Blackstone in Talks to Acquire Retail Opportunity Investments

By Anirban Sen
NEW YORK (Reuters) – Blackstone is in advanced discussions to acquire Retail Opportunity Investments (NASDAQ:ROIC) Corp, a company with a market value of $3.4 billion, including debt.

If successful, a deal may be finalized in the forthcoming weeks, according to anonymous sources. Blackstone is expected to win the auction against other interested private equity firms, including Bain Capital.

Sources warned that a deal with Blackstone is not guaranteed and a rival bidder may emerge. Blackstone, ROIC, and Bain did not immediately respond to comment requests.

Earlier reports indicated that Blackstone was engaging in early-stage talks with ROIC.

ROIC has successfully passed increased costs due to high inflation onto consumers, benefiting from recent rent increases of 13.8% in same-space new leases during Q3. Based in San Diego, ROIC owns 93 shopping centers across 10.5 million square feet. It reported a net income of $32.1 million for Q3, up from $8.4 million the previous year.

Shares of ROIC, primarily housing supermarkets and drugstores, have risen by 11% this year, making it an attractive target for buyouts despite underperforming other real estate investment trusts.

Limited new retail real estate construction has also fueled interest in high-quality spaces, with U.S. shopping center vacancies at 5.4% in Q3, near a record low. Only 6.4 million square feet of new shopping center space has become available this year compared to 10 million last year.

Real estate deal-making has slowed this year, with U.S. M&A volumes down 39% to $27.1 billion, largely due to high interest rates hindering borrowing. Blackstone, one of the world's largest real estate investors with $336.1 billion in assets as of June, has focused mainly on warehouses, rental housing, and data centers, which make up 75% of its global real estate equity portfolio.

Earlier this year, Blackstone agreed to acquire Apartment Income REIT for $10 billion.