Unite money still tied up in Icelandic bank

UK student housing developer The Unite Group is still pursuing roughly £30 million ($45 million; €31 million) in proceeds from its private equity real estate fund caught up in the collapse of Icelandic banking giant Landsbanki.

“The situation hasn’t been resolved yet,” Joe Lester, chief financial officer for Unite, told PERE. “The funds are effectively still trapped in Iceland. We’re going through the processes of recovering that money and have lawyers working in Iceland.”

Lester added that the process will likely take months rather than weeks, and that Unite will know more about the fate of the funds once Landsbanki begins accepting UK claims in 2009.

The £30 million in proceeds stems from the August sale of £178 million in assets owned by the Unite Student Accommodation Fund, a co-investment fund Unite established in 2006 to target student accommodation developed by Unite’s development arm.

The company placed the proceeds on a fixed term deposit in the London branch of Landsbanki. Two months later the bank was put into receivership by Iceland’s government as a result of the credit crisis.

In a statement to the London Stock Exchange in October, Unite said it was unsure how much, if any of the money it could recover.

Third party investors, which include financial services companies Schroders and ING, have contributed £425 million to the fund, according to Lester. Unite currently maintains a 19 percent stake in the fund. There are a total of 18 third party investors.

In related news, Lester said an affiliate of defunct investment bank Lehman Brothers was also looking to sell its equity stake in a joint venture formed with Unite before 2006. The joint venture, in which the Lehman unit and Unite both own 50 percent stakes, financed the development of a 1,300 bed student housing facility in Sheffield. The asset is worth roughly £60 million. Unite will have first right of refusal over Lehman’s stake.