Maritim Equity buys two 1,700 teu container vessels at half price

9.9.2009 | Hamburg

First acquisition by German opportunity fund in 2009

• Price of 21.5 million US-dollars per vessel over 50 percent lower than in early 2008, built 2008

• Two 1,700 teu container vessels with charter contracts until summer 2011

• Daily rate of 16,400 US-dollars from reliable charterer STX Pan Ocean

• Private fund investors with preferential payments on returns

Hamburg, 9th September 2009. After much speculation about bargain prices for second hand commercial vessels it is the Hamburg based ship financing house Maritim Equity that has now closed the first deal comprising two 1,700 teu container vessels. It is the first acquisition of second hand ships with good charter contracts at a significant markdown by a so-called opportunity fund this year.

The Asian ship owner sold the one year old vessels at a price of 21.5 million US-dollars each. Container freighters this size were traded at about 45 million US-dollars in spring 2008, more than twice the agreed price. The buyers’ consortium includes Hamburg-based ship owner Carsten Rehder who will manage both vessels, Maritim Equity’s parent company Salomon Invest and Hesse Newman Private Shipping I, partner fund of Maritim Equity.  

Both ships, MS Tasman Strait and MS Torres Strait, have charter contracts at a daily rate of 16,400 US-dollars until summer 2011 with the South-Korean company STX Pan Ocean. The going rate for new charter contracts is currently only 4,500 to 5,000 US-dollars per day. STX Pan Ocean operates a diverse fleet and is said to be one of the most stable ship managers in Asia today.

„While the market is expecting a rising number of distressed asset deals we have not actually seen this happening yet. Mostly, deals are falling through due to insufficient equity and loans on the buyers’ side despite decent bargains offered by the owners”, says Albrecht Gundermann, managing director of Maritim Equity. His funds have changed the usual pattern of closed-end ship funds in the German KG market by collecting equity first before investing in actual ships. This allows the fund and its partners a down-payment of 59 percent on the ships, making the risk acceptable for a bank to provide the remaining 41 percent as debt. “Cash is king. If you have equity, you get the best bargains”, says Gundermann.

Maritim Equity’s decision to buy the vessels was not based on the low price alone. Gundermann stresses that safety aspects for investors were also important in making the final offer: “Our ship management partner Carsten Rehder is an experienced professional. Also, we have a very conservative loan-to-equity ratio and good bank terms so I am confident that we will be flexible enough to weather the storm.” Also, private investors of Maritim Equity funds have been granted preferential payment on returns of their investment. The institutional partners will benefit only once private investors have reached their expected return. 

Good economic prospects for recovery for interregional feeder vessels

Co-owner and ship manager Thomas Rehder sees good economic prospects for the two vessels despite the current economic downturn in container freight rates. The company already owns 15 container ships between 500 and 1,800 teu, a size that should recover rather quicker than the market as a whole. “The majority of orders have focused on ships over 5,000 teu. The number of vessels with less than 2,000 teu might be shrinking from 23 percent today to about 17 percent in 2012, resulting in another shortage and rising prices”, says Thomas Reeder.

The acquisition of the two vessels was the first investment of closed fund Maritim Equity III. The fund is still open for investors interested in combining the shipping markets bargain prices with reliable income from stable charter contracts. The fund is due to close December 2009. Minimum subscription is 20,000 Euros.

Maritim Equity Beteiligungsgesellschaft mbH & Co KG was founded in 2007 by Hamburg based Salomon Invest. Both owners and managing staff have over 30 years of experience in managing closed funds and investments in commercial vessels. Maritim Equity funds aim to invest in a diverse selection of commercial vessels of all sizes, various partners and multiple markets. Mostly, the fund management seeks off-market deals not otherwise available via closed funds.

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