Sky Harbour Group Corp (SKYH) stock intrinsic value fair value estimate & owner earnings analysis

Sky Harbour builds and operates private-aviation hangar campuses ("HBOs" - Home Base Operations) for owners of business jets, on long-term ground leases it signs directly with airport authorities across the country - currently 16 airports from Seattle to Miami, with lease terms mostly running 30 to 79 years. The company is still in its build-out phase: 61 hangar buildings totaling just over 1 million square feet were operating as of the end of 2025, running at a blended 78% occupancy, with an additional roughly 1.2 million square feet already funded and under construction at seven more airports. A $200 million bank term loan and $150 million of tax-exempt bonds issued in 2025-2026, on top of $166 million of bonds from the original 2021 financing, are paying for this expansion. The portfolio shows a clear, repeatable pattern: newly opened campuses start in the 25-35% occupied range and fill up over roughly two to three years. The company's oldest campus (Stuart, FL area, opened December 2020) and a couple of others acquired or completed in 2023 are now at or near 100% occupied; campuses opened in 2025 are still in the early part of that ramp. That ramp, plus the campuses already funded and being built, is the basis for the growth in this analysis. We have not credited the company's stated ambition to eventually reach 50 airports and roughly $3 billion of investment - that plan depends on continuing to raise new debt and equity year after year, on terms not yet known, and the company itself flags that it may not be able to do so on attractive terms, or at all. Today, the business spends more cash running itself and building new hangars than it takes in. Rental and fuel revenue grew about 87% in 2025 to $27.5 million, but cash operating losses continued, and the underlying cash burn (after removing a one-time favorable swing in payables) was larger in 2025 than in 2024. Reaching the scale where corporate overhead is comfortably covered by rental income - what we call stabilization - is probably still several years away, and depends on the already-funded campuses filling up the way the earlier ones did. The bear, base and bull cases in this analysis differ mainly in how confidently and how quickly that stabilization happens, and what it costs to finance the remaining construction. In the base case, the currently negative cash flow continues for another two to three years before turning positive as the funded pipeline fills, settling into a modest, durable level once the buildout is complete (the ground leases run for decades, so once the portfolio is full there is no reason to expect that level to fade). The bull case assumes a faster, fuller lease-up consistent with management's statement that several campuses already run above 100% "economic" occupancy (extra revenue from overflow and premium parking). The bear case assumes occupancy plateaus below full and financing continues to get more expensive. One specific risk worth flagging: nearly all of the company's ground leases run into the 2050s-2090s, but one - at Seattle's Boeing Field - is due to expire in 2026 even after every available extension, far sooner than the rest of the portfolio. Renewal terms there are not yet known, and this is treated as a bear-case risk. The company has also taken on increasingly varied and in places expensive financing to keep building - most recently unsecured promissory notes at 7.75% with stock issued alongside them - which we read as a sign that construction is being funded however it can be funded, not necessarily on the cheapest terms. Set against that, the largest slice of debt (the original 2021 bonds, $166 million) carries a fixed rate of about 4%, well below what we use to value the business, which helps. Because the company is pre-profitability and carries substantial debt against a still-unfinished portfolio, this analysis values the business after subtracting everything it owes (including a swap-adjusted view of the debt) from what its future cash flows are worth today. Under our base-case assumptions, the value of the business roughly equals what it owes; the bear case shows the business worth meaningfully less than its debt, and only the bull case - full, on-schedule lease-up of the already-funded pipeline at good margins - clears the debt by a modest amount per share. We are not assigning value to expansion beyond what is already funded and under construction, since that depends on future financing that has not yet happened. Given the combination of pre-profitability cash flow, high leverage, and a still-unproven path to stabilized economics, the margin-of-safety price is set at a very large discount to our base-case estimate, and it assumes at least a couple more years of results confirming that the 2024-2025 vintage campuses are filling up on the same track as the earlier ones, and that construction can be finished without needing to keep tapping increasingly costly financing.