FSL – BT

First Ship Lease Trust to pay out US$12.95m in Q1

DIVERSIFIED shipping trust First Ship Lease (FSL) Trust has announced a distribution of US$12.95 million for the first quarter ended March 31, 2008 – working out to 2.59 US cents per unit.

There were no comparative figures for the previous corresponding period as FSL was constituted and listed in March last year. Compared with the preceding fourth quarter’s 2.42 US cents, the Q1 DPU of 2.59 US cents was 7 per cent higher. This came as FSL added ships to its portfolio.

Q1 revenue rose 10.1 per cent from Q4 to US$16.6 million as the impact of the purchase and concurrent leaseback of two product tankers from Groda Shipping and Transportation in November was fully realised during the quarter.

The distribution translates into an annualised DPU of 10.36 US cents, 7 per cent higher than the annualised DPU of 9.68 US cents in the preceding quarter. Based on FSL Trust’s closing unit price of S$1.10 on April 22, this translates into a distribution yield of 12.7 per cent per annum.

Trustee manager FSL Trust Management (FSLTM) said it will continue to pursue acquisition opportunities as part of its strategy to grow the trust. To support this effort, it has broadened the transaction origination platform by hiring a head of sales (East of Suez), who is joining the management team next month.

FSLTM is confident of achieving the previously announced acquisition target of US$300 million for financial year 2008. In fact, with the recent US$140 million Geden Lines transaction involving two Aframax class crude oil tankers announced earlier this week, about 50 per cent of the acquisition target has already been achieved.

‘In view of the greater difficulty in raising conventional bank financing in the current tight credit environment, ship operators are turning increasingly to alternative financing solutions such as leasing. We are bullish in meeting the balance of the acquisition target of US$160 million over the next eight months of this year,’ said FSLTM chief executive officer Philip Clausius.

Funding for these future acquisitions will be from the newly secured US$200 million credit facility, of which about US$150 million remains undrawn.