Knowledge Realty Trust to raise ₹4,800 cr, eyes asset buys post IPO listing

Knowledge Realty Trust (KRT), which would be India's largest real estate investment trust (Reit) by gross asset value of ₹62,000 crore upon listing next week, is looking to add more assets to its portfolio of premium office space, through acquisitions in the top seven cities across the country.

 

The Reit, backed by Blackstone and Sattva Group, which will open its public offer on August 5, has 46.3 million square feet (msf) in its portfolio, with 94 per cent of its assets located in the top three Indian office markets— Mumbai, Bengaluru, and Hyderabad.

 

“We will be looking out for acquisitions, depending on the opportunity. We will be looking to grow in the six or seven major office markets in India,” said Shirish Godbole, chief executive officer, KRT. The Reit has the right of first offer for the four of sponsor Sattva's under-construction assets, spanning 6.7 msf.

 

 

Quaiser Parvez, chief operating officer, KRT, said that the acquisitions will generate more value for unit holders, which will strengthen the Reit’s earnings and the portfolio. “The focus will always be on the right asset, in the right location, with the right diversity of the occupiers, and the right price. We have a stabilised starting dividend yield of about 7.2 per cent. Our average yield for the next three years would be 7.73 per cent,” he added. 

 

Further, 45 per cent of the Reit’s rents come from the global capability centres (GCCs), while 76 per cent of its total occupiers are multinational corporations. “The rentals are going to increase. There's a lot of demand for office space. We have two types of tenants – GCCs and front-office tenants like BFSI, consultancies, etc. Both of them are out in the market looking to grow,” Godbole said.

 

Commenting on the recent events in the IT/ITes sector, the management stated that less than 10 per cent of its rents come from the IT/ITes sector. “The exposure is less. We don't think they're going to be able to have much of an impact on us, at least for now," Godbole added.

 

The Reit considers its current leverage of 19 per cent “low” and aims to use it to make acquisitions. “We have a massive headroom to fund third-party acquisitions. We can keep going without doing any QIP or anything like that. That's a big advantage for us,” Quaiser said.

 

Asheesh Mohta, senior managing director in Blackstone Real Estate, said, “As we continue to build our commercial platform, we want to try and build scale. KRT is jointly owned by us and Sattva. It’s a good vehicle to keep scaling going forward. A lot of investments that we will look to add in will be under this (KRT) portfolio. There will be joint ventures with other partners who may or may not want to be part of this (KRT).”

 

Shivam Agarwal, V-P, strategic growth, Sattva Group, stated that adopting a brand-neutral strategy was a “conscious” decision. KRT’s management added, “We have created a platform where we would rather be inviting people to join as partners and they can enjoy the upside of being in that partnership, which is the capital appreciation on the units and also the tax-free dividend outflows every quarter.”

 

Of its total issue, the Reit aims to use about ₹4,640 crore for partial or full repayment or prepayment of certain financial indebtedness of the asset SPVs and the investment entities. 

 

The Reit’s total borrowings stood at ₹19,792.17 crore as of March 31, 2025, and following the consummation of the IPO and the repayment of a portion of its indebtedness from the net proceeds from the fresh issue, its total indebtedness on listing is expected to be approximately 19 per cent of its initial GAV at the time of listing.

 

The Reit has set a price band of ₹95-₹100 per unit and is valued at ₹44,344 crore at the top end of the price band. Pre-IPO, Blackstone has a 55 per cent stake in the Reut, with the rest belonging to Sattva. Post-IPO, Blackstone’s stake will be 45 per cent, while that of Sattva will be 35 per cent. Eighty per cent of the shareholding will be with the sponsors. It is looking at achieving 60 per cent growth in net operating income by FY29, up sharply from FY25 levels on the back of expansion and better returns. This means a 13 per cent compounded annual growth rate (CAGR) in net operating income to ₹5,504 crore from ₹3,432 crore over the next four financial years till March 2029. The IPO will close on Thursday, August 7.

 

On being asked if KRT is Blackstone’s long-term bet, Mohta said, “Blackstone is a long-term investor, and we have invested across asset categories in India. For commercial offices, yes, KRT is a long-term bet where we will continue to scale and keep adding assets into the portfolio through our acquisition capabilities.”

 

Earlier, Blackstone exited from Embassy Office Parks Reit in December 2023, selling its entire stake of 23.5 per cent for ₹7,100 crore. In 2022, it also exited from Mindspace Business Parks Reit by selling its entire stake of 9.16 per cent for ₹1,740 crore. Last year, the firm sold its partial stake of 20.8 per cent in Nexus Select Trust for more than ₹4,300 crore.