John Fredriksen-controlled SFL Corp has sold its fleet of handysize bulkers to an Asian buyer a week after snapping up three modern suezmaxes.
The deals appear to be classic cases of selling high and buying low, as SFL waited for dry cargo markets to improve before making its move, while making a counter-cyclical tanker bet.
The New York-listed sale and leaseback specialist will bank $100m from the bulker disposals.
Delivery of the vessels — viewed as non-performing last year — is expected to take place before the end of 2021, and net cash proceeds are estimated to be more than $50m after repayment of associated debt.
Overall, the book gain will be more than $40m from the sale of the Chinese-built ships.
"The sale will not have an impact on our charter backlog, and the net proceeds are expected to be reinvested in new assets," SFL said.
The handysizes have been working spot for the last five years, after redelivery from their original charters.
The bulkers in question are the 31,700-dwt SFL Dee (built 2013); the 31,600-dwt SFL Clyde, the 33,800-dwt SFL Kent, the 34,000-dwt SFL Trent, the 31,900-dwt SFL Tyne (all built 2012); and the 33,800-dwt SFL Medway and 34,000-dwt SFL Spey (both built 2011).
Time was right
With limited long-term chartering opportunities for small dry bulk vessels, the intention had been to trade the vessels in the spot market until the markets improved, SFL added.
Chief executive Ole Hjertaker said: "The seven small bulkers were redelivered from the initial charters when the market was soft, and instead of divesting the vessels at the time we have waited for improved market conditions."
"Asset values in the segment are up 75% this year, and we believe this is a good time for a strategic sale of these vessels."
Hjertaker had revealed in 2020 that the company had no intention of selling the handysize fleet in what were then weaker markets, likening a deal at that time to "selling chicken in the rain."
In September 2020, the ships' commercial management were transferred from Fredriksen's Golden Ocean Group to Belships' operating arm, Lighthouse Navigation, in Oslo.
In May this year, Jefferies analyst Randy Giveans raised his 2021 and 2022 earnings estimates for SFL, based on the handysizes averaging rates of $14,500 this year and $9,000 next year.
Oslo-based SFL took an $80m impairment hit on the vessels in the first quarter of 2020, as their likely future earnings were expected to be below their book value.
The shipowner retains supramaxes, kamsarmaxes and capesizes, as well as tankers and containerships.
As the bulkers move out, SFL will take delivery of three modern suezmaxes bought earlier in September.
The shipowner provided no details of the vessels or their price beyond saying that the eco-ships were built in 2019 and have scrubbers fitted.
One broking source said the vessels are probably three owned by China's Bank of Communications Financial Leasing or ICBC Leasing and commercially controlled by trader Trafigura.