Real Estate Opportunities (REO), the investment company formed by Treasury Holdings and Aberdeen Asset Management two years ago, plans to sue Aberdeen over losses incurred on its income portfolio
REO said yesterday it had dismissed Aberdeen as its investment manager following a review of its management of the income portfolio, on which REO has incurred losses of more than £165 million sterling (€242 million).
REO said it has also written to Aberdeen, making clear that it holds it responsible "for a substantial proportion of the losses and will be taking appropriate steps to seek their recovery".
The board of REO does not intend to pay Aberdeen any further management fees, nor will it pay those accrued to date. It has appointed Invesco International to replace Aberdeen.
The three REO directors connected to Aberdeen, which initially took a 21 per cent stake in the company, have all resigned in recent times.
Meanwhile, REO said 2002 had been "an extremely difficult year for the company" due to the losses incurred by its split capital investment funds and the fall in value of its high-yield bond portfolio. The company recorded a pre-tax loss of £131.3 million, up from £69 million a year earlier.
