NMM Navios Maritime Partners LP

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13A-16 OR 15D-16

OF THE SECURITIES EXCHANGE ACT OF 1934

DATED: August 26, 2021

Commission File No. 001-33811

NAVIOS MARITIME PARTNERS L.P.

7 Avenue de Grande Bretagne, Office 11B2

Monte Carlo, MC 98000 Monaco

(Address of Principal Executive Offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F  ☒                 Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes  ☐                No  ☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes  ☐                 No  ☒

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes  ☐                 No  ☒

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A

 --12-31

NAVIOS MARITIME PARTNERS L.P.

FORM 6-K

TABLE OF CONTENTS

This Report on Form 6-K is hereby incorporated by reference into the Navios Maritime Partners L.P. Registration Statement on Form F-3, File No. 333-237934.

Operating and Financial Review and Prospects

The following is a discussion of the financial condition and results of operations for the three and six month periods ended June 30, 2021 and 2020 of Navios Maritime Partners L.P. (referred to herein as “we”, “us”, “Company” or “Navios Partners”). All of the financial statements have been stated in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). You should read this section together with the consolidated financial statements and the accompanying notes included in Navios Partners’ 2020 Annual Report filed on Form 20-F with the U.S. Securities and Exchange Commission (the “SEC”) on March 31, 2021.

This Report contains forward-looking statements (as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) concerning future events including Navios Partners’ 2021 cash flow generation, future contracted revenues, future distributions and its ability to have any distributions going forward, opportunities to reinvest cash accretively in a fleet renewal program or otherwise, potential capital gains, our ability to take advantage of dislocation in the market and Navios Partners’ growth strategy and measures to implement such strategy; including expected vessel acquisitions and entering into further time charters. Words such as “may,” “expects,” “intends,” “plans,” “believes,” “anticipates,” “hopes,” “estimates,” and variations of such words and similar expressions are intended to identify forward-looking statements. Such statements include comments regarding expected revenue and time charters. These forward-looking statements are based on the information available to, and the expectations and assumptions deemed reasonable by Navios Partners at the time these statements were made. Although Navios Partners believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. These statements involve risks and are based upon a number of assumptions and estimates that are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of Navios Partners. Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, global and regional economic and political conditions including the impact of the COVID-19 pandemic and efforts throughout the world to contain its spread, including effects on global economic activity, demand for seaborne transportation of the products we ship, the ability and willingness of charterers to fulfill their obligations to us and prevailing charter rates, shipyards performing scrubber installations, drydocking and repairs, changing vessel crews and availability of financing, potential disruption of shipping routes due to accidents, diseases, pandemics, political events, piracy or acts by terrorists, including the impact of the COVID-19 pandemic and the ongoing efforts throughout the world to contain it, the creditworthiness of our charterers and the ability of our contract counterparties to fulfill their obligations to us, tanker industry trends, including charter rates and vessel values and factors affecting vessel supply and demand, the aging of our vessels and resultant increases in operation and dry docking costs, the loss of any customer or charter or vessel, our ability to repay outstanding indebtedness, to obtain additional financing and to obtain replacement charters for our vessels, in each case, at commercially acceptable rates or at all, increases in costs and expenses, including but not limited to: crew wages, insurance, provisions, port expenses, lube oil, bunkers, repairs, maintenance and general and administrative expenses, the expected cost of, and our ability to comply with, governmental regulations and maritime self-regulatory organization standards, as well as standard regulations imposed by our charterers applicable to our business, potential liability from litigation and our vessel operations, including discharge of pollutants, general domestic and international political conditions, competitive factors in the market in which Navios Partners operates; risks associated with operations outside the United States; and other factors listed from time to time in Navios Partners’ filings with the U.S. Securities and Exchange Commission, including its reports on Form 20-F and reports on Form 6-K. Navios Partners expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Navios Partners’ expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based. Navios Partners makes no prediction or statement about the performance of its common units.

 Recent Developments

Merger

On August 25, 2021, Navios Partners and its direct wholly-owned subsidiary, Navios Acquisition Merger Sub. Inc. (“Merger Sub”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Navios Maritime Acquisition Corporation (“Navios Acquisition”). Pursuant to the Merger Agreement, Merger Sub will be merged with and into Navios Acquisition, with Navios Acquisition being the surviving entity (the “Merger”). Upon consummation of the Merger, Navios Acquisition will become wholly owned by Navios Partners. The Merger Agreement was unanimously approved by a special committee of the board of directors of Navios Acquisition and its board of directors and by Navios Partners’ conflict committee and its board of directors.

Under the terms of the Merger Agreement, upon consummation of the Merger, each outstanding share of common stock of Navios Acquisition (“Navios Acquisition Common Stock”) that is held by a holder other than Navios Partners, Navios Acquisition and their respective subsidiaries will be converted into the right to receive 0.1275 of a common unit of Navios Partners. 

Pursuant to the Merger Agreement, Navios Partners will file with the Securities and Exchange Commission (“SEC”) a registration statement on Form F-4, which will include a proxy statement/prospectus describing the Merger and Navios Partners’ common units to be issued in the Merger. After the registration statement is declared effective by the SEC, the proxy statement/prospectus will be mailed to holders of Navios Acquisition Common Stock and Navios Acquisition will hold a special meeting of the holders of Navios Acquisition Common Stock (the “Navios Acquisition Stockholders’ Meeting”) to vote on the Merger Agreement and the Merger. Under the terms of the Merger Agreement, Navios Partners, which, subsequent to the Equity Issuance, described below, beneficially owns 44,117,647 shares of Navios Acquisition Common Stock or approximately 62.4% of the outstanding shares of Navios Acquisition Common Stock, has agreed to vote those shares of Navios Acquisition Common Stock in favor of the Merger and the Merger Agreement at the Navios Acquisition Stockholders’ Meeting. The closing of the Merger is conditioned upon, customary terms and conditions. 

NMM Loan Agreement

In connection with the execution of the Merger Agreement, on August 24, 2021, Navios Acquisition and Navios Partners entered into a loan agreement (the “Navios Partners Loan Agreement”) under which Navios Partners agreed to make available to Navios Acquisition a working capital facility of up to $45.0 million. As of the date hereof, the full amount of the facility has been drawn by Navios Acquisition. The full amounts borrowed, including accrued and unpaid interest are due and payable on the date that is one year following the date of the draw. The facility bears interest at the rate of 11.50% per annum.  

Redemption and Discharge of Ship Mortgage Notes

Pursuant to the Merger Agreement, on August 26, 2021, Navios Acquisition called for redemption of all of its outstanding 8.125% First Priority Ship Mortgage Notes due November 15, 2021 (the “Ship Mortgage Notes”) and remitted to the indenture trustee the aggregate redemption price payable to the holders of the Ship Mortgage Notes to satisfy and discharge Navios Acquisition’s obligations under the indenture relating to the Ship Mortgage Notes. The redemption date for the Ship Mortgage Notes will be September 25, 2021. 

Navios Acquisition funded the approximately $397.5 million aggregate redemption price with net proceeds from (i) the purchase by Navios Partners pursuant to the Merger Agreement of 44,117,647 newly issued shares of Navios Acquisition Common Stock for an aggregate purchase price of $150.0 million, or $3.40 per share (the “Equity Issuance”), and (ii) new secured borrowings by Navios Acquisition and its subsidiaries. The shares of Navios Acquisition Common Stock purchased by Navios Partners pursuant to the Equity Issuance will be cancelled in the Merger for no consideration.

Fleet Developments

In July 2021, Navios Partners agreed to purchase six 5,300 TEU newbuilding containerships (four plus two optional) from an unrelated third party, for a purchase price of $61.6 million each. The vessels are expected to be delivered in Navios Partners’ fleet during the second half of 2023 and 2024.

In January and March 2021, Navios Partners entered into bareboat charter-in agreements for four newbuilding Capesize vessels from unrelated third parties. Each vessel has approximately 180,000 dwt and is being bareboat chartered-in for 15 years. Navios Partners has the option to acquire the vessels starting at the end of year four until the end of the charter period. The total implied acquisition price for the three vessels is approximately $154.5 million and for the fourth is approximately $51.5 million and the implied effective interest rate is 4.4% and 5.0%, respectively. Three vessels are expected to be delivered in Navios Partners’ fleet during the second half of 2022 and the fourth vessel is expected to be delivered by the first half of 2023.

In June 2021, Navios Partners entered into a bareboat charter-in for one newbuilding Capesize vessel from an unrelated third party. The vessel has approximately 180,000 dwt and is being bareboat chartered-in for 10 years. Navios Partners has the option to acquire the vessel starting at the end of year four until the end of the tenth year. The implied acquisition price is approximately $60.0 million and the annual effective interest rate is approximately 4.3%. The vessel is expected to be delivered in Navios Partners’ fleet during the second half of 2022.

In June 2021, Navios Partners agreed to acquire from an unrelated third party a newbuilding Kamsarmax vessel for a purchase price of $34.3 million. The vessel has approximately 81,000 dwt and is expected to be delivered in Navios Partners’ fleet during the first half of 2023.

In June 2021, Navios Partners agreed to acquire from Navios Maritime Holdings Inc. (“Navios Holdings”) the Navios Azimuth, a 2011-built Capesize vessel of 179,169 dwt, the Navios Ray, a 2012-built Capesize vessel of 179,515 dwt, and the Navios Bonavis, a 2009-built Capesize vessel of 180,022 dwt for an aggregate purchase price of $88.0 million. The Navios Bonavis and the Navios Ray were delivered in Navios Partners’ fleet in June 2021 and the Navios Azimuth was delivered in July 2021. The acquisition of these vessels was approved by the Conflicts Committee of the Board of Directors of Navios Partners.

On August 25, 2021, Navios Partners agreed to sell the Navios Altair I, a 2006-built Panamax vessel of 74,475 dwt to an unrelated third party for a net sale price of $13.5 million. The sale is expected to be completed during the third quarter of 2021.

On August 16, 2021, Navios Partners completed the sale of the Harmony N, a 2006-built Containership of 2,824 TEU, to an unrelated third party for a net sale price of $28.7 million.

On August 13, 2021, Navios Partners completed the sale of the Navios Azalea, a 2005-built Panamax vessel of 74,759 dwt, to an unrelated third party for a net sale price of $12.7 million.

On July 31, 2021, Navios Partners completed the sale of the Navios Dedication, a 2008-built Containership of 4,250 TEU to an unrelated third party for a net sale price of $33.9 million.

Financing Arrangements

On June 17, 2021, Navios Partners entered into a new credit facility with a commercial bank for a total amount of up to $43.0 million, in order to refinance the existing credit facilities of six dry bulk vessels. The credit facility matures in the second quarter of 2026 and bears interest at LIBOR plus 300 bps per annum.

On June 28, 2021, Navios Partners completed a $18.5 million sale and leaseback transaction with an unrelated third party, for a 2012-built Capesize vessel. The sale and leaseback transaction has a duration of nine years and an implied fixed interest rate of approximately 5.8%. Navios Partners has the option to buy the vessel at the end of year nine for a $5.0 million obligation at maturity.

On June 28, 2021, Navios Partners completed a $15.0 million sale and leaseback transaction with an unrelated third party, for a 2009-built Capesize vessel. The sale and leaseback transaction has a duration of six years and an implied fixed interest rate of approximately 6.1%. Navios Partners has the option to buy the vessel at the end of year six for a $5.0 million obligation at maturity.

On August 25, 2021, Navios Partners completed a $15.0 million sale and leaseback transaction with an unrelated third party, for a 2009-built Capesize vessel. The sale and leaseback transaction has a duration of six years and an implied fixed interest rate of approximately 6.1%. Navios Partners has the option to buy the vessel starting at the end of year three which de-escalates until maturity to $5.0 million obligation.

On August 19, 2021, Navios Partners entered into a new credit facility with a commercial bank for a total amount of up to $18.0 million in order to finance the acquisition of a 2011-built Capesize vessel. The credit facility matures in the third quarter of 2026 and bears interest at LIBOR plus 2.85% per annum. 

Cash Distribution

In July 2021, the Board of Directors of Navios Partners authorized its quarterly cash distribution for the second quarter of 2021 of $0.05 per unit. The cash distribution was paid on August 12, 2021 to all unitholders of record as of August 9, 2021. The declaration and payment of any further dividends remain subject to the discretion of the Board of Directors and will depend on, among other things, Navios Partners’ cash requirements as measured by market opportunities and restrictions under its credit agreements and other debt obligations and such other factors as the Board of Directors may deem advisable.

Overview

We are an international owner and operator of dry cargo vessels, formed in August 2007 under the laws of the Republic of the Marshall Islands. We have been a public company since November 2007. Navios GP L.L.C., a wholly owned subsidiary of Navios Holdings, was also formed on that date to act as the general partner of Navios Partners. Currently, our general partner is Olympos Maritime Ltd. (the “General Partner”) and holds a 2.0% general partner interest in Navios Partners.

As of August 25, 2021, there were 26,808,861 outstanding common units and 553,408 general partnership units. Navios Holdings currently owns an approximately 9.6% ownership interest in Navios Partners and the General Partner currently owns 2.0% general partner interest in Navios Partners.

Fleet

As of August 23, 2021, our fleet consists of 27 Panamax vessels, 24 Capesize vessels, four Ultra Handymax vessels and 43 Containerships, including four Capesize bareboat charter-in vessels expected to be delivered by the second half of 2022, one Capesize bareboat charter-in vessel expected to be delivered by the first half of 2023, two Panamax vessels expected to be delivered by the second half of 2022 and first half of 2023 and six Containerships (four plus two optional) expected to be delivered by the second half of 2023 and 2024.

We generate revenues by charging our customers for the use of our vessels to transport their dry cargo commodities. In general, the vessels in our fleet are chartered-out under time charters, which range in length from one to twelve years at inception. From time to time, we operate vessels in the spot market until the vessels have been chartered under long-term charters.

As of August 23, 2021, the Company has 15,702 and 31,390 available days for the second half of 2021 and for the 2022 and has currently contracted out (excluding index-linked charters) 10,958 and 11,598, respectively, expecting to generate revenues (excluding index-linked charters) of approximately $256.5 million and $349.0 million, respectively.The average contracted daily charter-out rate for the fleet is $23,407 for the second half of 2021 and $30,095 for 2022. As of August 23, 2021, the Company has total contracted revenue of $1,137.3 million.

The following table provides summary information about our combined fleet as of August 23, 2021:

Our Charters

We provide or will provide seaborne shipping services under long-term time charters with customers that we believe are creditworthy. For the six month period ended June 30, 2021, Singapore Marine Pte Ltd. (“Singapore Marine”) and Hyundai Merchant Marine Co., Ltd. (“HMM”) represented approximately 13.8% and 12.8%, respectively, of total revenues. For the six month period ended June 30, 2020, HMM represented approximately 29.0% of total revenues. No other customers accounted for 10% or more of total revenues for any of the periods presented.

Our revenues are driven by the number of vessels in the fleet, the number of days during which vessels operate and our charter hire rates, which, in turn, are affected by a number of factors, including:

Time charters are available for varying periods, ranging from a single trip (spot charter) to long-term which may be many years. In general, a long-term time charter assures the vessel owner of a consistent stream of revenue. Operating the vessel in the spot market affords the owner greater spot market opportunity, which may result in high rates when vessels are in high demand or low rates when vessel availability exceeds demand. We intend to operate our vessels in the long-term charter market. Vessel charter rates are affected by world economics, international events, weather conditions, strikes, governmental policies, supply and demand and many other factors that might be beyond our control. Please read “Risk Factors” in our 2020 Annual Report on Form 20-F for a discussion of certain risks inherent in our business.

We could lose a customer or the benefits of a charter if:

Under some of our time charters, either party may terminate the charter contract in the event of war in specified countries or in locations that would significantly disrupt the free trade of the vessel. Some of the time charters covering our vessels require us to return to the charterer, upon the loss of the vessel, all advances paid by the charterer but not earned by us.

Trends and Factors Affecting Our Future Results of Operations

We believe the principal factors that will affect our future results of operations are the economic, regulatory, political and governmental conditions that affect the shipping industry generally and that affect conditions in countries and markets in which our vessels engage in business. Please read “Risk Factors” in our 2020 Annual Report on Form 20-F for a discussion of certain risks inherent in our business.

(1)    The vessel was sold on December 14, 2018.

(2)    The vessel was sold on December 4, 2018.

(3)    The vessel was sold on December 21, 2017.

(4)    The vessel was sold on April 23, 2019.

(5)      The vessel was sold on April 21, 2017.

(6)      The vessel was sold on January 12, 2017.

(7)      The vessels were acquired on December 13, 2019, following the liquidation of Navios Europe I.

(8)      The vessels were acquired on December 16, 2019.

(9)      The vessel was delivered on July 24, 2019 (see Note 17 – Leases).

(10)    The vessels were delivered on May 28, 2021 and June 10, 2021 (see Note 17 – Leases).

(11)    Not a vessel-owning subsidiary and only holds right to charter-in contracts.

(12)    Vessels under the sale and leaseback transaction (see Note 17 – Leases).

(13)    The vessel was sold on December 10, 2020 (see Note 5 – Vessels, net).

(14)    The vessels were acquired on June 29, 2020, following the liquidation of Navios Europe II (see Note 5 – Vessels, net).

(15)    The vessels were acquired on September 30, 2020, from Navios Holdings (see Note 5 – Vessels, net).

(16)    The vessels were acquired on March 30, 2021, from Navios Holdings (see Note 5 – Vessels, net).

(17)    The vessel was sold on January 13, 2021(see Note 5 – Vessels, net).

(18)    The vessel was sold on January 28, 2021 (see Note 5 – Vessels, net).

(19)    The vessel was sold on February 10, 2021 (see Note 5 – Vessels, net).

(20)    The vessel was sold on March 25, 2021 (see Note 5 – Vessels, net).

(21)    Expected to be delivered by the second half of 2022.

(22)    Expected to be delivered in the second quarter of 2023.

(23)    The vessel was sold on July 31, 2021.

(24)    The vessels were acquired on May 10, 2021 (see Note 5 – Vessels, net).

(25)    Expected to be delivered in the first quarter of 2023.

(26)    The vessel was acquired on June 4, 2021, from Navios Holdings (see Note 5 – Vessels, net).

(27)    Expected to be delivered by the second half of 2023.

(28)    Expected to be delivered by the first half of 2024.

(29)    The vessel was acquired on June 30, 2021 from Navios Holdings (see Note 5 – Vessels, net).

(30)    The vessel was sold on August 16, 2021.

(31)    The vessel was sold on August 13, 2021.

(32)    The vessel was agreed to be sold and the sale is expected to be completed during the third quarter of 2021.

The following table reflects certain key indicators of Navios Partners’ core fleet performance for the three and six month periods ended June 30, 2021 and 2020.

(1)       EBITDA, Adjusted EBITDA and Operating Surplus/ (Deficit) are non-GAAP financial measures. See “Reconciliation of EBITDA and Adjusted EBITDA to Net Cash from Operating Activities, EBITDA and Operating Surplus/ (Deficit)” for a description of EBITDA, Adjusted EBITDA and Operating Surplus and a reconciliation of EBITDA, Adjusted EBITDA and Operating Surplus to the most comparable measure under U.S. GAAP.

Period over Period Comparisons

For the Three Month Period ended June 30, 2021 compared to the Three Month Period ended June 30, 2020

Time charter and voyage revenues: Time charter and voyage revenues of Navios Partners for the three month period ended June 30, 2021 increased by approximately $105.5 million, or 226.6%, to $152.0 million, as compared to $46.5 million for the same period in 2020. The increase in revenue was mainly attributable to the increase in the size of our fleet and to the increase in TCE rate. For the three month period ended June 30, 2021, TCE rate increased by 81.2% to $20,296 per day, as compared to $11,202 per day in the same period in 2020. The available days of the fleet increased by 79.7% to 7,242 days for the three month period ended June 30, 2021, as compared to 4,029 in the same period in 2020.

Time charter and voyage expenses: Time charter and voyage expenses for the three month period ended June 30, 2021 increased by approximately $3.9 million to $5.9 million, as compared to $1.9 million for the three month period ended June 30, 2020. The increase was mainly attributable to a: (i) $1.1 million increase in brokers’ commissions; (ii) $0.5 million increase in bunkers expenses; (iii) $0.5 million increase in port expenses related to the freight voyages; (iv) $0.3 million increase in bareboat charter-in hire expense; and (iv) $1.5 million net increase in other voyage expenses.

Direct vessel expenses: Direct vessel expenses, for the three month period ended June 30, 2021 increased by $1.6 million, to $4.0 million, as compared to $2.4 million for the three month period ended June 30, 2020. The increase of $1.6 million was mainly attributable to the increase in amortization of drydock and special survey costs of certain vessels in our fleet.

Vessel operating expenses (management fees): Vessel operating expenses for the three month period ended June 30, 2021, increased by approximately $19.8 million, or 90.5%, to $41.8 million, as compared to $21.9 million for the same period in 2020. The increase was due to the increase in the size of our fleet.

General and administrative expenses: General and administrative expenses increased by $3.3 million to $10.3 million for the three month period ended June 30, 2021, as compared to $7.0 million for the three month period ended June 30, 2020. The increase was mainly due to a: (i) $2.9 million increase in administrative fees paid to the Navios Shipmanagement Inc., (the “Manager”) due to the increased number of owned and chartered-in vessels in Navios Partners’ fleet; and (ii) $0.5 million increase in legal and professional fees, as well as audit fees and other administrative expenses. The above increase was partially mitigated by a $0.1 million decrease in stock based compensation expenses.

Depreciation and amortization of intangible assets: Depreciation and amortization amounted to $22.1 million for the three month period ended June 30, 2021, as compared to $13.7 million for the three month period ended June 30, 2020. The increase of approximately $8.5 million was mainly attributable to: (i) an $8.3 million increase in depreciation expense due to the delivery of the 29-vessel fleet of Navios Maritime Containers L.P. (“Navios Containers”) in Navios Partners owned fleet; (ii) a $0.9 million increase in depreciation expense due to the delivery of six vessels in 2021; and (iii) a $1.0 million increase in depreciation expense due to the delivery of seven vessels in 2020. The above increase was partially mitigated by a: (i) $1.2 million decrease in depreciation expense of four of our vessels as a result of the impairment charge in the fourth quarter of the fiscal year 2020; and (ii) $0.5 million decrease due to the sale of one vessel in December 2020 and four vessels during the three month period ended March 31, 2021.

Amortization of unfavorable lease terms: Amortization of unfavorable lease terms amounted to $42.0 million for the three month period ended June 30, 2021, related to the fair value of the time charters with unfavorable lease terms as determined at the acquisition date of Navios Containers. There was no amortization of unfavorable lease terms for the corresponding interim period of the previous year.

Vessels impairment loss: As of June 30, 2021, we concluded that events and circumstances did not trigger the existence of potential impairment of our vessels, mainly due to the market improvement. As a result, there was no impairment for the three month period ended June 30, 2021. As of June 30, 2020, we concluded that events and circumstances triggered the existence of potential impairment of our vessels. As a result, Navios Partners recognized an impairment loss of $6.8 million related to three containerships, as the undiscounted projected net operating cash flows were lower than the vessels’ carrying value.

Interest expense and finance cost, net: Interest expense and finance cost, net, for the three month period ended June 30, 2021 increased by approximately $1.1 million or 16.9% to $7.3 million, as compared to $6.3 million for the three month period ended June 30, 2020. The increase was mainly due to an increase in interest expense and finance costs related to the Navios Partners’ credit facilities entered into during the three month period ended June 30, 2021 and the interest and finance costs of Navios Containers’ credit facilities and financial liabilities recognized following the completion of the merger on March 31, 2021. The above increase was partially mitigated by a decrease of the weighted average interest rate for the three month period ended June 30, 2021 to 3.90% from 4.80% for the same period in 2020.

Interest income: Interest income increased by approximately $0.6 million to $0.7 million for the three month period ended June 30, 2021, as compared to $0.2 million for the three month period ended June 30, 2020.

Other expense, net: Other expense, net for the three month period ended June 30, 2021 amounted to $3.5 million, as compared to $0.7 million for the three month period ended June 30, 2020.

Equity in net earnings/ (loss) of affiliated companies: There was no equity in net earnings of affiliated companies for the three month period ended June 30, 2021 as compared to a $0.7 million loss for the three month period ended June 30, 2020. The amount consisted of the loss related to the investment in Navios Containers.

Net income/ (loss): Net income for the three month period ended June 30, 2021 amounted to $99.9 million as compared to $14.6 million net loss for the three month period ended June 30, 2020. The increase in net income of $114.6 million was due to the factors discussed above.

Operating surplus/ (deficit): Navios Partners generated Operating Surplus for the three month period ended June 30, 2021 of $65.9 million, as compared to Operating Deficit $1.1 million for the three month period ended June 30, 2020. Operating Surplus/ (Deficit) is a non-GAAP financial measure used by certain investors to assist in evaluating a partnership’s ability to make quarterly cash distributions (See “Reconciliation of EBITDA and Adjusted EBITDA to Net Cash from Operating Activities, EBITDA and Operating Surplus/ (Deficit” contained herein).

For the Six Month Period ended June 30, 2021 compared to the Six Month Period ended June 30, 2020

Time charter and voyage revenues: Time charter and voyage revenues of Navios Partners for the six month period ended June 30, 2021 increased by approximately $124.0 million, or 133.3%, to $217.1 million, as compared to $93.0 million for the same period in 2020. The increase in revenue was mainly attributable to the increase in the size of our fleet and to the increase in TCE rate. For the six month period ended June 30, 2021, TCE rate increased by 66.8% to $18,276 per day, as compared to $10,957 per day in the same period in 2020. The available days of the fleet increased by 41.4% to 11,494 days for the six month period ended June 30, 2021, as compared to 8,126 in the same period in 2020.

Time charter and voyage expenses: Time charter and voyage expenses for the six month period ended June 30, 2021 amounted to $8.4 million, as compared to $5.0 million for the six month period ended June 30, 2020. The increase was mainly attributable to a: (i) $1.3 million increase in brokers’ commissions; (ii) $0.6 million increase in bunkers expenses; (iii) $0.3 million increase in port expenses related to the freight voyages; (iv) $0.3 million increase in bareboat charter-in hire expense; and (iv) $0.8 million net increase in other voyage expenses.

Direct vessel expenses: Direct vessel expenses for the six month period ended June 30, 2021 increased by $2.2 million, to $7.1 million, as compared to $4.9 million for the three month period ended June 30, 2020. The increase of $2.2 million was mainly attributable to the increase in amortization of drydock and special survey costs of certain vessels in our fleet.

Vessel operating expenses (management fees): Vessel operating expenses for the six month period ended June 30, 2021, increased by $20.6 million, or 46.7%, to $64.7 million, as compared to $44.1 million for the same period in 2020. The increase was due to the increase in the size of our fleet.

General and administrative expenses: General and administrative expenses increased by $4.1 million to $15.2 million for the six month period ended June 30, 2021, as compared to $11.1 million for the six month period ended June 30, 2020. The increase was mainly due to a: (i) $3.4 million increase in administrative fees paid to the Manager due to the increased number of owned and chartered-in vessels in Navios Partners’ fleet; and (ii) $1.0 million increase in legal and professional fees, as well as audit fees and other administrative expenses. The above increase was partially mitigated by an approximately $0.3 million decrease in stock based compensation expenses.

Depreciation and amortization of intangible assets: Depreciation and amortization amounted to $35.2 million for the six month period ended June 30, 2021, as compared to $27.3 million for the six month period ended June 30, 2020. The increase of $7.9 million was mainly attributable to: (i) an $8.3 million increase in depreciation expense due to the delivery of the 29-vessel fleet of Navios Containers in Navios Partners owned fleet; (ii) a $0.9 million increase in depreciation expense due to the delivery of six vessels in 2021; and (iii) a $2.0 million increase in depreciation expense due to the delivery of seven vessels in 2020. The above increase was partially mitigated by a: (i) approximately $2.4 million decrease in depreciation expense of four of our vessels as a result of the impairment charge in the fourth quarter of the fiscal year 2020; and (ii) $0.9 million decrease due to the sale of one vessel in December 2020 and four vessels during the three month period ended March 31, 2021.

Amortization of unfavorable lease terms: Amortization of unfavorable lease terms amounted to $42.0 million for the six month period ended June 30, 2021, related to the fair value of the time charters with unfavorable lease terms as determined at the acquisition date of Navios Containers. There was no amortization of unfavorable lease terms for the corresponding interim period of the previous year.

Loss on sale of vessels: Loss on sale of vessels amounted to $0.5 million for the six month period ended June 30, 2021, relating to the sale of the Esperanza N, the Solar N and the Joie N during the first quarter of 2021. There was no loss on sale of vessels for the corresponding interim period of the previous year.

Vessels impairment loss: As of June 30, 2021, we concluded that events and circumstances did not trigger the existence of potential impairment of our vessels, mainly due to the market improvement. As a result, there was no impairment for the six month period ended June 30, 2021. As of June 30, 2020, we concluded that events and circumstances triggered the existence of potential impairment of our vessels. As a result, Navios Partners recognized an impairment loss of $6.8 million related to three containerships, as the undiscounted projected net operating cash flows were lower than the vessels’ carrying value.

Impairment of receivable in affiliated company: Impairment of receivable in affiliated company for the six month period ended June 30, 2020 amounted to $6.9 million, related to the other-than-temporary impairment recognized in the Navios Partners’ receivable from Navios Europe II. There was no impairment for the corresponding interim period as of June 30, 2021.

Interest expense and finance cost, net: Interest expense and finance cost, net remained approximately the same for both six month periods ended June 30, 2021 and 2020. 

Interest income: Interest income increased by $0.5 million to $0.9 million for the six month period ended June 30, 2021, as compared to $0.4 million for the six month period ended June 30, 2020.

Other expense, net: Other expense, net for the six month period ended June 30, 2021 amounted to $3.9 million, as compared to $0.3 million for the six month period ended June 30, 2020. The increase of $3.6 million was mainly attributable to a: (i) $2.8 million increase in claims related expenses; and (ii) $0.9 million increase in tonnage tax expenses mainly attributable to the acquisition of Navios Containers’ fleet.

Equity in net earnings/ (loss) of affiliated companies: Equity in net earnings of affiliated companies for the six month period ended June 30, 2021 amounted to $80.8 million as compared to $1.0 million for the six month period ended June 30, 2020. The amount of $80.8 million is the gain from equity in net earnings resulting from remeasurement of existing interest held in Navios Containers. As of March 31, 2021, Navios Partners previously held interest of 35.7% in Navios Containers was remeasured to a fair value of $107.0 million, resulting in revaluation gain of $75.4 million which along with the equity gain of approximately $5.4 million from the operations of Navios Containers upon the closing date aggregate to a gain on acquisition of control in the amount of $80.8 million.

Bargain purchase gain: Bargain purchase gain amounted to $44.1 million for the six month period ended June 30, 2021, resulting from the excess Navios Containers’ fair value of the identifiable assets acquired of $342.7 million over the total purchase price consideration of $298.6 million.

Net income/ (loss): Net income for the six month period ended June 30, 2021 amounted to $236.6 million as compared to $25.4 million net loss for the six month period ended June 30, 2020. The increase in net income of $262.0 million was due to the factors discussed above.

Operating (deficit)/surplus: Navios Partners generated Operating Surplus for the six month period ended June 30, 2021 of $77.9 million, as compared to $3.3 million for the six month period ended June 30, 2020. Operating Surplus is a non-GAAP financial measure used by certain investors to assist in evaluating a partnership’s ability to make quarterly cash distributions (See “Reconciliation of EBITDA and Adjusted EBITDA to Net Cash from Operating Activities, EBITDA and Operating Surplus/ (Deficit” contained herein).

Liquidity and Capital Resources

In addition to distributions on our units, our primary short-term liquidity needs are to fund general working capital requirements, cash reserve requirements including those under our credit facilities and debt service, while our long-term liquidity needs primarily relate to expansion and investment capital expenditures and other maintenance capital expenditures and debt repayment. Expansion capital expenditures are primarily for the purchase or construction of vessels to the extent the expenditures increase the operating capacity of or revenue generated by our fleet, while maintenance capital expenditures primarily consist of drydocking expenditures and expenditures to replace vessels in order to maintain the operating capacity of or revenue generated by our fleet. Investment capital expenditures are those capital expenditures that are neither maintenance capital expenditures nor expansion capital expenditures. We anticipate that our primary sources of funds for our short-term liquidity needs will be cash flows from our equity offerings, operations, proceeds from asset sales, long-term bank borrowings and other debt raisings. Based on internal forecasts and projections that take into account reasonably possible changes in our trading performance, we believe that the Company has adequate financial resources to continue in operation and meet its financial commitments, including but not limited to capital expenditures and debt service obligations, for a period of at least twelve months from the date of issuance of these consolidated financial statements. Generally, our long-term sources of funds derive from cash from operations, long-term bank borrowings and other debt or equity financings to fund acquisitions and expansion and investment capital expenditures, including opportunities we may pursue under the Omnibus Agreement, as defined herein. We cannot assure you that we will be able to secure adequate financing or to obtain additional funds on favorable terms, to meet our liquidity needs.

Cash deposits and cash equivalents in excess of amounts covered by government provided insurance are exposed to loss in the event of non-performance by financial institutions. Navios Partners does maintain cash deposits and equivalents in excess of government provided insurance limits. Navios Partners also minimizes exposure to credit risk by dealing with a diversified group of major financial institutions.

Navios Partners may use funds to repurchase its outstanding common units and/or indebtedness from time to time. Repurchases may be made in the open market, or through privately negotiated transactions or otherwise, in compliance with applicable laws, rules and regulations, at prices and on terms Navios Partners deems appropriate and subject to its cash requirements for other purposes, compliance with the covenants under Navios Partners’ credit facilities, and other factors management deems relevant.

In January 2019, the Board of Directors of Navios Partners authorized a common unit repurchase program for up to $50.0 million of the Company’s common units over a two year period. The program did not require any minimum repurchase or any specific number of common units and could be suspended or reinstated at any time in Navios Partners’ discretion and without notice. Repurchases were subject to restrictions under Navios Partners’ credit facilities. As of June 30, 2021, Navios Partners had repurchased and cancelled 312,952 common units, on a split adjusted basis, for a total cost of approximately $4.5 million. There were no repurchases during the six month period ended June 30 2021, and the program expired in January 2021.

On November 18, 2016, Navios Partners entered into a Continuous Offering Program Sales Agreement (the “$25.0m Sales Agreement”) for the issuance and sale from time to time through its agent common units having an aggregate offering price of up to $25.0 million. The $25.0m Sales Agreement was amended on August 3, 2020 to address the updated shelf registration statement pursuant to which sales are made. As of August 25, 2021, since the commencement of the amended $25.0m Sales Agreement, Navios Partners has issued 1,286,857 units and received net proceeds of $23.9 million. Pursuant to the issuance of the common units, Navios Partners issued 26,265 general partnership units to its General Partner in order to maintain its 2.0% general partner interest. The net proceeds from the issuance of the general partnership units were approximately $0.5 million. No amounts remained available for sale under the $25.0m Sales Agreement.

On April 9, 2021, Navios Partners entered into a Continuous Offering Program Sales Agreement (“$75m Sales Agreement”) for the issuance and sale from time to time through its agent common units having an aggregate offering price of up to $75.0 million. As of August 25, 2021, since the commencement of the $75.0m Sales Agreement, Navios Partners has issued 2,437,624 units and received net proceeds of $73.1 million. Pursuant to the issuance of the common units, Navios Partners issued 49,747 general partnership units to its General Partner in order to maintain its 2.0% general partner interest. The net proceeds from the issuance of the general partnership units were approximately $1.5 million. No amounts remained available for sale under the $75.0m Sales Agreement.

On May 21, 2021, Navios Partners entered into a new Continuous Offering Program Sales Agreement (“$110m Sales Agreement”) for the issuance and sale from time to time through its agent common units having an aggregate offering price of up to $110.0 million. As of August 25, 2021, since the commencement of the $110.0m Sales Agreement, Navios Partners has issued 3,963,249 units and received net proceeds of $103.7 million. Pursuant to the issuance of the common units, Navios Partners issued 80,883 general partnership units to its General Partner in order to maintain its 2.0% general partner interest. The net proceeds from the issuance of the general partnership units were approximately $2.2 million.

Long-Term Debt Obligations

Navios Partners’ long-term borrowings are presented under the captions “Long-term financial liabilities, net”, “Long-term debt, net”, “Current portion of financial liabilities, net” and “Current portion of long-term debt, net”. As of June 30, 2021 and December 31, 2020, total borrowings, net of deferred finance costs amounted to $795.5 million and $486.9 million, respectively. The current portion of long-term borrowings, net amounted to $115.4 million at June 30, 2021 and $201.8 million at December 31, 2020.

Credit Facilities

 As of June 30, 2021, the Company had secured credit facilities with various banks with a total outstanding balance of $539.7 million. The purpose of the facilities was to finance the acquisition of vessels or refinance existing indebtedness. All of the facilities are denominated in U.S. dollars and bear interest based on LIBOR plus spread ranging from 260 bps to 350 bps per annum. The facilities are repayable in either semi-annually or quarterly installments, followed by balloon payments with maturities, ranging from December 2022 to June 2026.

Hellenic Bank Credit Facility: On April 23, 2021, Navios Partners entered into the Hellenic Bank Credit facility for an amount of $8.9 million in order to partially finance the acquisition of one containership from Navios Acquisition. On April 28, 2021, the amount of $8.9 million was drawn. The new credit facility is repayable in four consecutive quarterly instalments of approximately $0.75 million each, two consecutive quarterly installments of $0.3 million each and nine consecutive quarterly installments of approximately $0.15 million each with a final balloon payment of $3.9 million to be repaid on the last repayment date. The facility matures in the fourth quarter of 2024 and bears interest at LIBOR plus 300 bps per annum. As of June 30, 2021, the total outstanding balance was $8.9 million.

BNP Credit Facility: On April 28, 2021, Navios Partners entered into new credit facility with BNP PARIBAS (the “BNP Credit Facility”) for a total amount of $40.0 million to refinance the existing BNP Credit Facility dated June 26, 2017, as amended on April 9, 2019 and to finance the acquisition of two 2012 built 2,782 TEU containerships. On May 10, 2021, the full amount of the BNP Credit Facility was drawn. The new credit facility is repayable in 16 consecutive quarterly installments of $1.4 million each, with a final balloon payment of $17.1 million to be repaid on the last repayment date. The facility matures in the second quarter of 2025 and bears interest at LIBOR plus 285 bps per annum. As of June 30, 2021, the total outstanding balance was $40.0 million. 

HCOB Credit Facility: On May 11, 2021, Navios Partners entered into a new credit facility with Hamburg Commercial Bank for a total amount of up to $160.0 million, in order to: (i) refinance its existing HCOB Credit Facility dated September 26, 2019; (ii) refinance the existing facility of one dry bulk vessel; and (iii) to partially finance the acquisition of one dry bulk vessel. On June 8, 2021, the full amount of the HCOB Credit Facility was drawn. The credit facility is repayable in eight consecutive quarterly installments of $6.25 million each and eight consecutive quarterly installments in the amount of $3.75 million each, with a final balloon payment of $80.0 million to be repaid on the last repayment date. The facility matures in the second quarter of 2025, bears interest at LIBOR plus 310 bps per annum. As of June 30, 2021, the total outstanding balance was $160.0 million.

NBG Credit Facility: On June 17, 2021, Navios Partners entered into a new credit facility with National Bank of Greece (the “NBG Credit Facility”) for a total amount of up to $43.0 million, in order to refinance the existing credit facilities of six dry bulk vessels. On June 18, 2021, the full amount was drawn. The credit facility is repayable in four consecutive quarterly installments of $1.5 million each followed by 16 consecutive quarterly installments of $1.25 million each, together with a final balloon payment of $17.0 million to be paid on the last repayment date. The facility matures in the second quarter of 2026 and bears interest at LIBOR plus 300 bps per annum up to maturity date. As of June 30, 2021, the total outstanding balance was $43.0 million.

CACIB Credit Facility: On March 23, 2021, Navios Partners entered into a new credit facility with Credit Agricole Corporate and Investment Bank (“CACIB”), (the “CACIB $58.0m Credit Facility”) of $58.0 million in order to refinance the CACIB $33.0m Credit Facility and to partially finance the acquisition of the Navios Centaurus and the Navios Avior. On March 30, 2021, the full amount was drawn. The facility matures in the first quarter of 2026 and bears interest at LIBOR plus 300 bps per annum. As of June 30, 2021, the total outstanding balance was $56.0 million, is repayable in one quarterly installment of $2.0 million, followed by 18 consecutive quarterly installments of $1.6 million each, together with a final balloon payment of $25.2 million to be repaid on the last repayment date.

On August 25, 2021, Navios Partners prepaid $11.4 million of the CACIB $52.8m Credit Facility and released one vessel from the collateral package of the credit facility. The Company entered into a new sale and leaseback agreement of $15.0 million for the released vessel (see also Financial Liabilities below).

DNB Credit Facility: On August 19, 2021, Navios Partners entered into a new credit facility with DNB BANK ASA, (the “DNB Credit Facility”) for a total amount of up to $18.0 million, in order to finance the acquisition of a 2011-built Capesize vessel. The new credit facility is repayable in 20 consecutive quarterly installments of $0.64 million each, together with a final balloon payment of $5.2 million to be paid on the last repayment date. The facility matures in the third quarter of 2026 and bears interest at LIBOR plus 285 bps per annum up to maturity date.

Amounts drawn are secured by first preferred mortgages on certain Navios Partners’ vessels and other collateral and are guaranteed by the respective vessel-owning subsidiaries. The credit facilities and certain financial liabilities contain a number of restrictive covenants that prohibit or limit Navios Partners from, among other things: incurring or guaranteeing indebtedness; entering into affiliate transactions; charging, pledging or encumbering the vessels; changing the flag, class, management or ownership of Navios Partners’ vessels; changing the commercial and technical management of Navios Partners’ vessels; selling or changing the beneficial ownership or control of Navios Partners’ vessels; not maintaining Navios Holdings’ (or its affiliates) ownership in Navios Partners of at least 5.0%; and subordinating the obligations under the credit facilities to any general and administrative costs relating to the vessels, including the fixed daily fee payable under the management agreement.

Navios Partners’ credit facilities and certain financial liabilities also require compliance with a number of financial covenants, including: (i) maintain a required security ranging over 111% to 140%; (ii) minimum free consolidated liquidity in an amount equal to at least $0.5 million and a number of vessels as defined in Navios Partners’ credit facilities and financial liabilities; (iii) maintain a ratio of EBITDA to interest expense of at least 2.00:1.00; (iv) maintain a ratio of total liabilities or total debt to total assets (as defined in the Company’s credit facilities) ranging of less than 0.75; and (v) maintain a minimum net worth to $135.0 million.

It is an event of default under the credit facilities if such covenants are not complied with in accordance with the terms and subject to the prepayments or cure provisions of the facilities.

As of June 30, 2021, Navios Partners was in compliance with the financial covenants and/or the prepayments and/or the cure provisions, as applicable, in each of its credit facilities.

Financial Liabilities

On August 16, 2021, the Company entered into a new sale and leaseback agreement of $15.0 million, with an unrelated third party for the Navios Pollux, a 2009-built Capesize vessel of 180,727 dwt. Navios Partners has a purchase obligation to acquire the vessel at the end of the lease term and under ASC 842-40, the transfer of the vessel was determined to be a failed sale. In accordance with ASC 842-40, the Company did not derecognize the respective vessel from its balance sheet and accounted for the amount received under the sale and leaseback agreement as a financial liability. On August 25, 2021, the amount of $15.0 million was drawn. Navios Partners is obligated to make 72 consecutive monthly payments of approximately $0.19 million each, commencing as of August 2021. The agreement matures in the third quarter of 2027, with a purchase obligation of $5.0 million on the last repayment date.

On June 18, 2021, the Company entered into a new sale and leaseback agreement of $15.0 million, with unrelated third parties for the Navios Bonavis, a 2009-built Capesize vessel of 180,022 dwt. Navios Partners has a purchase obligation to acquire the vessel at the end of the lease term and under ASC 842-40, the transfer of the vessel was determined to be a failed sale. In accordance with ASC 842-40, the Company did not derecognize the respective vessel from its balance sheet and accounted for the amount received under the sale and leaseback agreement as a financial liability. On June 28, 2021, the amount of $15.0 million was drawn. Navios Partners is obligated to make 72 consecutive monthly payments of approximately $0.19 million each, commencing as of June 2021. The agreement matures in the second quarter of 2027, with a purchase obligation of $5.0 million on the last repayment date. As of June 30, 2021, the outstanding balance under the sale and leaseback agreement of the Navios Bonavis was $14.9 million.

On June 18, 2021, the Company entered into a new sale and leaseback agreement of $18.5 million, with unrelated third parties for the Navios Ray, a 2012-built Capesize vessel of 179,515 dwt. Navios Partners has a purchase obligation to acquire the vessel at the end of the lease term and under ASC 842-40, the transfer of the vessel was determined to be a failed sale. In accordance with ASC 842-40, the Company did not derecognize the respective vessel from its balance sheet and accounted for the amount received under the sale and leaseback agreement as a financial liability. On June 28, 2021, the amount of $18.5 million was drawn. Navios Partners is obligated to make 108 consecutive monthly payments of approximately $0.19 million each, commencing as of June 2021. The agreement matures in the second quarter of 2030, with a purchase obligation of $5.0 million on the last repayment date. As of June 30, 2021, the outstanding balance under the sale and leaseback agreement of the Navios Ray was $18.4 million.

The above financial liabilities have no financial covenants.

The following table presents cash flow information derived from the unaudited condensed Consolidated Statements of Cash Flows of Navios Partners for the six month periods ended June 30, 2021 and 2020.

Cash provided by operating activities for the six month period ended June 30, 2021 as compared to the cash provided by operating activities for the six month period ended June 30, 2020

Net cash provided by operating activities increased by $29.6 million to $77.2 million for the six month period ended June 30, 2021, as compared to $47.7 million for the same period in 2020. In determining net cash provided by operating activities, net loss is adjusted for the effects of certain non-cash items as discussed below.

The aggregate adjustments to reconcile net income to net cash provided by operating activities was a $124.0 million loss for the six month period ended June 30, 2021, which consisted mainly of the following adjustments: (i) $42.0 million amortization of unfavorable lease terms, (ii) $1.4 million non-cash accrued interest income and amortization of deferred revenue, (iii) $0.1 million amortization of operating lease right-of-use asset, (iv) $44.1 million bargain purchase gain from merger with Navios Containers and (v) $80.8 million equity in net earnings of affiliated companies. These adjustments were partially mitigated by: (i) $35.2 million depreciation and amortization of intangible assets, (ii) $1.6 million amortization and write-off of deferred finance costs and discount, (iii) $6.9 million amortization of deferred dry dock and special survey costs, (iv) $0.5 million loss on sale of vessels and (v) $0.2 million stock based compensation.

The net cash outflow resulting from the change in operating assets and liabilities of $35.3 million for the six month period ended June 30, 2021 resulted from a $1.4 million increase in accounts receivable, a $12.5 million increase in prepaid expenses and other current assets, a $17.3 million decrease in amounts due to related parties and a $21.1 million in payments for dry dock and special survey costs. This was partially mitigated by a $0.7 million increase in accounts payable, a $5.5 million increase in accrued expenses, a $5.9 million increase in deferred revenue and a $5.0 million decrease in amounts due from related parties.

The aggregate adjustments to reconcile net loss to net cash provided by operating activities was a $46.1 million non-cash gain for the six month period ended June 30, 2020, which consisted mainly of the following adjustments: $27.3 million depreciation and amortization of intangible assets, $6.9 million loss related to the other-than-temporary impairment recognized in the Navios Partners’ receivable from Navios Europe II, $6.8 million impairment loss related to three containerships, $0.8 million non-cash accrued interest income and amortization of deferred revenue, $0.5 million amortization of operating lease right-of-use asset, $1.0 million amortization and write-off of deferred finance costs and discount, $4.9 million amortization of deferred dry dock and special survey costs, $1.0 million equity in net earnings of affiliated companies and $0.5 million equity compensation expense.

The net cash inflow resulting from the change in operating assets and liabilities of $26.9 million for the six month period ended June 30, 2020 resulted from a $2.0 million increase in accrued expenses, a $1.6 million increase in deferred revenue, a $14.9 million decrease in amounts due from related parties and a $22.1 million increase in amounts due to related parties. These were partially mitigated by a $2.6 million decrease in accounts payable, a $0.5 million decrease in operating lease liabilities short and long term, a $1.2 million increase in prepaid expenses and other current assets and a $9.3 million in payments for dry dock and special survey costs.

Cash used in investing activities for the six month period ended June 30, 2021 as compared to the cash used in investing activities for the six month period ended June 30, 2020 

Net cash used in investing activities increased by $93.9 million to $133.5 million for the six month period ended June 30, 2021, as compared to $39.7 million for the same period in 2020.

Cash used in investing activities of approximately $133.5 million for the six month period ended June 30, 2021 was mainly due to a: (i) $180.4 million relating to vessels acquisitions and additions; and (ii) $5.0 million relating to deposits for the option to acquire two bareboat charter-in vessels, one newbuilding Panamax vessel and capitalized expenses. This was partially mitigated by a: (i) $32.7 million of proceeds related to the sale of four vessels; (ii) $10.3 million cash acquired from Navios Containers following the merger; and (iii) $8.9 million of proceeds from the senior unsecured notes of HMM.

Cash used in investing activities of $39.7 million for the six month period ended June 30, 2020 was mainly due to a: (i) $37.6 million relating to vessels acquisitions and additions; and (ii) $4.4 million relating to deposits for the option to acquire two bareboat charter-in vessels and capitalized expenses. This was partially mitigated by a $2.3 million of proceeds from the note receivable related to the sale of the MSC Cristina.

Cash provided by financing activities for the six month period ended June 30, 2021 as compared to cash used in financing activities for the six month period ended June 30, 2020

Net cash provided by financing activities increased by $267.0 million to $258.4 million for the six month period ended June 30, 2021, as compared to $8.6 million cash used in financing activities for the same period in 2020.

Cash provided by financing activities of $267.0 million for the six month period ended June 30, 2021 was mainly due to: (i) a

$180.5 million of proceeds from the issuance of 6,280,995 common units and 294,173 additional general partner units related to the Continuous Offering Program Sales Agreements and the acquisition of Navios Containers; and (ii) $343.4 million of proceeds from the new credit facilities and sale and leaseback agreements. This was partially mitigated by: (i) a payment of a total cash distribution of $1.7 million; (ii) loans and financial liabilities repayments of $260.4 million; and (iii) a payment of $3.3 million of deferred finance fees relating to the new credit facilities and sale and leaseback agreements.

Cash used in financing activities of $8.6 million for the six month period ended June 30, 2020 was mainly due to: (i) a payment of a total cash distribution of $6.7 million; (ii) loans and financial liabilities repayments of $47.9 million; and (iii) a payment of $0.4 million of deferred finance fees relating to the new credit facilities. This was partially offset by $46.5 million of proceeds from the new credit facilities.

(1) EBITDA and Adjusted EBITDA

EBITDA represents net income/ (loss) attributable to Navios Partners’ unitholders before interest and finance costs, before depreciation and amortization (including intangible accelerated amortization) and income taxes. Adjusted EBITDA represents EBITDA before impairment losses, equity in net earnings of affiliated companies and bargain purchase gain. Navios Partners uses Adjusted EBITDA as a liquidity measure and reconciles EBITDA and Adjusted EBITDA to net cash provided by operating activities, the most comparable U.S. GAAP liquidity measure. EBITDA in this document is calculated as follows: net cash provided by operating activities adding back, when applicable and as the case may be, the effect of: (i) net increase/ (decrease) in operating assets; (ii) net (increase)/ decrease in operating liabilities; (iii) net interest cost; (iv) amortization and write-off of deferred finance cost; (v) equity in net earnings of affiliated companies; (vi) impairment charges; (vii) non-cash accrued interest income and amortization of deferred revenue; (viii) stock-based compensation expense; (ix) non-cash accrued interest income from receivable from affiliated companies; and (x) amortization of operating lease right-of-use asset; and (xi) gain/ (loss) on sale of assets and bargain purchase gain. Navios Partners believes that EBITDA and Adjusted EBITDA are each the basis upon which liquidity can be assessed and presents useful information to investors regarding Navios Partners’ ability to service and/or incur indebtedness, pay capital expenditures, meet working capital requirements and make cash distributions. Navios Partners also believes that EBITDA and Adjusted EBITDA are used: (i) by potential lenders to evaluate potential transactions; (ii) to evaluate and price potential acquisition candidates; and (iii) by securities analysts, investors and other interested parties in the evaluation of companies in our industry.

EBITDA and Adjusted EBITDA have limitations as an analytical tool, and should not be considered in isolation or as a substitute for the analysis of Navios Partners’ results as reported under U.S. GAAP. Some of these limitations are: (i) EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, working capital needs; and (ii) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future. EBITDA and Adjusted EBITDA do not reflect any cash requirements for such capital expenditures. Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as a principal indicator of Navios Partners’ performance. Furthermore, our calculation of EBITDA and Adjusted EBITDA may not be comparable to that reported by other companies due to differences in methods of calculation.

EBITDA of Navios Partners for the three month period ended June 30, 2020 was affected by the accounting effect of a $6.8 million impairment loss related to three containerships. Excluding this item, Adjusted EBITDA increased by approximately $76.1 million to $90.4 million for the three month period ended June 30, 2021, as compared to $14.3 million for the same period in 2020. The increase in Adjusted EBITDA was primarily due to a: (i) $105.5 million increase in time charter and voyage revenues; and (ii) $0.7 million decrease in equity in net loss of affiliated companies recorded in the second quarter of 2020. The above increase was partially mitigated by a: (i) $19.8 million increase in vessel operating expenses, mainly due to the increased fleet; (ii) $3.9 million increase in time charter voyage expenses; (iii) $3.3 million increase in general and administrative expenses, mainly due to the increased fleet; (iv) $2.8 million increase in other expense, net; and (v) $0.3 million increase in direct vessel expenses (excluding the amortization of deferred drydock, special survey costs and other capitalized items).

EBITDA of Navios Partners for the six month period ended June 30, 2021 was affected by the accounting effect of an $80.8 million gain from equity in net earnings of affiliated companies resulting from remeasurement of existing interest held in Navios Containers and a $44.1 million bargain purchase gain. EBITDA for the six month period ended June 30, 2020 was negatively affected by the accounting effect of a $6.9 million loss related to the other-than-temporary impairment recognized in the Navios Partners’ receivable from Navios Europe II and a $6.8 million impairment loss related to three containerships. Excluding these items, Adjusted EBITDA increased by $90.7 million to $124.1 million for the six month period ended June 30, 2021, as compared to $33.4 million for the same period in 2020. The increase in Adjusted EBITDA was primarily due to a $124.0 million increase in time charter and voyage revenues. The above increase was partially mitigated by a: (i) $20.6 million increase in vessel operating expenses, mainly due to the increased fleet; (ii) $4.1 million increase in general and administrative expenses, mainly due to the increased fleet; (iii) $3.6 million increase in other expense, net; (iv) $3.3 million increase in time charter voyage expenses; (v) $1.0 million equity in net earnings of affiliate companies, recorded in the first half of 2020; (vi) $0.5 million net loss on sale of vessels; and (vii) $0.2 million increase in direct vessel expenses (excluding the amortization of deferred drydock, special survey costs and other capitalized items).

(2) Operating Surplus

Operating Surplus represents net income adjusted for depreciation and amortization expense, non-cash interest expense, non-cash interest income, equity compensation expense, estimated maintenance and replacement capital expenditures and one-off items. Maintenance and replacement capital expenditures are those capital expenditures required to maintain over the long term the operating capacity of, or the revenue generated by, Navios Partners’ capital assets.

Operating Surplus is a quantitative measure used in the publicly-traded partnership investment community to assist in evaluating a partnership’s ability to make quarterly cash distributions and is a non-GAAP measure. Operating Surplus is not required by accounting principles generally accepted in the United States and should not be considered a substitute for net income, cash flow from operating activities and other operations or cash flow statement data prepared in accordance with accounting principles generally accepted in the United States or as a measure of profitability or liquidity.

Capital Expenditures

Navios Partners finances its capital expenditures with cash flow from operations, equity raisings, long-term bank borrowings and other debt raisings. Capital expenditures for each of the six month periods ended June 30, 2021 and 2020 amounted to $185.4 million and $42.0 million, respectively. The reserves for estimated maintenance and replacement capital expenditures for the three and six month periods ended June 30, 2021 were $17.7 million and $34.7 million, respectively. The reserves for estimated maintenance and replacement capital expenditures for the three and six month periods ended June 30, 2020 were $8.6 million and $17.2 million, respectively.

Maintenance for our vessels and expenses related to drydocking expenses are reimbursed at cost by Navios Partners to our Manager under the Management Agreement. In each of October 2013, August 2014, February 2015, February 2016 and November 2017, Navios Partners amended its existing Management Agreement with the Manager to fix the fees for ship management services of its owned fleet, excluding drydocking expenses, which are reimbursed at cost by Navios Partners at: (a) $4,225 daily rate per Ultra-Handymax vessel; (b) $4,325 daily rate per Panamax vessel; (c) $5,250 daily rate per Capesize vessel; (d) $6,700 daily rate per Container vessel of TEU 6,800; (e) $7,400 daily rate per Container vessel of more than TEU 8,000; and (f) $8,750 daily rate per very large Containers vessel of more than TEU 13,000 through December 31, 2019.

In August 2019, Navios Partners extended the duration of its existing Management Agreement with the Manager until January 1, 2025. Management fees are fixed for two years commencing from January 1, 2020 at: (a) $4,350 daily rate per Ultra-Handymax Vessel; (b) $4,450 daily rate per Panamax Vessel; (c) $5,410 daily rate per Capesize Vessel; and (d) $6,900 daily rate per 6,800 TEU Containership. The agreement also provides for a technical and commercial management fee of $50 per day per vessel and an annual increase of 3% commencing January 1, 2022 unless agreed otherwise.

Following the liquidation of Navios Europe I, Navios Partners acquired three Sub-Panamax and two Panamax containerships and following the liquidation of Navios Europe II, Navios Partners acquired five drybulk vessels, three Panamax and two Ultra-Handymax vessels, As per the Management Agreement, as amended in December 2019, management fees are fixed for two years commencing from January 1, 2020 at $6,100 daily rate per Sub-Panamax/Panamax Containership. The agreement also provides for a technical and commercial management fee of $50 per day per vessel and an annual increase of 3% commencing January 1, 2022 for the remaining period unless agreed otherwise. Drydocking expenses are reimbursed at cost for all vessels.

Following the completion of the merger with Navios Containers on March 31, 2021, the 29-vessel fleet of Navios Containers is included in Navios Partners owned fleet. As per the Management Agreement, management fees are fixed for two years commencing from January 1, 2020 at: (a) $6,100 and $6,215 daily rate per Containership of TEU 3,000 up to 4,999, respectively; (b) $7,400 and $7,780 daily rate per Containership of TEU 8,000 up to 9,999, respectively; (c) $7,400 and $8,270 daily rate per Containership of TEU 10,000 up to 11,999, respectively. The agreement also provides for a technical and commercial management fee of $50 per day per vessel and an annual increase of 3% after January 1, 2022 unless agreed otherwise. 

Maintenance and Replacement Capital Expenditures Reserve

We estimate that our annual replacement reserve for the year ending December 31, 2021 will be approximately $70.7 million, for replacing our vessels at the end of their useful lives.

The amount for estimated replacement capital expenditures attributable to future vessel replacement was based on the following assumptions: (i) current market price to purchase a five year old vessel of similar size and specifications; (ii) a 25-year useful life for drybulk vessels and a 30-year useful life for containerships; and (iii) a relative net investment rate.

The amount for estimated maintenance capital expenditures attributable to future vessel drydocking and special survey was based on certain assumptions including the remaining useful life of the owned vessels of our fleet, market costs of drydocking and special survey and a relative net investment rate.

Our Board of Directors, with the approval of the Conflicts Committee, may determine that one or more of our assumptions should be revised, which could cause our Board of Directors to increase or decrease the amount of estimated maintenance and replacement capital expenditures. The actual cost of replacing the vessels in our fleet will depend on a number of factors, including prevailing market conditions, charter hire rates and the availability and cost of financing at the time of replacement. We may elect to finance some or all of our maintenance and replacement capital expenditures through the issuance of additional common units, which could be dilutive to existing unitholders.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have, a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

On March 13, 2020, two purported holders of the Navios Containers’ common units commenced a lawsuit in the United States District Court for the Southern District of New York captioned The Mangrove Partners Master Fund, Ltd. et al v. Navios Containers, Case No. 1:20-cv-02290-LJL. In the suit, the plaintiffs allege that Navios Containers breached its limited partnership agreement and the Marshall Islands Limited Partnership Act, in each case based on an alleged refusal by Navios Containers to provide to the plaintiffs certain non-public books and records of Navios Containers. On July 20, 2020, the plaintiffs amended their complaint to add Navios Containers’ CEO as a named defendant, and added two additional causes of actions; one for alleged violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and one for common law fraud, and the plaintiffs sought, among other things, damages, fees, expenses, rescission, and an order requiring Navios Containers to furnish the requested records to the plaintiffs. On September 25, 2020, the named defendants moved to dismiss the amended complaint, which resulted in plaintiffs filing a second amended complaint that further added two additional causes of actions (one for fraudulent inducement and one for negligent misrepresentation) and sought the same relief as requested in the first amended complaint. The named defendants moved to dismiss the second amended complaint on January 15, 2021, and briefing was completed on March 2, 2021. On July 13, 2021, prior to any ruling on the motion to dismiss, the parties filed with the court a stipulation of dismissal with prejudice pursuant to a confidential settlement, thereby concluding the matter.

Navios Partners leases office space in Monaco pursuant to a five year lease agreement dated July 1, 2018 that expires in June 2023, for a monthly rent of approximately $0.01 million.

Limitations on Cash Distributions and Our Ability to Change Our Cash Distribution Policy

There is no guarantee that unitholders will receive quarterly distributions from us and beginning with the quarter ending December 31, 2015, our Board of Directors elected to suspend distributions on our common units in order to preserve cash and improve our liquidity. In March 2018, the Company’s Board of Directors announced a new distribution policy under which it paid quarterly cash distributions in the amount of $0.30 per unit, or $1.20 annually. In July 2020, the Company amended its distribution policy under which it intends to pay quarterly cash distributions in the amount of $0.05 per unit, or $0.20 per unit annually.

Our distribution policy is subject to certain restrictions and may be changed at any time, including:

Our ability to make distributions to our unitholders depends on the performance of our subsidiaries and their ability to distribute funds to us. The ability of our subsidiaries to make distributions to us may be restricted by, among other things, the provisions of existing and future indebtedness, applicable partnership and limited liability company laws and other laws and regulations.

Quarterly Distribution

There is no guarantee that we will pay the quarterly distribution on the common units in any quarter. The amount of distributions paid under our policy and the decision to make any distribution is determined by our board of directors, taking into consideration the terms of our partnership agreement. We are prohibited from making any distributions to unitholders if it would cause an event of default, or an event of default exists, under our existing credit facilities.

Quarterly distributions were paid by the Company through September 2015. For the quarter ended December 31, 2015, the Company’s board of directors determined to suspend payment of the Company’s quarterly distributions in order to preserve cash and improve our liquidity. In March 2018, the Company’s board of directors announced a new distribution policy under which it paid quarterly cash distributions in the amount of $0.30 per unit, or $1.20 per unit annually. In July 2020, the Company amended its distribution policy under which it intends to pay quarterly cash distributions in the amount of $0.05 per unit, or $0.20 per unit annually.

In July 2021, the Board of Directors of Navios Partners authorized its quarterly cash distribution for the three month period ended June 30, 2021 of $0.05 per unit. The cash distribution was paid on August 12, 2021 to all unitholders of record as of August 9, 2021. The declaration and payment of any further dividends remain subject to the discretion of the Board of Directors and will depend on, among other things, Navios Partners’ cash requirements as measured by market opportunities and restrictions under its credit agreements and other debt obligations and such other factors as the Board of Directors may deem advisable.

Incentive Distribution Rights

The following description of our incentive distribution rights reflects such rights and the indicated levels are achieved, of which there can be no assurance. Incentive distribution rights represent the right to receive an increasing percentage of quarterly distributions of available cash from Operating Surplus after the minimum quarterly distribution and the target distribution levels have been achieved. Navios GP L.L.C. currently holds the incentive distribution rights, but may transfer these rights, provided the transferee agrees to be bound by the terms of the partnership agreement. As of December 31, 2017, the holder of incentive distribution rights may transfer any or all of its Incentive Distribution Rights without unitholder approval.

The following table illustrates the percentage allocations of the additional available cash from Operating Surplus among the unitholders, our general partner and the holder of our incentive distribution rights up to the various target distribution levels. The amounts set forth under “Marginal Percentage Interest in Distributions” are the percentage interests of the unitholders in any available cash from Operating Surplus we distribute up to and including the corresponding amount in the column “Total Quarterly Distribution Target Amount”, until available cash from Operating Surplus we distribute reaches the next target distribution level, if any. The percentage interests shown for the unitholders for the minimum quarterly distribution are also applicable to quarterly distribution amounts that are less than the minimum quarterly distribution. The percentage interests shown for our general partner assume that our general partner maintains its 2.0% general partner interest.