Private equity giant Blackstone and Bengaluru-based real estate firm Sattva Developers Pvt. Ltd have jointly filed draft papers with the Securities and Exchange Board of India (SEBI) for an initial public offering (IPO) of their real estate investment trust (REIT), Knowledge Realty Trust. The proposed IPO aims to raise ₹6,200 crore, marking a significant development in India’s commercial real estate sector.
Knowledge Realty Trust: India’s Largest REIT in the Making
Knowledge Realty Trust is set to become the largest REIT in India by net operating income and gross asset value upon listing. The trust will be jointly sponsored by Blackstone and Sattva Developers, with Blackstone holding a 55% stake, while Sattva will own 45%. The trust’s portfolio comprises 48 million square feet of leasable space, combining assets from Sattva Developers and Blackstone’s Nucleus Office Parks.
With this launch, Knowledge Realty Trust will become India’s fifth major listed REIT, joining the ranks of Brookfield India Real Estate Trust, Embassy Office Parks REIT, Mindspace Business Parks REIT, and Nexus Select Trust. Together, these REITs manage a total of 126 million square feet of commercial and retail properties across the country.
Understanding REITs and Their Market Impact
A Real Estate Investment Trust (REIT) is an entity that owns and manages income-generating real estate properties. Similar to mutual funds, REITs allow investors to pool capital to invest in commercial properties, providing them with regular income through dividends and interest.
IPO Details and Key Stakeholders
According to the Draft Red Herring Prospectus (DRHP), the Knowledge Realty Trust IPO will be a book-built issue, with the price band to be announced at least two working days before the issue opens. The REIT’s units will be listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange of India (NSE).
The offering is being managed by major financial institutions, including:
- Lead Managers: Kotak Mahindra Capital Co., Axis Capital Ltd, BofA Securities India Ltd, ICICI Securities Ltd, IIFL Capital Services Ltd, JM Financial Ltd, Morgan Stanley India Co., and SBI Capital Markets Ltd.
- Registrar: KFin Technologies.
The exact opening and closing dates for the IPO are yet to be disclosed.
Utilization of IPO Proceeds
As per the DRHP, the net proceeds from the IPO will be used for:
- Partial or full repayment of certain financial obligations of the asset special purpose vehicles (SPVs) and investment entities.
- General corporate purposes.
Knowledge Realty Trust’s Market Position and Financial Performance
Established on October 10, 2024, in Mumbai, Knowledge Realty Trust is already a dominant player in the commercial real estate market. It holds 30 Grade A office properties across six major Indian cities, making it the most geographically diverse office REIT in India. Around 95% of its portfolio value is concentrated in Bengaluru, Hyderabad, and Mumbai, India’s top three office markets.
For the first half of the 2024-25 financial year, Knowledge Realty Trust reported:
- Net Operating Income: ₹1,632.38 crore.
- Total Asset Value: Nearly ₹60,000 crore (as of September 30, 2024).
