Blackstone buys San Diego-based shopping center landlord for $4 billion

Real estate investment giant Blackstone has agreed to buy San Diego-based Retail Opportunity Investments Corp., which specializes in grocery-anchored shopping centers, for about $4 billion.

The deal will take Retail Opportunity Investments Corp., or ROIC, private. ROIC was founded in 2007 as a real estate investment trust, and is the largest publicly traded REIT of its kind focused on the West Coast.

It owns more than 90 shopping complexes centered around grocery stores across Los Angeles, Seattle, San Francisco and Portland. Blackstone is one of the world’s largest real estate investment firms and boasts $325 billion of investor capital under management.

Blackstone will buy the outstanding shares of ROIC for $17.50 each, which represents a 34% premium to the company’s closing price on July 29, the last trading day before news reports of a potential sale. The San Diego firm’s stock was up about 3% when markets closed Wednesday, the day the deal was announced.

The all-cash deal, which includes outstanding debt, is expected to close in the first quarter of 2025.

“This transaction represents the culmination of the steadfast commitment and extraordinary dedication of our talented team and their tireless efforts over the past 15 years,” said Stuart A. Tanz, president and chief executive officer of ROIC. “We are confident that Blackstone will position ROIC’s portfolio for continued growth and success.”

Across the country, premium retail space is in high demand as available square footage on the market remains low. High inflation and increased costs for construction have dissuaded developers from pursuing new projects, according to a U.S. market report by real estate firm, Jones Lang LaSalle.

In turn, landlords like ROIC wield more negotiating power and can ask for higher rent from tenants whether it be a national supermarket chain or a small business.

“This transaction reflects our strong conviction in necessity-based, grocery anchored shopping centers in densely populated geographies,” said Jacob Werner, co-head of Americas Acquisitions at Blackstone Real Estate in the announcement. “The sector is experiencing accelerating fundamentals, benefiting from nearly a decade of virtually no new construction, while demand for brick-and-mortar grocery stores, restaurants, fitness and other lifestyle retailers remains healthy.”

In San Diego, these trends are playing out with retail rents up 3% year over year, according to a market report by real estate tracker CoStar.

Last year, the region’s annual growth in rent for retail businesses peaked at a 15-year high of 4.9%, according to CoStar.

Originally Published: November 7, 2024 at 3:58 PM PST