The Trade

SKYH common at $9.45, scaling to 3% over 8 weeks. Optional 0.5% speculative overlay in SKYH-WT warrants ($0.74, $11.50 strike, expires Jan 2027).

EV: $11.54 (12-month). Idio alpha: 10.5% annualized. LR: 1.8.

Why This Exists

SkyHarbour builds private hangar campuses at major U.S. airports and leases them to jet owners on 5-12 year terms with 3-4% annual escalators. Unit economics: $40/sq ft rent + $5 fuel = $45 revenue, minus $9 opex = $36 NOI per square foot. At $250/sq ft construction cost, that's a 14.4% unlevered yield on cost. Current footprint: 1.1M sq ft across 23 airports. Secured ground leases: 4.16M sq ft — 4x the current footprint.

The stock is at 21% of its 52-week range. Revenue grew 87% last year. EBITDA turned positive for the first time in December. The company just closed a bond offering that was 3x oversubscribed. And nobody is looking at it.

The reason nobody is looking at it: SPAC origin, pre-EBITDA (just barely), no analyst coverage, complex UP-C structure with 76.1M total units vs 34.1M public Class A shares, and average daily volume that makes it un-ownable for any fund above $500M. Every automated screen institutional capital runs to find ideas filters this stock out. The fundamentals inflected. The filters haven't updated.

The catalysts that break the filters — Miami Phase 2 opening in April, first positive EBITDA quarter on May 12 — are 6-8 weeks away.

The Supply-Demand Problem

854 business jets were delivered in 2025 (GAMA, confirmed). The active fleet is 30% above pre-COVID (GOGO CEO cited this independently in Q4). Fractional fleets are up 60%+ since 2019 (CAE). Honeywell projects a record 8,500 jets over the next decade.

Every one of those jets needs a hangar. Hangars take 24-36 months to build, plus 2-3 years to negotiate the airport ground lease. Aircraft take months to assemble. Supply cannot keep pace with demand by construction.

It's worse than that. 45% of existing U.S. hangar stock is functionally obsolete for modern large-cabin aircraft (AGP Aviation). The Gulfstream G700 has a 25'5" tail height and needs a 28-foot door minimum. The Falcon 10X, certifying in 2027, stands 29 feet tall. Most hangars built in the 1990s-2000s have 24-26 foot doors. You can't retrofit a door height. 65% of new deliveries are large-cabin, and each generation is taller than the last.

SKYH builds to a 34-foot door standard. The existing hangar stock is aging out of relevance. SKYH is building what replaces it.

We searched exhaustively for a direct scaled competitor. There isn't one. Vantage Aviation (PE-backed) does FBOs, not home-base. Signature Aviation (Blackstone) does transient services. Volare Hangars does GA ownership, not BizAv leasing. The CEO flagged "rumblings of competition" for the first time — honest — but the rumblings are adjacent, and a new entrant needs 2-3 years just to secure first ground leases.

Cross-ticker corroboration on demand: GAMA, GOGO, GD (book-to-bill 1.4x, backlog at 2008 levels), SARO (BizAv MRO +12% YoY, expanding large-cabin capacity), CAE, Honeywell, TXT ($8B backlog), RTX. Six independent sources confirm the demand inflection. This is not one company's promotional narrative.

The Two Data Points That Matter

22% average re-leasing markup. Miami and Nashville. Leases that came to term in 2025 were renewed at 22% above the prior rate — on top of built-in 3-4% CPI-floor escalators. CEO doesn't expect 22% to persist. But even 5-11% recurring markup plus escalators means 8-15% annual rent growth at stabilized campuses. Airports like Teterboro and Van Nuys have 10-year hangar waitlists. This is the pricing behavior of a scarce asset.

Preleasing at $44.85/sq ft vs $40 target. Campuses where ground hasn't broken yet are preleasing 12% above model — hard leases with cash deposits. Tenants are paying for hangars that don't exist yet. This is not the behavior of a market in balance.

Both data points are from the Q4 transcript, released March 19. The stock hasn't moved. It can't — the buyers who act on this kind of data can't see the stock through their filters.

The Capital Structure Nobody Noticed

$150M subordinate bonds, closed February 2026. 6% fixed. 3x oversubscribed. 18 institutional investors.

Before sub bonds: 70% debt / 30% equity funding. Project ROE ≈30%. Growth required dilutive equity — the thing that kills small-cap compounders and destroys warrants.

After: sub bonds replace the equity layer. Same $36 NOI/sq ft. Project ROE jumps to 60%+. The company can fund its entire pipeline without issuing equity. The credit market — 18 institutions competing for a 3x oversubscribed deal — is pricing this as quality infrastructure. The equity market is pricing it as a speculative SPAC near its 52-week low.

Pathway: refinance into investment-grade tax-exempt bonds (IRC Section 142 covers airport hangars explicitly) once campuses cash-flow. SKYH has $166M in prior tax-exempt issuance. The legal framework is established. No comparable deal from a competitor exists — they may be creating a new asset class in the muni market.

Factor Profile

Regression (250 days): 83.7% idiosyncratic variance. SPY β = 0.52, XLRE β = 0.48, MTUM β = 0.05. The stock moves on its own story.

Trailing alpha: -27% annualized. Fundamentals improved all year. Stock went down. That's the setup.

Edge-weighted total: 61.5%. Thesis stands on pricing power + capital structure. Both are company-specific, recently disclosed, and buried in a transcript the market isn't reading.

What the Market Implies vs What We Think

At ≈$1.0B EV, 7% cap rate: market implies $70M stabilized NOI, roughly 2M sq ft. That's the funded pipeline. The additional 2.16M sq ft of secured-but-unfunded leases is priced at zero — $1.1B of unpriced enterprise value if fully executed.

Reverse-engineering the stock price:

The edge is in the probability gap. Market assigns 5% to the bull case. We assign 25%. Twenty points of difference on the highest-payoff scenario.

The Bear Case

First-vintage yield-on-cost is impaired. COVID inflation plus a design issue 18 months ago forced extra equity into the obligated group. Yield-on-cost is below original forecast. Rents came in above target, but costs did too. Management was forthright; they'll publish vintage IRRs when the group completes.

Leasing team is "stretched thin." CEO's words. Team "has always been a little bit too small." They're growing it, but if Miami Phase 2 opens in April and they can't fill it fast, the EBITDA ramp stalls.

Competition rumblings. First explicit flag. PE capital is entering adjacent segments. No direct competitor yet, but the window is narrowing.

Cash flow milestone was partly one-time. Q4 operating cash flow turned positive, but $5.9M was an upfront rent payment from a lease extension. Underlying recurring cash flow is still borderline.

Steel headwind. HRC at $941/ton, up 31.6% YoY with 50% Section 232 tariffs. Vertical integration helps relative cost but absolute costs are rising. Sub-$250/sq ft construction target is under pressure.

No 2026 guidance yet. Punted to Q1 call (May). Directional: "deep in the black towards end of 2026" — contingent on every campus delivering on time.

Scenarios

Bear (30%): Execution Stumbles. Miami delayed. Occupancy ramps take 12+ months. Leasing team can't scale. Steel compresses margins.

• 1.3M sq ft, $32 NOI/sq ft, 8% cap rate. Equity: $225M. Common: $2.96. Warrant: $0.

Base (45%): Pipeline Executes. Three campuses deliver on schedule. EBITDA positive Q2 2026. One analyst initiates. Market re-rates from SPAC to infrastructure.

• 1.8M sq ft, $37 NOI/sq ft, 6% cap rate. Equity: $842M. Common: $11.07. Warrant: $0-1.50.

Bull (25%): Full Re-Rating. Preleasing blows out. Markups persist above 10%. Multiple analysts. REIT conversion talk. Short squeeze dynamics (12% SI, 22.5 days to cover).

• 2.5M+ sq ft trajectory, $40 NOI/sq ft, 5% cap rate. Equity: $1,725M. Common: $22.67. Warrant: $11.17.

EV: Common $11.54 (+22%). Warrant $3.43 (+363%).

Vehicle: Common Over Warrant

SKYH-WT at $0.74. Strike $11.50. Expires January 25, 2027. Common needs +22% to reach strike, +30% to break even on warrant. We assign 45% probability it touches $11.50 before expiration.

We have edge on fundamentals. We have no edge on timing. The warrant is a timing bet on top of a fundamental bet. Common removes the timing constraint. 0.5% warrant overlay is rational. Making the warrant the primary vehicle is not.

Entry and Kill Switch

Start 1.5% now. Add 1.5% on Miami Phase 2 confirmation (April). Full 3% by Q2 earnings (May 12) if EBITDA positive.

Kill: common below $8 on volume. Q2 EBITDA materially negative. Equity raise announced. Scaled competitor enters home-base market.

Conclusion

Market assigns 65% to the bear case. We assign 30%. The gap exists because the stock is trapped behind institutional filters that haven't updated for the EBITDA inflection. The pricing power is real — hard lease data, not projections. The capital structure shift is under-appreciated — credit market oversubscribed, equity market at 52-week lows. The competitive moat is intact — confirmed via exhaustive search.

The first execution test arrives in 6 weeks. If Miami Phase 2 opens on time and Q2 EBITDA prints positive, the stock shows up on different screens, attracts different buyers, and gets a different multiple. That's not a demand thesis. It's a price discovery thesis.

Evidence