them in the Q&A box at the bottom of your screen, and we will get to those at the end. So with that, I will hand the floor over to Tim. Go ahead.
Thanks, Pat. As you mentioned, I'm Tim Herr. I'm the treasurer at Sky Harbour. We're a real estate company that focuses on aviation infrastructure, constructing hangars for business aircraft around the United States. Let me scroll through here. Just a bit about me. I started my career in military aviation, so I was a Navy pilot for 10 years. Ended up separating from the Navy and then joining Tal Keinan, our CEO and founder, as he was getting Sky Harbour started. Our business conceptually is simple, a lot of nuance in the execution, but we get ground at airports around the country.
We can't own the land typically, because all airports are owned by the local city or municipality that they're located in. So we secure the land via long-term ground leases, typically out to 50 years. We then develop or design and develop the aircraft hangars that you see in the pictures here, and then we lease them out to business aviation owners and operators. And our kind of three main tenant, I'll call them tenant buckets. The first bucket is high net worth individuals who own and operate their planes for business and personal use. That's the majority of our clients. Next is corporations, so, you know, companies that operate a business aviation fleet for their company use.
And then finally, the smallest bucket, but, I'll call it the other bucket, consists of various other clients, such as government tenants, charter operators, and other users of business aviation. So that's the business. It's acquire land, construct, and lease, and operate. In addition to renting the hangar space, we also do ancillary aviation services, such as selling fuel and towing the aircraft in and out of the hangars and getting them ready to fly. The unit economics on each of our projects is attractive.
We look to target low to mid-teen yields on cost or NOI yields, however you want to think about them, and then we actually finance them with a type of tax-exempt municipal bond called private activity bonds. Which are tax-exempt financings available to non-government entities. They do certain types of infrastructure development, one of them being new construction on airports, which qualifies us for that tax exemption. So that drives our project returns, return on equity, much higher than those yields on costs. And the goal is, we're still in growth phase. We're currently at 23 airports around the country, so I'll get to a map of where we are in a second.
You know, we're targeting 50+ airports and beyond as we continue to grow. Real quickly on kind of the macro state of the business aviation fleet in the United States. These charts kind of explain our business in, you know, in one graphic. It's the fact that without fail, every year, the size of the business aviation fleet, that's the square footage, if you imagine an aircraft as a length times wingspan, and then add up all the aircraft in the country, the size of that business aviation fleet is growing over time. So, it's not just older aircraft getting longer lives, it's new aircraft.
The average size of the new aircraft coming off the line are much bigger on average than the ones they're replacing. So it's the actual footprint of the business aviation fleet is growing. And the one on the right here is a Honeywell analysis that's showing future growth is gonna be... Essentially, the large jet portion of the market is gonna be outpacing the small and medium jets over time. On the supply side, hangar development has not kept up pace to house that growth in square footage in the business aviation fleet we saw in the previous slide. A couple reasons for that. As I mentioned, almost every airport is owned and operated by the local county or municipality it's located in.
They typically don't want to spend taxpayer dollars or the political capital to, to spend, you know, kind of what is seen as, as storage for rich people's aircraft. So they've historically, you know, the airport owners have historically then relied on private partners to, to construct that hangar space. And kind of the legacy hangar builders in, in the U.S. have been company called Fixed Base Operators, which we think of as, you know, they, they sell the fuel on an aircraft or on an airport, and they service aircraft that are both based and visiting the airport. And so the FBOs typically are required to build a minimum amount of hangar space, but they, they only reach that minimum.
They don't, they don't build more than is necessary because their focus is on fuel. You can't hangar or you can't sell fuel in a hangar and fuel an aircraft in a hangar. So they build the minimum amount that they have to, rather than developing and meeting the need of the growing business aviation fleet. So, that was essentially the dynamic that Tal saw about a decade ago. He actually had his own plane, couldn't find hangar space for it, and looked more into it, and realized there was a market opportunity to partner with these airports to bring the hangar infrastructure that's needed to meet this growing demand.
I touched on it briefly, fixed base operators, this is just a contrast, us to them. Again, they're the legacy players in the aviation world. But, you know, the vast majority of their revenue is derived from fuel sales. That's their focus. They're right to focus on that. It's a great business. But, you know, they haven't met the demand for hangar space around the country, and so that's where Sky Harbour has come in, and we're what we call, we call ourselves a Home Base Operator. So we only service our own base residents. And so we do sell fuel to them.
We provide, you know, similar services that an FBO might, but because we're not also servicing visiting aircraft to an airport, we're just a much... We're able to to focus our services, you know, much more directly on our individual clients, rather than having the turnover that of the turnover of clients that an FBO does. So we're, you know, our hangars are much more private and much more secure, much fewer operations, they're quieter. And so our tenants appreciate the fact that, you know, they have that privacy and security, based on how our business actually operates. So how do we get onto airports? As I mentioned, they're all publicly owned, so we can't go out and just buy the land.
So we have to do various processes to get ground leases on these airports. The most direct way that the majority of our ground leases come from, it's partnering directly with the airport. Essentially, Sky Harbour will, you know, our type of development will jive with the airport's required development, according to their FAA-approved master plan. So the, you know, we'll partner with the airport to bring in this infrastructure that they're looking to grow to, you know, to bring in more based aircraft onto their airports. We'll also respond to RFPs, which are requests for proposals. That's where a municipality or an airport will go out and, you know, request bids for development. So we'll respond to those as well.
And finally, the final way is partnering with someone who may have a master lease on the airport, and then are kind of, you know, parcel out subdivisions of the airport to developers like ourselves to build these hangars. The map on the right is a map of all our current ground leases. So, our first one was in Sugar Land in Houston, then Nashville, Tennessee, Miami-Opa Locka, all the way out to number 23, which we just announced a month or two ago at Fort Worth Meacham in the Fort Worth area. The ones in green are in operation. That's where we're currently constructed and operating.
The ones in yellow are under construction, and then the ones in blue are where we have the ground lease, but we're in various stages of pre-development, either going through the permitting process or environmental reviews or you know, design phase. Basically various stages of getting the you know, getting ready for construction at these airports. Just a final note, this is probably the hardest part of our business. It's getting the ground leases. So it's really become a core competence, competency of ours that differentiates us from someone like an FBO, who typically grow by acquisition.
We're really focused on getting that new, those new ground leases so that we can do new construction of our hangars at all of these airports. Next couple slides, I won't spend too much time on, in the interest of speeding things up here, but we've internalized a lot of the processes of getting these things designed and constructed. That's been everything from bringing on our own architects and general contractor to actually owning and operating a hangar manufacturing facility in Weatherford, Texas, just outside of Fort Worth.
So we've, you know, all of our, all of these efforts have been to drive down that, that construction cost, 'cause if, if you look at yield on cost, it's, you know, that development cost is, is the, is the denominator, that, that, you know, that leads to that, that yield. So the smaller it is, the higher the yield. So it's, it's all been an effort to, to get, get our costs down as low as possible. I already touched on, how, how we differentiate from an FBO. Our clients really value these things on the left. It's the, the efficiency. There's... We're, we're not, you know, you're not waiting for a visiting aircraft.
The security, it's unlike an FBO that has a public terminal, it's this is your own private space, you know, so it's very secure and private, and it's yours, so you can customize it, however you see fit as an aircraft owner. As I mentioned earlier, we're still very much in growth mode. I mean, our focus is acquiring these ground leases, you know, in an effort to kind of lock up land at airports, because they're not building any new airports where we need them. So, the land at these airports is becoming an increasingly scarce commodity.
But this slide just gives you a sense of kind of the unit economics of the business as we continue to scale. So again, we're, you know, we're looking for that low to mid-teen NOI yield that we get by charging our clients' revenues, and then we have our expenses. So we're targeting that low to mid-teen NOI yield, and then using tax-exempt debt that I mentioned earlier, to drive the ROEs into the 20%-30% range. This is just a brief overview of our recent financial results. Just as not updated yet for Q4. We're gonna announce earnings here next early next month, sometime in March.
The biggest thing I wanna focus on here is, you know, we have our kind of quarterly step up, step up of revenues as all of the airports in our portfolio go from, you know, raw ground leases to under construction, to completed construction, and then through the lease-up process. So, you know, that whole kind of throughput is, it can take... It can take two to three years, but it's all about getting to the scale of where we're leasing up all of these airports.
And kind of each airport we complete and then lease up is just another step function in our revenue as we continue to grow. So, we're essentially on an EBITDA basis. So, if you think about the property level economics, we're very profitable at the property level. We're now just reaching a scale where our corporate expenses are being outweighed by our property level revenues. So, you know, we're on an EBITDA basis, as of this quarter, we're now break even.
As we finish construction at airfields this year, including a phase two at Miami-Opa locka, a phase two at Addison Airport, a phase one at Bradley International Airport, and then more airports that you know to complete into 2027, that will just be not break even on an EBITDA basis, but positive EBITDA and continue to grow from there. Just wanna touch on some quick recent developments that have happened in the last couple of months, and then actually one that happened last Thursday. You know, a question we get a lot from investors is: How are you gonna fund these things? I did touch on it earlier.
We issued tax-exempt municipal debt to fund these, paired with what so far has been common equity. We issued our first round of these Private Activity Bonds a few years ago. So that was $166 million in debt, long-term, 33-year final, 25-year average life, that we issued at 4.18%. So a 4.18 cost of debt for our first round of debt issuance. That funded the green circles on the map that you saw previously. So that first round of debt, you know, funded our initial projects. Now it's funding the yellow and blue circles that you saw in that previous slide.
At the end of last year, we announced a $200 million debt facility with JP Morgan. That is... Essentially functions as a, it kinda looks like a, like a tax-exempt construction loan. So it has a, it has a five-year maturity, and then, as our upcoming fields, like Bradley International and Salt Lake City and, and beyond, are ready for construction, they get added into this facility, and we can draw down on it, for tax-exempt debt to, you know, to complete our construction. It's a floating note, but we, we fixed it, about a month or two ago, at 4.73.
So, you know, a little bit more expensive than our first issuance when rates were lower a few years ago, but it's still a very, very low cost of debt financing. And then, this note, in particular, is funded 65%, or we can draw 65% debt, paired with 35% of equity. And so, as essentially what will function as our equity contribution into the JP Morgan facility, we actually haven't closed yet, but we priced, this past Thursday, a week ago, on $150 million in subdebt. So still tax-exempt, because all of these proceeds from the bonds, as well as the JP Morgan facility, are gonna be used for that new construction on airports.
But we issued $150 million in bonds at 6%. And so these, the bond proceeds that we get will essentially function as our equity contribution into JP Morgan. So, this, this kind of gives us the $200 million plus $150 million, you know, $350 million plus in capital to fund our upcoming projects without the need to issue additional equity. So it was, you know, that 6% on the subdebt we issued, just very, very, you know, much more cost-efficient than issuing additional equity as we look to draw on that JP Morgan facility. So that, that's kind of our recent development.
You know, going forward, you know, we're always gonna be announcing new ground leases and continue to grow. And you know, with this new financing in place, it's a exciting time in the company as we kind of have all our, you know, everything aligned for, you know, for our construction in 2026 and 2027, and beyond. So with that, we have a few minutes for questions. So I'll turn it over to Pat. You can read those, and if there's any questions in the chat, we can answer those as well.
Hey, thanks, Tim. Yeah, we do have a number of questions here, from the audience. First one has to do with-
... with the dividend or with the potential of a dividend in the future, could you give any outlook in terms of if that's something that you would expect to begin paying at some point in time as cash flow grows? And if so, even if it's small, maybe what the timeline would be for that?
Yeah, we do get this question a lot from investors. And you know, people often ask us, "Are you a REIT, or are you gonna become a REIT? Are you gonna issue dividends?" And the answer is eventually, yes. But we're not there yet. You know, I touched on it on the presentation, but you know, it's a CapEx heavy business. So as we turn cash flow positive, the best use of our capital is retaining internally and using that, you know, they call it the flywheel.
So it's retaining internally generated cash flows, plowing it back into these high-yielding assets that we're able to achieve, and you know, without the need of issuing additional equity. So you know, for kind of the foreseeable future, I don't even wanna put a date on when we would consider it. But the foreseeable future is gonna be retaining those internally generated cash flows and plowing them back into future airfields. But eventually, you know, we're gonna reach a steady state, either where you know, our growth has slowed, you know, we've kind of hit a number of airports where you know, where each new one doesn't make as much sense, or that you know, they're just not available.
And at that point, you know, that's when the cash flow return will really accelerate. Again, I don't have a timeframe on that, but that's the eventual end state.
Excellent. And then the next question is, in your meetings with potential investors, what tends to come up as the main concern, that might make an investor apprehensive to buy your stock? And what would be your counterpoint to those?
The probably the biggest concern in recent years has been construction costs. So, just to give you kind of a sense of, we put some numbers on it. In we struck kind of our first few airfields, those ones in green that you saw, Miami Opa-locka, Nashville International, Sugar Land, Texas. We built those for some less than $200 a sq ft, and then some, you know, right around $200, maybe $215-$20 per sq ft, per rentable sq ft in construction costs. We're now aiming at, you know, to construct at $300 per sq ft. So it's, you know, it's been almost a 30%-50% increase of our construction costs.
It’s not unique to us. I mean, you know, this is kind of a post-COVID, 2021, 2022, phenomenon. But it’s, you know, the concern has been, you know, how your business is so construction dependent and CapEx dependent, how are you gonna keep those costs down? And so, you know, I touched on it briefly on the presentation, but it’s all about driving that numerator down in terms of the development costs. So we vertically integrated into acquiring a hangar manufacturer that you know, constructs our prototype design, the ones, you know, the ones that you see in the picture here.
So that drives down our, you know, kind of our unit cost on, you know, on the hangar manufacturing side. We're also within the past year, we've brought on an internal general contractor, who... They, they won't general contract all of our projects. There are certain regions where it still makes sense to bring on a, you know, a kind of a local general contractor. But this is a GC that's had decades of experience in building, not just hangars, but metal buildings in general. And so, you know, we're, you know, we're confident in our ability to continue driving down those costs.
So, yeah, it's been, you know, the cheaper we can build to the spec we want, you know, we still have high standards, but the cheaper we can build, you know, the better it is gonna be for our equity holders.
And Tim, you mentioned the construction and bringing more of that into in-house. Are there any remaining aspects of the construction process that are, you know, still external, that are maybe low-hanging fruit that you could bring in-house? You know, what could you outline maybe what a next step would be in terms of internalizing that process?
I think with the, with bringing on the general contractor, that might be one of the final steps. I don't think we're gonna be... I don't think we're gonna have, you know, traveling subcontractors or anything like that. I think we're still gonna have to rely on, because remember, we're nationwide. I think we're still gonna have to rely on, kinda local subcontractors. One thing I think kind of the next step, though, would be you know, bringing on a subcontractor that's specific to our building. So the one I'm thinking of is essentially having a national erector.
So that's someone who's very familiar with our product, knows all the steps to, you know, to getting these buildings up quickly and efficiently. And, you know, so that's a potential area where, you know, it's less, you know, regional dependent. You can kind of bring in an erector to do that. So that's a potential, but the GC and the actual manufacturing of hangars were the big pieces.
Great. And then, our next question from the audience is: Could you walk us through the fully loaded unit economics for a representative stabilized campus? Specifically, if you could touch on, cost per sq ft, stabilized rent, OpEx, NOI per sq ft, those sorts of metrics.
Yeah. So, these are averages. You know, so some are gonna be lower, some are gonna be higher. But on average, you know, that numerator, or excuse me, denominator, I talked about, the construction costs, we're looking now to average $300/sq ft total, so that's hard and soft costs. So that's about, you know, $250 in hard costs and the remainder in soft costs for the total of $300. We're looking to rent on average at about $40/sq ft. So that's hangar rent alone. Remember, we also do fuel sales, so we're looking to get an extra $5 per sq ft in fuel sales, so that's $45 per sq ft.
And so that's the revenues. Then OpEx, I talked about the ground leases. Ground leases are, we think, underpriced relative to the market. So on a per sq ft basis, you know, our ground rent is anywhere from, you know, $2-$4. Then we have, you know, personnel costs and other kind of ancillary costs of, you know, of the linemen that you see in the picture, this picture here. And those add, you know, call it another $4-$5 per sq ft. So, you know, you're looking at, on a per sq ft basis, anywhere from $7-$9, you know, maybe $10 in OpEx per sq ft.
On an NOI basis, you're looking at, you know, $35-$37 in NOI. And when you divide that over the 300, that's how you kinda get that low to mid-teen yield we're looking for. Again, some airports are gonna be a little bit lower, some will be a little bit higher, kind of depending on the region and the... It's really dependent on kind of the revenues. You know, the OPEX lines, those kind of stay relatively consistent across airports. It's the revenues we're able to get. You know, some, like the Northeast, South Florida, Southern California, those rents are a lot higher. And so, but on average, that's kind of the breakdown.
Great! And then, you know, we can get to, I think, one last question here, as we are running low on time.
Yeah. Great.
Well, so the question is: It seems that your debt recent financing has pretty much relieved concerns that there will be no equity issuance in the near future, and even potentially never. Can you explain how important this is, and why shareholders no longer should be concerned about dilution, or should they no longer be concerned about dilution, even?
Yeah. So I did touch on this on the previous slide. So remember, we're using the $150 million in bonds as our equity contribution into the JP Morgan facility. So, you know, this was last year, as we were kind of in discussions with JP Morgan. It was, how are we gonna fund that? You know, how are we gonna fund that 35% equity requirement? We could have gone back to the, you know, back to the public markets, but we, you know, in conjunction with Barclays, who underwrote these bonds, we kinda came up with this innovative sub-debt structure. You know, they're kinda sub-debt municipal bonds.
So, you know, I can't say we'll never come back to the equity market, but this structure is pretty transformative for the business because all of that CapEx, you know, that I discussed, you know, a lot... And, you know, the debt we just raised is not gonna fund all 23 airports that we have, but it'll get us close. And so it kinda takes the pressure off the next couple of years to raise equity. So, you know, we, again, I can't promise... We might come back at some point, you know, depending-- And it's just a question of growth. If, you know, the faster we grow, kind of, the more capital we'll need.
You know, it may require us to come back to the equity market, but the sub-debt has, you know, put off any raise for CapEx, you know, into the future. So we were very excited about that, and shareholders should be excited about that because, you know, we can avoid the dilution by issuing that very competitive sub-debt at 6%.
Excellent! Well, Tim, I wanna thank you very much for joining us today, as we are at the end of our time here. So much appreciated, and thanks, everyone, for connecting today.
Thank you, everyone.