Thank you for standing by and welcome to the Capital Product Partners First Quarter 2015 Financial Results Conference Call. We have with us Mr. Petros Christodoulou, Chief Executive Officer and Chief Financial Officer of the company; and Mr. Jerry Kalogiratos, Chief Operating Officer. At this time all participants are in a listen-only mode. There will be a presentation followed by question-and-answer session. [Operator Instructions] I must advise you that this conference is being recorded today April 30, 2015. The statements in today's conference call, that are not historical facts, including our expectations regarding developments in the markets, our expected charter coverage ratio for 2015 and expectations regarding our quarterly distribution 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 obligation 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 statements by the performance of our common units. I would now like to hand it over to your speaker today Mr. Christodoulou. Please go ahead, sir.

Thank you, Melanie. And thank you all for joining us today. As a reminder, we will be referring to the support slides available on our Web site as we go through today's presentation. On April 23, 2015, our Board of Directors declared a cash distribution of $0.2345 per common unit and $0.21575 for the Class B unit for the first quarter of 2015 which would present an increase of about $0.002 compared to the distribution of the fourth quarter of 2014. The first quarter common unit cash distribution will be paid on May 15 to unitholders of record on May 7, the first quarter Class B unit cash distribution will be paid on May 8 to Class B unitholders over the record on May 1 this year. We are also pleased to announce a new distribution growth objective of 2% to 3% per year for the foreseeable future which we will discuss in more detail at the end of this presentation. The partnerships operating surplus for the quarter amounted to $29.9 million which is $1.3 million lower than the $31.2 million for the first quarter of 2014 mostly due to the earlier drydocking of two of our vessels in anticipation of their employment with Petrobras. On March 31, due to the delivery of the medium range eco product tanker M/T Active to the first of five dropdown vessels which the partnership agreed in 2014 to acquire from our sponsor. Upon delivery the vessel commenced a two-year charter with Capital Maritime at $17,000 per day plus a 50/50 profit share. Year-to-date, the partnership secured new employments for four of our vessels at increased rates as well. As a result of the new charters at the end of the first quarter of 2015, the average remaining charter duration of our charters to…

Thank you, Petros, and good morning. Starting with Slide 6, as we continue to take advantage of the current favorable rate environments in the product and crude tanker markets, in order to provide better cash flow ability to our unitholders, we are pleased to have secured year-to-date employment for a total of 4 of our vessels at decreased rates. The partnership chartered that the M/T Amoureux to Stena Bulk for two years at a gross annual rate of 29,000 with its $5000 per day higher than the vessels previous employment with CMTC of 24,000 gross per day. M/T Militiadis M II extended its time charter employment to Pemex for 11 months at an increased daily rate of $33,000. Previously the vessel earned $28,000 gross per day. The charter of the Amore Mio was also extended and as the table continued time charter employment of Capital Maritime for another 12 to 14 months and the gross daily rate of $27,000. The vessel was previously employed at the gross rate of $17,000 per day. Moreover, the Motor Tank Avax, one of our product tankers, which is the third product tanker to secure employment with Petrobras for three years at $15,400 gross per day. The charter is expected to commence at the end of April 2015. The vessel is currently earning $14,750 under its time charter employment with Capital Maritime. Finally, we are pleased to announce that today Total has exercised its option under the current charter party to extend the employment of the Motor Tanker Alkiviadis for additional 12 months at the rate of $15,215 per day, which represents an increase of $1000 compared to its current employment. The extension will commence since September 2015 and the early expiration of the charter is August 2016. Furthermore and as previously announced, the Motor…

Thank you, Jerry. Let's turn out to Slide 11, having increased the partnership distribution by $0.202 to $0.2345 per common unit and $0.21575 per Class B unit for the first quarter of 2015. We are pleased to announce our distribution growth objective of 2% to 3% per annum for the foreseeable future, our objective – it's of course objective achieving the 1.1x distribution coverage. This is based on the incremental cash flow expected from recently announced euro bonds, the potential for further growth through a number of sources that was the right of first refusal we have on the 6 MR product tankers currently under construction by Capital Maritime, other tanker and container vessels that capitalize and controls all from the second hand market. The financial flexibility provided by our balance sheet, the increased cash flow generated by a number of our vessels as they are being employed in a higher charter rates and the overall improving market backlog for product and crude tanker market as they both benefit from the lower oil price environment and the product tanker seeing increased from our demand average utilization due to refiner dislocation and the increased U.S. product exports while crude tankers benefit from the increased sourcing of crude oil from the Atlantic basin to the Far East [indiscernible] supplier of new ships in the short to medium-term. And with that, I'm happy to answer any questions you may have. Thank you.

Thank you, sir. [Operator Instructions] And your first question comes from Michael Webber from Wells Fargo. Michael, please ask your question.

Hi. Good morning, guys. How are you?

All right. Good. Thank you.

First, I wanted to start with the distribution growth guidance obviously it's been couple of years in the making, so I wanted to focus on it. Just curious around the timetable, I know you guys use foreseeable future within the ROEs just looking for and forgive me if you gave this and I missed it, I hopped on from another call. If you can give a bit more of detailed timeframe around, when you look at your current opportunities set in your current cash flows outside of whatever else maybe coming by a profit share or new growth how far do you think that could extend?

Well, we have made our announcement for this quarter, we appreciate you have various scenarios in your mind. We have given you a rough guidance of our objective to 2%, 3% growth in our distribution. We feel that as we have being and we have so far we want to be in the conservative side and would like to sort of surprise on the upside. So we listed a number of factors that would affect our future distribution. You can see why – and you can see that we have a lot of openings in the product segment. So we stand to gain from capturing in these rates.

Great. And if I think about it, guidance it's kind of a baseline, is it fair to extend that through 2016 at this point?

Mike, I think this distribution growth objective is based on the incremental cash flow coming from the drop downs. It does not factor in increased rates. So it is distribution objective that at this point and had it of course to market when we feel comfortable with for the next minimum two years.

Okay, perfect. That's helpful. I know you guys have talked about the year growth guidance, I'm just looking for some sort of fine print to kind of hang that on. Along those lines I mean, you mentioned you are being conservative and even with the most recent offering and with the growth guidance which – I would imagine more or less a number of years, your coverage ratios are still pretty healthy. And then north of 1.1 and I think we get to 1.2 at certain timeframes. In that – in the new scenario what kind of growth guidance out there, where your target coverage ratio on a go forward basis and you mentioned the ability to maybe get more aggressive if you do hit some more in the money and the money charters on the product tanker side, at what level should we start thinking about your ability to maybe surprise the upside from a coverage perspective, what coverage level?

We would obviously as Jerry mentioned we are – after this year we know that dropdowns, so we have announced, we have various scenarios for growth for either at the end of this year or 2016. And this coupled of course with the better period rates that you mentioned will shape our distribution growth going forward. So I don't think we are preferred much more at this stage.

Okay. That's helpful. And just one more around –

Mike, I think as we have communicated at our distribution growth is more correlated with the expansion of our fleets and our growth in that way rather than with the moving rates. So we want whatever distribution we said to be sustainable with the long-term. So increasing rates that can translate into an increasing distribution, it's more – this is more tied with our fleet growth, increased rates might translate into higher reserves which can help us on a rainy day.

Right. Okay. That's fair. I can follow up offline. There is one more I will it turn it over, from a profit share perspective on the product tanker side hit a bit this quarter. Just thinking a minus of 1 net cash actually translates to the balance sheet and how that's trending thus far in Q2, I think we have a big idea considering rates have been strong, how that cash actually translates and when that should hit your balance sheet?

I apologize. We must have missed part of your question. Can you just repeat it? I'm sorry.

In terms of the profit share, obviously, seen a money a bit, can you talk to – can you remind us how that actually hits your – how that's broken out, actually hits your cash flow statement throughout the year, is it semi-annual or annual?

The profit share from the Active, the vessels that was delivered to us at the end of the previous quarter. And the profit share from the Amoureux the other end market product tanker. This is going to be settled biannually, so every six months. And it's on the actual profit of the vessels. This is different from the profit share that we have on other product tankers which was on trading outside IEA. So that means effectively highest rates. So that profit shares that you have this quarter the $660,000. This was from highest rate for two of our product tankers the Apostolos and the Anemos, so about $260,000 each. And then another 130 from the Suezmax Amoureux, we have had a six plus six month profit share on the 50/50 base from the actuals. So but as you know Amoureux will be charted to Stena Bulk, so effectively you will have two MRs which have normal profit sharing to one and then actuals and this will be settled biannually. The rate will only depend on when the vessels trade in-house.

Okay. That's helpful. And I appreciate the color guys. Thank you.

Thank you.

Thank you. Your next question comes from Ben Nolan from Stifel. Ben, please ask your question.

Yes. Thanks. So real quickly on the distribution and having Mike covered a lot of sort of the dynamics behind growth. But, was curious about the rationale for this specific increase the point – or 0.02, little point less than a quarter penny increase quarterly. How did you arrive at that numbered seems like sort of a very specific sort of number. What was the rationale behind that specifically?

Well, as we said, we looked at our projected dropdowns and earnings generated from them and honoring our target for the coverage. It's not so much why 2020 or why not 2015 or why not 2025 or 2030, it's more like give – take into account the growth objective for the foreseeable future as Jerry said before for this and next year. And I think with further dropdowns that we are contemplating we will be able to assess that.

Okay. So should I – maybe think about this is sort of you – something that you guys review every single quarter and to the extent that there is a little bit of growth you can add a little bit to each quarterly distribution according to sort of your coverage ratios or is it maybe something that you don't revisit quite as frequently?

No. We expect to have a more change frequently I would say in the quarter.

Okay. That's helpful. And now sort of switching to your day rate payment obviously you have been able to restructure some of that and postpone some amortization prepay something. The one that wasn't sort of broken out the presentation was that 2013 facility, could you remind me what the amortization schedule is, I believe there is nothing until at least 2016. But, how does that facility sort of work in with this schedule that you have in the presentation.

Well, we didn't mention that facility because nothing changed there really. But, as you correctly pointed out there is no amortization for until March 2016. And assuming that the facility will be fully drawn by end of the year, you will have the same point for 10 million on an annualized basis in terms of amortization payments.

Okay. You said 15.4?

15.14.

14, okay. Perfect. All right. That's very helpful. And then I think lastly well, actually I have two more but really quickly there is the two container ships to 8000 TEU container ships that you guys have on contract with Maritime. I believe there is an option for them to extend in the first of those is coming up pretty quickly. Have you had any indication from them whether are not they intent to extend that contract?

To remind you, the term period is until the 31, August 2015 at $34,000 for the Agamemnon and until the 18, November 2015 for the Archimidis. Then Maersk has a number of options they have one-year flexible option of 51500 another year flexible at 50500 and then another two years of 32000 same for the Archimidis. So far the container markets has been firm until the beginning of the year basically in all segments with limited available on that's for 2015 and given flexibility about our charters provide to MassLime because the structure given them a lot of flexibility with all these options. And I think it – ability that they will continue with six going forward. That's the current market rate is not far off from the option of the rate that Maersk had the options at. Having said that, it's always very difficult to put rate when it comes to the container market because it's not as liquid as a tanker market.

Hey, thanks. So that's helpful. And then my last question sort of is more macro oriented around the product tankers obviously you guys have a number that are coming off contract pretty soon, the sponsor has a number of new builds that you guys have options to acquire. Could you maybe talk me through the how you are thinking about and maybe how the market is at the moment for longer term contract availability i.e., is there a firm market and would you be interested in contracts that do have five, eight year kind of durations or is that not in the cards to speak?

Well, I think the fourth quarter of 2014 and of course into the first quarter of 2015 and as well as today we have had very strong spot market for product tankers. Cold, winter I mean the Northern Hemisphere helped out primary outages and strikes in the U.S., of course were helpful. But, all in all it seems that the lower oil price and the more architectural facilities that this creates in the Atlantic have created a very active market. And if you couple it together we have new refineries that are coming on line East of Suez, Yanbu refinery or the [indiscernible] refinery that thus came online. We see an active market for us spot rates have been in excess of $21,000 year-to-date that were not very different in the fourth quarter of 2015. And as a result, period rates started to follow there is always a lag. Today one year deal can be done between $15,750 and $16,250 depending on position and cargo and maybe slightly less for two years. As the spot market continues to be strong, you see increasingly more charters trying to take charter coverage and they are willing to offer longer term duration. So what used to be a market of mostly 12-month deals to-date, if you are here to get 24 months deals. Some people might go a little longer. So what I'm trying to say is that no, we don't see many five year deals out there but we do to-date two or three year deals like the ones we did with Petrobras for example. And dozen market continues to be strong, a spot market then I think you will increasingly find that the charters will be out there to offer more covenants at increased rates. So it's healthy market overall, we see a lot of period activity. It's mostly between one to two years unless duration of three years and above. But, demand is there.

That's very helpful and very thorough answer. Thank you. And that does it for my questions. Thanks a lot guys.

Thank you.

Thank you very much. And your next question comes from Spiro Dounis from UBS Securities. Please ask your question.

Hi, Petros and Jerry, how are you?

Hello.

Yes. Just wanted to follow up on that last answer as it relates to I guess vessels participating in profit sharing arrangements looks like the levels fallen over the last few quarters and I guess I'm just trying to figure out maybe going forward, is that really just a function of rates being higher in general and therefore maybe an unwillingness by charters to enter into profit sharing arrangements, or is it just you making internal decision to I guess lock-in a higher rate today and not worry about the upside?

Well, I think it's a bit of both really as you put charter as – for higher rates – when profit share is taken off the table and that is a fact. But, also a lot of our profit share aligns previously where only on nine stages. So effectively or especially on new products, so effectively now with the addition of the Active and the Amadeus, the other MR that will come in June. You will have proper profit share on two product tankers. But, you are right, I mean, the more it goes for higher rates, the less the profit share.

Okay. Make sense. And then just respect with the recent pay down and debt maturity extension, do you feel like you have sufficiently secured the balance sheet where future debt and equity transactions were really just be around new dropdowns or I mean you shown to be opportunistic in the past, yes, we are trying to refinance, could we see do something later this year to I guess push something out even further.

When you have seen our leverage drop down significantly, right?

Right.

We have to leverage the loss. That is opening up a lot of options for us in the future including our plans for further dropdowns. And to remind you we expect if we want to go to get a rating now, we are given a better rating from the agencies and we got the early part of – early on this year. So that's opening up sort of all the options to us.

Great. And then just last one, with respect to the six right of first refusal assets, I believe they are all eco-MRs, just to be thinking about, I guess if they were in the spot market you are operating, you go to get the full benefit savings on the fuel, but I suppose obviously you are going to be time chartering these vessels. Should we – or would it be reasonable to expect that you get maybe a premium to the charter rate at the time assuming that the charterer would be willing to share some of those benefits with you?

Well, the current period market that allocate the premium for eco-MR tankers. If you recall, we are calling the one-year period market between $15,750 to $16,250, but you will find that eco-MRs are fixed closer to 17. The Active and the Amadeus two eco-MR tankers that are fixed couple of Maritime demonstrate that. But also recent fixtures, for example ExxonMobil fixed for three years, eco-MRs have $16,650 and other traders or operators that would be willing to pay even more. I would say that today we – our charters are willing to pay about $750 to $1000 above conventional MR for an eco product tanker.

Great. Very helpful color. Thanks guys.

Thank you.

Thank you very much. And your next question comes from Amit Mehrotra from Deutsche Bank. Please ask your question.

Yes. Thanks very much. I just want to clarify a previous comment on the distribution growth guidance of 2% to 3% per year. I think I know the answer, but I just want to make sure I'm thinking about it correctly. The guidance, does it mean that if you basically add up all the quarterly distribution this year, it will be 2% o 3% above the total distributions last year. Or is there a potential reset every quarter so that when you actually look at it on a full year basis we could be talking about something greater than 2% to 3%.

Well, it's not going to be necessarily the same absolute increase every quarter, okay. But, we gave you the collective growth for the year and go for the next few years. And obviously, as I mentioned before, we can definitely more certain – be more certain for this year that we are – we have already factored into the dropdowns that we know when we have bottom-size like regarding the other options we have and the other projects we are looking at, obviously, that will give you different metrics. And but I think the 2% growth for the next – per annum for the next two years, I think this gives you a fix all this as I reiterate well being on the conservative side.

Okay. Just want to follow up on that because, so I was thinking about it correctly, but Petros the company has been sort of talking about quote “a new growth space” for some time now. And I would just imagine that would translate to something greater than long-term inflation trend. And so how do you sort of reconcile the two, and maybe you are right, maybe just conservative but there is relatively good visibility here, so can you just maybe help us understand how conservative it is. And just a follow-up to that, the 2% to 3% assumes – what is that sort of assume in terms of coverage if the accretive recharters which have been a good part of the story here are going to just basically boost reserves?

Well, Amit the – this is the first distribution increase for the partnership since the third quarter 2010. So it is definitely a new growth phase for us. What we are trying to say is that distribution growth at least distribution guidance that we are giving today is linked to the growth of our fleet not necessarily the increase in the rates. So of course, they – the additions set to the fleet that they will by now during the remainder of 2015 and it should look like in 2016 there we will always think for 1.1x unit covered. And if we have increased customer from new charters, we can always put aside for transfer any day. Now, having said that, this will also help us and having also very strong balance sheet we can boast off because of the reasonable payment. We should be able also to add more tonnage to the fleet and if we find accretive acquisitions and then maybe revisit distribution growth. But, we do not want the base distribution growth on charter rates that might not be sustainable thereafter.

Right. And okay that makes sense. Just one last question if I can, it's a little bit of a follow-up to the last question but just after the equity issuance and sort of with respect to perspective funding requirements, can you just update us on the company's capital commitments related to the acquisitions schedule, and I assume that a large chunk of that is going to be addressed with additional draw downs of debt as well as cash in the balance sheet. So if you can just confirm that that's the right way I'm thinking about it.

We are going to drop another 135 roughly million from the 2015 facility. The rest we have the cash already in place. We will be left with a hefty cash position, which we expect to be well north of let's say 70 million towards year-end. But, we are looking at various other projects so which are not too much enough space to settle.

Okay. All right. Thank you very much.

Thank you.

Thank you. Your next question comes from Ben Brownlow from Raymond James. Ben, ask your question please.

Thanks for taking the question. Just follow up on earlier – on the six vessel options that are kind of late this year and through 2016, can you remind us again of the decision timing for those rights and is that based primarily on just kind of waiting until those two year charters are secured for those vessels, or just give us the kind of a overview on the decision process and timing for those?

Sure. The criteria needs to find employment and it should be also accretive employment so if and when Capital Maritime employment then we will look at those vessels. But, for the moment nothing has been secured. There are many discussions but I think don't forget the first – from the series of these vessels we – vessels will be delivered to Capital Maritime only from September 2015 onwards. So there is still time.

Okay. And going back to the guidance the assumptions that you gave for the 2% to 3% growth that I think I heard you mention that conservatively does it factor in improved tanker recharters, is that correct?

It is based on rate environment that is lower than the current environment. Yes, so effectively, yes, it does not take into account higher income today. We have used more conservative way to be able to give you that distribution growth. And of course, that is not taken into account any new additions to the fleet.

And then just one last one for me, I assume the guidance probably assumes either the current rate environment for the containerships, is there any reason to expect an improved market there or just your thoughts on the outlook for the year, that side vessels? Thanks.

Container market has seen a marked improved since the beginning of the year. And that is most segments, mostly on smaller ships but also in the bigger ones, especially for the 8,000 to 11,000 TEU segment. And we have seen another positive development which is that all speculative tonnage, so tonnage that is not owned by liners has been already absorbed. So the incremental demand for this type of ships should boost rates higher. Now, there have been some certain factors such strikes in the West Coast – in terminals in the West Coast that has driven the container market upward. But, overall, I think the outlook is much leisure and you will find that one additional positive development in the container side is that the idle fleet has now been reduced below 2% with – should be a good thing for increased fleet utilization. So yes, there are signs of the container market is improving especially for smaller segments and I think it will be prudent to see what happens over the next 6 to 12 months and see how sustainable this is.

Great. Thank you.

Thank you.

Thank you. And your next question comes from Sunil Sibal from Global Hunter. Please ask your question.

Hi. Good morning, guys. Many of my questions have been asked and answered. Just had a quick follow-up on one of the comments you made and I just want to make sure that I get the numbers right. I think in your opening remarks you had indicated that you are signing a new agreement on with Total, could you just repeat what kind of rates you were getting for that?

Sunil, sorry, can you repeat the question please.

Yes. I think in your opening remarks you mentioned about a new contract with Total for one of your vessels and I just wanted to make sure that if you could repeat the numbers in terms of what rates are you getting from that particular contract?

Yes, right. This is -- actually it is an existing charter where Total had an option to extend which they does exercise today and certainly before our conference call. So that's why it's not reflected on the presentation. So Alkiviadis which is on – is on a 12-year charter to Total at $14,125 has been now extended for another 12 months commencing from September 2015 at $15,125, so a $1000 more. That was an option that Total had under the current charter party.

Okay. That's pretty helpful. And that's all I had. Thanks.

Thank you, Sunil.

Thank you. And your next question comes from Shawn Collins from Bank of America. Please ask your question.

Great. Thank you. Hi, Petros and Jerry, good afternoon.

Hello.

On Slide 5, if you reference debt and what not, can you talk about capital structure, you have deleveraged quite a bit now you are currently at a debt to equity I think in the low 3x range. How do you think about ideal future debt and leverage ratios, and is there a minimal level i.e., 2, 2.5 I don't want to put words in your mouth, but and is there a maximum level i.e., 5x, what do you think about this?

Yes. We will be seeing below 5, of course. We want to – we believe we are on the leverage at the moment. And so we have [indiscernible] if you like to delever at this stage. But, we think that we shouldn't be targeting much lower leverage than we have now.

Okay. That's direct and understandable. I appreciate that. Did the – your underlying markets crude and product markets are particularly healthy and robust, I'm just wondering, have you seen any recent unexpected oil trade activity in a particular region whether it would be Asia or the Middle East or the Americas, anything that has surprised you?

Shawn not really, I guess. The developments over the last few years are the ones that we see – we continue to see maybe in the more in hands way. We have seen for example more condensate moving from the U.S. We have seen of course the U.S. product exports out of the U.S. Gulf. I think we continue to sit tight and India sourcing more crude from the Atlantic. I think for the last six months the issue of strategic reserves building both for China and India has been very important to the market. But overall, you see more trade because simply as oil price – all product prices are lower and traders as well as majors they can trade more with the same credit facilities, which are in balance. So there is increased trade that is for sure.

Great. That's helpful. Thank you for the time guys.

Thank you.

And your final question comes from Hardin Bethea from HSB Capital. Please ask your question.

Hi, guys. One question regarding the Capital Maritime in treating fleet that you profiled in some of your comments. The additional 9000 TEU containerships any of those have charters attached that might makes them eligible for dropdown?

Well, as we disclosed this is in a joint venture with a private equity firm as Capital Maritime is a minority shareholder. So we don't disclose much that joint venture. But, there is of course an opportunity for Capital Partners, we are as close as it gets to be able to have a proper look at it. But, if you allow us – will allow us, and we don't disclose much without going into a different direction here.

Okay. As a minority hold or a minority interest holder in the joint venture does Capital Maritime ultimately does not control that decision to sell assets?

That is correct.

Okay. All right. Thank you.

Thanks.

There are no further questions at this time, sir. Please do continue.

Well, we thank you for listening to this quarter's call. And for any further questions please feel free as usual to talk to Jerry or me. And we will be happy to accommodate any of your questions by phone or email. Thank you.

Ladies and gentlemen, that does conclude your conference for today. Thank you all for participating. You may all disconnect. Speakers please standby.