Sattva Group, Blackstone-backed trust files for ₹6,200 cr REIT public issue

Knowledge Realty Trust, sponsored by real estate company Sattva Group and Blackstone, on Thursday filed initial documents with market regulator SEBI to launch its maiden REIT public issue to raise more than Rs 6,200 crore.

Knowledge Realty Trust (KRT) has filed the Draft Red Herring Prospectus (DRHP) with SEBI to launch Initial Public Offering (IPO) and list the REIT on stock exchanges, as part of its strategy to monetise its 30 prime office assets across major cities.

KRT will be the largest REIT in India in terms of Net Operating Income (NOI) and Gross Asset Value which is estimated at around Rs 60,000 crore.

KRT plans to raise around Rs 6,200 crore through REIT-IPO, according to its DRHP.

At present, there are four listed REITs in India -- Brookfield India Real Estate Trust, Embassy Office Parks REIT, Mindspace Business Parks REIT, and Nexus Select Trust.

Apart from Nexus Select Trust, the other three REITs are backed by rent-yielding office assets. Nexus owns a large portfolio of retail real estate spaces.

This will be the fifth public listing of Blackstone India Real Estate business, including three listed REITs and one of Ventive Hospitality.

KRT's total portfolio is 48 million sq ft (37 million square feet completed) across 30 Grade A office assets across six major cities, making it India's most geographically diverse Office REIT.

Of the total portfolio, 90 per cent is leased with marquee tenants - 76 per cent with MNCs and 45 per cent with GCCs (Global Capability Centres).

Sattva Developers has so far constructed 74 million square feet across seven Indian cities in commercial, residential, co-living, co-working, hospitality, and data center sectors. An additional 75 million square feet area is in planning and implementation.

Blackstone, is one of the leading global investment firms, has a huge exposure in the Indian real estate market.

The two sponsors have decided to adopt brand neutral strategy to grow the KRT portfolio inorganically through third party acquisitions.

The existing four REITs have a combined portfolio of over 126 million square feet of Grade A office and retail space across the country. Since their inception, these REITs have collectively distributed over Rs 21,000 crore to unitholders.

"The REIT market is expanding rapidly in India with the active participation of large developers and investors. The listing of the new REIT will further ease the liquidity in the real estate sector through increased participation of retail investors," real estate consultant Vestian CEO Shrinivas Rao, said.

REITs are an indispensable investment tool to diversify investor portfolios and provide consistent income, he said.

According to Vestian's latest report, nearly 60 per cent of pan-India office stock is REIT-worthy across the top seven cities.

"As the regulatory environment matures, India is likely to witness more and more REIT listings with expansion into new real estate segments. Favourable regulatory environment, better returns on investment, and a rapidly expanding office market are likely to provide impetus to the REITs market in India," Rao said.