Tufton Sells Last Containership to Focus on Chemical/Product Tankers
In the latest demonstration of softening in the containership market, UK-based investment management firm Tufton Oceanic Assets reports that it completed the divestment of its last containership. The owner of secondhand tonnage had previously said that it was reducing its exposure to the containership segment instead favoring chemical and product tankers.
The company reported it sold a vessel owned by Riposte, for $13 million. The ship which is registered as the Sealand Guayaquil, is sailing under the flag of Liberia. Built in 2009, the 14-year-old ship is 34,220 dwt with a capacity of 2,500 TEU. The ship was recently operating in Central America and is currently at the Panama Canal anchorage.
Tufton reports they sold the vessel at “approximately depreciated replacement cost.” They said they were able to realize a net return on investment measures by the internal rate of return (IRR) exceeding 12 percent. The Equasis database reports Rispote acquired the vessel in 2018 from Hammonia which had owned it since it was built in 2009. The return, however, is down significantly from Tufton’s aggregate realized net IRR on its containerships which over the past five years the company says was near 27 percent. Between mid-2021 and the fall of 2022, Tufton divested seven other containerships.
Reporting to investors in October 2022, Tufton said it believed the containership market was weakening from its record highs as port congestion unwinds and consumer demand is negatively impacted by high inflation and tightening monetary policy. The company said its divestments were part of its commitments to capital re-allocation based on market conditions and the opportunities for the strongest yields.
The investment managers report that they believe the product tanker market remains strong, driven by a continued lack of new supply combined with the demand impact of low inventories and energy market dislocations. “In recent months, the chemical tanker market has further improved materially, converging towards the product tanker market as it tends to do. This is expected to further increase the yields from our two chemical tankers with partial market exposure as well as, in the medium term, their asset values,” Tufton advises investors.
During the first half of 2022, Tufton agreed to acquire two product tankers followed by two more deals in the third quarter also for product tankers. The investment portfolio currently has 22 vessels, with half the fleet consisting of product/chemical tankers. Their second largest segment is bulkers and a small holding in gas tankers.
The investment manager is reporting to investors that it continues to identify an attractive pipeline of opportunities. It says that the recent macroeconomic and geopolitical environment it believes is creating dislocations and reducing some industry participants’ access to capital.