SYDNEY, Oct 5 (Reuters) - Australia's top supermarket operator Woolworths Ltd is set to spin off some of its property portfolio into a fund worth more than A$1 billion ($1.02 billion), as well as raise about $500 million in equity as early as Friday, a source with direct knowledge said on late Wednesday.
Citigroup is underwriting the equity raising with Woolworths finalising the property funds structure in consultation with potential investors, said the source who declined to be named as discussions are not yet public.
No other details were immediately available. Woolworths denied a decision had been made on its properties last month.
Woolworths has previously said it was looking at several options including sale and float. It has sold property assets worth about A$500 million in the 2011 and 2012 financial years, based on filings.
Company officials and a Citigroup spokeswoman in Sydney could not be reached outside of office hours.
Shares in Woolworths closed on Wednesday at A$28.90.
Australian retailers hurt by rising competition from nimble online rivals and an increasing preference to save by consumers are looking at ways to cut costs and better use assets such as their properties.
Department store David Jones has also undertaken a review of its properties.
Last month Woolworths said it was selling its Dick Smith Electronics chain in Australia and its Indian wholesale venture to private equity firm Anchorage Capital Partners for a combined A$55 million under a plan to exit the consumer electronics segment.
(Reporting by Narayanan Somasundaram; editing by Gyles Beckford)
Keywords: WOOLWORTHS PROPERTIES/