so on?
Right now we only have five airports in operation.
It's Sugar Land Regional Airport, Nashville International Airport, and Miami-Opa Locka Executive Airport. Camarillo Airport was an acquisition we added in December. Actually, very little of its revenue was seen in 2024, so that's just starting to show up. San Jose International is our final operating campus. It's really those four airports in 2024 that we're in operation. Yep.
What has been your experience in new rental rates every time a lease expires?
Yeah. I mentioned the shorter-term leases. A couple things can happen at the end of a lease term. Sometimes the aircraft move, so the principal may move and move the aircraft. That happens occasionally, but not as frequently.
What happens more often is we resign them for a longer-term ground lease at higher rates. On average, we're seeing about 20% increases from the kind of initial rate to the re-up rates. That's either through signing up the same tenant or bringing someone else in to replace them. You know, we're kind of seeing that in Miami right now. As an example, we have a tenant who's moving his aircraft out of our hangars to another airport. We're trying to find a tenant to replace him. It looks like we're gonna be getting a nice jump from a rent that's currently in the, you know, around $40 per sq ft into the high $40s per sq ft.
You know, we're seeing really, really nice bumps in rent when either re-ups or new tenants come in. I see 40 seconds left if anyone has one last short question.