Capital Product Partners L.P. (Nasdaq: CPLP) is an international, shipping company engaged in the seaborne transportation of containerized goods and dry cargo. As a publicly traded master limited partnership, CPLP has elected to be treated as a C-Corp. for tax purposes which is most beneficial for U.S. investors (as they receive the standard 1099 form). The Partnership is well-positioned to benefit from the long-term growth dynamics of the global shipping industry and to capitalize on potential acquisition opportunities in the fragmented shipping market.
On March 27, 2019, the Partnership consummated the spin-off and merger of its tanker fleet with DSS Holdings L.P. forming one of the largest publicly traded tanker companies, Diamond S Shipping, Inc. (NYSE: DSSI). CPLP shareholders received approximately 32% of DSSI’s shares while retaining their ownership in CPLP.
Modern High Specification Fleet
The CPLP fleet currently consists of 16 high specification vessels: 15 container carrier vessels and one Capesize bulk carrier.
The average age of the CPLP fleet is 10.1 years (as of May 18, 2021).
CPLP vessels have been designed and equipped to the highest specification.
The International Maritime Organization (IMO) new regulations, effective January 1, 2020, have limited the sulfur in fuel used by ships to 0.5% from 3.5%. In consideration of these new regulations, the Partnership has equipped seven of its vessels with an exhaust gas cleaning system (“scrubber”).
Fleet Employment -- Visible & Stable Cash Flows with High Quality Counterparties CPLP’s modern containership assets and multi-year time charters are highly suitable for the Partnership’s business model.
CPLP vessel charters have an average revenue weighted remaining term of 4.0 years (as of May 18, 2021), with staggered expirations. The Partnership’s charter coverage for the remainder of 2021 and 2022 currently stands at 90% and 85%, respectively (as of May 18, 2021).
CPLP’s vessels are chartered to reputable counterparties worldwide including major operators and liner companies. Over the years, CPLP vessels have secured long term employment among others with CMACGM, HMM, MSC, Maersk Lines, ONE and ZIM Integrated Shipping Services Ltd.
Distribution - Growth Strategy & Financial Strength
The Partnership’s common unit distribution for the first quarter of 2021 was $0.10 per common unit. The common unit distribution coverage for the three-month period ended March 31, 2021 was 7.6 x.
Strong balance sheet with net debt to capitalization ratio at 41.3% as at the end of the first quarter of 2021.
Following the consummation of the spin-off of our Crude and Product Tanker Business and depending on our access to the financial markets, our objective is to pursue additional accretive transactions going forward and expand our asset base, with a view to further increasing the long-term distributable cash flow of the Partnership. To this end, we acquired three 5,100 TEU sister container vessels in February 2021 for a total consideration of $40.5 million from Capital Maritime. The vessels are employed under approximately five-year time charters with Hapag- Lloyd.
Capital Maritime & Trading Corp. (“Capital Maritime”), CPLP’s sponsor, owns significant LNG, tanker (including VLCCs and Chemical/Product tankers) and container tonnage which could potentially be dropped down to the Partnership. Some of these vessels are contracted under medium to long term charters.
As of March 31, 2021, the Partnership repurchased 133,423 common units since the launch of the unit repurchase plan on February 19, 2021, at an average cost of $10.46 per unit.
CPLP’s sponsor, Capital Maritime, is a large, financially strong and diversified shipping company with a long, successful track record.
Capital Maritime owns a 17.8% stake in the Partnership (as of March 31, 2021).
Capital Maritime has an extensive network of relationships with oil majors, traders, liners and other major charterers.
Last updated 18 May, 2021