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Knowledge Realty Trust to raise ₹4,800 cr, eyes asset buys post IPO listing
The REIT, backed by Blackstone and Sattva Group, will open its public offer on August 5. It 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'll 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 four of sponsor Sattva's under-construction assets, spanning 6.7 msf.
Quaiser Parvez, chief operating officer, KRT, stated that the acquisitions will generate more value for unit holders, strengthening the REIT's earnings and portfolio. 'The focus will always be on the right asset, in the right location, with the right diversity of 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 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 recent developments in the IT/ITeS sector, the management stated that less than 10 per cent of its rents come from that segment. '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 for acquisitions. 'We have 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,' said Parvez.
Asheesh Mohta, senior managing director, 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, vice-president, 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 Rs 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 Rs 19,792.17 crore as of March 31, 2025. Following the consummation of the IPO and repayment of a portion of its indebtedness from the net proceeds from the fresh issue, total indebtedness on listing is expected to be approximately 19 per cent of its initial gross asset value (GAV) at the time of listing.
The REIT has set a price band of Rs 95–100 per unit and is valued at Rs 44,344 crore at the top end of the band. Pre-IPO, Blackstone holds a 55 per cent stake in the REIT, with the rest belonging to Sattva. Post-IPO, Blackstone's stake will be 45 per cent, while Sattva's will be 35 per cent. Eighty per cent of the shareholding will be with the sponsors.
The REIT is targeting 60 per cent growth in net operating income by FY29, up from FY25 levels, driven by portfolio expansion and better returns. This translates into a 13 per cent compound annual growth rate (CAGR), taking net operating income to Rs 5,504 crore from Rs 3,432 crore over the next four financial years till March 2029. The IPO will close on Thursday, August 7.
When 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 23.5 per cent stake for Rs 7,100 crore. In 2022, it exited Mindspace Business Parks REIT by selling its entire 9.16 per cent stake for Rs 1,740 crore. Last year, it sold a 20.8 per cent stake in Nexus Select Trust for over Rs 4,300 crore.
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