Greetings and welcome to the Diana Shipping Fourth Quarter 2012 Conference Call and Webcast. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ed Nebb, Investor Relations for Diana Shipping. Thank you, Mr. Nebb. You may begin.

Thank you, Kevin and thanks to all of you who have joined us today for the Diana Shipping, Inc. 2012 fourth quarter and year-end conference call. The members of the Diana Shipping management team who are with us today are Mr. Simeon Palios, Chairman and Chief Executive Officer; Mr. Anastasios Margaronis, President; Mr. Andreas Michalopoulos, Chief Financial Officer; Mr. Ioannis Zafirakis, Executive Vice President and Secretary; and Ms. Maria Dede, Chief Accounting Officer. Before management begins their remarks, let me briefly summarize the Safe Harbor notice. Certain statements made during this conference call, which are not statements of historical facts, are forward-looking statements pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act. Such forward-looking statements are based on assumptions, expectations, projections and beliefs as to future events that may not prove to be accurate. For a description of the risks, uncertainties, and other factors that may cause future results to differ materially from the forward-looking statements, please refer to the company’s filings with the Securities and Exchange Commission. And with that, let me turn the call over to Mr. Simeon Palios, Chairman and Chief Executive Officer of Diana Shipping.

Thank you, Ed. Good morning and thank you for joining us. 2012, Diana Shipping continued to pursue a strategic cost designed to produce stable operational and financial performance despite the current challenging industry cycle by also strongly positioning the company for future opportunities as conditions in dry bulk shipping marketplace gradually improve. A key accomplishment during the year was the significant expansion and diversification of our fleet. This was made possible by our solid balance sheet and ample financial capacity. At the same time, we maintained our balanced and prudent approach to chartering and continued do business with well-established and high-quality charterers. I would like to expand on the progress we have made thus far in expanding our fleet both in numbers and types of large bulk carriers. Between January 2012 and February 2013, Diana Shipping either acquired or announced contracts for 10 vessels. That represents a dramatic increase from the 24 vessels in our fleet as of year-end 2011. These new additions included two Panamax vessels, two post-Panamax vessels, two Newcastlemax vessels, two Kamsarmax vessels and two Ice Class Panamax vessels currently under construction and scheduled for delivery in the 2013 fourth quarter. Through these actions we have positioned the company with a young diversified fleet which now consists of 32 dry bulk carriers. The delivery of the two Ice Class Panamax vessels later this year will bring the size of our fleet to 34 vessels. We’ll continue to manage the fleet in a prudent manner that promotes a balance of time charter maturities and produces a predictable revenue stream. Currently, our fixed-revenue days are 92% for 2013. The majority of our vessels are chartered for periods ranging from 2013 through 2015 and beyond. Our balance sheet remains one of the strongest in our industry. The company’s cash position…

Thank you, Simeon, and apologies in advance to those participating in those conference call who may have expected us to be more optimistic about the medium-term fortunes of the bulk carrier market. This is, after all, one of the most cyclical industries. Things improve as unexpectedly as they go down. Starting as we usually do, from the Baltic Dry Index, I would like remind ourselves that we were up 777 points at the beginning of the fourth quarter of 2012. And by yesterday, the index had moved to 875 points. The Baltic Panamax Index started the fourth quarter in 2012 at a dismal 439 points, and yesterday closed at 1,138 points. As for the Baltic Cape Index, we started the fourth quarter at 1,660 only to move to 1,314 yesterday, March 13. The IMF certifies the global growth forecast for 2013 onwards. Global economic growth is now forecast to be 3.6% in 2013. Advanced economies are expected to grow by 1.5% in 2013, while forecast for the emerging economies in 2013 were cut by 0.2 percentage points to 5.6%. According to a report issued by the OECD, the main reason for the weaker outlook is a drop in confidence due to fiscal consolidation, weaker global trade growth, and rising unemployment. The Euro area recession deepened in the fourth quarter of 2012 as the group’s gross domestic products fell 0.6% quarter-on-quarter, which is the largest drop since the first quarter of 2009. Year-on-year, the Eurozone’s GDP shrunk 0.5% in 2012, while the German economy expanded by an anemic 0.7% during that year after growing by 3% in 2011. In the United States, the manufacturing sector expanded in January this year for the second consecutive month. The PMI increased from 50.2% in December to 53.2% in January. During those months, unemployment remained…

Thank you, Stacy, and good morning. I’m pleased to be discussing today with you Diana’s operational results for the fourth quarter of 2012 and year ended December 2012. Fourth quarter 2012 net income for Diana Shipping, Inc. for the fourth quarter 2012 amounted to $5 million and the EPS was $0.06. Time charter revenues decreased to $49.4 million compared to $57.4 million in 2011. The decrease is attributable to decreased average time charter rates that we achieved for our vessels during the fourth quarter compared with the same quarter of 2011. This decrease was partly offset by revenues derived from the vessels Leto, delivered in January 2012; Los Angeles, delivered in February 2012; Philadelphia and Melia, delivered in May 2012; Amphitrite, delivered in August 2012; and Polymnia, delivered in November 2012. Ownership days were 2,710 for the fourth quarter of 2012, compared to 2,208 in the same period of 2011. Fleet utilization was 96.3% in the fourth quarter 2012, compared to 99.2% in 2011. The daily time charter equivalent rate for the fourth quarter of 2012 was $17,681, compared to $25,714 in 2011. Other revenues for the fourth quarter of 2012 amounted to $0.6 million. The voyage expenses were $2.1 million for the quarter. Vessel operating expenses amounted to $19.3 million, compared to $14.9 million in 2011. The increase was due to the enlargement of this fleet, with six vessels during 2012, and also due to increased crew costs. The increase in operating expenses was partly offset by decrease in insurance, spares and other maintenance costs. Daily operating expenses were $7,128 for the fourth quarter of 2012, compared to $6,734 in 2011, representing an increase of 6%. Depreciation and amortization of deferred charges amounted to $16.1 million. General and administrative expenses decreased to $6 million compared to $6.3 million in…

Thank you. (Operator Instructions) Our first question is coming from Michael Webber from Wells Fargo Advisors. Please proceed with your question. Michael Webber – Wells Fargo Advisors: Hey, guys. How are you?

Hi, Mike. Hi. Michael Webber – Wells Fargo Advisors: The first question is just kind of on the market, and Stacy, as always, you give a very thorough and solid overview of the market. But I just wanted kind of boil it down a bit more simply. And we’ve certainly seen a run of recent optimism in this space. So, maybe just kind of on a very high level basis, do you think rates on average will be materially better this year than last, and do you think this kind of recent round of optimism is more of a headtaker or the start of a real recovery?

That’s a – you may have guessed from my quoting various analyst reports, we try to avoid doing this. We wouldn’t be surprised if we had on average better rates this year than last, but we would not consider that as meaning that the difference would be material in the sense that we are going to have a huge double-digit increases. Having said that, when you start from a very low base, if you have a double-digit percentage increase in the rate is not very difficult, but yet it might not be meaningful in the sense that it will create a difference in the ability of an owner to pay debt in the sense of principal and interest charges. So, in that respect, we don’t think anything will change materially but, yes, we might have, on average, better rates this year than we saw last year across the price ranges. So, there’s more question mark on Panamax strictly. Michael Webber – Wells Fargo Advisors: Got you. No, no, no, that’s helpful. And clearly, from your remarks, it seems like you think the drop is going to persist, to some degree, over the intermediate term. As you look at that kind of a landscape, and you guys have obviously been pretty active in acquiring assets, to what degree can you pick up your acquisition pace? And then when you look at across the major asset categories, is there one specific category you think you’re going to be more active in, be it Capes, Panas or Kamsarmaxes?

Hi, Mike. This is Ioannis Zafirakis speaking. Michael Webber – Wells Fargo Advisors: Hey, Ioannis.

We have stated in the past that our pace of purchases assets do not change based on our strategy. Our strategy dictates the company to buy assets for the next two-year period without being influenced by the short-term events that are happening around us. We are strong believers of the hedging strategy not being amended based on what is happening around. Otherwise, this hedging strategy ceases to be a hedging strategy. So, our pace of purchases is not supposed to change. As regards to the preferable losses at the moment, based on what Stacy also told you, as a fine-tuning, nothing more than this, Capesize are preferable and the bigger vessels are preferable today than the Panamaxes. Michael Webber – Wells Fargo Advisors: Okay. That’s helpful. And then also, the pace of acquisition is also going to be a function of what’s available to you in the market. And it’s not always perfectly liquid. When you think about what’s out there for you guys to do right now, is there more to do right now on the Cape side? I mean, can you give a little color in terms of what that liquidity is like from an S&P perspective?

Well, regarding the second-hand tonnage, admittedly, there is not a lot in the market for the old quality ships. Don’t forget that you have the ability of ordering new tonnage also. So, in our spectrum, it’s also not only the sales or second-half tonnage, but we have the newbuilding charge-offs. So, we are looking in all segments of the pipeline. Michael Webber – Wells Fargo Advisors: No. That’s helpful. Just one more for me and I’ll turn it over. Given the cash balance you guys are carrying and you’ve got a sub that’s filling off pretty significant yield, any thoughts around potential increase in your stake in DCIX, especially as it looks to continue to grow and to develop its liquidity?

We have no such plan. We have not discussed that with the Board of Directors. Michael Webber – Wells Fargo Advisors: Okay. That’s helpful. I’ll turn it over. Thanks, guys.

Thank you.

Thank you. Our next question is coming from Chris Combe from JP Morgan. Please proceed with your question. Nishant Mani – JP Morgan: Hey. This is actually Nish Mani on the phone for Chris. Good afternoon, guys. Thanks for taking the time. Just a couple of quick questions. I notice that there are several vessels that are coming up in the next six months, one in May and kind of the rest in the summer. I kind of want to get some thoughts on our chartering strategy. I know you guys have stated the hedging strategy where you have charters of various durations, but would you really consider going along at this low end of the market, or is kind of the 12 to 24 months, the sweet spot, that we should be thinking about from these vessels?

Well, the governing factor is not how long we are going to charter the vessel. But the governing factor is when we have opened ships. So, we have to look on balance when the vessels expires, the other vessels. So, we are going to open the next ships we have to charter at a period that we have no other ship’s time charters expiring. Trying to have one particular ship every so – one month or one-and-a-half months open at any time. That’s the key issue here, not the duration, and we would like to go not more than two years. Nishant Mani – JP Morgan: Got it. Okay. And that’s consistent with what you guys have done recently. I mean, I’ve noticed a lot of kind of in between the 18 and 24 months, and that makes sense. And thinking about kind of, I guess, the coming months in terms of recovery, I know you guys don’t necessarily think there’s going to be a meaningful recovery in 2013, but would there be any consideration of the profit share agreements or anything of the sort for any of the charters?

We do not like this type of charters. We want to have as transparent as possible deals and easy to be understood from our shareholders. The profit sharing is for those people that they have only few vessels, and they want to get the upside when that comes. We are getting our better, you said earlier differently, physically by having so many vessels. We can take the upside potential of the market by chartering another vessel. So, we feel that the 50/50 arrangement is for the benefit more of the charter as anybody else. Nishant Mani – JP Morgan: Yes.

And so, over and above, it’s not very easy for you to calculate what our income will be under circumstances. So, clarity and transparency is of the utmost importance and we would like to keep it for you to be easy to calculate what we are doing. Nishant Mani – JP Morgan: Yes. I actually understand. And then just finally, I guess, we noticed that OpEx this quarter is kind of above $7,000 a day. It was higher than prior quarters both on a quarter-by-quarter and year-over-year basis. Just want to get some thoughts as to is that kind of the new normal of the $7,000 range or if we’re going to see a reversion back to kind of the $6,500, $6,600 range that we saw previously?

I think it’s a seasonal fluctuation or if you can call it like this. And the best proof of that is that, if you look at the daily OpEx for the year, and I’m sure you saw it, it’s only 2% up. So, the overall idea would be to keep at the $6,500, $6,700 level a day per vessel. Nishant Mani – JP Morgan: Okay. That’s your kind of 2013 target on a yearly basis?

Yes, that’s what – yes. Nishant Mani – JP Morgan: Got it. Okay. That’s it for me. Thank you so much to the team.

Thank you.

Thank you.

Thank you. Our next question is coming from Gregory Lewis from Credit Suisse. Please proceed with your question. Gregory Lewis – Credit Suisse: Yes. Thank you. Good morning, gentlemen.

Hi, Greg.

Hi.

Hi.

Hi, Greg. Gregory Lewis – Credit Suisse: Hey, Stacy, I just have two questions for you. The first is more on the market and then – and really and so – when we think about shipowners in distress, and clearly there are a lot of them now in the dry bulk market, are you seeing, like, firsthand discrimination of vessels owned by distressed companies and they – simply they’re getting excluded from the spot market. In other words, are there – is there a pool of vessels that are idle or having real difficulty getting work just simply because cargo – movers of cargo were afraid those vessels are going to be getting arrested?

You are correct. This has been recently a very big concern of the charterers for two reasons. So, one is the one you mentioned as regard to potential arrest of such vessels. They don’t want to end up at a place somewhere in the world with a vessel full of cargo being arrested by someone. And the second reason also has to do with the fact that it is a rather common for companies that they have financial difficulties to not to maintain properly their vessels. And that has an effect with regards to the off-hire days and unforeseen repairs, et cetera, something that destroyed basically and completely takes out of schedule those companies – chartering companies. Gregory Lewis – Credit Suisse: Okay, great. And then just – I just had one other question. I mean, clearly rates are pretty low and you kind of mentioned that right now we’re in a period where we’re not seeing much scrapping, is there some seasonality in the demolition market just simply because when you think about a special survey, it’s something where, once the calendar year starts, you have a couple – you have a window where you can watch the market before you make that decision in scraps. And I guess what I’m wondering is, is it – if we see rates where they are today, is it sort of plausible to think that maybe we’ll see a pickup in scrap in maybe in the middle and back half of the year?

Well, if you can consider seasonality, the period of typhoon season in India and in that sort of area, there is a seasonality. But the seasonality comes from the supply and demand of the scrapping deals. And I think that the scrapping will help to increase for the next few months. And of course, the rate of the scrap value will decrease, too.

Yes. And something else has mentioned is that scrap buyers tend to temporize the beginning of each year trying to, in a way, digest the deals that were booked that year before and to try and also put pressure on prices which they have partially succeeded in doing now as we have seen. So, there is a kind of a lulling January and February more influenced by year demand side for the ships to be scrapped rather than the of the supply. Gregory Lewis – Credit Suisse: Okay, guys. Hey, thank you very much for the time.

You’re welcome. Thank you.

Thank you. Our next question is coming from Fotis Giannakoulis from Morgan Stanley. Please proceed with your question. Fotis Giannakoulis – Morgan Stanley: Yes. Hello, guys, and thank you.

Hi, Fotis. Fotis Giannakoulis – Morgan Stanley: I have a couple of questions. The first is about durability to operate additional vessels. You have a fleet of 34, 35 ships right now. How many ships can you operate under your current establishments?

I think we are organized in a way where at the moment if we add a few headcounts, we could without any major issue go up to 50 vessels operated by Diana Shipping Services. So, you have seen that operating more vessels has kept nevertheless our G&A’s impact, which proves the fact that we’re getting economies of scale from a bigger fleet. And on the contrary, we will have also diminished the G&A for that matter. So, that’s your answer, I guess. Fotis Giannakoulis – Morgan Stanley: Thank you. In addition to that, you have approximately $450 million cash in your balance sheet. This has been the case for the last 12 months. If I understand well, you expect that at some point in 2014, we’re going to see some improvement either smaller or a greater, but there is going to be an improvement. Regardless the degree of improvement, your cash flow is pretty much fixed for the next 12 months. Is there a time that you might start considering or introducing or reintroducing dividend to the company?

Dividend partly is going to be reintroduced when we feel comfortable that we have reached the upper part of our cycle, and we are moving towards the next peak. We think that we are still far away from that point. You understand that the dividend, this reduction is going to happen at the middle of the cycle moving upwards. Now we are at the bottom.

And what is we are questioning whether we have, as a matter of fact, reached the absolute bottom because at the moment, you are at a forward running expenses. It was only a few days that we reached the running expenses of the ships as time charter rates. So, I’m wondering whether the bottom has gone. So, we have to be careful there. Fotis Giannakoulis – Morgan Stanley: Noted. Thank you. That was all I have.

Thank you, Fotis.

Thank you. Our next question is coming from Justin Yagerman from Deutsche Bank. Please proceed with your question. Joshua Katzeff – Deutsche Bank: Hi, good afternoon, guys. It’s Joshua on for Justin.

Hi, Josh.

Hi. Joshua Katzeff – Deutsche Bank: I just want to follow up on some of the acquisitions and potential vessel sizes. You mentioned the kind of newer-age profile of some of the bigger ships and there’s a lot of older ships in the kind of Handysize segment. I guess, why not consider some of the Supermaxes or Handysize ships just given the ability for scrapping rates to pick up in this segment and, I guess, maybe for rates to be a bit more stable, although maybe lesser upside in those segments? Why not bring in a channel into the smaller sizes?

Well, there are various reasons. First of all, it’s the quality of the charters that you have to deal with when you deal with smaller ships, which is something that has always bothered us in the sense that we want to deal with the best charters in the industry. And you have huge difficulty in doing that when you’re dealing with Handysize vessels. You have to have a pretty large number of operators and relatively unknown charters to charter your ships. Otherwise, you won’t be able to have a steady business flow. That in the Handymax sector, we have significant order book. And we are quite convinced that the way that the cascade effect has worked on it. It’s easier for it to work down the size ranges in the bulk area sectors. And lot of the larger Handysizes are going to be displaced by the more modern and economical Handymaxes. So, the only real question that we have in our minds and have not managed to get a proper answer to it is why not invest in small Handysize – between 20,000 and 30,000 tons. But that’s a different market – and the trades that they do are really trades that, and we really don’t want to have much to do with mainly because of the – and mainly because of the volatility that the business attracts. So, that sector is being underbuilt. There is no doubt about it. And we’d rather leave that sector to people who are more geared up in trading ships in that small-size range than we are. Our operation is set in a way that we are best in operating larger-bulk carriers.

Don’t forget also that our model depends on the high volatility. The model that we have takes advantage of high volatility on the charter rates and prices for the benefit of our –that we have a vessel that it is, the bigger the volatility in the cycle. Joshua Katzeff – Deutsche Bank: Got it. That’s fair enough. Kind of moving up to the larger segments, I guess, when you look at acquisitions, how do you feel about a more Post-Panamaxes, I saw you did the recent Kamsarmax, but kind of the bigger odd-sized segments versus the more traditional at a Panamax at 75,000, 76,000 deadweight tons and the Capes have 180,000 or so versus maybe going to Newcastlemaxes and the post-Panamaxes?

Well, I think that you have to understand that when the market is good, every ship is a good one, and when the market is bad, every ship is a bad one. But what we have to think and be careful is how much it costs to move one ton of cargo from A to B? And I feel that today, with the increase of vim even in the Panama Canal and the efficiency of the shipyards, you can get a very good productivity of how much it will cost you to move one ton of cargo with the big ships. And I think that they have an edge, the Newcastlemaxes, for example, from the 180,000 Panamaxes – 180,000 Capes. And that’s why I think we have to focus on those ships. Joshua Katzeff – Deutsche Bank: Got it. Then just maybe switching over to your balance sheet, you have a lot of cash. In the past, you’ve talked about funding acquisitions with kind of 40%, 50% debt going forward. But I guess, why not just fund new acquisitions with just all cash now, maybe reduce some of the interest expense going forward and then lever up maybe in the better part of the cycle and just maybe turning some of that cash balance down?

It’s part of the scattered strategy of buying vessels basically. At the moment, we easily when we buy a vessel, we have a finance of 50% of that vessel. And we feel it’s – and we have cost-efficient finance. The risk is that you spend all the cash as you save or save little on interest. Okay, I guarantee that one. But then when you need to lever up because it’s part of strategy and it’s at this time of the cycle that you lever up, when you need to do that, nobody is there anymore to lend you money. So, this is the reason why and we have proven that and we will continue doing that way. As soon as we have an acquisition, we try to have a conservative level that you mentioned of 40% to 50% on the particular vessel and gradually build up the leverage and a bit less gradually, of course, spend the cash. Joshua Katzeff – Deutsche Bank: I appreciate the time, guys. Thanks.

Thank you.

Thank you.

Thank you. Our final question today is coming from Herman Hildan from RS Platou Markets. Please proceed with your question. Herman Hildan – RS Platou Markets: Good morning. And thank you very much. I just have a quick question on asset values. I mean, you have five-year-old Panamaxes, 10-year-old Panamaxes at historically low levels versus newbuilds. Newbuild prices are historically at low levels as well, and you mentioned that there is, call it, scarcity in the secondhand market for (inaudible) and you’re actually seeing like recently quite high interest for buying secondhand. Could you shed some light on how you think about why you choose secondhand versus newbuild prices and, yes, basically how you conclude on that?

First of all, we have discussed in the past that we strongly believe that market prevails and there is a reason why the newbuilding cost so much and the secondhand don’t cost so much, and everything is incorporated in the price, but that’s trying to explain what we have just said. And the benefits and disadvantage to both – if you look at the optimum return that someone should expect from an investment today, a vessel in the – a vessel being aged in the vicinity of 5 to 10 years, it is more likely that will produce a better return on equity invested if the market turns after, let’s say, two years from today. On the other hand, the newbuildings, they have the attraction of waiting for two years without burning any cash but, at the same time, they are adding to the existing supply of vessels. And a prudent – we just all believe that a prudent owner should do both carefully. Herman Hildan – RS Platou Markets: So, just to kind of ask a question, if you’re – when you’re talking about newbuilds, are you talking about adding to the order book, not buying existing orders.

No, of course, you can buy the resale. But usually, resales, they do not go forward two or three years if they are prone to vessels. Herman Hildan – RS Platou Markets: Yes. Okay. That’s all for me. Thank you.

Thank you.

Thank you. We have reached the end of our question-and-answer session. I would like to turn the floor back over to management for any further or closing comments.

Thank you again for your interest in and support of Diana Shipping. We look forward to speaking with you in the months ahead. Thank you.

Thank you. This does conclude today’s teleconference. You may disconnect your lines at this time. And have a wonderful day. We thank you for your participation.