Greece-based Performance Shipping has completed a $37.8m sale and leaseback arrangement for an LR1 product tanker under construction at Jiangsu New Yangzi shipyard in China. Scheduled for delivery in 2027, the vessel will be financed through a structure in which the company continues as operator under a 10-year bareboat charter.
Under the terms of the agreement, Performance Shipping will lease the vessel back at a daily bareboat rate of $5,451. The interest structure is set at SOFR plus a 2% margin, and at the end of the charter term the company will have a purchase option on the vessel via an $18.1m balloon payment. This structure allows the company to support its newbuild investment through off-balance-sheet financing.
LR1-class product tankers are among the most heavily used segments in refined products transport. This new unit joining Performance Shipping's portfolio will support the company's fleet expansion strategy and long-term committed ton-mile growth. Similar sale and leaseback structures are becoming increasingly common in the sector, particularly with Asian financial institutions.
Key Takeaways:
1. Performance Shipping signed a $37.8m sale and leaseback for an LR1 being built at Jiangsu New Yangzi.
2. The vessel will be delivered in 2027 and operated under a 10-year bareboat charter.
3. The daily bareboat rate is set at $5,451.
4. The interest structure is priced at SOFR plus a 2% margin.
5. There is a repurchase option at the end of the charter via an $18.1m balloon payment.
