Real Estate Opportunities Limited, the property company controlled by Treasury Holdings, has today reached a settlement with Aberdeen Asset Management in relation to all claims against Aberdeen arising from the launch of REO and the subsequent management by Aberdeen of REO’s income portfolio.
REO said it was continuing with related claims against UBS.
REO was set up as a split-capital trust but later became a pure property company after its income portfolio plummeted in value. REO sacked Aberdeen as its manager in April 2003 and in June 2005 sued Aberdeen and UBS for around £80m, saying it was ‘seeking compensation for the substantial losses suffered by REO in its income portfolio, which was established by those advisers in June 2001’.
Today’s settlement with Aberdeen provides for an immediate cash payment to be made to REO by Aberdeen and a further cash payment to be made in January 2008. In addition, Aberdeen has agreed to discontinue its counterclaim against REO for unpaid management fees.
The net effect of the settlement on REO is an enhancement to net assets of £49.7m, equivalent to 14p a share on a diluted basis.
Aberdeen said it ‘has made no admission whatsoever of any liability or of acceptance of the validity of REO's claim, but the board has recognised that it is in the best interests of the group and its shareholders to conclude this matter and to end the distraction it has caused to Aberdeen’.
The cost to Aberdeen will be around £30m.