A £20 million loan taken out by the Prince of Wales to help save a stately home left his Charities Foundation with a multimillion-pound debt following the slump in land development prices, it emerged.
The purchase of Dumfries House in Ayrshire for £45 million in 2007 was financed with the help of the loan taken out by the Foundation, which funds the Prince's 20 charities.
The security for the loan was land around the property on which Charles wants to build a model community along the lines of Poundbury in Dorset, as part of a regeneration project to boost business and employment opportunities in East Ayrshire.
As a result of the crash in land development prices, the value of the greenfield site plummeted to less than £9 million, leaving the heir to the throne in the position of a homeowner in negative equity, according to The Times.
In a statement, the Prince's spokesman insisted the loan had not put any of his charities at risk.
He said it had "involved, like any entrepreneurial activity, an element of risk, but the risks were manageable and fully covered".
Returns on the property deal were already proving "substantial", he added.
He said the purchase of the house, nearby land and the preservation of its collection of Chippendale furniture for future generations was only made possible with the Foundation's contribution.
"The loan taken out by the Foundation in 2007 was fully disclosed at the time and has since been refinanced and partly paid off.
"The value of the land bought with the property has since declined - a reflection of a nationwide decline in property and land values which were not foreseen in 2007 - but there is no intention to sell the land.
"Quite the opposite. The land will be developed as part of a major regional heritage-led regeneration project which the Prince hopes will play an important part in creating much-needed business and employment opportunities in East Ayrshire for many years to come.
"His Royal Highness is in this for the long-term, for the benefit of the country's heritage and, he hopes, the local economy and communities."
The statement continued: "When The Prince of Wales commenced his property development at Poundbury in Dorset some 20 years ago, he was told that it would not work and was too risky.
"We believe that the same mould-breaking and beneficial outcome across a broad spectrum achieved at Poundbury will be repeated with the rescue of Dumfries House and the associated property development and economic regeneration plan at nearby Knockroon."