Nasdaq-listed tanker owner Performance Shipping has secured a sale and leaseback deal for its LR1 newbuilding currently under construction in China.

Under the agreement, the vessel being built at Jiangsu New Yangzi Shipbuilding for delivery in early 2027 will be sold to an unaffiliated third party and chartered back to the company on a bareboat basis for 10 years.

The financing totals $37.8m and will be repaid through 120 monthly instalments equivalent to about $5,451 per day.

The deal carries an interest rate linked to Term SOFR plus 2%, with a balloon payment of around $18.1m due at the end of the charter period. Performance Shipping also retains options to repurchase the vessel after the second year of the lease.

The Andreas Michalopoulos-led company with 14 tankers on a fully-delivered basis said the financing covers around 70% of the vessel’s contract price and keeps leverage at what it described as conservative levels, with a daily cashflow breakeven of about $22,200.

The LR1 already has employment lined up with Mercuria Energy Trading for a firm period of four years at $23,750 per day upon delivery, with extension options for up to three additional years.