Sky Harbour Group Corporation Announces its 2023 Financial Results; Updates on New Ground Leases, Construction and Hangar Leasing; Injects Equity into Obligated Group and Files Various Registration Statements with SEC - Seite 3

Construction Update

As previously announced, in December 2023 the Company discovered a flaw in the prototype design employed in the construction of Phases I at Phoenix Deer Valley Airport (“DVT”) and Denver Centennial Airport (“APA”), and that was planned to be employed in Phase I at Dallas Addison Airport (“ADS”).

Having completed a comprehensive review and prototype-redesign process with a leading national structural engineering firm, the Company is executing a remediation plan, including:

1. Retrofitting significant elements of the DVT and APA structures currently under construction,
2. Modifying the design of ADS structures in pre-construction to conform with Sky Harbour prototype requirements, and
3. Applying the amended SH34 and SH16C prototype design to future projects with the intention of:
   1. Delivering best-in-class 100-year structures of the highest quality and
   2. Standardizing and streamlining procurement, manufacturing and construction in pursuit of shorter development time frames and lower development costs.

Expected remediation costs are between $26 and $28 million, including approximately $16 million at DVT, approximately $8.5 million at APA, and approximately $2.5 million at ADS. Expected delivery dates of these projects are now November 2024 (APA), and February 2025 (ADS) and March 2025 (DVT).

Leasing Update

Sky Harbour’s first three campus phases (SGR, BNA and OPF 1) are approximately 95% occupied. Total potential economic occupancy is expected to exceed 100% due to successes in semi-private leasing.

SJC is expected to commence operations on April 1, 2024, and is approximately 58% preleased. SJC tenant rents are reflective of Sky Harbour’s tier-1 target markets, with expected revenues from certain initial tenants exceeding $80 per rentable square foot.

Registration of prior PIPE Shares, Replacement of Stand-By Share Sale Program and New “Shelf” Registration

As required under the registration rights agreement with the PIPE common stock investors which closed in November 2023, we have filed a registration statement on Form S-3 registering the Class A common shares, the associated PIPE warrants, and the Class A common shares underlying those warrants. Similarly, the Company has terminated its 10 million share Stock Purchase Agreement, originally dated August 18, 2022, and replaced it with a Stock Selling Agreement (“at the market” or “ATM”) with an affiliate of the same broker-dealer of slightly smaller size. The Company did not sell any shares under the original agreement and only intends to sell shares under the new ATM if attractive market opportunities arise.