A PROPERTY giant behind the controversial regeneration of Preston city centre has posted a loss of almost £600million.

But bosses of the Grosvenor Group said the loss, brought on by the ongoing economic downturn, would not affect the £700m Tithebarn Project.

The Tithebarn scheme has divided opinion across Lancashire, with Blackburn with Darwen Council opposing the project and calling for it to be scaled down.

The Grosvenor Group, which developed the Liverpool One shopping centre, reported pre-tax losses of £593.9m last year against profits of £524m the year before.

But Grosvenor bosses said a 7.4 per cent drop in net asset value of its portfolio in 2008 - to £2.8 billion - reflected resilience in a market that has been devastated by the economic downturn.

Mark Preston, group chief executive, said: "This is a challenging time for the property industry and inevitably Grosvenor has been affected.

"But the impact has been cushioned by our well-diversified portfolio, low gearing, and steps taken since 2007 to curb acquisitions and reduce our development exposure."

Grosvenor cut around three per cent of its workforce at the end of last year and has ruled out further reductions in headcount as it warned it could be another three years before a market recovery.

The fear amongst many East Lancashire councils and chamber of trade bodies is that Tithebarn would reduce trade in centres such as Blackburn by up to 20per cent.

The scheme would see Preston's retail space become bigger than that of Blackburn and Blackpool combined.

Blackburn with Darwen Council is so worried about Preston's plans that it is urging people to object to the Tithebarn project and is launching a campaign to get it scaled down The property company is controlled by the Duke of Westminster who stood down as chairman of the board in 2007 after 33 years in the role.