LAS VEGAS — Ft. Lauderdale Executive Airport (FXE) is not the typical general aviation facility: master developers; FAA tower; U.S. Customs seven days a week; some 700 based aircraft; 447 hangars; a 200-acre industrial park on airport property. At the head of the FXE management team is Clara Bennett, who was recognized during the recent Aviation Industry Expo/NATA Convention as the association’s annual Airport Partnership Award winner, which is sponsored by AIRPORT BUSINESS. During the show, she shared her thoughts on recent FXE lease negotiations.
Bennett, 37, earned her aviation management degree at the Florida Institute of Technology. She has her private pilot’s license (a requirement for her position as airport manager), and started out in airports at Orlando International in noise abatement. She has been at FXE since 1993 and became full-time manager in 2003.
Following are highlighted excerpts of her interview:
On the current lease situation at Ft. Lauderdale Executive ...
“We have different generations of leases. About half are non-aviation leases in a thriving industrial park; about 1.5 million square feet of warehouse and office space. Those leases are done on fair market value, etc.
“The other half, the aviation leases, include FBOs and hangar development leases. Some of those leases are older generation leases that were done in the late ‘70s and ‘80s. They’re very successful and long term.”
On recent lease/redevelopment negotiations ...
“A couple of the tenants came to us and said they wanted to be able to redevelop some of their older facilities to meet the current market. We went through a market analysis of the rent structure to determine what kind of market rent would apply to a new lease with a new entity at the airport. We wanted to give them the incentive to reinvest at the airport, but also wanted to be able to have some additional rent paid to the airport that reflected more of the fair market. It meant a pretty large escalation of the ground rent.
“It also included for the first time the assessment of rents on improvements. The leases are written such that the improvements revert to the airport at the end of the current lease. By extending the ground lease, the airport would defer our ownership of those improvements. We worked within those leases that at the end of current lease term … we would begin assessing an improvement rent [at current term end] thereafter through the extension.”
On determining lease term ...
“We look for a match. By state statute in Florida, you can only do 30-year leases at municipally run airports. In some instances, we have given them extensions to that; it depended on the investment.
“For example, Sheltair Aviation was proposing approximately $11 million in improvements, new facilities for Banyan Air Service as well as refurbishing of older hangars, ramps, etc. We were able to extend their lease to a new full 30-year term, with current market rent, with improvement rent at the end of the existing period, and the improvements would be done within the first three years of the new lease.”
On FXE rates and charges ...
“Some of the rents were down in the 14 cents a square foot range; the newer rents are closer to 30 cents/square foot, and also allow for periodic fair market value adjustments.
“There is a percent of revenue on the improvement at the end of the current lease. We have a 5-1/2 percent per gallon fuel flowage fee up to 500,000 gallons; then 3-1/2 percent thereafter. Our FBOs are pumping over 11 million gallons a year right now.”
On the fact airside, FXE is fully leased out ...
“We have little opportunity for brand new development; so, we’re looking for redevelopment of existing properties. That’s why it’s so important for us to have a structure that allows for tenants to get additional years. They understand that it is a partnership; that we as the airport have to provide for the infrastructure and the safe operation. The private sector, like Sheltair and World Jet and Banyan, provide for the investment and the services. We are not an FBO; we are not a hangar developer. It’s not our core line of business; it’s their core competency.”