John Fredriksen-backed SFL Corp is in no rush to invest in fleet additions just for the sake of it.
Chief executive Ole Hjertaker told a conference call that identifying the best vessel sector to spend money in is “tricky”.
The sale and leaseback company is looking at market opportunities across all the main classes, he said.
“And we see opportunities everywhere, but given where the segments are in their cycle, you would structure the deals differently,” the CEO added.
Tankers have obviously seen their values rise quite rapidly in recent months.
A year or so ago, SFL would have looked at bringing in ships and chartering them out on variable rates with “more optionality on the upside,” Hjertaker explained.
“Now, we would probably look more for fixed-rate and to ensure that we take it down to a more mid-level depreciated book or market value at the end of the charter period,” he told the call.
SFL sees underlying value in tankers, with reduced shipbuilding capacity and money coming off both newbuilding prices and also secondhand vessels over time.
Prices being paid now could be seen as an inflation hedge, Hjertaker said.
“So that is mitigating some of that risk that you you will take on if you invest a little higher in the cycle than our preference,” the CEO added.
Structuring is everything
The New York-listed company’s boss said it all comes down to transaction structuring.
“We look at deals now on the tanker side, we look at deals on the dry bulk side, we look also into the container segment,” he added.
“Although, of course, there we are quite careful. And the car carrier market has been quite interesting over the last two years,” Hjertaker said.
And he added: “But we’re also patient, so we don’t feel that we need to invest a certain amount every single quarter.”
“It’s all about finding the right deals and deploying the capital when we think that the dynamics are right for us and our stakeholders, which means that maybe a quarter or two, we won’t invest,” the CEO explained. “But then, when we see the right deal, we can invest a lot more. So, that is the balance.”