Blackstone is in advanced negotiations to acquire Retail Opportunity Investments Corp (ROIC), which operates shopping centers in the United States and has a market value of $3.4 billion, including debt.

According to reports, Blackstone is expected to win the auction for ROIC which has also drawn interest from Bain Capital and other private equity firms. Earlier this year, Bain Capital's real estate arm and retail investor 11North Partners forged a partnership to acquire and operate open-air shopping complexes across North America.

A Brief History of Retail Opportunity Investment Corporation

ROIC, headquartered in San Diego, California, owned 93 shopping complexes totaling over 10.5 million square feet. In October, it recorded net profits of $32.1 million for the quarter ended September 30, up from $8.4 million the year before.

ROIC shares, which primarily house supermarkets and drugstores, have grown approximately 11% this year, outperforming several other real estate investment trusts and making it an appealing target for buyout groups such as Blackstone.

The scarcity of high-quality retail space has also been exacerbated by limited new construction. Vacancies at US shopping centers were 5.4% for the third quarter ended September 30, 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 has become available this year, up from 10 million square feet during the same period last year.

Furthermore, Blackstone is one of the world's top real estate investors, with $336.1 billion in assets as of June 30. The firm has recently focused on warehouses, rental housing, and data centers, which account for over 75% of its worldwide real estate equity portfolio.

Dealmaking in the real estate market has been restrained this year, with US M&A volumes decreasing by 39% to $27.1 billion, as rising interest rates have made borrowing more expensive in the industry.