Bill Ackman has one word for Target shareholders, just one word: land.

There may be a great future in Target's land investments, but it's not clear that the retailer has any plans to capitalize on it right now, at least not with Ackman's plan.

Ackman's Pershing Square Capital owns nearly 10 percent of Target's shares and the activist investor insists that he has had a "wonderful dialog" with Target's management about how to boost shareholder value. Ackman believes that shareholders aren't recognizing the sizable real estate portfolio Target holds—it owns most of its buildings and the land they sit on.

So Pershing Square hunkered down with UBS and Sullivan & Cromwell to hatch a plan. Even in this dark and dismal market, how can Target unlock some of that value?

Their solution: A tax-free spinoff of a company that owns the land that Target's boxes and distribution centers sit on. The spinoff would collect rent, which would be tied to inflation, from Target, and become its outsourced facilities management provider. Ackman calls it a T.I.P. R.E.I.T., for Target inflation-protected real estate investment trust.

Ackman presented his plan Wednesday afternoon to an auditorium of investors and media with a 163-page PowerPoint presentation.

If it sounds novel, it's because it is. According to Ackman, it's never been done before. It would create the largest public R.E.I.T. out there, and it would have the distinction of being the only one free of debt, at least at first. And according to Pershing's analysis, what's now a $40 Target stock would be worth a combined $70 in a post-spinoff world (Target at $32 and the T.I.P. R.E.I.T. at $38).

Shareholders welcomed the idea. Target shares advanced 6 percent Wednesday afternoon, after climbing 18 percent on Tuesday after Ackman announced plans to make his announcement.   

But in Minneapolis, where Target is based, the idea is generating less enthusiasm. The company issued a statement outlining its concerns over Ackman's proposal, although it said it has not yet reached a conclusion regarding the idea's merits.

Ackman has a response for every one of Target's concerns. The likely downgrade in Target's debt that would occur when the real estate is spun off? It would eventually be offset by improved cash flows, which would be used to deliver the balance sheet and return Target's debt to an "A" credit rating before it would even need financing.

Target is also worried about having rent tied to inflation, but Ackman believes the company's treasury department would be savvy enough to hedge against that with T.I.P.'s. Indeed, for every concern raised by Target, Ackman has a swift and simple-sounding response.

In fact, Ackman's idea makes perfect sense, but in an almost "too good to be true" way.  Is now really the time for a major retailer to undertake a costly and novel transaction that may not end up with the intended effects that Ackman proposes? We are in a recession, after all, and Target's got enough to worry about at the mercy of scrimping consumers. And certainly plenty of investors are well aware of Target's real estate portfolio today. Who's to say they would value it better if the company splits in two?

Of course, one could also take a page from the Obama campaign handbook and argue that when things are this bad, it's time for Target to try something new.

That argument might not go so well, however, as Target chief executive Robert Ulrich is a McCain supporter.