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Woolworths to spin off property group

Woolworths Limited (ASX: WOW) has invited existing shareholders to top up their holding in a new property group it is setting up, primarily to hold 69 of Woolworths’ shopping centres. Shareholders in Woolworths, on the record date of  30th November, will automatically receive 1 share in the new company for every five Woolworths shares they own, as long as the distribution is approved by shareholders at the AGM on 22 November 2012.

This offer is for additional shares and is open for the general public, existing shareholders and broker clients. Woolies is offering 337 million units with an offer price range between $1.26 and $1.50 per unit. The offer to buy additional shares opens on 15 October 2012 and closes on 20 November 2012. If you’re interested in registering for notifications before the offer opens, or downloading the Product Disclosure Statement, here’s the link.

The new property trust is known as the Shopping Centres Australia Property Group (or SCA Property Group), and is expected to list on the ASX on 26 November 2012. The company will own a portfolio of 69 shopping centres located throughout Australia and New Zealand, with an independent valuation of around $1.4 billion. 56 properties are already completed and operating, while another 13 are under construction or re-development. Many of the properties come with long term leases to a high quality anchor tenant (a Woolworths Group store). The average lease to expiry time is around 20 years.

Property trusts are becoming increasingly popular with Australian companies and investors. BWP Trust (ASX: BWP), formerly known as Bunnings Warehouse Property Trust,  has long been the landlond for many Bunnings hardware stores, while Westfield Retail Trust (ASX: WRT) was spun out of Westfield Group (ASX: WDC) recently to hold a half share of the shopping centre managers’ Australian and New Zealand assets.

We’ll be keeping an eye on developments and will update Motley Fool Share Advisor members with a special report within the next week or so. To find out more about Motley Fool Share Advisor, you can click here, to sign up for our free email newsletter.

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Motley Fool writer/analyst Mike King owns shares in Woolworths. The Motley Fool’s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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