Aircraft Hangar Appraisal Report

Letter of Transmittal

1. Summary of Salient Facts and Conclusions

Illustrative figures for a sample property.

2. Scope of the Assignment

Purpose and intended use

The purpose of the assignment is to develop an opinion of the market value of the leasehold estate. The intended use is to support the internal valuation of the ownership entity in advance of a partner buyout. The intended users are the client and the client's counsel. No other party is an intended user.

Property rights appraised

We appraised the leasehold estate, which is the interest held by the tenant under the ground lease. It is not a fee simple interest. The tenant does not own the land, cannot convey the land, and will not own the improvements after June 30, 2048. This distinction is not a formality. It sets the terminal value in the income approach, it requires comparable sales that were themselves leasehold transfers, and it raises the rate at which the income is discounted.

Definitions

Market value. The most probable price a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. We apply the definition published at 12 C.F.R. Part 34, Subpart C.

Market rent. The most probable rent a property should bring in a competitive and open market under all conditions requisite to a fair lease. Rent in this report is stated on a triple net basis for a five year term.

Leasehold and leased fee. The leasehold is the tenant's interest for the lease term. The leased fee is the lessor's interest, being the right to contract rent and the right to the reversion.

Exposure time. The time the property would have been offered before a sale at the concluded value on the effective date. It is an opinion, and it conditions the value opinion.

What we did

We inspected the interior and exterior of the improvements and the leasehold parcel on June 24, 2026, measured the door opening and clear height, photographed the property, and walked the apron and taxilane connection. We read the ground lease in full, together with the sponsor's minimum standards, the rates and charges schedule, and the airport layout plan. We obtained based aircraft counts, operations, and the sponsor's hangar waiting list from airport management. We confirmed five hangar sales and five hangar rents with a party to the transaction or with the sponsor, and we verified the remaining ground lease term at each sale against the sponsor's lease record. We developed construction cost from a published cost service, a current door system quotation, and two recent hangar construction contracts in the region.

What we did not do

We did not perform an environmental site assessment, a structural or mechanical engineering study, a survey, or an accessibility compliance survey. We did not value personal property, aircraft, ground support equipment, or tenant trade fixtures, and we did not value the operating business of any occupant.

Standards

We prepare our reports to be transparent, reproducible, and reviewable. Every conclusion in this report is traceable to a schedule in it. Where an intended use requires a state certified general appraiser, which includes federally related transactions and many tax and litigation uses, we identify that at the proposal stage and scope the engagement accordingly.

3. Assumptions and Limiting Conditions

General

1. Title is assumed marketable. No title search was performed.
2. Information supplied by others was reviewed for reasonableness but not audited.
3. No survey was performed. Areas are taken from the lease exhibit and the site plan.
4. The property is assumed free of hazardous materials, including per and polyfluoroalkyl substances associated with legacy firefighting foam. No environmental assessment was provided.
5. Structural, mechanical, and door systems are assumed to be in the condition observed.
6. The improvements are assumed to conform to the airport layout plan and to the sponsor's minimum standards.
7. Possession of this report conveys no right to publish it or to use it in any proceeding.

Extraordinary assumptions

E-1. The ground lease provided to us is assumed to be the complete and current agreement, with no side letters or amendments that modify the reversion clause, the assignment provisions, or the rent adjustment mechanism. The reversion clause sets the terminal value in the income approach. If a side agreement provides for compensation at reversion, our conclusion would change.

E-2. The hydraulic door system is assumed operable and to have received the manufacturer's recommended service. We observed the door in the open and closed positions. Cylinder and seal condition were not tested.

Hypothetical conditions

None. The property is analyzed as it exists at the effective date, subject to the actual lease terms.

4. How We Value Hangars

Hangars are not warehouses with airplanes in them. Our method reflects four things we have found decide the number on nearly every hangar assignment we take.

The lease is the asset

On leased airport land the tenant owns a wasting interest. Most airport ground leases return the improvements to the sponsor at expiration, so the tenant's ownership has an end date and no residual. We read the lease before we look at a comparable, we abstract it clause by clause, and we carry the reversion into the terminal value rather than mentioning it and then capitalizing income as if it ran forever. A hangar with 22 years left and a hangar with 40 years left are different assets even when the steel is identical.

The door decides who rents the building

Floor area is a weak proxy for hangar value. What a tenant is buying is a door width, a door height, and a clear span, because those three dimensions decide which aircraft fits. Two buildings of the same square footage at the same airport can differ in rent by several dollars a foot because one accepts a large cabin aircraft and the other does not. We measure the opening on every inspection and we price it separately.

Depreciation belongs at the component level

A bi-fold hydraulic door is a mechanical assembly of cylinders, pumps, valves, hinges, and seals with an economic life roughly half that of the shell it hangs on, and on this subject it is 12.3 percent of direct construction cost. Applying one age to life ratio to the whole building understates depreciation on the door and mechanical systems while overstating it on the shell and the slab. We break the improvement into its major systems and depreciate each on its own life.

The airport is the market

The relevant market for a hangar is the set of fields a based aircraft owner would actually consider, which is usually three to six airports within a reasonable drive. Runway length, instrument approach, fuel, fleet mix, and the length of the hangar waiting list explain more about hangar value than metropolitan industrial vacancy ever will. We collect that evidence from the sponsor rather than from a regional market report.

5. Wexley Field and the Hangar Market

Wexley Field is a general aviation airport with one 6,000 foot primary runway, a full parallel taxiway, a precision instrument approach, one fixed base operator, and both jet A and 100LL. It has no air carrier service. It is a federally obligated airport.

The competitive set below is the group of fields a based turbine operator in this market would actually consider. It is the evidence behind the vacancy assumption in the income approach and behind the airport tier adjustments in the sales grid.

Exhibit 1. Competitive airport set. Illustrative figures for a sample property.

Demand exceeds supply at three of the four fields. Halverson, with longer pavement and a heavier turbine population, commands higher ground rent and higher hangar rent, which is why comparable sale 3 required a downward tier adjustment. Delmar is not a substitute for a turbine operator, which is why comparable sale 4 required the largest upward adjustment in the grid.

Supply pipeline

Two box hangars totaling 30,000 square feet are under construction at Halverson with delivery expected inside 18 months. Nothing is under construction or permitted at Wexley Field. The subject's 28 foot opening is current generation and is matched by the new Halverson product, so no functional deduction for door height is warranted here.

6. The Ground Lease

We abstract the lease before we value anything, because the lease determines what the client actually owns and for how long.

Exhibit 2. Ground lease abstract. Illustrative figures for a sample property.

Pricing the reversion

We set the terminal value in the income approach to zero because that is what the lease requires. The effect is visible in the arithmetic. Of the $2,535,608 this income stream would be worth over a 40 year horizon, the 22 year leasehold captures $2,199,290, or 86.7 percent. The balance belongs to the sponsor, and the sponsor pays nothing for it. Section 12 shows how that share moves as the term runs down.

7. Site and Improvements

The leasehold parcel contains 24,000 square feet, is rectangular at 120 feet of frontage by 200 feet of depth, fronts taxiway C with direct airside access, and is level and at grade with the apron. Landside access is by a shared service road under a non exclusive easement described in the lease exhibit. Utilities are supplied by the sponsor.

The apron serving the hangar contains 12,000 square feet. Roughly half of it lies inside the leasehold boundary and the balance is airport pavement the lease grants the tenant the right to use. The tenant built and maintains the whole of it, so the cost approach carries the full 12,000 square feet as an improvement.

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Exhibit 5. Improvement summary.

At 100 feet of clear opening and 28 feet of height the subject accepts the large cabin business jets that drive rent at this field. That is the single most important physical fact about the building, and it is why we do not lead with a dollar per square foot figure.

Subject photographs

Photographs are the record of the condition assumed in the depreciation analysis. We photograph the exterior elevations, the door in both positions, the interior bay, the slab, the door mechanism, the mechanical and fire equipment, the office, and the apron connection on every inspection. They are what a reviewer uses two years later to test whether the effective ages we applied were reasonable. The four below were taken on the morning of the inspection.

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8. Highest and Best Use

As vacant

Legally permissible. The lease restricts the premises to aircraft storage, maintenance, and directly related activity. The sponsor's minimum standards and the airport layout plan permit a conventional hangar on this parcel. Federal policy limits non aeronautical occupancy of hangars. The permissible set is aviation use.

Physically possible. The parcel is level, at grade with the apron, has taxilane frontage, and is served by utilities. At 24,000 square feet it supports a footprint of roughly 15,000 to 16,000 square feet once setbacks and the apron inside the boundary are allowed for.

Financially feasible. Waiting lists at three of four fields in the competitive set and market rent of $19.50 per square foot triple net support new construction where the ground lease term is long enough to amortize it. At 22.0 years remaining the parcel would not support a new building today. On a fresh 35 year lease it would.

Maximally productive. A conventional box hangar with an opening tall and wide enough for the current turbine fleet, on a term long enough to finance.

Conclusion as vacant. Development with a corporate box hangar under a new long term ground lease.

As improved

The improvements are legally conforming, in good condition, and generate income that exceeds the return available from the site in any permitted alternative. Demolition is not indicated. Conversion is foreclosed by the lease and by federal policy.

Conclusion as improved. Continued use as a corporate aircraft storage and maintenance hangar through the remaining lease term.

9. Cost Approach

Replacement cost new

Costs are developed by component from a published cost service, a current quotation for the door system, and two recent hangar construction contracts in the region. We use the component structure rather than a single square foot rate because the door and the mechanical systems behave differently from the shell over time, and because it lets a reader test any line.

Exhibit 6. Replacement cost new, $278.15 per square foot. Illustrative figures for a sample property.

We apply no entrepreneurial incentive. Incentive is the reward that motivates a developer to build, and highest and best use as vacant established that no developer would build this building on a 22 year remaining term. Carrying an incentive line here would import a profit the market will not pay.

Physical depreciation, by component

Each system carries its own effective age and economic life. Effective age reflects condition and maintenance rather than the calendar, which is why the shell and the slab on this 13 year old building carry an effective age of 12 while the door and mechanical systems carry 13.

Exhibit 7. Component depreciation schedule. Illustrative figures for a sample property.

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External obsolescence, extracted from the market

Depreciated cost overstates what a leasehold hangar sells for, and the difference is external to the building. It comes from the finite term, the sponsor's consent right on transfer, the prohibition on alternative use, and the narrower pool of lenders who will advance against a leasehold. Rather than estimate that difference, we extract it from sales. For three of our five comparables we developed a cost estimate on the same basis we used for the subject and compared it to the price actually paid.

Exhibit 9. External obsolescence extracted from comparable sales. Illustrative figures for a sample property.

The three sales indicate 14.5 percent to 17.4 percent. We conclude 16 percent, which is near the middle of the extracted range and closest to sale 1, the transaction most similar to the subject in term and configuration.

Leasehold term adjustment

Depreciated cost measures the improvements over their remaining economic life, which is 27.5 years on a cost weighted basis. Our client has the use of them for 22.0 years. The adjustment is the ratio of the present value annuity factor for 22.0 years to the factor for 27.5 years, both at 11.50 percent, or 7.9027 divided by 8.2612, which is 0.9566.

Exhibit 10. Cost approach summary. Illustrative figures for a sample property.

10. Sales Comparison Approach

We analyzed five hangar transactions. All five were transfers of a leasehold interest on an airport ground lease, which is the first requirement. A fee simple industrial sale is not a comparable for this property no matter how close it sits, because the rights conveyed are different and that difference cannot be adjusted away credibly. Each sale was confirmed with a party to the transaction or with the sponsor, and the remaining term at the date of sale was verified against the sponsor's lease record.

Exhibit 11. Comparable leasehold hangar sales. Illustrative figures for a sample property.

Adjustment rates

We publish the rates rather than the percentages alone, so that a reader can test them. On a live engagement each rate is supported by paired sales and by market participant interviews, and that support sits in the workfile.

Exhibit 12. Adjustment rates. Illustrative figures for a sample property.

Adjustment grid

Exhibit 13. Adjustment grid. Illustrative figures for a sample property.

Conclusion

The adjusted indications run from $142.97 to $148.98 per square foot with a mean of $146.18. Sale 5 carries the smallest gross adjustment at 1.1 percent, sits at a competing field in the same submarket, and matches the subject on door height and closely on remaining term. It receives the greatest weight. Sale 1 is at the subject airport and corroborates it. Sales 3 and 4 bracket the range from above and below and required the largest gross adjustments, at 20.0 percent and 19.4 percent, which is itself a comment on how comparable they are.

Sales comparison indication: $2,205,000, or $147.00 per square foot.

11. Income Approach

Market rent

We survey hangar rent the way a standalone rent study surveys it, stating the rate together with its structure, term, escalation, and expense responsibility. A rate quoted without its structure is not comparable to anything, and gross and net quotes for the same building can differ by several dollars a foot.

Exhibit 14. Hangar rent comparables. Illustrative figures for a sample property.

The five rents run from $13.90 to $18.40 per square foot triple net. Two are at the subject airport. R-1 at $16.80 has newer office finishes than the subject and sets the upper bound. R-2 at $15.60 has a 26 foot opening that excludes part of the fleet the subject accepts and sets the lower bound. R-4 at Corbin is the closest configuration match. We conclude $19.50 per square foot per year, triple net, on a five year term.

Stabilized operating statement

Exhibit 15. Stabilized operating statement. Illustrative figures for a sample property.

The reserve is set above a warehouse rate because the door is the reserve. At $465,000 of replacement cost on a 25 year life it is the dominant replacement item in the building. Ground rent is deducted at the contract rate, which is how the below market lease enters this approach.

Rate support

We build the rate rather than quote one. The band of investment below reflects terms currently available for hangar leasehold collateral in this market.

Exhibit 16. Rate support. Illustrative figures for a sample property.

The premium sits at the bottom of the 200 to 400 basis point range we normally see on hangar leaseholds, because 22 years is a comparatively long remaining term and the lease grants lender cure rights. Shorter terms sit higher in that range and, inside roughly ten years, above it.

Discounted cash flow

Net operating income grows at 2.75 percent a year, consistent with the CPI mechanism in the lease and with observed rent movement in the submarket. The discount rate is 11.50 percent. The terminal value is zero, because the improvements revert to the sponsor without payment at the end of year 22.

Exhibit 17. Discounted cash flow. Illustrative figures for a sample property.

Direct capitalization cross check

Capitalizing first year net operating income at the leasehold overall rate of 10.52 percent indicates $2,192,395, against $2,199,290 from the discounted cash flow. The two agree within 0.31 percent. That agreement is not automatic and it is worth stating why it holds here. The overall rate we built carries a premium for the finite term, and the cash flow carries the same fact directly by ending at year 22 with nothing after it. When the two methods are set up consistently they should converge. When a report capitalizes a wasting leasehold at a fee simple rate they will not, and the error runs in the direction of overstating value.

Income approach indication: $2,199,290, or $146.62 per square foot. The implied overall rate is 10.49 percent.

12. Remaining Term and Reversion

This exhibit holds the building constant and varies only the remaining ground lease term. It is the analysis we are asked for most often, because it answers the question behind a buyout, a loan, or an estate plan: what is this worth later, not just today.

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Exhibit 19. Remaining term sensitivity. Illustrative figures for a sample property.

The decay is not a straight line. Value falls slowly while the horizon is long, because distant cash flows are discounted heavily in any case, and then falls sharply once the term approaches the point where conventional leasehold financing dries up. At 22 years the subject supports 86.7 percent of the 40 year value. At 10 years the same building supports 58.0 percent.

The renewal options

The lease carries two five year options. They require the sponsor to consent and they do not fix the rent, so we credit them at zero in the cash flow. We publish the sensitivity anyway. Crediting the first option in full would raise the indication to $2,443,067, or 11.1 percent above our conclusion. Anyone taking a different view of renewal risk can see the size of it without re-running the model.

13. Simulating the Renewal Options

Section 12 credits the two renewal options at zero, because the sponsor must consent and the rent on renewal is not fixed. That is the right basis for a value conclusion. It is not the whole answer to the question an owner actually asks, which is what the options might be worth if they run. This section answers that separately, and it does not change the conclusion in Section 16.

Why simulate rather than pick a number

A single renewal assumption buries three different uncertainties inside one figure: whether the sponsor consents, how rent behaves over the next thirty years, and what a buyer will pay for a wasting interest. Those uncertainties do not move together and they are not equally important. Running them as distributions rather than as point estimates shows which one drives the answer and how wide the honest range is.

Method

We ran 20,000 trials. Each trial draws a rent growth path, a discount rate, and the outcome of each consent decision, then values the leasehold over whatever term that trial produces, with the terminal value still set to zero at the end of it. Each trial is valued twice, once on the contract term alone and once with the options it was granted, so the difference isolates the option value from the noise in the other inputs.

Exhibit 20. Simulation inputs. Illustrative figures for a sample property.

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Exhibit 22. Simulated distribution against the concluded value. Illustrative figures for a sample property.

What the simulation says

The options are worth about $161,337 on a probability weighted basis, or $10.76 per square foot. That is 7.3 percent of the concluded value. The median trial carries $173,608 of option value, above the mean, because the distribution has a floor at zero for the 24.4 percent of trials in which consent is refused and no ceiling on the trials in which both options run in a strong rent environment.

Consent is the variable that matters. Across the trials, 24.4 percent end at the contract term, 26.8 percent gain five years, and 48.8 percent gain ten. Rent growth and the discount rate widen the distribution around each of those outcomes, but neither moves its centre nearly as far as the consent decision does. An owner protecting this value protects the relationship with the sponsor and the record of compliance with the lease, not the rent roll.

74.8 percent of trials value the leasehold above the concluded $2,200,000, which is the expected result of concluding on the contract term alone. The fifth percentile at $2,012,222 is the downside case: consent refused, weak rent growth, and a buyer pricing the wasting term hard.

14. Insurable Value

Insurable value and market value answer different questions, and on a leasehold they diverge sharply. An owner who insures to market value is underinsured. An owner who assumes the building is worth its insured replacement cost is overestimating what a sale would produce. We state both so the conversation with the carrier and the conversation with a buyer stay separate.

Exhibit 23. Insurable value compared with market value. Illustrative figures for a sample property.

Insurable value here is stated on a replacement cost basis. A policy written on actual cash value would indemnify the depreciated figure instead, which is a materially different number. The policy language controls and we express no opinion on any policy.

15. The Sponsor's Leased Fee Position

Our opinion covers the leasehold. The sponsor holds the other half of the lease, and in a buyout, a lease renegotiation, or an assessment appeal somebody will eventually ask what that half is worth. The sponsor's position is the right to receive contract ground rent for 22 years and the right to receive the improvements at the end of it. We discount the rent stream at 7.00 percent, below the leasehold rate, because ground rent secured by a building the tenant has already paid for is a low risk stream.

Exhibit 24. Leasehold and leased fee. Illustrative figures for a sample property.

The two interests do not sum to the value of an unencumbered fee, and they are not supposed to. Neither party can act alone. The tenant cannot extend or convert the use without consent and captures nothing at the end. The sponsor cannot reach the improvements before 2048 and cannot re-tenant the parcel in the meantime. Adding a leasehold value to a leased fee value and calling the total the value of the property is an error we see regularly in estate work, partnership disputes, and assessment appeals.

16. Reconciliation and Value Conclusion

Reconciliation is a judgment about the quality of evidence, not an average. We state the weight and the reason so that a reader who disagrees with a weight can compute the effect.

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Exhibit 26. Reconciliation. Illustrative figures for a sample property.

Sales comparison, 45 percent

Five verified leasehold transactions, four of them inside twelve months, with remaining terms that bracket the subject on both sides and one sale at the subject airport. This is the strongest evidence in the file.

Income approach, 40 percent

The intended use is a buyout of an income producing asset, so the approach that models the cash flow the owners actually receive is directly relevant. Rent support is good, with two comparables at the subject airport, and the direct capitalization cross check confirms it.

Cost approach, 15 percent

The cost approach carries real information here because the external obsolescence was extracted from sales rather than assumed, and because the component schedule is independently useful for insurance and for capital planning. It receives the least weight because it requires the most estimation, not because it is uninformative.

The three indications fall within 0.9 percent of one another. Weighted as shown they produce $2,204,879.39, which we round to $2,200,000.

17. Exposure Time and Marketing Time

Exposure time is 9 to 15 months. It is retrospective and answers how long the property would have had to be exposed before a sale at the concluded value on the effective date.

Marketing time is 9 to 15 months. It is prospective and begins at the effective date.

The comparable sales carried marketing periods of 6 to 18 months, shortest at Halverson where the ground lease terms run longest and longest at Delmar where they run shortest. The subject sits between them. Three conditions extend exposure for a leasehold relative to conventional commercial property: the sponsor's consent right adds a step and a timeline to any transfer, the buyer pool is limited to parties who can use aviation space at this specific field, and leasehold financing is available from a narrower set of lenders on shorter amortization.

18. Certification

We certify that, to the best of our knowledge and belief:

1. The statements of fact in this report are true and correct.
2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are our impartial and unbiased professional analyses, opinions, and conclusions.
3. We have no present or prospective interest in the property and no personal interest with respect to the parties involved.
4. We have performed no services regarding the subject property within the three year period immediately preceding acceptance of this assignment.
5. We have no bias with respect to the property or to the parties involved.
6. Our engagement was not contingent upon developing or reporting predetermined results.
7. Our compensation is not contingent upon the development or reporting of a predetermined value, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this assignment.
8. We made a personal inspection of the property.
9. No one provided significant real property appraisal assistance to the persons signing this certification.

Signature omitted. This is a sample report and is not certified.
Dr. Carter, DBA, CFA, FRM, CAIA, CIPM · Valuation Takes Flight LLC

19. About Valuation Takes Flight

Valuation Takes Flight LLC is an aeronautical valuation advisory firm. We value aircraft hangars, fixed base operations, and airport ground leases, and we do it nationwide. The practice is remote first, with site work performed wherever the engagement calls for it.

What we do

Market value and market rent opinions on hangars and FBO facilities. Ground lease and reversion analysis. Hangar rent studies for owners and airport sponsors. Property tax appeal support. Partner and shareholder buyout valuations. Estate and gift valuations of hangar holding entities. Litigation support and expert testimony. Portfolio level review for lenders and institutional owners.

Who leads the work

Dr. Carter, DBA, CFA, FRM, CAIA, CIPM, is the founder and principal. He is the author of Valuing Aircraft Hangars: A Textbook for Real Estate Appraisers and serves as Assistant Professor at an aeronautical university in Daytona Beach, Florida. His research covers hangar valuation method, ground lease economics, and capitalization rate determination for aviation leaseholds. Before founding the firm he worked in institutional investment analysis, performance measurement under the Global Investment Performance Standards, and risk modeling for private assets.

How we scope an engagement

Every proposal states the scope, the intended use and users, the deliverable, and the delivery date before work begins. Where an intended use requires a state certified general appraiser, we say so at the proposal stage and structure the engagement accordingly. We would rather turn down work than deliver a report that will not do the job the client needs it to do.

20. Addendum: Terms Used in This Report