Boston Omaha's SkyHarbour Thesis Fortified (Issue #66)
TL/DR
SkyHarbour Group Looking Forward
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Watchlist + Portfolio Updates
Wix Coming Soon
Hi all, I’m posting from Tel Aviv this week! While I am here I am hoping to learn more about Wix for an upcoming deep dive and why it is different (and potentially better) than its competition.
While I am here I wanted to use this week’s Sunday Update to talk about a part of one of my favorite companies to track the SkyHarbour branch of Boston Omaha. For those whole don’t know the company (SkyHarbour Group) was founded by an ex-Israeli fighter pilot.
Background: SkyHarbour Group (NYSE: SKYH — $268.63m) is essentially a private aircraft hangar REIT. Their customers are split between personal private aircraft and corporate private aircraft. They provide better quality care than typical US hangar facilities and in-house resources like fuel. The company focuses on making money on the rent side and sells the fuel and other add-ons at cost. The company is rolling out phases of development as they expand. They currently have at least Phase 1 Developed in 6 airports around the US: Denver, CO; Houston, TX; Miami, FL; Nashville, TN; Phoenix, AZ; and Dallas, TX.
Update:
When the pandemic hit we saw an increase in CFO private jet expense and use. However, as the effects of the lock down subsided the benefits stayed elevated compared to pre-COVID levels. This provides more fortification for SkyHarbour’s market of corporate jets. There thesis is reinforced by the lack of growth in hangar space while new planes continue to be built and few are being retired.
On the negative side for the company because of recent…
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shifts in the market there has been a re-rating for the Price/FFO (Funds From Operations) for luxury and specialty REITs. In their bond filing SKYH used specialty and luxury REITs like Americold, Stag Industrial, and more. While Americold is still trading at 30x Price/FFO all of the other comps have been re-rated to ~15x Price/FFO. Still possible for SKYH to trade above these levels, but addition developments may be necessary to hit initial price targets.
Watchlist Update:
Portfolio Update:
One of my favorite deep dives ever is coming soon! It’s a full analysis of Wix with more research than you can find anywhere else. It’s an interesting company, but only two well-known investors have positions (one of them is Pat Dorsey).
Until Thursday,
Soren