Duke of Westminster's firm in talks with banks

Grosvenor, the property empire run by the Duke of Westminster, is in talks with its lenders over the possibility of breaching banking covenants on its retail fund.

The Grosvenor Shopping Centre Fund, which owns several retail centres around the UK, is in “advanced discussions” with the banks on renewing its bank facilities, the company admitted.

Mervyn Howard, the head of Grosvenor's UK fund management, said: “At the end of the second quarter of 2007 we reported that we were concerned at the level of debt and we needed to address it. It was at our suggestion and we have been in dialogue about initiatives ever since then. We can understand investors' frustration at the performance; this is an issue not just for our funds but all property funds.”

Grosvenor manages around £3.1bn of property, much of it in Mayfair, central London. It is an important client of the construction industry, with such projects as the £1bn Liverpool One development.