SFL Corporation, backed by John Fredriksen, has decided to purchase three new tankers for approximately $365 million. This investment will help secure long-term contracts that will add at least $333 million to the company's leasing backlog.
Details of the Purchase and Contracts
The New York-based shipping company has announced that this investment includes two 8,800 TEU container ships scheduled for delivery in 2027, as well as a large dual-fuel vessel with a capacity of 93,000 cubic meters for ammonia (VLAC) that will be launched in 2028.
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The two container ships have been leased to a major shipping operator with a minimum eight-year lease agreement, which also has options to extend for another four years. These agreements also include purchase options at the end of the eighth, tenth, and twelfth years along with profit-sharing arrangements.
Future Plans and Market Impacts
The VLAC will enter into a lease agreement of at least five years with a large commodities group, with options to extend the contract for an additional two years. This charterer will also have the option to initiate the sale of the vessel in the final two years of the fixed term, which is dependent on profit-sharing.
SFL Corporation has not disclosed the names of the charterers, ship sellers, or shipbuilding yards involved. However, these agreements will bring the company's total additions to its fixed leasing backlog to over $1.6 billion this year.
This investment follows SFL's entry into the VLAC sector earlier this month, when the company ordered two 93,000 cubic meter dual-fuel vessels for approximately $216 million and secured long-term contracts with a major European oil company worth at least $162 million.
Additionally, the company continues to recycle capital from older tankers. In early October, SFL agreed to sell four LR2 tankers and three Suezmax tankers to commodities trader Trafigura, which is expected to generate about $275 million in net revenue and $175 million in book profit.
These seven vessels were purchased in 2021, and their sale marks another step in SFL's transition to shipping assets with fixed contracts. Furthermore, SFL has expanded its portfolio of container ships by extending more contracts. In September, the company secured $750 million in new contract revenue by extending contracts for six 15,400 TEU vessels with Hapag-Lloyd for seven years, keeping these vessels operational until 2035 and 2036.
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