July-August 2022 - 30

LEGAL MATTERS
AUTHOR Alison Squiccimarro
Tips for Navigating Hangar
and Leasehold Acquisitions
THE RECORD-SETTING demand for business aircraft has been widely reported. The
demand continues to exceed the aircraft available on the market; many of the purchasers
are first-time aircraft buyers. Along with the demand for business aircraft
comes the demand for hangar space to store the aircraft. Increased costs in raw
materials, labor, and inevitable delays make construction of a new aircraft hangar
impractical for many aircraft owners. This combination has many new aircraft owners
looking to purchase an existing hangar instead.
Katrin Gist, chairperson of CBRE's Aviation Properties,
who represents clients nationwide in the purchase, sale
and leasing of airport properties, offered this advice to
aircraft owners in search of space to store their aircraft, " If
you can find something [an existing hangar] to buy, you
should because new construction is so expensive. " Gist and
I share the common bond of having worked with clients
nationwide to secure hangar space and understand the most
common impediments to smooth closings.
Acquiring hangar space at an airport is very different
from other commercial real estate transactions. This is
largely because airports tend to be federally obligated,
and the owner of the airport, commonly referred to
as the Airport Sponsor, is required to abide by Federal
Grant Assurances. Those Federal Grant Assurances dictate
terms that the Airport Sponsor is required to adhere to
in its operation of the airport and also terms that must
be included in all leases of airport premises.
Often, first-time hangar buyers are surprised by the
complexity of the transaction. As with any transaction,
ABOUT THE AUTHOR
ALISON SQUICCIMARRO
Alison L. Squiccimarro is an attorney with the Law
Offices of Paul A. Lange, LLC with offices in New York
and Connecticut. Squiccimarro's nationwide practice
focuses on aviation related commercial litigation with an
emphasis on FAA and DOT regulatory issues, airports,
insurance coverage and employment matters.
surprises may create delays and unexpected expenses.
The purpose of this article is to educate first-time buyers
so that the delays and expenses are managed and do not
derail the transaction. Most hangar acquisitions start with
a letter of intent and are followed by a purchase and sale
agreement. The top five things that a hangar buyer should
consider whether they are entering into a letter of intent
or a purchase and sale agreement are (1) understand what
you are buying; (2) what does the process for acquiring
the hangar entail; (3) what due diligence will you need;
(4) are you able to use the hangar for the purposes you
intend to; and (5) will you need to make improvements to
the hangar and are you able to make those improvements.
Understand What You Are Buying
At most airports, the hangar can't be bought fee simple.
This is because often hangars on airports are constructed
through public-private partnerships. Like FBOs, a commercial
party such as a hangar developer constructs the hangar
in exchange for a long-term ground lease. Such ground
lease terms are often more than 20-30 years; allowing the
original developer/ground lessee to amortize the expense
of construction. The ground lease generally requires that
the hangar and any other improvements constructed on the
premises revert to the Airport Sponsor at the conclusion of
the term. Therefore, what is being purchased is the remaining
interest in the hangar until it reverts to the Airport
Sponsor and an assignment of the long-term ground lease.
In other cases, notes Doug Wilson, president of FBO
Partners, an advisory service to both FBOs and private
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July-August 2022

Table of Contents for the Digital Edition of July-August 2022
