Real Estate Opportunities (REO) has received shareholder approval for a share buyback but its proposal to re-organise itself as a property investment firm was rejected at an extraordinary meeting yesterday.

The split capital investment trust, formed by Treasury Holdings and Aberdeen Asset Management, failed to get the backing of the required number of zero dividend preference shareholders for the re-organisation.

The motion was blocked by a single large shareholder, British property investment firm Dawnay Day, Mr Will Rogers, a spokesman for REO's advisers, UBS Warburg, said. The board would now have to look at its strategic options, he said.

"Shareholders approved the share buyback but the technical change to policy was not approved. It is not material because most of the company is in property anyway," Mr Rogers said.

As part of the reorganisation the firm had been proposing to use some of its cash to repay debt. It will now have to look again its financing.

REO proposed the re-organisation against the background of falling stock markets. This has hit the value of its portfolio of high-yielding bonds and high-yielding shares issued by investment companies. The portfolio, valued at £333 million (€521.4 million) at end July 2001, was worth just £49 million 14 months later.

REO, one-third owned by Treasury Holdings's Mr John Ronan and Mr Richard Barrett, will proceed with a share buyback of up to 15 per cent of its ordinary shares and all of its outstanding zero dividend preference shares.

The company said it would also conduct buybacks of convertible, unsecured loan stock where it was in its interests to do so.