London & Stamford Property Plc (LSP) fell the most in more than four years after the company’s biggest shareholder, GE Asset Management Inc., said it plans to reduce its holding by almost 70 percent.
The stock dropped as much as 13.2 percent in London trading to 100 pence, the most since November 2007. It closed down 7.6 percent at 106.5 pence, the lowest since March 18, 2009.
The unit of Fairfield, Connecticut-based General Electric Co. plans to sell a total of 50 million shares, or a 9.2 percent stake, according to a statement today. Based on London & Stamford’s closing price yesterday, the holding would be valued at 57.8 million pounds ($90.8 million). GE Asset Management, which is acting on behalf of the General Electric Pension Trust, didn’t say why it planned the sale.
GE Asset Management “may think real estate will underperform as access to debt finance becomes more challenging,” said Andrew Saunders, an analyst at Panmure Gordon.
Guernsey-based London & Stamford owns 15.7 percent of Meadowhall in Sheffield, England, one of the U.K.’s biggest shopping malls. The company reported a first-half net loss of 5.3 million pounds for the six months through September, compared with a year-earlier profit of 16.3 million pounds, on rising administrative costs and a fall in the value of its properties. The stock fell more than 12 percent in the 12 months through yesterday.
“If the placement price provides investors with an opportunity to acquire the stock close to our target price, then we would expect the subscription to be attractive for longer- term holders looking for yield,” Sue Munden, an analyst at Seymour Pierce, said in a note this morning.
Munden on Nov. 28 recommended that investors reduce their stakes in the developer because of falling profits and the expectations that property values may fall or fail to rise. She gave a target price of 102 pence.
London & Stamford was downgraded to “hold” from “buy” today by Miranda Cockburn at Oriel Securities prior to GE Asset Management’s announcement. The firm revised its forecasts to reflect “an environment where there is little move in investment yields,” setting a price target of 115 pence.
GE Asset Management currently holds 13.6 percent of London & Stamford, according to data compiled by Bloomberg. Bookbuilding for the sale will begin immediately, it said.
The company has appointed Credit Suisse Group AG as lead underwriter, it said in a statement. Peel Hunt and Credit Suisse with act as joint lead managers, according to the filing.