Blackstone Property will pay $15.85 per share, a premium of about 15 percent to Excel's closing price on Thursday. Excel's shares were trading at $15.81 before the bell on Friday.
Excel has about 38 retail properties housing supermarkets, drug stores and department stores.
"Appetite for high-quality retail real estate is strong with cap rates and REIT stock multiples approaching historic levels and we did not believe the market accurately reflected the value of the assets," Excel Chief Executive Gary Sabin said in a statement.
Real estate has overtaken private equity as Blackstone's most high-profile and lucrative business, and the company now has the world's biggest private real estate investment business.
Real estate accounted for 43 percent of Blackstone's economic net income in 2014.
Morgan Stanley was financial adviser to Excel, while Eastdil Secured/Wells Fargo Securities and Barclays advised Blackstone. Latham & Watkins was Excel's legal counsel. Simpson Thacher & Bartlett was the legal adviser to Blackstone.