Vornado Realty Trust (VNO.N), the owner of office buildings and retail properties chiefly in New York and Washington, said it would spin off its shopping center business into a publicly traded real estate investment trust.
The company also named Jeffrey Olson, currently chief executive of Equity One Inc EQY.N, as CEO of the to be separated business.
Equity One, the American arm of Israel's largest real estate investment company Gazit Globe Ltd (GZT.TA), said in March that Olson would not renew his contract when it ends in December.
The shopping center business comprises 81 strip shopping centers and four malls including the Bergen Town Center in New Jersey, Vornado said.
The new company's 2014 net operating income is estimated to be about $200 million.
Vornado said it would retain for sale 20 small retail assets.
Goldman, Sachs & Co and Morgan Stanley are acting as Vornado's financial advisers, while Sullivan & Cromwell LLP is its legal adviser.
Vornado's shares closed unchanged at $98.15 on the New York Stock Exchange on Friday.
(Reporting By Sampad Patnaik in Bangalore; Editing by Sriraj Kalluvila)