Operating surplus, prior to capital reserves and distributions on the Class B units for 3Q16 amounted to $61.4 mill, an increase of 86%, compared to $33 mill during 3Q15 and an increase of 68% compared to $36.6 mill during 2Q16. The surplus was boosted by the proceeds from the sale of the Hyundai Merchant Marine shares for $29.7 mill.
The Partnership has put aside $14.6 mill in capital reserves for the quarter. As announced in April, the Partnership intends to maintain this capital reserve for the foreseeable future to fully provide for the debt repayments coming due in the next three years, until the end of 2018.
Total revenues for 3Q16 reached $60.3 mill, an increase of 5% compared to $57.6 mill during 3Q15. The increase was primarily a result of the increase in the size of the fleet, partly offset by the off hire periods related to the drydockings of two tankers.
As of 30th September, 2016 the total capital amounted to $922.8 mill, a decrease of $15 mill compared to the $937.8 mill reported as of 31st December, 2015. The decrease primarily reflects distributions declared and paid during the first nine months of this year totalling $56.1 mill, partially offset by the net income and the net proceeds from the issuance of common units under the at-the-market equity offering.
As at 30th September, 2016, the Partnership's total debt had increased by $22 mill to $593.6 mill, compared to $571.6 mill as of 31st December, 2015. The increase was due to a $35 mill drawdown underthe senior secured credit facility with ING Bank to fund the acquisition of a containership, which was delivered in February, 2016, partially offset by $13 mill of scheduled loan principal payments under the same credit facility during the first nine months of 2016.
Jerry Kalogiratos, CEO and CFO of the Partnership's General Partner, commented: "We are pleased to have achieved a number of important milestones during the last few months. First, we concluded our negotiations with HMM and we successfully liquidated the equity compensation received from HMM by recovering approximately 80% of our total charter hire loss under the Charter Restructuring Agreements.
“Second, we agreed to acquire a modern, eco MR product tanker from Capital Maritime with an attractive charter to Cargill. We have funded part of the acquisition cost with the proceeds from the sale of the HMM equity compensation. It is also worth highlighting that our sponsor Capital Maritime has received units as part of the purchase price at a significant premium to the latest closing price of our common units.
“Additionally, we launched the ATM offering for up to $50 mill with the aim of raising further capital over a period of time for vessel acquisitions and general corporate purposes.
"Regarding recent market developments, we note that the demand fundamentals for tankers, and especially product tankers, remain solid on the back of refinery capacity relocation, increased tonne/miles, and the low oil price environment.
“However, the high oil product inventories and the increased supply of tanker vessels has recently weighed on vessel earnings. The limited number of new tanker ordering thus far this year and the rationalisation of excess shipyard capacity combined with solid industry fundamentals are positive trends for the tanker markets in the medium- to long-run.
"Finally, we are delighted that with the expected expansion of our fleet, our Board of Directors has approved the increase of our quarterly distribution from the fourth quarter 2016 onwards to $0.08 per common unit. Depending on our access to the financial markets, our objective is to pursue additional accretive transactions going forward and expand our asset base, with a view to further increasing the long term distributable cash flow of the Partnership,” he concluded.