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Transactions With Related Parties
 12 Months Ended
Dec. 31, 2011
Transactions with Related Parties Abstract  
Transactions with Related Parties
4.
Transactions with Related Parties
The Partnership and its subsidiaries, have related-party transactions with the Manager, due to certain terms of the following three different types of management agreements.
 
 
1.
Fixed fee management agreement: At the time of the completion of the IPO the Partnership entered into an agreement with its Manager , according to which the Manager provides the Partnership with certain commercial and technical management services for a fixed daily fee per managed vessel which covers the commercial and technical management services, the respective vessels' operating costs such as crewing, repairs and maintenance, insurance, stores, spares, and lubricants as well as the cost of the first special survey or next scheduled dry-docking, of each vessel. In addition to the fixed daily fees payable under the management agreement, the Manager is entitled to supplementary compensation for additional fees and costs (as defined in the agreement) of any direct and indirect additional expenses it reasonably incurs in providing these services, which may vary from time to time. The Partnership also pay a fixed daily fee per bareboat chartered vessel in its fleet, mainly to cover compliance and commercial costs, which include those costs incurred by the manager to remain in compliance with the oil majors' requirements, including vetting requirements;
 
 
2.
Floating fee management agreement: On June 9, 2011, the Partnership entered into an agreement with its Manager based on actual expenses with an initial term of five years per managed vessel. Under the terms of this agreement the Partnership compensates its Manager for expenses and liabilities incurred on the Partnership's behalf while providing the agreed services, including, but not limited to, crew, repairs and maintenance, insurance, stores, spares, lubricants and other operating costs. Costs and expenses associated with a managed vessel's next scheduled dry docking are borne by the Partnership and not by the Manager. The Partnership also pays its Manager a daily technical management fee per managed vessel that is revised annually based on the United States Consumer Price Index; and
 
 
3.
Crude management agreement: On September 30, 2011, the Partnership completed the acquisition of Crude. The five crude tanker vessels the Partnership acquired as part of the Crude's acquisition continue to be managed under a management agreement entered into in March 2010 with the Manager whose initial term expires on December 31, 2020. Under the terms of this agreement the Partnership compensates the Manager for all of its expenses and liabilities incurred on the Partnership's behalf while providing the agreed services, including, but not limited to, crew, repairs and maintenance, insurance, stores, spares, lubricants and other operating and administrative costs. The Partnership also pays its Manager the following fees:
(a) a daily technical management fee per managed vessel that is revised annually based on the United States Consumer Price Index;
(b) a sale & purchase fee equal to 1% of the gross purchase or sale price upon the consummation of any purchase or sale of a vessel acquired by Crude Carriers; and
(c) a commercial services fee equal to 1.25% of all gross charter revenues generated by each vessel for commercial services rendered.
All the above three agreements will constitute the “Management Agreements”.
Under the terms of the fixed fee management agreement, the Manager charged the Partnership for additional fees and costs, relating to insurances deductibles, vetting, and repairs and spares that related to unforeseen events. For the years ended December 31, 2011, 2010 and 2009 such fees amounted to $1,237, $1,966 and $2,963, respectively. The 2011 charge includes a $710 adjustment in order to reflect the claim proceeds the Partnership received for one of its vessels the M/T Attikos.
On April 4, 2007, the Partnership entered into an administrative services agreement with the Manager, pursuant to which the Manager will provide certain administrative management services to the Partnership such as accounting, auditing, legal, insurance, IT, clerical, investor relations and other administrative services. Also the Partnership reimburses CGP for all expenses which are necessary or appropriate for the conduct of the Partnership's business. The Partnership reimburses the Manager and CGP for reasonable costs and expenses incurred in connection with the provision of these services after the Manager submits to the Partnership an invoice for such costs and expenses, together with any supporting detail that may be reasonably required. These expenses are included in general & administrative expenses in the consolidated statements of income.
 
 
Balances and transactions with related parties consisted of the following:
 
 
 
 
 
 
 
 
 
 
Consolidated Balance Sheets
  
As of
December 31,
2011
 
  
As of
December 31,
2010
 
Assets:
  
 
 
 
  
 
 
 
Hire receivable (c)
  
$
—  
  
  
$
2
  
 
  
 
 
 
  
 
 
 
Due from related parties
  
 
—  
  
  
$
2
  
 
  
 
 
 
  
 
 
 
Total assets
  
$
—  
  
  
$
2
  
 
  
 
 
 
  
 
 
 
Liabilities:
  
 
 
 
  
 
 
 
Manager - payments on behalf of the Partnership (a)
  
$
8,138
  
  
 
2,048
  
Management fee payable to CSM (b)
  
 
2,434
  
  
 
2,496
  
 
  
 
 
 
  
 
 
 
Due to related parties
  
$
10,572
  
  
$
4,544
  
 
  
 
 
 
  
 
 
 
Deferred revenue - current (f)
  
 
4,225
  
  
 
1,542
  
 
  
 
 
 
  
 
 
 
Total liabilities
  
$
14,797
  
  
$
6,086
  
 
  
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
For the year ended
December 31,
 
Consolidated Statements of Income
  
2011
 
  
2010
 
  
2009
 
Revenues (c)
  
$
31,799
  
  
$
11,030
  
  
$
—  
  
Voyage expenses
  
 
165
  
  
 
—  
  
  
 
—  
  
Vessel operating expenses
  
 
30,516
  
  
 
30,261
  
  
 
30,830
  
General and administrative expenses (d)
  
 
1,630
  
  
 
1,103
  
  
 
1,088
  
Interest expense and finance cost (e)
  
 
—  
  
  
 
210
  
  
 
543
  
(a) Manager - Payments on Behalf of Capital Product Partners L.P . : This line item includes the Manager payments it makes on behalf of the Partnership and its subsidiaries.
(b) Management fee payable to CSM : The amount outstanding as of December 31, 2011 and 2010 represents the management fee payable to CSM as a result of the Management Agreements the Partnership entered into with the Manager.
(c) Revenues: The following table includes information regarding the charter agreements the Partnership entered into with CMTC during 2011 and 2010.
 
 
 
 
 
 
 
 
 
 
Vessel Name
  
Time
Charter (TC)
in years
  
Commencement of
Charter
  
Termination or
earliest expected
redelivery
  
Gross (Net) Daily
Hire Rate
M/T Agisilaos
  
1 TC
  
03/2010
  
03/2011
  
$12.0 ($11.9)
M/T Agisilaos
  
0.25 TC
  
03/2011
  
08/2011
  
$13.0 ($12.8)
M/T Agisilaos
  
1 TC
  
08/2011
  
07/2012
  
$13.5 ($13.3)
M/T Axios
  
1 TC
  
02/2010
  
03/2011
  
$12.8 ($12.6)
M/T Arionas
  
1 TC
  
10/2010
  
10/2011
  
$12.0 ($11.9)
M/T Arionas
  
1 TC
  
10/2011
  
09/2012
  
$13.8 ($13.6)
M/T Alkiviadis
  
2 TC
  
06/2010
  
05/2012
  
$13.0 ($12.8)
M/T Amore Mio II
  
1 TC
  
01/2011
  
12/2011
  
$25.3 ($25.0)
M/T Amore Mio II
  
0.9 to 1.2TC
  
12/2011
  
11/2012
  
$18.25 ($18.0)
M/T Avax
  
1 TC
  
05/2011
  
04/2012
  
$14.0 ($13.8)
M/T Akeraios
  
1 TC
  
07/2011
  
06/2012
  
$14.0 ($13.8)
M/T Alexander the Great
  
1+1+1 TC
  
11/2011
  
10/2012
  
$28.0+$34.0+$38.0
($27.7+$33.6+$37.5)
M/T Amoureux
  
1+1+1 TC
  
10/2011
  
09/2012
  
$20.0+$24.0+$28.0
($19.8+$23.7+$27.7)
M/T Aias
  
1+1+1 TC
  
11/2011
  
10/2012
  
$20.0+$24.0+$28.0
($19.8+$23.7+$27.7)
M/T Achilleas
  
1+1+1 TC
  
01/2012
  
12/2012
  
$28.0+$34.0+$38.0
($27.7+$33.6+$37.5)
 
 
(d) General and administrative expenses: This line item mainly includes internal audit, investor relations and consultancy fees.
(e) Interest expense and finance cost : Interest expense for the related-party loans for the years ended December 31, 2011, 2010 and 2009 amounted to $0, $210 and $543 respectively and relates to the loans that CMTC had entered into with financial institutions for the financing of the acquisition of the shares of the vessel owning company of the M/T Atrotos and the M/T Alkiviadis when both operated under CMTC's fleet. There were no outstanding balances in relation to these loans as of December 31, 2011 and 2010.
(f) Deferred Revenue: As of December 31, 2011 and 2010 the Partnership received cash in advance for revenue earned in a subsequent period from CMTC.