Frasers Centrepoint Trust: UOB Kay Hian's BUY Call Ignores a Two-Gate Balance Sheet Problem 🦖
Frasers Centrepoint Trust: UOB Kay Hian's BUY Call Ignores a Two-Gate Balance Sheet Problem 🦖
FCT just sold White Sands for an 8.4% premium and every broker headline reads like a clean-up win. What caught my eye was not the premium, it was what happened to the balance sheet after sacrificing 6.9% of group NPI to get there. Even after applying roughly S$454 million of net proceeds to repay debt, pro forma gearing only drops from 40% to 36.5%, and interest cover is still stuck below 4 times.
If you hold FCT for retirement income, the yield near 5.4% to 5.6% looks comforting until you line it up against that 36.5% gearing and a 3.59x interest coverage ratio. The White Sands sale buys time, it does not remove the need for further deleveraging if you want your distributions to survive a nasty SORA spike.
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