One of Goldman Sachs premier real-estate funds is in discussions with its lenders to restructure debt on some of its biggest investments: Nevada casinos, German office buildings and a US hotel chain.

The wrinkle: One of the main lenders on those deals is Goldman Sachs.

Investors were warned about potential conflicts of interest when they put money into this group of real-estate vehicles, which use the Whitehall name. Such funds were billed as 'opportunity funds,' huge, highly leveraged investments funded directly by Goldman, its employees and a group of outside investors. Overall, Goldman has raised $31bn for various Whitehall funds over the past 18 years, with outsiders usually investing two-thirds or more into each one.

With commercial real-estate values plunging, investors and their advisers have begun focusing on the conflicts. They say that Goldman is able to use its position as investor, lender and fee-collector to benefit itself at the expense of outsiders.

Wall Street Journal