Written by Anirban Sen
NEW YORK (Reuters) – Blackstone is in talks to buy U.S. shopping center owner Retail Opportunity Investments Corp., which has a market value of $3.4 billion including debt, according to people familiar with the matter. That's what it means.
If the talks are successful, a deal could be reached within weeks, the sources said, asking not to be identified because the matter is confidential.
Blackstone is likely to win the ROIC bid, which is also attracting interest from other private equity firms such as Bain Capital, people familiar with the matter said. Earlier this year, Bain Capital's real estate arm and private investor 11 North Partners entered into a partnership to acquire and operate outdoor retail centers in North America.
Officials warned that the deal with Blackstone was not guaranteed and that rival suitors could emerge.
Blackstone, ROIC and Bain did not respond to requests for comment.
Reuters reported in July that Blackstone was in early talks to acquire ROIC.
Over the past year, owners of strip malls, pharmacy chains, and retail stores have successfully passed the increased costs of high inflation onto consumers, benefiting landlords like ROIC.
The company increased rents and saw a 13.8% increase in new leases for the same space in the third quarter, according to its latest quarterly report.
San Diego, Calif.-based ROIC owned 93 shopping centers spanning approximately 10.5 million square feet, according to its website. In October, the company reported net income of $32.1 million for the quarter ended Sept. 30, up from $8.4 million a year earlier.
Shares in ROIC, which primarily owns supermarkets and drug stores, are up about 11% so far this year, underperforming other real estate investment trusts and making it an attractive target for buyout firms like Blackstone. It becomes.
Limited new commercial real estate construction also contributes to the competition for quality space. The U.S. shopping center vacancy rate was 5.4% in the third quarter ended Sept. 30, near the lowest level since Cushman & Wakefield began tracking the data in 2007.
According to Cushman & Wakefield, 6.4 million square feet of new shopping center space became available this year, compared with 10 million square feet during the same period last year.
Real estate deals have been weak this year, with U.S. M&A deals down about 39% to $27.1 billion as high interest rates made borrowing more expensive in the real estate industry, according to Dealogic data.
Blackstone is one of the world's largest real estate investors, with $336.1 billion in assets in the sector at the end of June. The New York-based company has recently focused on warehouses, rental housing and data centers, which account for about 75% of its global real estate stock portfolio.
Earlier this year, Blackstone signed a deal to acquire Apartment Income REIT for $10 billion.
(Reporting by Anirban Sen in New York; Editing by Lisa Shoemaker)
