Student accommodation provider Unite is seeking to recover £30m of funds placed on a fixed term deposit with the London branch of Icelandic bank Landsbanki.

The funds were received following assets sale in August by Unite’s Student Accommodation Fund (USAF), which is managed by Unite and in which it has a 20% stake. They represent 3.5% of the total assets held in the fund.

Earlier this month the Icelandic government placed the bank in receivership and is now under the control and supervision of the Icelandic Financial Supervisory Authority.

Unite said it was pursuing all channels but ‘the extent and timing of recovery is uncertain at the present time’.

It said in a Stock Exchange announcement today that: ‘In the event that all the monies were to prove irrecoverable, the overall investment capacity of the Fund at its target gearing level would be reduced by £67m to £313m.

'Up to £205m of this investment capacity is available to acquire stabilised direct let assets from Unite later this year, under the terms of the acquisition and development pipeline agreement between USAF and UNITE.

'Unite will use the proceeds from the disposal of these assets to reduce its borrowings and maintain its stake in USAF at 20%.’

Unite provided the information on its exposure to Landsbanski ahead of a meeting today with a number of shareholders. It will also provide a general update on the fund following its third closing during the first week of October.

Unite said the fund continued to perform strongly and it was the top performing fund in the IPD UK Pooled Property Funds index and the only fund in the index to record a positive return for the nine months to the end of September.

It says the fund still has £58m of unconditionally committed equity subscriptions and committed, but undrawn £120m bank facility from HSH Nordbank and Abbey, and £93m of cash resources.

The fund also has additional leverage capacity, within its permitted target gearing parameters, of a further £110m, subject to the availability of further debt facilities taking its total potential overall investment to a maximum of £380m.

Unite itself does not have any cash deposits or banking facilities with Landsbanki.