Thank you for standing by, and welcome to the Capital Product Partners' Second Quarter 2022 Financial Results Conference Call. We have with us Mr. Jerry Kalogiratos, Chief Executive Officer of the company. [Operator Instructions]. I must advise you this conference is being recorded today. The statements in today's conference call that are not historical facts, including our expectations regarding cash generation, equity returns and future debt levels, our ability to pursue growth opportunities, our expectations or objectives regarding future distribution amounts, capital reserve amounts, distribution coverage, future earnings, capital allocations as well as our expectations regarding market fundamentals and the employment of our vessels, including redelivery dates and charter rates may be forward-looking statements as such as defined in Section 21E of the Securities Exchange Act of 1934 as amended. These forward-looking statements involve risks and uncertainties that could cause the stated or forecasted results to be materially different from those anticipated. Unless required by law, we expressly disclaim any obligations to update or revise any of these forward-looking statements whether because of future events, new information, a change in our views or expectations to conform to actual results or otherwise. We assume no responsibility for the accuracy and completeness of the forward-looking statements. We make no prediction or statement about the performance of our common units. I would now like to hand over to your speaker today, Mr. Kalogiratos. Please go ahead, sir.

Thank you, and thank you all for joining us today. As a reminder, we'll be referring to the supporting slides available on our website as we go through today's presentation. So since the end of the first quarter of 2022, we have announced a number of significant transactions for the partnership, including the divestment of our two oldest container vessels for $130 million and the agreement to acquire 4 newbuilding vessels with long-term charters attached for $597.5 million. We have also owned last week, successfully placed 100 million-euro bond maturing in 7 years on the Athens Exchange. Turning to the partnership's financial performance. Net income for the second quarter of 2022 was $20.4 million compared with net income of $35.4 million for the second quarter of last year or $10 million if we exclude the gain from the sale of a vessel we sold at the time. So our net income more than doubled year-on-year when comparing the operational performance of the partnership. Our Board of Directors has declared a cash distribution of $0.15 per common unit for the second quarter of 2022. The second quarter cash distribution will be paid on August 12 to common unitholders of record on August 8. The partnership's operating surplus for the second quarter was $43.9 million or $12.7 million after the quarterly allocation to the capital reserve. We continued acquiring units under our unit buyback program. And during the second quarter of 2022, we repurchased approximately 185,000 common units. As of yesterday and since inception of our unit buyback program, we have acquired a total of 592,190 units at an average unit price of $13.11. Finally, the Partnership's charter coverage for 2022 and for 2023 stands at 95% and 92%, respectively, with the remaining charter duration corresponding to 6.2 years take into account…

[Operator Instructions] I show our first question comes from the line of Ben Nolan from Stifel. .

This is Macalla on for Ben. Just a quick one here. Would you be able to provide any insight on how you're thinking about maximum leverage? And additionally, what does capital firepower look like after the LNG vessel acquisition?

I think if you look at the average leverage across the 6 vessels we acquired last year, it's probably today less than 50%. That's partly due to the increase in the underlying charter-free asset prices and some debt amortization paid. So our indebtedness has been increasing by quite a bit if you compare it, for example, to last -- to the same period last year. So almost from $400 million to $1.2 billion as at the end of the second quarter. But you'll find that net leverage continues to be at a very reasonable levels as defined in our loan agreements, and that's below 40%. I think given our -- the profile of our fleet, that is the average age of our fleet and the employment profile, as we discussed, we have a minimum of remaining charter duration of 6 years, and against very creditworthy counterparties, there is definitely more room. I think a leverage up to potentially 65% to 70% can be reasonable. If you have that type of employment profile, but that is also always taking into account the potential volatility of your underlying assets. So right now, this leverage point is on the back also of a very frothy, if you want, container market, and we are very mindful of that. So the answer is that the LTV at any given point is -- and the maximum levers that you can take is also connected to the underlying assets and where its asset is in the cycle. I think the good thing is that with the addition of the LNGs, we have diversified our exposure in terms of the underlying assets. And secondly, also LNG carriers have shown over time that they have a smaller beta. So their asset value volatility is less compared to other assets. So I think with the diversification of our asset base to both containers at LNG and the fact that LNG tends to be stable than other shipping assets in terms of its valuation, I think we have room to increase. But the exact levers, I think it will depend on where we think we are in its shipping cycle and making sure that even if there are more dire conditions ahead, the balance sheet can remain strong.

I show our next question comes from the line of Omar Nokta from Jefferies. .

I wanted to just ask about the -- you mentioned LNG carrier that was extended until I believe 2028 from 2026 originally in exchange for that 3.5% reduction. Is there an opportunity you think, to do that with the other 2 ships that roll off in circa early 2025?

Omar, yes, so this was a baked-in option. So that was part of the charter party agreement. And the charter simply exercised an option that they already had. But I think your question is very, very topical. So we are having from time to time such discussions with charters. And given the scarcity of available [indiscernible] forward, even for 2026, 2027 deliveries and increase in newbuilding prices, there are discussions to be had with charters if you want to fix for longer. But I think given also the backdrop of the market environment, if we do something like that and depending on which charter we're talking about, it could be that we extend at a higher rate, not at a lower rate. But it does depend on which charter we're talking about across our fleet. But such discussions are being had as we speak.

Okay. And I guess for those 2 ships I was referencing that roll-off in '25, do they have that similar type of option to extend it? Or would these be you think at altogether just new charters?

So are you talking about the 3 BP ships or the senior ships? .

I'm just double checking there, it's Aristarchos and the [indiscernible]. I forgot the charter.

So these are the 2 vessels that are fixed to Cheniere. These were fixed for 3.5 years original term and they have 2-year options -- sorry, 2 1-year options. So they run until 2027, really early 2027. These are at higher rates. The options that they have, they are at higher rates compared to what they have today. And this, for example, could be prime candidates for a potential extension.

Okay. Got it. That clarification. One follow-up just on the containerships. Clearly, you sold those 2 vessels or you agree to sell them to $130 million. How are you thinking about some of the other containerships in the fleet today? Perhaps maybe the narrow -- or the older 5,000 TEU ships [indiscernible], are those potential candidates you think, to monetize given where secondhand prices have gone to?

Absolutely. I think it's a question of whether we find an interesting bid because these vessels are there an until 2025 and beyond. So it will require a charter to take quite a long-term view. And this is -- I think, if anything, has changed in the container market, it's mostly that, that you don't have so much liquidity in the forward market. That today is very firm, and there is a lot of interest and you can fix at very high rates, potentially historically high rates. But this is what has changed, I think, over the last 6 months in the container market, that forward view. So if we see interesting bids, we will definitely consider divesting from these assets. It is also very much in line with our policy of divesting from older ships. So the answer is yes, but the bid has to make sense.

I show our next question comes from the line of Clement Mullins from [ Valley Investors Edge ].

I wanted to start by asking about the increase of other expenses on a quarter-over-quarter basis. Could you provide some commentary regarding what have been the main drivers behind this increase?

Clement, do you mean in other income? .

Yes, exactly.

So in other income, you'll find the effect of 2 things. First of all, the effect of the FX change in terms of the -- in terms of our euro exposure. And as you know, we had in that quarter the 150 million eurobond exposure. So as you have changes in the U.S. dollar euro FX you will see an effect creeping into the other income expense line. And then you have, on the other hand, the change in the fair market value of the swap, the hedge that we have done for this bond. So in particular, in this quarter, the effect of the change in the fair value of the swap was a loss of EUR 12 million, but then we had a gain from the translation of the euro-denominated debt of about $10.6 million. . So we had from -- just from these 2 things, we had the net effect which is recorded in other income of minus $1.4 million. Then we had some other income from certain other things that is potential underreported claims, a certain piece of equipment that was installed on our vessels by the charters and which we do not pay for and that reduced that loss to $0.9 million. So this is what you see in other income. It's -- most of it is a noncash effect, but it's still shown there. .

That's very helpful. And you recently completed the second raft of acquisitions, which are set to be delivered later this year and into 2023. Could you provide some commentary on how your capital allocation priorities will shift once the vessels are delivered? And what's your current stance regarding the additional LNG carrier drop-downs?

I think it's a fair question. But for the moment, we want to concentrate on executing against the four vessel acquisition. That's a $597.5 million acquisition. We have vessels starting delivered from October until May next year. So I think we want to make sure we get all this done before we think about our next move, as discussed. And previously, we want to make sure also at any given point that we retain a strong balance sheet with reasonable leverage. We do have room, but also the container market seems to be in flux. We think that the container market will do well over the next few months. But what happens beyond that and well into 2023, who knows. So I think before we commit to our next move, we want to see more of the announced transaction being executed. So hopefully, we'll start thinking about that towards Q3, Q4. Now in terms of the remaining LNG carriers, if there is a segment that we like, it definitely -- LNG is definitely very interesting. I think we are in a multiyear upcycle for latest generation 2-stroke vessels. And the economics for these vessels together with this in a market where commodity prices are high and are expected to remain high for at least the next few years are going to be exceptional. And you can see that already from the market. So it is very much a segment where we would like to expand. I think in view of our business model, of course, we would like also to see cash more flow visibility on these assets. And currently, they have none. So while we definitely want to grow in the LNG space, and I think, as I pointed out in my prepared remarks, they're literally -- there's literally only one company out there, which has a similar fleet to CPLP, that is only 2-stroke LNG ships. We want to make sure that we do it in the right way. I mean, so far, I think we have done a very well-timed entry into the LNG space. We have acquired 7 LNG carriers -- brand new ships, two-stroke ships, latest technology at an average price of about [ $208,000 ] when today, a resale will be at [$245,000 ] plus or potentially even higher. I mean, we have new builds being now contracted for 2026 and '27 for $245 million, and then you have to add delivery costs on top. So I think we will look very good at the moment, but we want to make sure we do this the proper way.

I'm showing no further questions in the queue. That concludes our Q&A session. At this time, I'd like to turn the call back over to Jerry Kalogiratos, CEO, for closing remarks.

Thank you all for joining today. Have a good morning.

This concludes today's conference call. Thank you for participating. You may all disconnect.