Capital & Counties is in talks with Hong Kong-based property developer CK Asset Holdings about selling most of its stake in Earls Court in west London.
Capco also said it continues to prepare for a possible break-up by splitting its Covent Garden and Earls Court estates into two separately listed companies.
The statement to the stock market this afternoon confirms recent media speculation that it is preparing for a possible demerger.
There is no certainty a deal will result, it added.
Shares are almost 6% higher in London.