Saba ramps up demands for Workspace break-up
Notorious activist investor Saba has dialled up its efforts to force a London-listed property trust to sell off its portfolio of offices, warning the firm’s revamped strategy was fraught with “considerable execution risk”.
In an excoriating open letter, the New York-based hedge fund, which is run by pugnacious founder Boaz Weinstein, called on flexible office provider Workspace to “pursue an orderly and accelerated disposal programme” to unlock instant value for investors. It also demanded the group’s board unveil a share buyback programme to prop up its stubbornly low share price.
“Shareholder value can be realised more quickly and with substantially lower execution risk by prioritising much more significant property sales with the proceeds utilised in share buybacks over large-scale reinvestment,” Paul Kazarian, a partner at Saba, wrote, adding the group’s current plans will take “several years” to generate any meaningful return.
Saba’s letter ramps up the pressure on Workspace top brass to offload their portfolio of flexible offices, months after the investor first called for the embattled trust to be broken up. The hedge fund is Workspace’s second-largest shareholder and has previously called for the defenstration of all six of the property firm’s non-executive directors – including chairman Duncan Owen – to push through its desires for a break-up.
Workspace has spent years trading at a hefty discount to its net asset value (NAV), with shares having fallen some 60 per cent since 2021. The bleak performance, weighed down by a sector-wide downturn in the property trust sector and an preference for permanent office arrangements, prompted Saba to take up a stake in the embattled trust last year.
Saba doubles down on trust onslaught
The activist investor is renowned for leaping on depressed valuations and forcing through strategic and governance changes, and is the midst of a years-long battle to shake up Britain’s struggling investment trust industry. In the past two months, it successfully orchestrated the effective downfall of two London-listed trusts, Baillie Gifford-run Edinburgh Worldwide and Impax Environmental Markets, and oversaw the transfer of Herald to Scottish investment juggernaut Aberdeen.
Since Saba launched its Workspace campaign, the trust has installed a new executive team, who earlier this month overhauled the group’s strategy to become an “earnings-focused business”. The new bosses vowed to reinvest the proceeds of any disposals back into the portfolio, in a move that runs directly counter to that outlined by the hedge fund.
In its letter, Saba, whose 24.7 per cent stake in Workspace makes it the trust’s second-largest shareholder, warned the new approach would take years to bear any fruit, and instead outlined a three-phase approach that would lead to its eventual mothballing.
“We have identified a disposal roadmap comprising three distinct tranches: an initial group of 21 priority non-core assets, a second phase of 19 assets, and a final opportunity-led portfolio of 16 assets,” Kazarian wrote. “This framework provides a clear pathway to realising value while retaining flexibility to respond to market conditions.”
Kazarian also vowed to press ahead with his push to replace Workspace’s board with Saba’s nominees, with a vote on the personnel moves slated for the group’s annual general meeting in July.