Obayashi Falls on Link to San Francisco Leaning Tower

  • Shares drop for seventh day; slide is temporary, EastGate says
  • Biggest shareholder is Japan’s GPIF: Bloomberg-compiled data

Shares of Obayashi Corp. fell for a seventh day after a unit of the Japanese construction company was found to have done work on a San Francisco tower that is sinking.

The shares dropped 4.9 percent to 956 yen at the close in Tokyo Tuesday after earlier falling as much as 8.6 percent, the largest decline since May 2013. The stock rose 80 percent in the three years before Tuesday’s slide, compared with a 46 percent gain in the 99-member Topix Construction Index.

The involvement of the Obayashi unit came to light after the award-winning Millennium Tower was found to have tilted. In 2007, Obayashi acquired a majority stake in San-Francisco based Webcor Builders for an undisclosed price. Webcor finished building the 1.2 million-square-foot, luxury residential complex that consists of two towers of 60 and 11 stories in October 2005.

Obayashi’s biggest shareholder is the Government Pension Investment Fund Japan with a 6.3 percent stake, according to data compiled by Bloomberg.

The decline in the stock may be temporary, said Singapore-based Reid Mackay, the managing director of EastGate Asia Pte, a real estate brokerage and advisory firm.

“It would be a short-term correction,” said Mackay, who has advised Japanese developers and builders on overseas acquisitions of buildings. “It is really isolated to that project. That building is just a legacy issue from that acquisition.”

(Company corrects earlier comments to say Webcor built the tower in the third paragraph.)
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