Workspace Group’s board members must be feeling pretty validated by the decision of shareholders to support their turnaround strategy for the flex space firm over managed wind-down proposals put forward by activist investor fund Saba Capital Management.
Mel Flaherty
The New York-based hedge fund is Workspace’s largest shareholder, with a stake of almost 30% in the business. It had suggested replacing the group’s non-executive directors with its own nominees, accelerating the sell-off of chunks of its portfolio and returning capital to shareholders through share buybacks.
Workspace had attracted the attention of Saba due to the fact it was trading at a hefty 45% discount to net asset value (NAV). Indeed, the aggressor fund has enjoyed much success in its native US targeting funds trading at deep discounts to NAV. However, critics are questioning the suitability of that approach for the UK REITs Saba has turned its gaze to in recent years.
While I hesitate to use the word ’naïve’ to describe a company founded by former child chess prodigy and Deutsche Bank wunderkind Boaz Weinstein, I am surely not the only one wondering whether Saba has truly appreciated lags in valuation data and the fact that for REITs, NAV does not take into account operational efficiencies, earnings quality or market sentiment. Workspace Group’s shareholders clearly didn’t think so.
Critics are questioning the suitability of the approach for the UK REITs Saba has turned its gaze to
How this outcome affects Saba’s next move in the UK property market is the really interesting bit. The fund holds around a 6% stake in Grainger, which of course completed its conversion to REIT status last September. However, it is the news that Saba has, according to various national press reports, accumulated a 4% stake in student accommodation provider Unite Group that will cause ears to prick up.
The group has suffered a more than 50% fall in its share price since it first proposed buying Empiric, which it went on to do last August, right at the top of the market, in a £723m deal. It is currently trading at around a 36% discount to NAV.
Unite’s results for the first half of this year (p7), which show a swing from a pre-tax profit of £185.9m for H1 2025 to a pre-tax loss of £417.1m for the six months ended 30 June 2026, will have done little to quell investor nerves, or patience for the completion of its disposals programme and strategy to focus on 20 cities instead of 29. The well-documented affordability issues for students and financial difficulties among universities will not help the market sentiment bit of the picture either.
Whether any of this will result in a bigger opening move from Saba remains to be seen, especially given its lack of success with its push at Workspace.
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