A large portfolio of UK properties owned by Glenn Maud’s Propinvest that is in negative equity is also in breach of its interest cover covenant.

The value of the 35 assets, secured by an £850m senior loan that has been securitised and a £105m junior loan, fell from £959m as at 17 April to £801m at 26 September. This meant the Propinvest subsidiaries that borrowed the money are in negative equity.

The loan-to-value ratio has risen to 106% on the senior loan, which is securitised in Barclays’ Gemini (Eclipse 2006-3) vehicle, and 119% for the whole loan.

Today it emerged that the assets were in breach of both the actual and projected interest cover, which stipulates that for they must be at least 120% as at 17 October 2008.

Propinvest is negotiating with its banks and intends to repay all the senior and junior loans once Maud has completed a financing of his entire UK portfolio in a plan codenamed Project Sparkle.