What Saba is demanding, and why now

Saba Capital, run by founder Boaz Weinstein, published an open letter on 17 June calling on Workspace Group (LSE: WKP) to "pursue an orderly and accelerated disposal programme" across its portfolio of 56 flexible office assets in London, according to the letter filed via PR Newswire.

The hedge fund outlined a three-phase roadmap. Paul Kazarian, a partner at Saba, wrote that the fund had "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," as reported by City AM.

"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."

Kazarian added that Workspace's current plans would take "several years" to generate any meaningful return, according to the letter.

Saba is Workspace's second-largest shareholder. Its campaign is not new; the fund previously called for the removal of all six non-executive directors, including chairman Duncan Owen. A vote on replacing the board with Saba's nominees is slated for Workspace's annual general meeting in July, according to City AM.

The timing is pointed. Workspace shares have fallen roughly 60 per cent since 2021, weighed down by rising interest rates, a sector-wide downturn in commercial property valuations, and shifting demand patterns for office space. The trust has traded at a persistent and deep discount to its reported net asset value, a gap that Saba argues can only be closed through asset sales rather than operational improvement.

Workspace's counter-strategy under new management

Since Saba launched its campaign, Workspace has installed a new executive team. Earlier in June, the new leadership overhauled the group's strategy, repositioning it as an "earnings-focused business," according to City AM. The revised plan centres on reinvesting disposal proceeds back into the existing portfolio to improve occupancy, rental income, and operating margins.

That approach runs directly counter to Saba's demands. Where the hedge fund wants capital returned to shareholders through buybacks, management wants to deploy it into refurbishment and repositioning of retained assets.

Saba's letter dismissed the new strategy as carrying "considerable execution risk." Kazarian argued that the reinvestment plan would tie up capital for years with uncertain returns, while a structured disposal programme would crystallise value at a pace shareholders could see in their holdings.

The tension is a familiar one in UK listed property. Management teams tend to argue that patient capital expenditure will narrow NAV discounts over time. Activist shareholders counter that the discount itself is evidence the market does not believe in the turnaround, and that returning cash is the surer route to value realisation.

The practical question: who buys 56 London offices?

Saba's roadmap is clear on sequencing but less explicit on the mechanics of execution. Selling 21 assets in a first tranche, followed by 19 and then 16, implies a disposal programme lasting well beyond a single financial year. The practical question is whether sufficient buyer demand exists at prices that do not simply confirm the discount the market has already applied.

London's commercial property investment market has been subdued. Higher interest rates since 2022 compressed transaction volumes across the sector, and flexible office assets occupy an unusual niche. They are neither conventional long-lease investments attractive to pension funds nor pure operational businesses that private equity typically targets. A buyer would need to underwrite both the property value and the operating platform that generates tenant income.

Workspace's portfolio is concentrated in London's fringe and suburban office markets, areas such as Clerkenwell, Wandsworth, and Hackney, rather than the West End or City core. These locations appeal to small and medium-sized businesses seeking flexible terms, but they also carry higher vacancy risk than prime assets.

If the trust were wound down, the fate of existing tenants would depend on the acquirer's intentions. A property investor might seek to reposition buildings for alternative uses. An operator such as IWG or another flexible workspace provider might absorb the portfolio but would likely seek a steep discount to reflect integration costs. A piecemeal sale to multiple buyers could fragment the portfolio and disrupt tenant relationships.

Kazarian's letter acknowledged this complexity, noting the framework would "retain flexibility to respond to market conditions," according to the published letter. That caveat suggests Saba accepts that not all assets would sell quickly or at book value.

Wider implications for UK investment trusts

The Workspace campaign is the latest in a series of interventions by Saba across the UK investment trust sector. In the past two months alone, the hedge fund successfully orchestrated board changes at Edinburgh Worldwide, a Baillie Gifford-run trust, and at Impax Environmental Markets, as reported by AJ Bell and City AM respectively. It also oversaw the transfer of Herald Investment Trust to Aberdeen, according to City AM.

The pattern is consistent. Saba identifies trusts trading at deep discounts to NAV, acquires a significant stake, and then pressures boards to return capital or wind down. The strategy exploits a structural feature of the closed-ended fund market: when shares trade below the value of underlying assets, an activist can profit by forcing a narrowing of that gap through asset sales, mergers, or liquidation.

Property trusts have been particularly vulnerable. The sector has faced a prolonged period of discount widening since interest rates began rising in 2022. Post-pandemic shifts in working patterns have added a further layer of uncertainty for office-focused vehicles. Demand for flexible workspace has grown as a share of total office take-up, but that structural shift has not translated into higher valuations for listed operators.

For boards of other UK property trusts trading at wide discounts, the Workspace saga is instructive. Saba's willingness to pursue board replacements, strategic overhauls, and full wind-downs raises the cost of inaction. Trusts that cannot articulate a credible path to discount narrowing risk becoming targets.

The July AGM vote will be a decisive moment. If Saba succeeds in replacing the board, the disposal programme could begin in earnest. If management retains control, the hedge fund faces a choice between patience and escalation. Either outcome will set a precedent for how the UK market handles the tension between activist capital and incumbent management in a sector where valuations remain under sustained pressure.

Workspace has not yet publicly responded to the latest letter. The company's next scheduled update is its AGM, expected in July.