What: Shareholders in Woolworths Limited (ASX: WOW) must be scratching their heads today in wonderment at why the share price is down 1.2% on a day when the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) is rallying and has touched a brand new six-year high.
The prime reason the sell-off seems odd is because the retail giant actually released an announcement to the market today which would appear to be a positive for the company.
So what: The announcement stated that the group is investigating the possibility of divesting property assets including the freehold assets of its hotel venture ALH Group. One option could include the creation of a separately listed vehicle, similar to what was achieved from the $1 billion listing of property trust Shopping Centres Australia Property Group Ltd (ASX: SCP) and likewise by Wesfarmers Ltd (ASX: WES) with its Bunnings property assets via BWP Trust (ASX: BWP).
Now what: Freeing up property assets from Woolworths’ balance sheet has the potential to create substantial shareholder value; the fall in share price would appear to be at odds with that possibility. Given investors’ enthusiasm for high quality property assets such as ALH’s hotel portfolio, a listing or sale-and-lease-back could be expected to meet with significant demand.