Dunedin’s £521m industrial property fund has failed to secure the short-term working capital that it was ‘urgently’ seeking in order to survive.

The Edinburgh-based property company has been holding crisis talks with the Royal Bank of Scotland and other stakeholders about its struggling Dunedin Property Industrial Fund. The fund owns the 10m sq ft Industrious portfolio, which comprises assets bought from Brixton, Carisbrooke, Workspace and Edinburgh House.

The fund was trying to access £4m under its existing lending structure, which last week it said ‘needs to be made available as soon as possible, and in any event by 15 September 2008’.

However, today a notice issued to holders of the commercial mortgage-backed securities issued by RBS, which securitised the senior part of the loans in October 2006, said the fund ‘cannot access the funds within the existing lending structure and does not have access to an additional credit facility’.

The notice added: ‘The directors of the fund ‘do not anticipate [the fund] will obtain such a facility. Discussions are continuing in relation to the short-term funding position of the operating companies within the [fund’s] group which, if resolved, will allow them to continue to operate’.

The amount outstanding on the bonds is £472.7m, while RBS and the junior lenders are owed £585m of debt – £60m more than the value of the portfolio, which fell from £631m in September 2007 to £521m at 30 June.