By Anirban Sen
(Reuters) – Private equity firm Blackstone is in early talks to acquire Retail Opportunity Investments Corp, a U.S. shopping mall owner with a market value of about $2 billion, people familiar with the matter said.
Blackstone’s interest comes after ROIC shares have lost more than 10% of their value in the past 12 months, underperforming some other real estate investment trusts. The buyout firm’s approach suggests it sees value in ROIC’s properties, which mainly include supermarkets and pharmacies.
There is no firm deal and another competitor could emerge to buy Roy A, said the sources, who asked not to be identified because the matter is confidential.
Blackstone declined to comment, and ROIC did not immediately respond to requests for comment.
ROIC shares jumped about 20% on the news in afternoon trading Tuesday.
Mall owners, drugstore chains and retailers have been able to pass on some of the recent inflation to consumers, which has benefited landlords like ROIC. The company has raised rents, posting a 12.4% increase in new rents for the same space in the second quarter.
Limited new construction of commercial properties has also contributed to the scramble for quality space. U.S. shopping mall vacancy rates were 5.3% in the second quarter ended June 30, the lowest since Cushman & Wakefield (NYSE:) began tracking the data in 2007.
ROIC, based in San Diego, California, owned 95 shopping centers with about 10.7 million square feet (994,000 square meters) of retail space as of the end of June. Last week, it reported net income of $18.4 million for the first six months of 2024, up from $18.1 million in the year-ago period.
Real estate investment deals are starting to pick up. Earlier this year, Blackstone struck a deal to buy real estate investment trust Apartment Income for $10 billion.
Blackstone is one of the world’s largest real estate investors, with $336.1 billion in assets under management as of the end of June. The New York-based firm has recently focused on warehouses, rental housing and data centers, which make up about 75% of its global real estate portfolio.