Workspace urges investors to vote against Saba’s ‘short-sighted’ plans

Workspace has hit back at Saba’s attempts to stage a boardroom shake-up, urging shareholders to vote down proposals to force a sell-off of its properties and appoint new directors. 

The real estate investment trust, whose shares have traded significantly below net asset value for years, urged investors to vote against proposals submitted by the activist investor ahead of its annual general meeting later this month.

Saba, run by New York financier Boaz Weinstein, owns stakes in dozens of UK investment trusts and has campaigned to assume charge of their boards. 

Most recently, it succeeded in taking control of Impax Environmental Markets Trust and Edinburgh Worldwide Investment Trust.

The US raider has since turned its attention to real estate investment trusts, including Workspace, calling for reforms to its strategy and board.

Earlier this week, Weinstein said its dispose-and-repurchase strategy would generate higher returns than Workspace’s existing turnaround strategy. 

It said shares trade around 50 per cent below NAV, the widest discount among UK real estate investment trusts, after delivering a total loss of 48 per cent to shareholders over five years.

Saba has also proposed six changes to the Workspace board, having increased its stake from around 27 per cent to over 28 per cent.

Workspace said the plan is ‘high-risk, short-sighted and not suitable for Workspace’, calling on investors to vote against Saba’s plans and to re-elect all current directors.

The flexible office provider said it ‘sees a clear risk of value destruction’ from the sell-off programme advocated by Saba’s nominees for the board, who it said have ‘limited’ real estate investment experience.

‘(The) Board continues to firmly believe Saba’s proposal to accelerate or increase the volume of disposals is unrealistic in the current market, and it positions Workspace as a forced seller and will likely result in wider discounts than we have recently achieved,’ Workspace said.

It also disputed Saba’s claim that Workspace had sold 13 properties at an average discount of 7.2 per cent to the most recent book value, which ‘overlooks the fact that in most cases the final valuation before sale reflected the level at which bids were being received.’

The FTSE 250-listed trust said that the average discount to the sale price was 19.6 per cent, based on the valuation six months prior to the last valuation.

Last month, the Financial Conduct Authority announced plans to prevent a director nominated by the firm from voting it as the new investment manager. However, Saba says its nominees for directors at Workspace are ‘wholly independent’.

In response to Workspace’s statement, Saba reiterated its strategy and pointed to a recommendation from proxy advisory firm ISS to vote in favour of appointing Saba’s director nominations.