Two of the world’s largest proxy advisory firms have urged shareholders to support changes to the board of Workspace Group plc, handing activist investor Saba Capital Management LP a significant boost ahead of the UK-based real estate investment trust’s July 23 annual general meeting.
The latest recommendation came from proxy adviser Glass Lewis, which concluded in a report published July 13 that Workspace’s board lacks sufficient real estate expertise and that the company’s performance continues to trail its peers.
Glass Lewis recommended shareholders vote against the re-election of non-executive director David Stevenson and instead support Saba Capital nominee Richard Starr, saying the board’s composition “has not been optimal to deal with the complexities of the situation at hand,” and adding that Workspace Group is “struggling” to regain momentum while competitors have begun to recover.
The firm also concluded that the board “could benefit from having more than just two non-executive directors with core industry expertise.”
The recommendation from Glass Lewis follows a similar report this month from Institutional Shareholder Services (ISS) that advised shareholders to vote against the re-election of non-executive directors Nick Mackenzie and David Stevenson and instead elect Saba nominees Gregory Attwood and Andrew Sim.
Although Glass Lewis and ISS endorsed different candidates, both concluded that Workspace would benefit from additional real estate expertise and changes to its non-executive board.
Saba Capital said the two reports validate its campaign to overhaul the company’s board.
“The world’s two leading proxy advisors have now both concluded that Workspace would benefit from board change,” Paul Kazarian, partner at Saba Capital, said in a July 15 statement. “We believe shareholders have a clear opportunity to strengthen the board with directors who have the experience to make better capital allocation decisions and unlock significant shareholder value by prioritising share buybacks, which offer immediate value accretion, over higher-risk, lower-return reinvestment opportunities.”
Saba argues that Workspace’s prolonged underperformance, persistent discount to net asset value (NAV), and upcoming strategic decisions require directors with deeper expertise in commercial real estate and capital allocation.
The hedge fund continues to urge shareholders to back all six of its nominees — Greg Attwood, Nick Shattock, Andrew Sim, Richard Starr, Gautam Garg and Simon Hampton — and vote to remove the company’s six incumbent non-executive directors.
The activist campaign has intensified in recent weeks as the July 23 shareholder meeting approaches, with Saba increasing its stake in Workspace to 29.1 percent as of July 14, making it the company’s largest shareholder while remaining just below the 30-percent threshold that would trigger a mandatory takeover offer.
Workspace Group has pushed back strongly against Saba’s proposals. On July 9, the company described the activist investor’s plans to increase shareholder value as “high-risk, short-sighted and not suitable” and urged investors to reject all of Saba’s resolutions.
Instead, Workspace is defending the strategy it outlined on June 10, which focuses on growing earnings through disciplined property sales and reinvesting the proceeds into upgrading its portfolio to increase rental income, rather than using those funds for the share buybacks advocated by Saba.
The proxy contest is the latest chapter in an activist campaign that began in January, when Saba sent a letter to Workspace’s board calling for a managed 12-month wind-down of the company’s property portfolio, debt reduction, and the return of capital to shareholders.
After the board rejected that proposal, Saba escalated its campaign in May by formally seeking a shareholder vote to replace Workspace’s non-executive directors. In June, the hedge fund launched a dedicated campaign website and published an open letter outlining an accelerated property disposal plan designed to fund large-scale share buybacks.
Shareholders will decide the outcome of the increasingly contentious battle at Workspace Group’s annual general meeting in London on July 23.