The State of Michigan Retirement System is contemplating a departure, while a $20 billion open-ended fund run by JPMorgan Investment Management wants to remain a partner, according to the sources, who are not authorized to speak on the record. It could not be determined what the third partner, the New York State Teachers' Retirement System (NYSTRS), wants to do.

Each party has different investment objectives and together they are looking at options going forward, three of the four sources said.

A spokeswoman for JPMorgan (>> JPMorgan Chase & Co.) on Friday declined to comment. NYSTRS declined to comment other than saying that as of the end of 2012, its investment in Edens was $587.3 million.

Edens declined to comment. The Michigan pension fund did not respond to a request for comment.

The partnership has a sunset clause, effective at the end of the next year, which allows any of the partners to force a sale. That triggered the talks over a range of options before the deadline, one of the sources said.

The Columbia, South Carolina-based company owns or has developed a portfolio of 111 shopping centers and other assets, generally in high-income areas along the East Coast, according to a company representative.

The centers are mostly anchored by grocery stores that include Whole Foods (>> Whole Foods Market, Inc.), Ahold's (>> AHOLD) Giant and Stop & Shop, SuperTarget (>> Target Corporation) and Publix (>> Publix Super Markets Inc.). About a third of the retailers in each of its centers are locally owned.

It has redeveloped historic Union Market, in Washington D.C., into a marketplace with 40 local and regional vendors.

The parties have several options, including a buyout of one or both of the partners, bringing in another partner and keeping it private.

It could also sell the company to rivals such as Federal Realty Trust Investment Trust (>> Federal Realty Investment Trust) or Regency Centers Corp (>> Regency Centers Corp). Both real estate investment trusts have access to significant equity or debt capital.

Alternatively, the company could launch an initial public offering. Last year, Edens considered an IPO but did not proceed, another source said.

This year, the shopping center sector is outperforming the broader real estate investment trust market as well as the S&P 500 index.

As of May 2, shopping center REITs rose 20.06 percent this year, while the overall FTSE NAREIT All Equity REITs index rose 14.79 percent, according to the National Association of Real Estate Investment Trusts. The S&P 500 is up 13.3 percent.

The State of Michigan has engaged Evercore Partners Inc (>> Evercore Partners Inc.) to advise it. NYSTRS has hired Green Street Advisors, and the company is working with Eastdil Secured LLC, a unit of Wells Fargo & Co (>> Wells Fargo & Co), two of the sources said.

(Editing by Frank McGurty)

By Ilaina Jonas