Thank you for standing by and welcome to the Capital Product Partners Fourth Quarter 2016 Financial Results Conference Call. We have with us Mr. Jerry Kalogiratos, Chief Executive Officer and Chief Financial Officer of the Company. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session [Operator Instructions] I must advise you this conference is being recorded today 31, January 2017. The statements in today's conference call that are not historical facts, including our expectations regarding developments in the markets, fleet developments, our ability to pursue growth opportunities, our ability to refinance our debt, our expected charter coverage ratio 2017 and 2018 and expectations or objectives regarding our quarterly distributions and annual distribution guidance maybe 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 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, Lawrence. And thank you all for joining us today. As a reminder, we will be referring to the supporting slides available on our Web site as we go through today's presentation. On January 18, our Board of Directors declared a cash distribution of $0.08 per common unit, which represents an increase of 0.5 cents compared to the common unit distribution for the third quarter of 2016. The fourth quarter common unit cost distribution will be paid on February 15 to unit holders of record on February 6. In addition on January 18, our Board of Directors declared a cash distribution of $0.21375 for Class B unit for the fourth quarter of 2016. The fourth quarter Class B cash distribution will be paid on February 10 to Class B unit holders of record on February 3. The partnerships net income for the fourth quarter stood at $13.7 million compared to $15.4 million in the fourth quarter of 2015 and $11.8 million in the previous quarter and in September 30. The partnerships operating surplus for the quarter prior to Class B unit distribution amount to $34 million, an increase of 7% compared to $31.7 million for the previous quarter. That is excluding the proceeds from the sale of the HMM shares. Common unit coverage for the fourth quarter 2016 stood at a solid 1.7x. During the quarter and as previously announced, we completed the acquisition of the Amor from our sponsor for a total consideration of $32.7 million. The vessel is employed until October 2017 at a rate of $17500 gross per day. Also in the fourth quarter 2016 and in connection with the spin-off of International Seaways from its parent OSG, we agreed to increase the gross daily hire rate for three of our tankers which are currently employed…

Your first question today comes from the line of Michael Webber of Wells Fargo. Your line is now open.

Hey, good morning guys. How are you?

Hi, Mike. How are you?

Good. Good. Just a handful of questions for you Jerry. But first, I wanted to touch on the fees that you guys announced that you waived this past quarter, I know those are kind of legacy fees, but if you give me -- just give a bit of -- just a bit of context around where those came from, why they are there and just a bit of context around those because I know they didn't necessarily impact the entire fleet.

Sure. The reason that we had these -- let's say these fees, they wanted to work their chartering fee and the one percentage of fee before three of our vessels, was that -- these vessels were part of crude carriers, a company with which we merged back in September 2011. Those vessels came with their own management agreement which we took over. And as a result, we carried if you want these fees forward. It is important to stress that the all or other management agreements do not have such fees S&P or chartering fees. And as this was a topic that was discussed it was as I said a legacy that we were just carrying forward, the Capital Ship Management agreed to waive them and here we are.

Got you. Okay, that's helpful. Just wanted to touch quickly on growth, I guess around the dropdown pipeline. And then, kind of ability to restructure some of the boats further out, but and you guys have been laying out the growth pipeline and the assets of capital for several quarters now. Just curious is there any change in the way you prioritize that pipeline, obviously, you are geared to run with product tankers kind of earning at these levels that isn't necessarily negatively impact your operating performance at this point because you are going to regear the company around these levels. But, the Afra's on the crude side are going to carry charters? Just curious, you think about it now within the context of an improving market?

Well, we started with the Amor as you know which was a vessel that we had in the water had a lucrative charter to Cargill and that was in place. And as you might recall Capital Maritime received also units at a substantial premium for part of this consideration at the time. Now, when it comes to additional dropdowns, the criteria are in the end quite straight forward. I mean assuming that we have the capital in place, it is the accretion and as well as the cash flow visibility that these vessels offer. And so what we have today, I mean what the sponsor control today, we have five product tankers, sisters of the Amor, which trade in the spot market and as such might not be an ideal if you want candidate at least in the short-term or at least when we can secure accretive time charters. But, we also have the two Aframaxes which have five-year charters and now have been delivered to Capital Maritime. So, given that we have the debt financing for certain of these vessels and certain of these vessels also carry long-term charters, we also have part of the equity we expect that we should be able to conclude additional dropdowns within 2017.

Okay. That's helpful. One more for me and I will turn it over and I will let someone else search in the debt. But, I want to test you at the two containerships you guys have rolling later this year, the Archimidis and the Agamemnon. Obviously, those have been repriced already to rate at markets, there is a ton of rollover is there. But, they look they are hitting a market which should be a pretty firm time seasonally. So, just curious what's your expectations are for whether or not you can get those charter -- rechartered I guess ahead of time and whether we should anticipate any kind of modest degree of cash flow interruption for those if they do happen to ideal for a month or two as you look to re-let them?

Well, as you know, the container market while it was -- it saw certain signs of recovery pre-Hanjin bankruptcy unfortunately the Hanjin bankruptcy created a big gap in the market and meant that the number of ideal vessels are currently trying to secure employment quite a few of them also on the post Panamax side. So, when it comes to the -- to our Two 8,000 to use, you can be certain that the charters will not exercise the option. But, we are in advance discussion for the vessels to continue with the present charter for another year at similar today's level. So I won't expect a big drop or a big decrease or a big increase either.

And in terms of the visibility or the ability to get those re-let kind of ahead of their roll over date or is it too early to tell or are you pretty confident, you will be able to get something on before they actually roll?

Yes. I think we are quite confident that we should be able to secure ideally some of direct continuation. I think in this market, it's good to play defense and I think that's what we are going to try to do. I mean try to -- it's not so much of the rate, as you said effectively the vessels are -- have been already repriced at today's market it's important to secure utilization and not to -- if you want to commit for longer than call it 12 months. Because the markets, when you look at the container market, they are quite a few signs as to why, these markets could see a supply led recovery going forward especially demolition and lack of new building orders if this continues in 2017 and with demand being what it is, you could see slight, you could see a scenario where by the other fleet is being gradually absorbed and you see a better charter rate environment. So it's important whatever we do we will try to, as I said to ensure utilization at similar rates and make sure that we don't commit for too long because there could be enough suite down the line.

Got you. That makes sense. I will turn it over. Thanks Jerry.

Thank you, Mike.

Thank you. Your next question comes from the line of Ben Nolan of Stifel. Please ask your question.

Yes. Thanks. My first question I guess for -- my first for you Jerry is, I appreciate that you guys have the vast majority of your vessels on time charter at this point. But, specific some of the product tankers that have ice glass capability, there has been a lot of noise of about how it's cold in Europe and being in the U.S. can really appreciate that as well. But, I'm curious if those are trading in the ice and if there is a substantial premium for ice glass vessels this year relative to where it normally would be.

Typically as you say because we trade in the product in the period market, what will happen is that, when we fix a charter party the rate we will negotiate will depend on whether we will allow charterers to breach IWL or so called let's say to do ice trading. So, typically that's when we will get paid, that’s how you will see the premium. So in certain cases, for example, if I recall correctly, the -- I will give you out this charter with Total allows for ice trading and as such. There is a small premium built in. But in terms of the -- if you wanted the spot premium for ice trading, we don't see much of that unless we have profit share element, as we have in, I think, one of our vessels whereby we earn -- we split the profits 50%-50% when -- above the floor when the vessel trade in ice. So that's how we get the benefits of the ice, if you want.

Okay. And then, switching gears a little and maybe could you just walk me through, obviously, you guys were a little bit active in terms of the ATM offering, at the same time, you increased your dividends, could you maybe just walk me through how you are thinking about the allocation of the capital that you generate of the cash that you are generating obviously, there is an argument for increasing the dividends by the time choking, you are simultaneously raising equity. How -- may be just help me walk through my mind how the value of the relative equity plays out relative to increasing dividends or how you came to kind of do both at the same time?

Well, as you know, there we have put a capital reserve in place which has been clearly earmarked to repay our debt for the next let's between 2016 and 2018, so for three years. And that money, this $14.6 million on a quarterly basis, we put aside. So that's -- that money is put aside to repay amortization and this is something that we will not touch. Now if we build cash reserves in excess of these, we will aim for two things, firstly, completely accretive transactions with these assets as we have done already with the Amor, for example, with the proceeds of the sale of the HMM shares. And two, we will use potentially part of cost to help with the refinancing of our debt under favorable terms going forward. So that's -- that's where also the ATM comes in. So, we don't really touch the capital reserves because these are going for debt repayments. And the small proceeds from the ATM they can complete, for example, other sources such as, for example, HMM sale proceeds to do an acquisition. And that is also why I think we should be able to deliver on more accretive transactions within this year.

Okay, that's helpful. And kind of along on those same lines, could you maybe walk me through why you choose sort of the ATM profile as opposed to just weighing until there is a dropdown and then doing a simultaneous or nearly simultaneous equity raise associated with the acquisition?

Well, the ATM filing is a filing that we have in place, it has a nominal, let's say, amount $50 million on the cover and that only allows us to sell incremental common units in the market over a three year period. So -- and that as we deem appropriate and always within certain parameters. Since we are generating as you say a lot of liquidity and that we already had some proceeds from -- example, from the HMM share sale, we only needed incremental amounts of equity to complete transactions or potentially use some of that money in the refinancing of our debt. So the ATM was a good tool and that's how we -- that's why we choose to go ahead with it. As you have seen, we have been fairly prudent, I mean, by today we have sold approximately 1.7 million units or about 5.3 million in proceeds. So we are using this prudently and the net proceeds as they come in, we will use them as we deem appropriate either for acquisitions or the refinancing.

Perfect. But if there were say a larger -- if you were to dropdown one of the Aframaxs, it would maybe be a little bit more challenging to use the ATM given the scale, I would assume, is that a fair assumption?

Potentially. We will -- let us see what are our requirements at the time -- in terms of capital, I mean, at the same time, we do think that 2017 is a good time to look into the refinancing of our debts. As we have discussed, we have a good relationship with our banks, our balance sheet remains strong. And from the preliminarily discussions that we have had, we understand that the banks would be very much interested in participating in the potential refinancing assuming some moneys repaid more or less in line with the sums we are putting aside as a reserve. So I think -- let us -- we have some proceeds from the HMM shares, we have some incremental proceeds from the ATM, we are looking at the refinancing, we have potential acquisitions, let us see what we do first and then we see if we need the additional equity as you say in a more proper offering as you describe.

Right. That makes sense. Okay, while I -- my two questions stretched out a little further than I thought, but I will turn it over to someone else. Thanks, Jerry.

Thank you, Ben.

Thank you. Your next question comes from the line of Jon Chappell of Evercore. Please go ahead.

Good morning, Jerry.

Hi, Jon.

So, really one question and one follow-up then. On the charters to Capital Maritime, was that a function of -- I mean, it's kind of got a little bit away from maybe a bit of diversification with the fleet, so is that really a function of there wasn't much liquidity in the market overall for that type of duration time charter or was it more of a function of the rates available in the market at that time weren't as attractive as what Capital Maritime was willing to essentially backstop?

It was more of the former. I think as the market was weaker overall and as a number of charters still have a number of vessels on time charter at higher rates, as well as many of them have adapted the wait-and-see attitude with regard to prospects of the markets, there was very little demand for let's say 12 months or longer time charters. Capital Maritime is always a good fallback position, as you know for years it has offered the good rates to us and has given us liquidity. We are always looking for third party charters, but in cases like that where there is illiquidity in the market, it's -- if you want a fallback position.

So then the follow is then given the seven product tankers that come off contract in 2017 and then given the backdrop also that you laid out for your view on the product tanker market, would you assume -- I don't know if assume is the right word, but I guess do you expect that you are going to have to use Capital Maritime a bit more maybe for the first half redeliveries of this year given the continued unwind of the global inventory glut and then maybe a little bit more diversification as you did at the back of the year or is it just most of a take it as it comes?

Well, I think, it's more the latter in the end. I mean, as I said, it's a question of what is on offer and by whom and at what rate. Typically, Capital Maritime if you want in a way is a better credit than other operators because we know the other side of it and has been a good charter to a good counter party to CPLP. So I guess it will very much depend on what is on offer. If things play out as you described in reality in the first quarter, we only have two 37,000 deadweight vessels coming off charter. The next product anchors MR2s that come off charter are really in June. So we have some time to see how the market evolves and what is on offer.

Okay, great. That's all I have. Thanks, Jerry.

Thank you, Jon.

Thank you. Your next question comes from the line of Spiro Dounis of UBS. Please go ahead.

Hi, Jerry. Thanks for taking the question. Just wanted to follow-up on some of what's been discussed. Just around rechartering here over the next year. It seems like you've got a lot coming off and presumably we would be going into in some cases maybe a weaker charter rate, not necessarily by much, but nonetheless down. So as we think about doing dropdown this year, I guess, some of that's probably trying to help offset, I guess, some of the cash flow that's coming off, but how do you think about the dividend accretion in that backdrop, do these dropdowns help to keep that coverage ratio higher, can we a tighter coverage ratio down to the year if we are coming into maybe just a week of 2017? Thanks.

Hi, Spiro. The uncertainty is that overall the tanker market has been affected in the short-term by the global inventory gluts and potentially the increased supply of vessels that we have seen over the last couple of years. But in the long run I do think that fundamentals remain very sound. The refinery expansion thesis is very much in place, I mean, analysts expect 7.7 million barrels of new refining capacity coming online by 2021 and a big chunk of that is expected to be added in 2017. The order book is decreasing; you see increased product exports of China and of course the very limited new orders and the decreasing shipyard capacity. So all-in-all, we remain positive for product tankers, but when you look at, as you say, on the -- our short-term exposure, we do have approximately 5.6 years of coverage and 82% of our 2017 available days fixed. So, while it does look like many vessels, in the end, the impact is limited. Because if you -- you might recall that when we reset our common distribution earlier in the year, we set a distribution so that it's sustainable even charter rates persist at close historical lows for the next few years as in a way we wanted to be conservative. And in addition, we accounted for a more adverse outcome for HMM and this is not materialized. As such, we feel quite confident that distribution even if the current environment persist is more than safe. You will see that if you plug in today's rates for product accrued tankers, we will be able to do deliver a coverage well north of 1.1 times after accounting for debt repayments over the next few years. But more importantly, Spiro, as you know, the distribution growth does not depend on charter rates, we never connected distribution growth to charter rates, but more on acquisitions, which enhance our asset base and in the end our long-term distributable cash flow.

Okay, that's clear. Second one for me just maybe bigger picture surround the charter profile. So I guess you are bit unique as an MLP just because you got this healthy amount of maybe medium term charters there and this obviously give you leverage to the upside, which sounds like in 2018 is probably going to be the case, but just I think on the other side of that it also probably means you may be traded a wider yield spread to peers. So just wondering longer term, if you see yourself getting into markets where 5-year to 10-year charter is a little more common, maybe like LNG or FSOs, something beyond container ships? Thanks.

Well, in the end, we are bit agnostic when it comes to the assets and we are fortunate to have a very good sponsor and manger who manages effectively three different asset classes and different sizes within its asset class. That's -- as you say, that was one reason why we diversified into containers where longer charters were more common. We do of course have access to dropdown two Aframaxs with five-year charters to U.S. oil company, which is a decent charter duration. If we do see other opportunities in other asset classes that in the end are accretive and we can handle, of course, we will look at that.

Got it. Appreciate the color. Thanks, Jerry.

Thank you, Spiro.

Thank you. Your next question comes from the line of Ben Brownlow of Raymond James. Please go ahead.

Hi, Jerry.

Hi, Ben.

There's been a lot of questions around the tanker market, but I guess just the two nearest product tankers coming out the Active and now Amadeus, obviously the Arionas was smaller product tanker and one of the oldest vessels in the fleet, but $11,000 day rate was a little bit lower than what I had modeled, is it pretty fair to assume that you are going to see a significant reach harder premium on the Active and now Amadeus and then -- or you have any sort of initial discussions or indication from either Capital Maritime or cargo on those two?

The Active and the Amadeus are MR2s and ECO MR2s. so they do come under a premium compared to normal MR2s and definitely compared to MR1s like the Arionas. Their charters I think expire at the end of the first half, so it is typically too early to start a discussion, but to give you an idea today the market for an ECO MR Product tanker for one year should be anywhere between $13,500 to $14,000, so that's where it is today and let us see how things develop going forward, but it definitely -- vessels like that definitely command a substantial premium over older 37,000 tons.

Great. Thank you. And just one more for me. You mentioned the profit sharing arrangement earlier in one product tanker, the Amadeus, I guess, that is the tanker you were referring to. Can you just remind us what the basic arrangement is for that profit sharing?

The Amadeus has a 50:50 profit share for any earnings above the floor, which is $17,000 per day. So if the charter earns more than $17,000 per day, we share that on a 50:50 basis, and I think it's settled biannually.

Great. That's it for me. Thank you.

Thank you. We have no further questions at this time. Please continue.

And with this, I would like to thank you all for joining us today.