Blackstone to Acquire Retail Opportunity Investments Corp. in $4 Billion Deal

Blackstone Real Estate, a division of the global investment firm Blackstone Inc., has announced a definitive agreement to acquire Retail Opportunity Investments Corp. (ROIC) in an all-cash transaction valued at approximately $4 billion, including outstanding debt.¹ This move will take ROIC private, adding a significant portfolio of grocery-anchored retail properties to Blackstone's extensive real estate holdings.

Details of the Acquisition

• Purchase Price: Blackstone will acquire all outstanding common shares of ROIC for $17.50 per share.¹

• Premium Offered: The offer represents a 34% premium to ROIC's closing share price on July 29, 2024, the last trading day before news of a potential sale emerged.¹

• Transaction Value: The total deal, including debt, is valued at approximately $4 billion.¹

• Expected Closing: The transaction is anticipated to close in the first quarter of 2025, subject to customary closing conditions and approval by ROIC's common stockholders.¹

About Retail Opportunity Investments Corp.

ROIC is a fully integrated, self-managed real estate investment trust (REIT) specializing in the acquisition, ownership, and management of grocery-anchored shopping centers.¹ Key highlights include:

• Property Portfolio: ROIC owns 93 high-quality, grocery-anchored retail properties totaling approximately 10.5 million square feet.¹

• Geographic Focus: The properties are concentrated in densely populated metropolitan markets along the West Coast, including Los Angeles, Seattle, San Francisco, and Portland.¹ ²

• Market Position: ROIC is the largest publicly traded, grocery-anchored shopping center REIT focused exclusively on the West Coast.¹

Strategic Rationale

Stuart A. Tanz, President and Chief Executive Officer of ROIC, expressed confidence in the deal:

"We are pleased to reach this agreement with Blackstone, as it will provide significant and certain value to our stakeholders. 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. We are confident that Blackstone will position ROIC’s portfolio for continued growth and success."¹

Jacob Werner, Co-Head of Americas Acquisitions at Blackstone Real Estate, highlighted the attractiveness of ROIC's portfolio:

"This transaction reflects our strong conviction in necessity-based, grocery-anchored shopping centers in densely populated geographies. 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. We are pleased to be acquiring ROIC, which owns a unique collection of high-quality assets in some of the most desirable West Coast markets."¹

Blackstone's Strategic Expansion

• Real Estate Leadership: Blackstone is one of the world's largest real estate investors, with $336.1 billion in assets under management in the sector as of the end of June 2024.³

• Recent Acquisitions: Earlier in the year, Blackstone signed a deal to acquire Apartment Income REIT for $10 billion, indicating an aggressive expansion strategy in the real estate market.³

• Focus on Necessity Retail: The acquisition of ROIC aligns with Blackstone's focus on investing in necessity-based retail properties that offer stable cash flows and growth potential.¹

Future Outlook

The acquisition is expected to provide several strategic benefits:

• Enhanced Portfolio: Blackstone will add ROIC's high-quality assets to its portfolio, strengthening its position in key West Coast markets.¹

• Operational Synergies: Blackstone's extensive resources and expertise may enhance the operational efficiency and growth prospects of ROIC's properties.

• Investor Confidence: The premium offered and the strategic rationale behind the acquisition may boost investor confidence in the retail real estate sector.

Investor Implications and Market Context

• Sector Resilience: Grocery-anchored shopping centers have demonstrated resilience, especially in metropolitan areas where demand for essential retail remains strong.²

• Inflation Impact: Owners of strip malls and retail stores have managed to pass on increased costs due to inflation to consumers, benefiting landlords like ROIC.³

• Rental Growth: ROIC achieved a 13.8% increase in same-space new leases during the third quarter, indicating robust rental growth and strong tenant demand.³

• Stock Performance: Prior to the acquisition announcement, ROIC's shares had risen 18.2% year-to-date but had underperformed compared to other real estate investment trusts, making it an attractive target for acquisition.³

Conclusion

Blackstone's agreement to acquire ROIC for $4 billion marks a significant development in the real estate investment landscape. The deal underscores the attractiveness of grocery-anchored retail properties and reflects confidence in the sector's fundamentals. As the transaction moves toward completion in early 2025, both companies anticipate that the integration will position the assets for continued growth and success in the evolving retail market.

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_{1. Blackstone Press Release, "Blackstone Real Estate to Take Retail Opportunity Investments Private for $4 Billion," 2024.}

_{2. The Wall Street Journal, "Blackstone to Take Retail Opportunity Investments Private in $4 Billion Deal," 2024.}

_{3. Reuters, "Blackstone Real Estate to Take Retail Opportunity Private in $4 Billion Deal," 2024.}

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