NEW DELHI: Blackstone Inc., an alternative asset manager, in collaboration with Bengaluru-based Sattva Group have filed the draft red herring prospectus (DRHP) for their Real Estate Investment Trust (REIT)-Knowledge Realty Trust (KRT). Knowledge Realty Office Management Services is the manager of the trust.
The proposed Rs 7,000 crore issuance is expected to become the largest REIT offering in India by net operating income (NOI) and gross asset value (GAV). The REIT’s portfolio is expected to comprise approximately 48-50 million sq ft of commercial office space in Mumbai, Bengaluru, Hyderabad, and Pune.
Blackstone will hold a 55% equity stake in the REIT, with Sattva Group retaining the remaining 45%. The portfolio has a 90% occupancy rate, with tenants that include 76% multinational corporations (MNCs) and 45% Global Capability Centers (GCCs).
The IPO aims to raise Rs 6,200 crore, with a portion of the proceeds allocated to repaying existing debt and funding future acquisitions. The REIT’s projected Net Operating Income (NOI) for FY26 is expected to be Rs 2,652 crore, rising to Rs 2,946 crore by FY27.
Key properties under KRT
| Property Name | Size (million sq ft) | Location |
|---|---|---|
| Sattva Knowledge City | 7.3 | Hyderabad |
| Sattva Knowledge Park | 3.3 | Bengaluru |
| One BKC | 0.7 | Mumbai |
| Image Tower | – | Hyderabad (Under Construction) |
| Sattva Global City | 12.3 | Bengaluru |
| One International Centre | 1.8 | Mumbai |
| One Unity Centre | 1.0 | Mumbai |
| One World Centre | 1.7 | Mumbai |
| Cessna Business Park | 4.2 | Bengaluru |
| Sattva Softzone | 1.0 | Bengaluru |
The remaining Rs 800 crore from the total issue size will be utilized for general corporate purposes and issue-related expenses, including underwriting fees, listing fees, regulatory costs, and marketing expenses. SEBI REIT regulations cap general corporate purposes at 10% of net proceeds, ensuring most funds are directed toward asset growth and debt reduction.KRT has an 18% projected CAGR in NOI from FY25-27 and a mark-to-market (MTM) upside potential of 15%. The REIT has a low loan-to-value (LTV) ratio and a pipeline of 7 million sq ft identified for future acquisitions. The Weighted Average Lease Expiry (WALE) stands at 8.6 years. The Gross Asset Value (GAV) of the portfolio is estimated at Rs 59,400 crore.
KRT’s total borrowings as of September 30, 2024, stood at Rs 199,482.93 million. Following the IPO and the planned debt repayment using proceeds from the fresh issue, the REIT expects to reduce its total indebtedness to below 21% of its initial GAV at the time of listing.
The IPO is being managed by Kotak Mahindra Capital Company, Axis Capital, BofA Securities India, ICICI Securities, IIFL Capital, JM Financial, Morgan Stanley India, and SBI Capital Markets. The Knowledge Realty Trust is sponsored by BREP Asia SG L&T Holding (NQ)(Blackstone Sponsor) and Sattva Developers.
The IPO will be conducted through a book-building process, with institutional investors allocated up to 75% of the issue (excluding the strategic investor portion), non-institutional investors receiving at least 25%, and strategic investors taking up between 5% and 25%. The issue will constitute at least a minimum percentage of the total outstanding units on a post-issue basis, ensuring broad market participation.
