Performance Shipping Inc. Secures Sale and Leaseback Agreement for Newbuilding LR1 Tanker

Rhea-AI Summary

Performance Shipping (NASDAQ: PSHG) entered a sale and leaseback for its LR1 newbuilding, M/T P. San Francisco, due for delivery in early 2027. The bareboat financing totals US$37.8 million with a ten-year bareboat charter and 120 monthly installments equal to US$5,451 per day.

The agreement carries an implied rate of Term SOFR + 2.00%, a balloon payment of ~US$18.1 million at final installment, and continuous repurchase options after year two. The vessel has a four-year charter to Mercuria at US$23,750/day, above a stated cashflow breakeven of US$22,200/day.

Positive

• US$37.8M financing secured almost one year before delivery
• Charter to Mercuria at US$23,750/day, above breakeven
• Financing equals 70% of vessel contract price
• Repurchase options available after second anniversary

Negative

• Balloon payment of approximately US$18.1M due at maturity
• Interest exposure at Term SOFR + 2.00% introduces rate risk
• Ten-year bareboat term creates long-term payment obligations

Key Figures

Bareboat financing: US$37.8 million Charter duration: 10 years Bareboat installments: US$5,451 per day +5 more

8 metrics

Bareboat financing US$37.8 million Sale and leaseback amount for LR1 newbuilding M/T P. San Francisco

Charter duration 10 years Bareboat charter period from vessel delivery

Bareboat installments US$5,451 per day Equivalent daily rate for 120 monthly installments

Balloon payment US$18.1 million Balloon due with final bareboat installment

Contract leverage 70% Financing as share of vessel contract price

Cashflow breakeven US$22,200 per day Stated vessel daily cashflow breakeven level

Time charter rate US$23,750 per day Four-year gross charter rate with Mercuria upon delivery

Charter firm period 4 years Initial fixed term of Mercuria charter, plus three 1-year options

Market Reality Check

Price: $2.08 Vol: Volume 93,756 is below th...

low vol

$2.08 Last Close

Volume Volume 93,756 is below the 20-day average of 204,496 (0.46x). low

Technical Price at $2.19 is trading above the 200-day MA of $2.00, despite the -2.23% move.

Peers on Argus

PSHG fell 2.23% while close marine shipping peers showed mixed moves: GLBS +5.63...

1 Down

PSHG fell 2.23% while close marine shipping peers showed mixed moves: GLBS +5.63%, CTRM +0.95%, USEA -3.86%, EDRY +3.05%, HTCO +7.90%. With peers not moving uniformly and only one unrelated stock in momentum scans, the reaction appears stock-specific rather than sector-driven.

Historical Context

5 past events · Latest: Mar 04 (Neutral)

Pattern 5 events

Date	Event	Sentiment	Move	Catalyst
Mar 04	Q4 2025 earnings	Neutral	-8.8%	Reported Q4 and full-year 2025 financial results with mixed trends.
Mar 02	Newbuild contracts	Positive	+0.4%	Signed contracts for two 158,000 DWT Suezmax tankers to expand fleet.
Feb 17	Vessel sale	Positive	+2.4%	Agreed to sell oldest Aframax vessel M/T P. Sophia at an implied gain.
Jan 20	Time charter deal	Positive	+0.0%	Secured three-year charter for M/T P. Monterey at US$31,000 per day.
Jan 14	Newbuild delivery	Positive	+1.9%	Took delivery of LR2 tanker M/T P. Marseille under a five-year charter.

Pattern Detected

Fleet renewal and charter announcements have generally seen modestly positive or flat reactions, while the latest earnings release coincided with a sharper selloff, suggesting stronger sensitivity to financial results than to operational expansion news.

Recent Company History

Over recent months, PSHG has focused on renewing and expanding its tanker fleet while locking in medium- to long-term employment. On Jan 14, it took delivery of LR2 vessel M/T P. Marseille under a five-year charter. A new three-year charter for M/T P. Monterey was announced on Jan 20, lifting backlog. On Feb 17, the company agreed to sell its oldest Aframax, M/T P. Sophia, at a gain, reinforcing fleet renewal. Early March brought two Suezmax newbuilding contracts, followed by Q4 and 2025 results on Mar 4, after which the stock declined sharply.

Market Pulse Summary

This announcement details long-term financing for the LR1 newbuilding M/T P. San Francisco via a US$...

Analysis

This announcement details long-term financing for the LR1 newbuilding M/T P. San Francisco via a US$37.8 million sale and leaseback and a 10-year bareboat charter. Management highlights a daily cashflow breakeven of US$22,200 versus a fixed charter rate of US$23,750 for at least four years, with additional extension options. In context of recent fleet additions and charters, investors may focus on contract coverage, delivery timelines into early 2027, and how this structure interacts with existing debt and renewal plans.

Key Terms

sale and leaseback, bareboat, bareboat charter, balloon payment, +1 more

5 terms

sale and leaseback financial

"it has entered into a sale and leaseback agreement with an unaffiliated third party"

A sale and leaseback is a financing arrangement where a company sells an asset—often property or equipment—to a buyer and immediately rents it back under a long-term lease. Think of selling your house to free up cash but staying as a tenant; the company gets immediate funds while continuing to use the asset. Investors watch these deals because they change a firm’s cash position, debt or lease obligations, and ongoing costs, which can affect profitability and financial risk.

bareboat financial

"chartered back to the Company on a bareboat basis for a ten-year period"

A bareboat arrangement is a lease of a ship where the renter takes the vessel without crew, fuel, or support and becomes responsible for operating, insuring, and maintaining it for the hire period. For investors, bareboat deals shift day-to-day costs, risks and often the accounting treatment onto the renter—similar to renting a car and handling driving, fuel and repairs yourself—so they can materially affect a company's cash flow, liabilities and reported assets.

bareboat charter financial

"The bareboat charter includes 120 monthly installments equivalent to US$5,451 per day"

A bareboat charter is a leasing arrangement where one person or company rents a vessel without crew, equipment, or supplies, essentially taking full control of it as if they own it. It matters to investors because it can be used to generate income from the vessel’s use or to reduce ownership costs, influencing a company's revenue and asset management strategies.

balloon payment financial

"Additionally, a balloon payment of approximately US$18.1 million will be due"

A balloon payment is a large, single lump-sum due at the end of a loan after a schedule of smaller regular payments; think of it as making modest monthly payments like rent but owing one big bill at the finish. For investors, it matters because the borrower's ability to make or refinance that final payment affects credit risk, cash flow timing and the value of debt or equity tied to that borrower—unexpected shortfalls can cause losses or force restructuring.

term sofr financial

"with an implied interest rate of Term SOFR plus 2.00% per annum"

Term SOFR is a benchmark interest rate that reflects the cost of borrowing money over a specific period, based on actual transactions in the financial markets. It is used by lenders and borrowers to set the interest rates on loans and financial contracts, helping to ensure rates are fair and transparent. For investors, understanding term SOFR helps gauge borrowing costs and the overall direction of interest rates in the economy.

AI-generated analysis. Not financial advice.

ATHENS, Greece, March 17, 2026 (GLOBE NEWSWIRE) -- Performance Shipping Inc. (NASDAQ: PSHG) (“we” or the “Company”), a global shipping company specializing in the ownership of tanker vessels, today announced that, through a separate wholly-owned subsidiary, it has entered into a sale and leaseback agreement with an unaffiliated third party for its previously announced LR1 tanker newbuilding vessel, to be named M/T P. San Francisco (the “Vessel”), currently under construction at Jiangsu New Yangzi Shipbuilding Co., Ltd. and scheduled for delivery in early 2027.

The bareboat financing amount totals US$37.8 million. As part of this agreement, the Vessel will be sold and then chartered back to the Company on a bareboat basis for a ten-year period starting from delivery from the shipyard. The bareboat charter includes 120 monthly installments equivalent to US$5,451 per day, with an implied interest rate of Term SOFR plus 2.00% per annum. Additionally, a balloon payment of approximately US$18.1 million will be due together with the last installment. The Company has continuous options to repurchase the Vessel at predetermined rates following the second anniversary of the bareboat charter.

Andreas Michalopoulos, the Company’s Chief Executive Officer, stated:

“We are pleased to announce the new financing arrangement for our LR1 newbuilding, secured almost one year ahead of the vessel’s expected delivery date. The financing represents 70% of the vessel’s contract price and an even lower leverage level when considering current market values for modern LR1 newbuilding tankers, while maintaining a conservative cashflow breakeven level of US$22,200 per day.

“As previously announced, the vessel has been chartered to Mercuria Energy Trading S.A. for a firm period of four years upon delivery, at a daily gross charter rate of US$23,750, providing coverage above the vessel’s daily cashflow breakeven, with options to extend the charter for up to three additional one-year periods. This financing is consistent with our strategy of fleet renewal, fleet deployment and balanced financial management.”

About the Company

Performance Shipping Inc. is a global provider of shipping transportation services through its ownership of tanker vessels. The Company employs its fleet on spot voyages, through pool arrangements, and on time charters.

Cautionary Statement Regarding Forward-Looking Statements

Matters discussed in this press release may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include, but are not limited to, statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts including with respect to employment of our fleet and vessel deliveries. The words “believe,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” “plan,” “potential,” “will,” “may,” “should,” “expect,” “targets,” “likely,” “would,” “could,” “seeks,” “continue,” “possible,” “might,” “pending” and similar expressions, terms or phrases may identify forward-looking statements.

The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including, without limitation, our management’s examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs, or projections.

In addition to these important factors, other important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include, but are not limited to: the strength of world economies, fluctuations in currencies and interest rates, general market conditions, including fluctuations in charter rates and vessel values, changes in demand in the tanker shipping industry, changes in the supply of vessels, changes in worldwide oil production and consumption and storage, changes in our operating expenses, including bunker prices, crew costs, drydocking and insurance costs, our future operating or financial results, availability of financing and refinancing including with respect to vessels we agree to acquire, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, the length and severity of epidemics and pandemics, including COVID-19, and their impact on the demand for seaborne transportation of petroleum and other types of products, general domestic and international political conditions or events, including “trade wars”, armed conflicts including the war between Israel and the U.S. and Iran and the consequent disruption of shipping routes, war in Ukraine and the war between Israel and Hamas, the imposition of new international sanctions, acts by terrorists or acts of piracy on ocean-going vessels, potential disruption of shipping routes due to armed conflict, accidents, labor disputes or political events, vessel breakdowns and instances of off-hires and other important factors. Please see our filings with the US Securities and Exchange Commission for a more complete discussion of these and other risks and uncertainties.

Corporate Contact:
Andreas Michalopoulos
Chief Executive Officer, Director and Secretary
Telephone: +30-216-600-2400
Email: amichalopoulos@pshipping.com
Website: www.pshipping.com

Investor and Media Relations:
Edward Nebb
Comm-Counsellors, LLC
Telephone: + 1-203-972-8350
Email: enebb@optonline.net

FAQ

What are the key terms of Performance Shipping's (PSHG) sale and leaseback for the LR1 vessel?

The deal is a sale and ten-year bareboat lease with US$37.8M financing and 120 monthly installments. According to the company, there is an implied rate of Term SOFR + 2.00% and a balloon payment of ~US$18.1M.

When will the M/T P. San Francisco (PSHG) be delivered and when does the bareboat charter begin?

Delivery is scheduled in early 2027 and the ten-year bareboat charter starts on delivery. According to the company, charter payments are structured as 120 monthly installments across the term.

How does the Mercuria charter for PSHG's LR1 compare to the vessel's breakeven rate?

Mercuria will charter the vessel for four years at US$23,750/day, which is above the stated cashflow breakeven of US$22,200/day. According to the company, this provides coverage above daily breakeven.

What financing exposure and future obligations should PSHG investors note from the sale and leaseback?

Investors should note an implied interest of Term SOFR + 2.00%, monthly payments equivalent to US$5,451/day, and a final balloon payment of ~US$18.1M. According to the company, repurchase options exist after year two.

How much of the LR1 contract price does the PSHG financing cover?

The financing covers 70% of the vessel's contract price. According to the company, market values for modern LR1 newbuildings imply even lower leverage versus current prices.

Does PSHG have options to repurchase the LR1 vessel after the sale and leaseback?

Yes. According to the company, continuous repurchase options are available at predetermined rates following the second anniversary of the bareboat charter, providing ownership flexibility.