Exclusive: Blackstone Pursues Acquisition of Shopping Center Owner Retail Opportunity, Sources Indicate

By Anirban Sen

Private equity firm Blackstone is reportedly in the preliminary stages of discussions to acquire Retail Opportunity Investments Corp, which manages shopping centers across the United States and has a market capitalization close to $2 billion, according to sources familiar with the situation.

Blackstone’s interest comes as ROIC’s stock has dropped over 10% in the past year, underperforming compared to other real estate investment trusts (REITs). The investment firm’s engagement suggests it recognizes potential value in ROIC’s properties, which primarily consist of supermarkets and drugstores.

There is no guarantee that a deal will come to fruition, and it is possible that another buyer may emerge, according to the anonymous insiders due to the confidential nature of the discussions.

Blackstone opted not to comment on the matter, while ROIC has not yet responded to inquiries.

Following the news, ROIC’s shares surged by up to 20% during afternoon trading on Tuesday.

Owners of retail spaces, including strip malls and pharmacy chains, have been able to pass on some recent inflationary pressures to consumers, benefiting landlords such as ROIC. The company has been able to raise rents, recording a 12.4% increase in same-space new leases in the second quarter.

Additionally, a slowdown in new retail construction has intensified competition for premium spaces. As of the second quarter ending June 30, U.S. shopping centers reported a vacancy rate of 5.3%, the lowest since tracking began in 2007.

Based in San Diego, California, ROIC owns 95 shopping centers totaling approximately 10.7 million square feet as of the end of June. Recently, it announced a net income of $18.4 million for the first half of 2024, a slight increase from $18.1 million during the same period last year.

Dealmaking activity within the REIT sector is gaining momentum. Earlier this year, Blackstone completed an agreement to acquire Apartment Income REIT for $10 billion.

As one of the largest investors in real estate globally, Blackstone managed $336.1 billion in real estate assets by the end of June. The firm has recently shifted its focus toward warehouses, rental housing, and data centers, which together account for approximately 75% of its worldwide real estate equity portfolio.