Capital Product Partners is taking a "first-things-first" approach with its quarterly dividend, having merged with Diamond S Shipping four months ago.
The New York-listed MLP wants to ensure long-term vessel employment before raising its $0.315 distribution, chief executive Jerry Kalogiratos said during today's second quarter earnings call.
"I think at this point and having completed the Diamond S transaction, we want to make sure that we deliver on certain things before we look at our distribution policy," he said.
Capital Product Partners (CPLP) turned over 23 tankers in March to Diamond S as part of a $1.65bn merger, turning the latter into the world's third largest listed tanker owner.
Kalogiratos noted long-term fixture of two 8,000-teu boxships to MSC but said CPLP wants to improve rates for its 5,000-teu units and finish its scrubber retrofit programme.
"Then, I think, as we as we see the MSC charters kick-in as well as the HMM charters kick-in from January 2020, we will see distribution coverage increases and quite considerably from already very strong levels," he said.
The company will also look to grow the business with "significant room" in its balance sheet, enough so to keep it away from the capital markets, he said.
"I think we need to deliver on all these issues and see the increased earnings capacity, see how our cash flow generation goes which we expect to be quite strong and deliver very strong distribution coverage always after our conservative reserve," he said.
CPLP will then talk with its board of directors on what to do with excess cash flow going forward and assess its valuation at that time, he said.
"No decisions have been made," he said.
Larger boxships on the menu
Kalogiratos said that those growth plans may include acquiring post-panamax boxships from its sponsor Capital Maritime, given the asset class' ability to lure long-term employment.
“The idea is to rebuild CPLP and grow by acquiring assets with medium to long-term charters attached," he said.
"As we have previously said, we tend to be a bit agnostic, when it comes to the asset class, this doesn't mean that we don't have a view on the different industry segments."
