Meta Platforms Inc (NASDAQ:FB) has decided to surrender its unused lease of 1 Triton Square office building next door to Regent's Park in London, meaning it will pay a £149 million cash break fee to property developer British Land Company PLC (LSE:BLND).
Analysts said the fee was staggeringly high for the Facebook and Instagram owner's decision to vacate the asset.
Matthew Saperia at Peel Hunt estimated that the £149 million is around seven years of rent against the 18 years outstanding on the lease.
He said British Land now also has the potential to let the 310k square feet of space at higher rents.
British Land and architects Arup had recently conducted a major refurbishment on the Triton Square building since it was originally designed in the 1990s.
Analysts at Stifel agreed the Meta news was the "key update" in the statement from British Land this morning.
Once accounting for interest savings, the move will dilute earnings by 0.6p (2.2%) due to lost income; "however, it will allow BL to accelerate plans to reposition Regent's Place as a Life Sciences campus".
The FTSE 250-listed developer also said it has completed a disposal from its office and data centre portfolio for £125 million, which was ahead of book value.
Combined with the Meta fee, this results in pro forma loan-to-value reduce to 33.6% from 36.0%.
"The shares continue to languish at a deep 48% discount to NTA, despite capital values having been written down 12.3% in the 12 months to Mar-23," Stifel said.
"We think further write-downs of this magnitude are unlikely as we approach the peak of the interest rate cycle, particularly given the potential for capital growth in the Retail Park portfolio (we are forecasting +4.0% for FY24), and think the shares look oversold."