Hilton Worldwide saw its stock soar after the Wall Street Journal’s Liz Hoffman reported the company is nearing a split of the brand from its real estate assets, which will be transferred into a separate trust.
The company’s stock rose more than 5% at the end of the trading day.
Earlier this year, Hilton CEO Christopher Nassetta hinted a move like this might be in the offing.
The move to separate real estate assets from popular brands has gained momentum after activist investors have increasingly pushed companies to cleave off property, expecting higher short-term gains.
Investors like the idea, because the real estate investment trusts the assets are loaded into pay little tax on income from their assets — and pay investors a steady stream of dividends.
Restaurant chain operator Darden announced plans earlier this year to spin out hundreds of restaurants into a separate REIT, and other hotel operators and retailers have come under pressure from activists to make similar moves.
Hilton did not immediately respond to a request seeking comment.
The company was bought out in 2007 deal by private equity and real estate investor Blackstone, only to be ushered back to public markets in a 2013 IPO that has, to date, been a relative success.
Here’s what Hilton’s gains looked like for investors: