BBC in £2.5bn LandSecs deal rethink

THE BBC has ripped up its £2.5bn property contract with Land Securities in a move that raises fresh concerns over the already over-budget and late-running redevelopment of Broadcasting House.

The Evening Standard, This is Money's sister publication, has revealed that the planned £650m rebuilding and refurbishment of the BBC's West End flagship - which was scheduled to be completed in 2008 - is already running 12 months late and may not be finished until 2011.

The £200m Phase 1 of the project is also £20m over-budget.

Problems at Broadcasting House are believed to have raised tensions between the BBC and Land Securities and played a part in the U-turn that terminates a 30-year contract - signed just three-and-a-half years ago - for Land Securities' outsourcing arm Trillium to manage the Corporation's London and Scottish estates.

While Land Securities continues to run the Broadcasting House contract, there is understood to be dissatisfaction within the BBC at how the project is being managed. A new £900m 10-year property management contract for the BBC will be going out to tender shortly.

It is claimed that Land Securities lost interest in the low-margin facilities management contract after completing the BBC's new White City media village in west London and bagging a £23m profit through selling it back to the Beeb in a £340m deal.