Euroseas is investing more money in the feeder segment of a containership market that has been on fire this year.
The US-listed shipowner has bought the 1,740-teu Piraeus Trader (built 2006) for $25.5m.
The ship is currently owned by Lomar Shipping and has a market value of $26.1m, according to VesselsValue.
Euroseas will have 10 feeder boxships and five intermediate container vessels once the vessel, which will be renamed Jonathan P, is delivered next month.
Euroseas has already lined up the ship with a three-year charter at $26,700 per day upon delivery.
The fixture is expected to add about $22m of Ebitda over the span of the charter, bringing the total investment cost below its current scrap value of $4.71m, Euroseas said.
The New York-listed sister company to dry bulk vessel owner Eurodry plans to pay for the latest asset play with its own funds and a bank loan.
"Of course, if the market after the end of the charter in three years is anything but terrible, we are bound to have significant further upside," chief executive Aristides Pittas said in a statement.
“At the same time, the current strong demand for securing vessel capacity for the medium and longer-term does not seem to be abating."
Those pending regulations
He said Euroseas expects the boxship sector's "such favourable market fundamentals" will continue because new green laws coming in effect by 2023 will further squeeze tight supply.
"Though, at some point, the logistical and operational inefficiencies attributable to the pandemic will start easing," he said.
Pittas said Euroseas still plans to keep growing its fleet "in a risk-measured and accretive manner" to maintain its status as the main US-listed owner of feeders and intermediates.
He said his company expects to add about $115m in total to Ebitda over the next three years by fixing a remaining 50% of open days within the next few months.
"[This] should form a solid foundation for our share price to move upwards towards its net-asset value and, potentially, assist us in consolidating other vessels or fleets.”
Euroseas announced this acquisition two months after placing its first newbuilding order since setting up shop 16 years ago.
The Athens-based outfit booked a pair of 2,800-teu vessels at Hyundai Mipo Dockyard in South Korea, to be delivered in the first half of 2023.
The company has said it will pay $76m in total for the eco-design, fuel-efficient vessels through equity and debt.
Euroseas last month posted second-quarter net profit attributable to common shareholders of $7.6m due to soaring freight rates, far exceeding year-ago attributable earnings of $1.1m.
Revenue rose by more than one-third to $18.3m as the average time charter equivalent rate of Euroseas’ ships jumped by 57% to $14,853 per day.
For the entire first-half, net income attributable to common shareholders jumped to $11.1m from $2.9m in the first six months of 2020.
This year’s results include a $1.1m gain from a dispute with a Middle Eastern cash buyer, which ultimately went in Euroseas' favour, as TradeWinds previously reported.
