for Gulfstream Aircraft Q2 2018 - Hagerty Jet Group...Available For Sale 24 MO High 20 - Q2 2016 Available For Sale 24 MO Low 11 - Q1 2018 Q2 2018 Transactions 4 Transaction Same Period

2340 Abercorn Street, Ste 201 - Savannah, Georgia 31401 - hagertyjetgroup.com - BUSINESS JET SALES & ACQUISITION EXPERTS

Quarterly Market Update for Gulfstream Aircraft Q2 2018

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Bombardier Challenges Gulfstream with Global 5500 and Global 6500 Announcement

Gulfstream has enjoyed a long run as the only manufacturer in the 6500nm plus range of aircraft for a while. They gained a huge head start with the launch of the G650 in 2008. The launch was like none other when they unveiled a complete aircraft in Savannah, ready to fly with certification around the corner. They amassed an order book of over 200 units quickly to kick start the program. The competition was caught a bit flat-footed and the economy that followed did not add fuel to their developmental machines to position them well to compete.

While loyal Bombardier and FalconJet customers waited for the Global 7000 and Falcon 8X, respectively, Gulfstream continued to grow their in-service fleet of G650 and G650ER aircraft, now totaling over 300 units. A very impressive run for an aircraft that lists for nearly $70M.

As the G450 production run officially ended, it was only natural for a G650 derivative to fill the gap. Gulfstream announced the G500 and G600 to do so with certification of both aircraft in progress and anticipated for late 2018 and early 2019, respectively. These aircraft fill the 5200nm and 6500nm range profiles exceptionally well.

Surprisingly, Gulfstream departed from the historical Rolls-Royce engine brand loyalty and mounted a pair of PWC 800 engines on the clean sheet design, providing the cabin features and amenities Gulfstream excels at including - noticeably larger oval-shaped windows. It is also clear they have focused on making the cabin as luxurious yet functional as possible.

The order books for the G500 and G600 are good and the outlook generally positive as the economy continues to accelerate and grow. However, certification has taken longer than expected. Although some are speculating about potential performance short-comings from the forecasted capability of the aircraft, Gulfstream has repeatedly under-promised and over-performed in the area of aircraft performance. Hence the delays may be to ensure they do so again. Press releases on records set thus far provide some insight to how the aircraft are stacking up.

Nonetheless the certification delay and the rapid economic improvement has provided a window of opportunity for the competition. Enter the Bombardier Global 5500 and Global 6500. Similar to the Gulfstream G-650 roll-out, Bombardier is offering two very capable ready-to-fly aircraft incorporating all of the innovation and technology of the Global 7000, now branded Global 7500. The ability to deliver aircraft in short order has positioned Bombardier very well from a timing perspective in this high end, high demand and high profit market.

IN THIS REPORT

Newsletter.......................1-2G650 Market .................. 3G550 Market ................. 4G450 Market .................. 5GV Market ..................... 6GIVSP Market ................ 7G280 Market .................. 8G200 Market...................9G150 Market...................10Recent Transactions.... 11Aircraft for Sale..............12

1600 E. Broughton Street - Savannah, Georgia 31401 - hagertyjetgroup.com - BUSINESS JET SALES & ACQUISITION EXPERTS


Touting the smoothest ride, largest cabin, best seat via the patented “Nuage” (French for the word cloud,) sharpest entertainment with 4K-enabled cabin, longest range combined with impressive airfield performance, and significant technological innovation in the cockpit, the Global 5500 and Global 6500 are sure to give Gulfstream a run for the money.

The key to Bombardier’s ability to launch, quickly certify and place into service this dynamic duo of aircraft is due to the innovative approach they chose to take. By improving the performance capability out of the proven Global 5000 and Global 6000 airframes, Bombardier has been able to glean a 10% improvement in range.

This was accomplished by working closely with Rolls-Royce under strict secrecy for the past two years. The Rolls Royce Pearl engine was developed with a new technology core producing 7% fuel savings while still fitting perfectly into the existing engine nacelle and pylon configuration on the aircraft. Refining the aerodynamics of the trailing edge of the wing and additional 3% of efficiency was achieved, yielding a combined 10% range improvement for each aircraft in very short order.

The cyclical business jet market has proven many times before that timing truly can be everything as many mistimed products have proven to be unsuccessful due in no part to the products’ capabilities. Bombardier’s ability to place the Global 5500 and Global 6500 in the market just as it is heating up will enhance the success of both programs and provide Gulfstream some serious competition at the top of the market. We are ready to enjoy the ride!



Current Supply of G650/ER’s in the market:

As of July 3, 2018

G650 Market Summary

Gulfstream G650 Value/Transaction History

In production300

Deals Pending2

Net For Sale10

% Of Fleet For Sale4%

Available For Sale 24 MO High20 - Q2 2016

Available For Sale 24 MO Low11 - Q1 2018

Q2 2018 Transactions 4

Transaction Same Period 20171

Advertised Price Reductions2

Average Price Reduction-3.85%

Current G650 Ask Price Range$47.5M - $66.95M USD(Incl. ER)

Avg. YTD Sales Price $52.25M

Current G650 Avg. Ask Price$57.23M USD

% Available w/Fwd Galley92%

% Equipped w/Crew Rest83%

Average Days On Market226

12

There are 12 G650/ER aircraft on the market with 2 deals pending. Among the 12 aircraft for sale, 4 have the ER upgrade. The total 12 aircraft represents 4% of the entire fleet of 300 aircraft built between 2013 and 2018. The industry average is much higher with an average of 9%.

The average days on market dropped back to 226 days compared to last quarter’s average of 278 days, indicating that Sellers price expectations are more realistic or the available aircraft have more desirable floorplans.

5 aircraft have come on the market this quarter, just under half of the total number of G650 & G650 ER’s currently For Sale. All 5 have FWD Galley configuration and are equipped with Crew Rest.

Ask Prices for G650/ER have increased slightly on the low end, but remain steady on the high end when compared with last quarter. Current Ask Prices range between $47.5M - $66.95M, compared with Q1 2018 when prices spanned between $46.9M and $66.95M. Recent transactions have ranged between $43.5M and $68M, compared with Q1 2018’s range of $55M and 61.25M, bringing the average Sales Price down from $58.12 last quarter to $55.75 this quarter.

© 2018 Hagerty Jet Group


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Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18

G650 For Sale G650 Transactions G650 Fleet Avg Value

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G650 year over year depreciation was -5.4% from Q2 2017 through Q2 2018Quarter over quarter depreciation was -2.1%


Current Supply of G550’s in the market:

There are 25 pre-owned G550s and no G500’s on the market with 5 deals pending. The current supply represents 4.5% of the entire fleet of approximately 553 aircraft built between 2003 and 2017. Net supply is 20 aircraft. Supply is down 65% from the 31 aircraft for sale at the end of Q2 2017.

Transaction levels have decreased over the past 12 months, averaging around 10 G550’s selling each quarter up until the beginning of this year when we saw a steep decline to 4 sales transactions. Q2 has doubled that number to 8 sales, plus the 4 deals pending should push numbers higher, potentially closer to where they were at this time last year.

The most common demand from buyers has been a forward galley configuration with a crew rest area. Less than half of the 24 aircraft for sale meet this criteria and there appears to be pent up demand. We’ve recently seen premiums paid for such a configuration and we see downward pressure on aft galley configurations.

Buyers have been finding good deals at all levels of the market. Recent transactions haven’t been focused on any particular age segment. However, it does seem that the lower end of the G550 market has been cleared out for good aircraft on programs in the sub $20M category.

As of July 3, 2018

G550 Market Summary


In production553

Deals Pending5

Net For Sale20

% Of Fleet For Sale4.5%



Transactions Q2 20188

Transactions Same period 201712

Advertised Price Reductions 3

Avg Price ReductionNA

Current G550 Ask Price Range$17M - $37.25M USD


Avg Sale Price Q2 2018$18.75M USD

Q2 2018 Sale Price Range$12.75M - $24.75M USD

Average Days On Market127 % Equipped w/Crew Rest 88%

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Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18


x$1M

USD

Airc

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G550 year over year depreciation was -6.3% between 2Q 2017 to 2Q 2018Quarter over quarter depreciation was 0.0%



G450 sale activity was steady during the previous quarter, with 8 sales and 22 listed for sale.

Sale prices ranged from $9.5M to $20M, and average sale price was $14.75M.

The average asking price and number of G450’s for sale have climbed roughly 5% over the past six months. During the same time period, we are not seeing any significant changes in number of days on market.

Expect the average fleet values of G450’s to continue their decrease over the coming quarters as new G450’s are no longer entering the market. G450 depreciation quarter over quarter was -6.9%, compared with the year-over-year depreciation of -9.1%.

G450 Market Summary

In production354

Deals Pending8

Net For Sale14




Transactions YTD16



Avg Price ReductionNA

Current G450 Ask Price Range$9.5M - $29M USD


Avg Sale Price Q2 2018$14.75M US

Q2 2018 Sale Price Range$9.5M - $20M USD


% on Engine Programs77%

5

As of July 3, 2018Gulfstream G450 Value/Transaction History


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42

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Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18


G450 year over year depreciation is -9.1% betweenQ2 2017-Q2 2018Quarter over quarter depreciation is -6.9%

Airc

raft

For S

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x$1M

USD


Current Supply of GV’s in the market:

There are 12 GV’s advertised on the market representing 5.8% of the entire fleet of 191 aircraft built between 1995 and 2002. This is much lower than the industry average of 10%. However, there is 1 deal pending for a net of 11 aircraft for sale and 19 GV’s have already closed YTD.

The reason the GV market has been so active is the lack of older G550’s for sale in the sub $20M range and for only a few million dollars more than a IV-SP of similar vintage, the GV offers a ton of value.

Supply of aircraft is expected to continue its’ decline but we’re certain that more GV owners will be testing the market in the coming months.

Ask prices currently range between $7.9M for a 1997 model on an engine program to $13M for a 2001 model with Rolls-Royce Corporate Care and the latest updates. The sweet spot for the GV market appears to be in the $10-12M range for aircraft on engine programs with Plane Deck or at least the FANS/CPDLC and ADS-B Out requirements, which can be very costly.

The average GV Book value remained flat again this past quarter, as it has since Q1 2017. The GV market over the past 6 months has shown only a slight decline of 3% in Average Asking Price, but a significant decrease of 35% in the number of aircraft for sale. While prices have stabilized on the GV dwindling inventory, we have seen an increase in the time it takes to sell an aircraft. Since the start of 2018, the GV market has increased from 200 days to 273 average days on market.

As of July 3, 2018Gulfstream GV Value/Transaction History

In production191

Deals Pending1

Net For Sale11







Avg Price Reduction-7.15%

Current GV Ask Price Range$7.9M - $13M USD

Current GV Avg. Ask Price$10.45M USD


GV Average Days on Market273

% with Fwd Galley43%

% with Engine Program78%


6

GV Market Summary

12


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$5

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$11

$14

$17

$20

Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18

GV For Sale GV Transactions GV Fleet Avg Value

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GV year over year depreciation is -2.8% between Q2 2017 - Q2 2018Quarter over quarter deprecitaion is -1.0%


Current Supply of GIV-SP’s in the market:

As of July 3, 2018

There are 30 pre-owned GIV-SP, G400 and G300 aircraft listed on the market with 3 deals pending. The remaining 27 listings represent 8% of the overall fleet of 338 airplanes. 1 aircraft is currently advertised as ‘lease only’.

Supply has decreased by 25% over the last 12 months from 40 to 30 aircraft. Additionally, the GIVSP market showed the largest decrease of available inventory in Q2 2018 since Q3 of 2015. While transactions have increased to double digits this year, the highest in 24 months, values have dipped slightly this quarter following a stablizing period in Q3 2017 - Q1 2018.

Published ask prices currently range from $2.25M for an 14,250hr 1993 model on engine and APU programs to $6.95M for a 2003 G400 with 3,675hrs with TCAS & ADS-B Out avionics upgrades.

Book values were flat for the second quarter in a row. 12 month average depreciation is easing up at -8.91%, compared to -9.77% for the period from Q2 2016 to Q2 2017.

GIV-SP Market Summary

Gulfstream GIV-SP Value/Transaction History

In production338 Incl. G300/G400

Deals Pending3

Net For Sale27

% Of Fleet For Sale8%






Average Price Reduction-14%

Current GIV-SP Ask Price Range$2.25M - $6.95M USD

Current GIV-SP Avg. Ask Price$4.6M USD


Q2 2018 Sale Price Range$2.5M - $8.55M USD


% Enrolled on Engine Program50%


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$7.5

Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18

GIV-SP For Sale GIV-SP Transactions GIV-SP Fleet Avg Value

x$1M

USD

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GIV-SP/G400 year over year depreciation is -8.9% between Q2 2017- Q2 2018Quarter over quarter depreciation is 3.1%



As of July 3 2018

Availability for pre-owned G280s remains extremely limited, with 1 available. When an airplane does come available, it typically sells within an average of 47 days, a significant drop from the average six months ago of 157 days.

The average asking price of G280’s has increased sharply since the beginning of 2018 by about 45% to $5,650k.

Fleet values were essentially flat for the third quarter in a row, with only 1% depreciation in Q2 2018. Year-over-year depreciation figures also show the flattening trend, at only 5% from Q2 2017 to Q2 2018, down from 17.3% during the same period a year prior (Q2 2016 to Q2 2017). The market clearly has an appetite for G280s as they come available.


In production136

Deals Pending0

Net For Sale1




Transactions YTD3


Number of Price Reductions0

Average Price ReductionNA

Current G280 Ask Price Range$18.3M

Current G280 Avg. Ask Price$18.3M

N-Registered on Market1/1

#Enrolled on Engine ProgramTBD

# Based in US0/1


G280

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G280 Market Summary


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Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18


G280 year over year depreciation is -5.0% between Q2 2017 - Q2 2018Quarter over quarter depreciation is less than -1.0%

Airc

raft

For S

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x$1M

USD



As of July 3, 2018

There are 20 pre-owned G200’s on the market with 3 deals pending. Net supply is 17 aircraft, representing 6.9% of the entire active fleet of 244. The number of in-service G200’s dropped by 1 this quarter, after SN 054 overran the runway on landing at Tegucigalpa-Toncontin AIrport, Honduras on 5/22.

Supply has fallen sharply over the past quarter, and is now at less than 2/3 of the average of 33 aircraft for sale for the past 24 months.

G200 ask prices currently range from $2.90M to $6.195M, bringing the average to $5.99M. The low value is fairly flat but the high value is coming down as these airplanes continue to age and depreciate. The shrinking supply should serve to stabilize the average value.


Active Fleet244

Deals Pending3

Net For Sale17




Transactions YTD13



Average Price Reduction-25.7%

Current G200 Ask Price Range$2.90M - $6.195M USD



For sale w/Engine Program95% (19 of 20)For Sale w/Hi Speed Data85% (17 of 20)



G200

9

G200 Market Summary

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Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18


Airc

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For S

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x$1M

USD

G200 year over year depreciation is 3.7% between Q2 2017 - Q2 2018 Quarter over quarter depreciation is -1.1%


Current Supply of G150s in the market:

As of July 3, 2018

There are 11 G150’s advertised for sale with 2 deals pending.

Net supply is 9 airplanes for sale.

Ask prices currently range between $4.25M and $8.9M, for an average of $6.575M.

Expect depreciation to flatten a bit as the supply tightens. 4 transactions occurred in Q1 2018, slightly higher than average for this model.

G150 Market Summary


Active Fleet125

Deals Pending2

Net For Sale9



Available For Sale 24 MO Low6 in Q3 2016

Transactions YTD7

Transactions Same Period 20172


Average Price Reduction -9.5%

Current Ask Price Range$4.25M to $8.9M USD

Average Ask Price$6.575M

For Sale w/ High Speed Data70% (7 of 10)

For Sale w/ Engine Program100% (10 of 10)


For Sale w/ U.S. Registration 80% (8 of 10)


G150

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Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 G150 For Sale G150 Transactions G150 Fleet Average Value

Airc

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x $1

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G150 year over year depreciation was -5.9% between Q2 2017 - Q2 2018Quarter over quarter depreciation was -2.1%

2340 Abercorn Street, Ste 201 - Savannah, Georgia 31401 - hagertyjetgroup.com - BUSINESS JET SALES & ACQUISITION EXPERTS 11130 Habersham Street - Savannah, Georgia 31401 - hagertyjetgroup.com - BUSINESS JET SALES & ACQUISITION EXPERTS

Recent Transactions


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Falcon 900C SN: 183

Sold

Augusta 109S GrandSN: 22102

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2008 Gulfstream G200SN: 186

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Sold


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1999 Gulfstream IV-SPSN: 1376

Sold


Sold


Sold

2001 Gulfstream VSN: 621

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Sold

2004 Gulfstream 400SN: 1522

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Currently Available

12

Hagerty Jet Group is a business aircraft brokerage firm providing aircraft sales, marketing and acquisition services to large corporations and high-net-worth individuals. Founded by veteran Gulfstream Specialist, James Hagerty, the firm is headquartered in Savannah, Georgia, conveniently near Gulfstream’s headquarters, with satellite offices in Charlotte, Dallas, Los Angeles and Washington, D.C.

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2001 Falcon 2000SN: 152

Sale Pending

1999 Citation X SN: 750-0082

Winglets

1999 Gulfstream VSN: 567

Fresh Engines

Brian PanningLos Angeles, CA

Ken HartDallas, TX

Greg KinsellaWashington, DC

Jeffrey “Shawn” Taylor Charlotte, NC

James HagertySavannah, GA


Global 5000SN: 9449

FOR LEASE

2001 Astra SPX SN: 134

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2005 Lear 60SE SN: 60-290

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Documents

for Gulfstream Aircraft Q2 2018 - Hagerty Jet Group...Available For Sale 24 MO High 20 - Q2 2016 Available For Sale 24 MO Low 11 - Q1 2018 Q2 2018 Transactions 4 Transaction Same Period