Board Thread:The Last Sovereign Discussion/@comment-29984007-20180115083425/@comment-31763506-20180630031019

Technically, it is GRAMMATICAL, but it appears to refer to a lair that is inhabited by various balrogs ("balroges" and "balrogii" are strongly discouraged) or somehow associated with balrogs rather than a lair belonging entirely to one specific balrog.

Compare: "We went to the orc cave." vs. "We went to the orc's cave."