FSL – BT

FSL Trust payout up 21.8% in Q2 to US$14m

Distribution per unit goes up 27.9% to 2.8 US cents as revenue rises 71.2%

FIRST Ship Lease Trust (FSL Trust), which provides leasing services to the international shipping industry, is distributing US$14 million to unit-holders for the second quarter ended June 30, a year-on-year rise of 21.8 per cent.

This translates to distribution per unit (DPU) of 2.8 US cents, a surge of 27.9 per cent from the previous corresponding quarter’s 2.19 US cents. Compared with the preceding first quarter’s 2.59 US cents, the increase is 8.1 per cent.

‘For the leasing environment, the transaction flows are still very strong,’ said Cheong Chee Tham, chief financial officer of FSL Trust Management (FSLTM), the trustee-manager of FSL Trust. As a result of ‘the credit crunch, banks are reluctant to lend money freely to ship operators, who look for alternative financing. So we see new enquiries coming in all the time’.

Revenue for the quarter surged 71.2 per cent to US$20.67 million from the year-ago period’s US$12.1 million. This came largely on the back of the acquisitions and leasebacks of six vessels – two product tankers from Groda Shipping & Transportation, two crude oil tankers from Geden Lines and two container ships from Yang Ming Marine Transport Corporation – after June 30 last year. Increased revenue resulted in US$14.2 million in net distributable amount, of which US$239,000 was payable as an incentive fee to the trustee-manager.

The quarter’s distribution translated into annualised DPU of 11.2 US cents, 27.9 per cent higher than the 8.76 US cents for 2Q07. This equals to a distribution yield of 12.3 per cent per year, based on FSL Trust’s closing price of S$1.23 on July 21.

FSL Trust aims to rely on raised capital to grow the trust. ‘We have to keep buying and leasing out vessels,’ said Mr Cheong. This being so, ‘we are keeping an eye on the equity markets as it will affect how we will raise our capital’.

Philip Clausius, chief executive officer of FSLTM, said: ‘The acquisition of the three Yang Ming vessels announced in May will further raise DPU from the next quarter onwards.’

The third container ship from Yang Ming will be acquired in October and will cost US$70 million. FSLTM is currently in talks with the lead arrangers of its recent US$200 million revolving credit facility to raise it to US$265 million.

Once the deal is finalised, FSLTM would have injected US$350 million worth of vessels into FSL Trust, exceeding its initial target of US$300 million for this financial year.

Payment of the distribution of 2.8 US cents per unit will be made on Aug 26. Books close on July 30.