Performance Shipping agrees sale and leaseback deal for LR2 newbuild

Greek tanker owner Performance Shipping has entered into a sale and leaseback agreement with an unaffiliated Japanese third party for a newbuild LR2 aframax tanker.

As announced in March last year, the newbuilding LNG-ready, scrubber-fitted, Tier III LR2 vessel of approximately 114,000 dwt is expected to be delivered to the company in the fourth quarter of 2025.

The bareboat financing amount totals $44.25m and as part of this agreement, the vessel will be sold and chartered back on a bareboat basis for eight years from delivery.

The bareboat charter rates will be equivalent to 96 monthly instalments of $7,132 per day and a balloon payment of approximately $23.7m payable together with the last instalment, with an implied interest rate of term SOFR plus 2.425% per annum.

The Nasdaq-listed company has options to repurchase the vessel at predetermined rates after two years of the bareboat charter.

In March 2024, Performance Shipping agreed to charter the vessel to Clearlake Shipping for five years upon delivery at a rate of $31,000 per day and an option to extend for a sixth and seventh year at a base rate plus profit sharing if declared by the charterer.

“We have secured very attractive terms to finance our first newbuilding vessel, ordered for $63.25m, whose value has since appreciated considerably. Our remaining capital expenditures for the vessel are $19m before delivery, with a final payment of $34.8m upon delivery. We are also in advanced discussions with lessors for our other newbuild LR2 Aframax tankers,” said Andreas Michalopoulos, Performance Shipping CEO.

Michalopoulos added that daily cashflow breakeven, including lease payments, is estimated at around $25,000 based on current expenses, which compares favourably with the $31,000 daily charter rate secured for the first five years.