Real Estate Opportunities to gain €73m from Aberdeen settlement

THE Treasury Holdings-backed property investment company, Real Estate Opportunities (REO) has reached a settlement in its legal battle with minority shareholder, Aberdeen Asset Management, which will see the company’s assets boosted by more than €70 million.

REO had taken legal action against both Aberdeen Asset Management and UBS related to investments made on REOs behalf — from which it suffered heavy losses in its income fund — after its flotation six years ago.

Both Aberdeen and UBS were previously investigated by the Financial Services Authority in Britain over a wider study on split capital investment trusts — where shares are split into different classes with different rights, return potential and risks linked with each class; such a structure which applies to REO shares.

Subsequently, REO took legal action against Aberdeen — which acted as its chief flotation adviser and manager of its property fund — and UBS, which assisted Aberdeen. REOs standpoint was that the share structure put in place by the other two companies was too complex and risk-laden.

Yesterday, REOs board of directors stated that it had reached a settlement with Aberdeen “in relation to all claims against Aberdeen arising from the launch of REO and the subsequent management by Aberdeen of REOs income portfolio”.

While the full details of the settlement are confidential, the main effect of the settlement will see REOs net assets boosted by almost £50m (€73m).

The settlement, according to REO, will result in an immediate cash payment from Aberdeen as well as a further cash payment to be made next January. In addition, Aberdeen has agreed to discontinue its counter-claim against REO for unpaid fees.

Yesterday’s statement also said that claims made against Aberdeen Asset Management by Treasury Holdings have also been settled for an undisclosed sum. REO, meanwhile, is to continue with related claims against UBS.