A major property industry legal stouch will begin in the Victorian Federal Court next Wednesday when commercial property giant GPT faces off against a $100 million class action claim from disgruntled investors.
It is one of a number of court room conflicts that property industry participants will follow closely this year.
The class action against GPT was filed on behalf of investors by law firm and class action specialists Slater & Gordon in December 2011.
It relates to a July 7 2008 statement from GPT to the ASX in which GPT downgraded its forecast earnings for the 2008 calendar year by 27%, and its distributions per security (DPS) by 30%.
Six months prior GPT had released its results for the 2007 calendar year and stated that its earnings would be “flat” (about $600m) for 2008.
“The class action against GPT alleges that it engaged in misleading or deceptive conduct and breaches of continuous disclosure obligations in relation to and following the release of its 2007 Full Year Statutory Accounts,” according to a statement on the Slater & Gordon website.
Former GPT boss Nic Lyons and current head of corporate development Michael O’Brien will be called to give evidence next week.
In its 2012 report to shareholders released this week GPT says it rejects the allegations and intends to defend the claim.
“GPT does not expect that any payment it could be required to make would have a material adverse effect on the group’s operation or strategic objectives, or its financial strength,” adds the group in the report.
Current CEO Michael Cameron, who became CEO in May 2009, will not be cross-examined.
GPT was one of the listed property trusts heavily impacted by the GFC, losing more than $1 billion in value as its share price plunged.
However, it has since recovered and is now regarded as one of the strongest companies in the A-REITS sector.
This article first appeared on Property Observer.