Workspace Group, a UK flexible-office landlord, has placed more than £200 million of its properties on the market and is considering an additional £100 million in sales, as activist investor Saba Capital Management builds its stake to 29.1% ahead of a critical shareholder vote on July 23.
The company says the disposals are part of a strategy to become "more earnings-focused," selling lower-return properties to free up cash and reinvest in higher-yielding assets. The update comes as Saba, a hedge fund known for pushing for changes at underperforming companies, nears the 30% threshold that would trigger a mandatory takeover offer under UK takeover rules.
What's Happening at Workspace?
Workspace provides flexible office space across London and the South East, catering to small and medium-sized businesses. The company has been under pressure from Saba, which has been steadily increasing its stake and is now the largest shareholder. Saba is pushing to replace the board at the annual general meeting on July 23, arguing that management has not done enough to improve shareholder returns.
The property sales are seen as a defensive move by Workspace's current management to demonstrate they are taking action to boost performance. The company says it has already identified buyers for some of the assets and expects to complete several transactions in the coming months.
What It Means for Investors
For everyday investors, this is a classic activist investor situation. Saba Capital, led by Boaz Weinstein, has a track record of targeting companies it believes are undervalued or poorly managed. By building a large stake, Saba gains leverage to push for changes—in this case, a board overhaul.
The July 23 vote will be a key test. If Saba succeeds in replacing the board, investors could see a shift in strategy, possibly including more aggressive asset sales, cost cuts, or even a sale of the company. If management holds on, the property sales announced now could help win over shareholders by showing they are already taking steps to improve returns.
Workspace's shares have been under pressure in recent years, partly due to the shift to hybrid working, which has reduced demand for traditional office space. The company's flexible office model was seen as a hedge against that trend, but it has still faced challenges. The broader UK commercial property market has also been weak, with rising interest rates making it harder to finance deals.
What to Watch Next
Investors should keep an eye on the July 23 vote and any further stake increases by Saba. If Saba crosses the 30% threshold, it would be required to make a formal takeover offer, which could lead to a bidding war or a premium for shareholders.
Also watch for details on the property sales. If Workspace can sell assets at good prices, it could boost its balance sheet and fund new investments. But if the sales come at a discount, it could signal weakness in the market.
For context, similar activist battles have played out in other sectors. For example, B&M's recent sales figures showed how retail companies are navigating changing consumer habits. And Richemont's strong jewelry sales highlighted how luxury goods companies are outperforming other segments.
The outcome at Workspace could have broader implications for the UK commercial property sector, which has been struggling with higher borrowing costs and changing work patterns. If Saba succeeds, it could encourage other activists to target similar companies.
