Thank you for joining us for Navios Maritime Partners' second quarter 2020 earnings conference call. With us today from the company are Chairman and CEO, Mrs. Angeliki Frangou, Chief Financial Officer, Mr. Stratos Desypris, and Executive Vice President of Business Development, Mr. George Achniotis. As a reminder, this conference call is being webcast. To access the webcast, please go to the investor section of Navios Partners' website at www.navios-mlp.com. You'll see the webcast link in the middle of the page, and a copy of the presentation referenced in today's earnings conference call will also be found there. Now, I will review the safe harbor statements. This conference call could contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about Navios Partners. Forward-looking statements are statements that are not historical facts.
Such forward-looking statements are based upon the current beliefs and expectations of Navios Partners' management and are subject to risks and uncertainties which could cause actual results to differ materially from the forward-looking statements. Such risks are more fully discussed in Navios Partners' filings with the Securities and Exchange Commission. The information set forth herein should be understood in light of such risks. Navios Partners does not assume any obligation to update the information contained in this conference call. The agenda for today's call is as follows. First, Ms. Frangou will offer opening remarks. Next, Mr. Desypris will give an overview of Navios Partners' financial results. Mr. Achniotis will provide an operational update and an industry overview. Lastly, we'll open the call to take questions. Now I turn the call over to Navios Partners Chairman and CEO, Mrs. Angeliki Frangou. Angeliki?
Thank you, Doris, and good morning to all of you joining us on today's call. While the pandemic has greatly affected business, countries, and people all over the world, the Navios family continues to persevere. We take great pride in the safety of our employees, and we have adapted to this ever-changing environment. Despite the pandemic, I am pleased with the results for the second quarter of 2020. Navios Partners reported $46.5 million in revenue and $14.3 million in adjusted EBITDA. Navios Partners also declared a quarterly distribution of $0.05 per unit, representing an annual distribution of $0.20 per unit. This distribution represents a reduction from the previous quarterly distribution. We choose to reduce our distribution in light of the combination of challenges and opportunities from the ongoing pandemic. The pandemic negative effect on global economic activity can be seen in the duration of the downturn in charter rates.
Year-to-date 2020, the Capesize 5TC rate is averaging around $9,700 per day. Even with rates recovering in the past month, as countries emerge from quarantine and return to normalized ways of doing business, the charter rate is still 50% less than the 2019 average of $18,000. As you can see from slide five, NMM's fleet is currently 53 vessels. In December 2019, we liquidated Navios Europe I, and during the second quarter of 2020, we liquidated Navios Europe II. NMM holds 33.5% interest in Navios Maritime Containers. On slide six, you can see why Navios Partners is a premier dry bulk shipping platform. We have a strong balance sheet with low leverage. Our net debt to capitalization is 38.7%. We have staggered debt maturities and non-significant committed growth CapEx requirements. We have cash flow capability with about $500 million in remaining contracted revenue.
For the second half of 2020, our approximately 39% open and index-linked days have a manageable break-even of $8,801 per open day. Slide seven details the pandemic's impact on global trade. The IMF projects 4.9% decrease in 2020 global GDP, mostly driven by the 8% decline in advanced economies. As a result of the disruption to world economic activity, dry bulk trade is expected to contract by 4.5% in 2020. We may have felt much of this negative impact in the first half of 2020 as countries observed extended lockdowns. Looking forward, economies are projected to recover in the second half of 2020, and dry bulk trade is projected to increase by 4.6% in 2021. Moreover, global GDP is expected to increase by 5.4% in 2021, which we would expect to be positive for the dry bulk trade.
Slide eight shows how NMM has weathered the storm during the ongoing market disruption. For the second quarter of 2020, we generated $14.3 million in adjusted EBITDA and earned a time charter equivalent rate of $11,202 per day. As to our chartering activities, the vessels we fixed long term provided us with protection against the ongoing market downturn. We have 61.2% of our days fixed for the second half of 2020 at an average charter rate of $13,667 net per day, and the remaining open days provide us with a breakeven of $8,801 per open day.
As to refinancing activities, we entered into approximately $50 million of new commercial bank facilities, which included a $17 million facility to refinance four container ships and $29.5 million new loan to finance five dry bulk vessels acquired from Navios Europe II. We also completed the liquidation of Navios Europe II during the second quarter.
Our net receivable of $17.3 million was settled through a $2.7 million in cash, and the balance with a steel value of five dry bulk vessels, including assumption of loans and working capital. Slide nine details our cost structure. For the remaining six months of 2020, 61.2% of our available days are fixed at an average rate of $13,667 net per day. Our 3,641 open plus index link days provide us with a breakeven of $8,801 per open day, but also allow us to generate $16.6 million, assuming current rates. Slide 10 shows our liquidity. As of June 30th, 2020, we have total cash of $29.8 million and total borrowings of $488.2 million. Our net debt to book capitalization is 38.7%. We have staggered debt maturities and no committed growth CapEx.
At this point, I would like to turn the call to Stratos Desypris, Navios Partners CFO, who will take you through the results of the second quarter of 2020.
Thank you, Angeliki, good morning, all. I will briefly review our unaudited financial results for the second quarter ended June 30, 2020. The financial information is included in the press release and is summarized in the slide presentation available on the company's website. Before I start discussing our financial highlights, I would like to draw your attention to certain one-off items that are listed in slide 11. For simplicity, the discussion of the financial results below exclude the effect of the one-off items listed in this slide. Moving to slide 11, revenue for the second quarter of 2020 decreased by 2.5% to $46.5 million, compared to $47.7 million for Q2 of 2019. The decrease was mainly due to the 20.7% decrease in the time charter equivalent rate achieved in the second quarter of 2020. This decrease was mitigated by the 25.8% increase in our available days.
Adjusted EBITDA for the second quarter of 2020 decreased to $14.3 million compared to $22.3 million in the second quarter of 2019, primarily due to a $5.4 million increase in operating expenses due to our larger fleet and a $0.9 million decrease in equity in earnings from Navios Containers. Adjusted net loss for the quarter amounted to $7.8 million. During the second quarter of 2020, we reported a negative operating surplus of $1.1 million. Replacement and maintenance CapEx reserve was $8.6 million. Fleet utilization for the second quarter was almost 99%. Moving to the six-month operations, time charter revenue for the six months decreased by $1.6 million to $93 million compared to $94.6 million in the first half of 2019. The decrease was mainly due to the 19.8% decrease in the time charter equivalent rate achieved in the second half of 2020.
This decrease was mitigated by the 25.4% increase in our available days. Adjusted EBITDA for the first half of 2020 amounted to $33.4 million compared to $45 million in the same period of last year, primarily due to an $11 million increase in operating expenses due to our larger fleet, which was partially mitigated by a $0.8 million increase in equity in earnings from Navios Containers. Adjusted net loss for the first half of 2020 amounted to $11.7 million. Operating surplus for the six months ended June 30, 2020, was $3.3 million. Turning to slide 12, I will briefly discuss some key balance data as of June 30, 2020. Cash and equivalents was almost $30 million. Long-term borrowings, including the current portion, net of deferred fees, amounted to $488.2 million.
Our cost of debt has been significantly reduced as a result of the refinancing of the Term Loan B last year, as well as the decrease in LIBOR rates. This resulted in a reduction in interest expense for the first half of 2020 of approximately $9 million compared to the same period of 2019. Net debt to book capitalization was 38.7% at the end of the quarter. Moving to slide 13, we declared a cash distribution for the second quarter of 2020 of $0.05 per unit, equivalent to $0.20 per unit on an annual basis. Our current annual distribution provides for an effective yield of approximately 2.5% based on yesterday's closing price. The record date is August 10, and the payment date is August 13, 2020. Total cash distributions for the quarter amount to $0.6 million. Slide 14 shows the details of our fleet.
We have a large, modern, diverse fleet with a total capacity of 5.3 million deadweight ton and an average age of 11 years. Our fleet consists of 53 vessels, 14 Capesizes, 23 Panamax, 6 ultra-Handymax, and 10 container ships. In slide 15, you can see the list of our fleet with the contracted rates and the respective expiration dates per vessel. Our charters have an average remaining contract duration of approximately two years. Currently, we have contracted 95% of our available days for 2020 and 31.5% for 2021, including days contracted at index-linked charters. The expiration days extend to 2028. In slide 16, you can see the details of Navios Containers. Currently, it controls 29 container ships. Navios Partners has a 33.5% ownership interest in Navios Containers. I now pass the call to George Achniotis, Executive Vice President of Business Development, to discuss the industry section.
Thank you, Stratos. Please turn to slide 18. In the last few months, we have seen extraordinary volatility in the rates as first half cargo demand slumped on the back of the impact of the restrictions caused by the pandemic. However, the Chinese economy, which accounts for approximately 40% of global dry bulk trade, returned to positive growth in Q2 on the back of government stimulus, particularly aimed at infrastructure spending. The BDI reflected this unusual seasonality by reaching a year-to-date low of 393 in mid-May, before turning around to reach a nine-month high of 1,956 in early July on the back of a strong recovery in demand led by Brazilian iron ore exports that helped Capesize rates reach close to $34,000 before correcting over the last few weeks.
With the entire globe continuing to be affected by the pandemic, the IMF projected global GDP contraction of 4.9% for 2020, led by an 8% contraction in advanced economies. Governments have put in place unprecedented emergency monetary and fiscal plans to support their economies. In light of this, the IMF projects 5.4% global GDP growth in 2021. As a result of the above, seaborne dry bulk trade is projected to contract by 4.5% in 2020 and grow by 4.6% in 2021. Turning to slide 19. The graph on the left shows that for the second half of the year, dry bulk demand for the three major cargoes of iron ore, coal, and grain is forecast to outpace the first half by about 8%.
This increase is led by iron ore, which is expected to grow by about 12%, or 85 million tons, much of which will come from Brazil, adding to ton miles. If you look at the graph on the right, net fleet growth is forecast to be 3% this year. Second half deliveries are expected to be 44% lower than the first half, resulting in less than 1% expected net fleet growth in the second half. Turning to slide 20. Chinese iron ore imports were flat last year, but are expected to increase by 4.4% in 2020. Chinese steel mills have reduced their iron ore stockpiles by about 47 million tons between June 2018 and July 2020.
With additional availability of iron ore in the second half of 2020, shipments from Brazil and Australia to China are expected to increase by about 40 million tons per quarter as steel mills replenish stockpiles, driving demand for Capesize vessels. The Chinese fiscal stimulus and infrastructure spending should support steel production and in turn, dry bulk trade going forward. Moving to slide 21. The combination of the pandemic and the significant drop in the price of oil and gas has resulted in reduced coal trade. Asian coal imports, which account for over 80% of the world seaborne trade, are expected to decrease in 2020 by 6.4%, but increase by 5.2% in 2021. This reduction has added pressure on the smaller-sized vessels, which has been partially offset by increased demand for grain, discussed on the following slide. Turning to slide 22.
Worldwide grain trade has been growing by approximately 5% annually since 2008, mainly driven by Asian demand. Recently, China has been a major buyer of soybeans and corn as it seeks to rebuild its swine herd. An ever-increasing world population, as well as increasing protein demand worldwide, continues to support the global grain trade. With the pandemic disruptions causing minimal grain trade disruptions, the International Grains Council projects record shipments of wheat, corn, and soybean for the 2020 crop year. Please turn to slide 23. The current order book stands at only 7.4% of the fleet, which is the second lowest since the 7.2% recorded in April 2002. New building contracting has collapsed, year-to-date is down by about 66% compared to 2019.
With the order book being front-loaded this year and scrapping expected to accelerate in the second half due to the phase-out of the Vale VLOCs, net fleet growth is expected to remain low at about 3% in 2020. Turning to slide 24. Vessels over 20 years of age are about 7% of the total fleet, which compares favorably with the previously mentioned low order book. Scrapping, which started slowly due to a combination of the pandemic lockdown and logistical and crew change challenges, now stands at 9.6 million tons year-to-date. This amount already exceeds the total for the whole of 2019, and it is in excess of 1% of the fleet.
In conclusion, positive demand fundamentals, mainly due to the easing of lockdowns around the world and the restart of economic activity, along with reduced fleet availability caused by the Vale phase-out of its VLOC fleet, should provide support to the dry bulk market in its continuing effort to navigate through the pandemic storm. This concludes my presentation. I would now like to turn the call over to Angeliki for any final comments.
Thank you, George. This completes our formal presentation. We open the call to questions.
The floor is now open for questions. If you wish to ask a question at this time, please press star then the number one on your telephone keypad. If at any point your question has been answered and you wish to remove yourself from the queue, press the pound key. Our first question comes from the line of Randy Giveans of Jefferies.
Howdy, team Navios. How are you?
Good morning. How are you doing?
Good. All right. Yeah, first question, obviously on the distribution cut, why was that cut from $0.30 to, let's say, $0.05? How did you come up with that number? Now that the dry bulk market has materially improved and your presentation appears pretty bullish for the back half of the year, any chance the distribution gets increased next quarter or soon thereafter when we expect you to earn positive income?
Very good question. Let's start from one thing. We are still in the pandemic. There's a lot of volatility. Even with a healthy Capesize rate of high teens, you are still at 50% of what was the year-to-date rate of last year. Basically, we are still in a volatile environment, and with this, we'll provide more balanced flexibility. This actual drop was much deeper than we thought. In last quarter, hindsight is always 2020, but this has been a volatile environment, and I think, providing additional balancing flexibility, I think, is a prudent decision.
Okay. Was there any specific benchmarks you looked at to cut it down to $0.05 instead of maybe 10 or zero?
Now on the current level, we are having about a 3% yield in our share price. We are not sure if market recovers, and you have a sustainable visibility of cash flows, and we see that this very unique because the pandemic is not a cycle. It's different than a business cycle. Basically, we really need to see a sustainable recovery on that.
Okay. Looking at Navios Europe II, it looks like you received $2.7 million in cash. I guess, what was the total equity value in the vessels you received, net of debt? Also on that, it looks like you raised a $29.5 million loan for those vessels, but it matures in less than a year. I guess, what are the plans for those vessels and I guess that loan next year?
We got a short facility. Actually we can roll to a longer facility, because we were working on different segments of some of our packages, this is done on a shorter term. Overall, if you see the maturities of the company, we have a very staggered debt maturities, and whatever we have next year is basically covered by scrap. The reason we didn't mind is because we are looking on overall restructuring some of our other facilities. Not restructuring, but creating new packages. One thing I like to say here, if you see NMM, where we are today, we have a company with a very low break-even, low leverage, and staggered debt maturity. We can grow in any market environment as we see.
One thing that I'll say that, yes, the lockdowns created a really uncertain time for dry bulk, but overall, we see a positive effect for the second half. The thing that we need to see is that we surpass the pandemic and we see a further, longer-term, stronger market.
Yep. Then can you give some context around the equity value of those five vessels net of the debt?
If you see from our presentation, we had a net receivable of around $17.5 million.
Yep.
Against that receivable, we got around $2.7 million in cash. The rest was the net value of the vessels, because the vessels, they had also associated loans and working capital. As Angeliki just said, the facility that came with the vessels initially, we refinanced it with this new facility, the $29.5 million, that as we said, is maturing next year. This facility effectively is almost covered. The balloon of this facility is almost covered by the scrap value of the vessel. It's a very comfortable position for us.
Got it. All right. I guess, a quick strategy question and then a modeling question. Looking at the unit price now, obviously trading at a pretty steep discount to NAV, you also have a lot of vessels over, Call it 15 years of age. I guess what are your thoughts on those two, selling vessels and repurchasing units, either simultaneously or both separately?
Actually, that's a very good question, and I think part of the strategy and the balance sheet flexibility is that you will reposition the company. Part of our ongoing process is some of the older vessels you will sell, and you will substitute with younger vessels, at opportune times. Our goal is to keep our fleet young, and this is an ongoing process that we will have. We did that a lot a couple of years ago, and this is an ongoing process that we will be looking on repositioning the fleet, and it's part of our overall goals and a strong driver on decisions.
Sure. Then repurchasing units?
This is part of we had and we returned capital to our investors through different methods. I think right now we are in a process that if you are doing a replacement of assets, you will need to reposition your portfolio first.
All right. I guess lastly, just a quick modeling question. The miss in terms of our EPU estimate was driven by a pretty big jump in G&A that was partially offset by a drop in interest expense. I guess what caused that G&A increase, and what run rate should we use for these two expenses going forward, G&A and interest expense?
G&A in our model is directly linked, of course, with the number of the vessels that we have. You have an increase of the vessels fleet by almost 25%. Of course, G&A did not increase by 25%. It increased by much lower than that. That was also offset by some decreases in the rest of our G&A items. Overall, you see on the three-month period, a half a million increase on G&A. I think this is a good run rate going forward given, of course, the increased fleet that we have today.
The almost $7 million, because it was $4 million first quarter, right?
There is a seasonality on the G&As. If you see historically between the quarters-
Yeah
yeah. I would say that for Q2 and Q4, this $7 million is a good number. Of course, you have to take into account seasonality. Q2, Q1, and Q3, you have to expect it to be lower again in the lower levels.
Yep. All right. Just making sure of that. Then on the interest expense?
Interest expense, I think this is a good run rate. This is a combination of our efforts last year to refinance the Term Loan B. We reduced significantly the interest cost of the company. Also it's a matter of the decrease in the LIBOR rate itself. You have seen in the nine months, we have approximately $9 million decrease in interest expense, and I think this is something that you should keep considering for the future. Just adding, of course, the new facilities that we have added. As a run rate, I would say it should be pretty representative.
Perfect. All right. Well, that's it for me. Thanks again.
Thank you.
Thank you.
I'm showing no further questions at this time. I'd like to turn the call back to Ms. Angeliki Frangou for any additional or closing remarks.
Thank you. This completes our quarterly presentation and questions.
Thank you, ladies and gentlemen. This does conclude today's conference call. You may now disconnect.