Business Profile of Knowledge Realty Trust
Knowledge Realty Trust (KRT) is the biggest company in the Indian Real estate market, specifically in commercial office spaces. KRT is a Real Estate Investment Trust (REIT) that was formed as a joint venture between Blackstone which has a 55% stake and Sattva Group with a 45% stake in Knowledge Realty Trust. KRT is the largest REIT office in India in terms of Gross Assets Value of ₨594,450 million as of September 30, 2024, and the second largest in terms of Net Operating Income of ₨28,820 million. The core business of KRT is owning and managing high-quality commercial real estate, mainly grade-A office building centers across urban areas in India. The company has a presence in major cities like Bengaluru, Hyderabad, Gurugram, Chennai, Mumbai, and Ahmedabad. KRTs emphasis on high-quality commercial spaces and the strong partnership with Blackstone and Sattva Group provide expertise in real estate acquisition, leasing, construction, and property management.
IPO Objective of Knowledge Realty Trust
As per the draft red hearing prospects, the IPO issue consists only fresh issue. The fresh issue consists of XXXX shares at the face value of ₨ XXXX each aggregating up to ₨62000.00 millions. There are fresh shares issues by company and main objective of company for listing is repayment of outstanding borrowings in full or partial and general purpose.
IPO Details of Knowledge Realty Trust:
| IPO Open Date | N.A. |
| IPO Close Date | N.A. |
| Basis of Allotment | N.A. |
| Listing Date | N.A. |
| Face Value | ₹XXXX per share |
| Price | N.A. |
| Lot Size | N.A. |
| Total Issue Size | Up to XXXX Equity Shares |
| Aggregating up to ₹ 62000.00 million | |
| Fresh Issue | Up to XXXX Equity Shares |
| Aggregating up to ₹62000.00 million | |
| Offer For Sale | N.A |
| N.A | |
| Issue Type | Book Built Issue IPO |
| Listing At | BSE & NSE |
| QIB Shares Offered | Not more than 75% of the Net Issue |
| Retail Shares Offered | N.A |
| NII (HNI) Shares Offered | Not less than 25% of the Net Issue |
Issue Price & Size of Knowledge Realty Trust
The issue price of Knowledge Realty Trust hasn’t been released yet. Upon releasing the dates, the investors can bid between those price ranges. The company has fresh issue aggregating up to ₹62000.00 million at the price of ₨XXXX.
Launch Date of Knowledge Realty Trust IPO
The IPO opening date of Knowledge Realty Trust hasn’t been officially announced yet, upon the declaration of dates investor can bid for IPO.
Financial Statements of Knowledge Realty Trust
| Particulars | Ended Sept 30 ,2024 | Ended Mar 31 ,2024 | Ended Mar 31 ,2023 | Ended Mar 31 ,2022 |
| Income | ||||
| Revenue from operations | 18,816.28 | 33,393.86 | 29,003.01 | 25,424.96 |
| Other income | 1,028.26 | 2,490.90 | 2,154.20 | 2,142.78 |
| 19,844.54 | 35,884.76 | 31,157.21 | 27,567.74 | |
| Expenses | ||||
| Cost of material consumed and works contract services | 69.88 | 373.33 | 20.91 | - |
| Operating and maintenance expenses | 2,137.11 | 3,024.02 | 2,561.92 | 2,197.48 |
| Employee benefits expense | 174.20 | 319.67 | 244.40 | 231.42 |
| Other expenses | 1,841.94 | 3,864.19 | 3,392.22 | 3,461.19 |
| 4,223.13 | 7,581.21 | 6,219.45 | 5,890.09 | |
| EBITDA | 15,621.41 | 28,303.55 | 24,937.76 | 21,677.65 |
| Finance costs | 8,704.14 | 16,927.13 | 15,331.76 | 13,999.09 |
| Depreciation and amortization expenses | 1,845.23 | 5,875.22 | 5,927.81 | 5.606.25 |
| 10,549.37 | 22,802.35 | 21,259.57 | 19,605.34 | |
| Profit before exceptional items and tax | 5,072.04 | 5,501.20 | 3,678.19 | 2,072.31 |
| Share of net profit / ( loss ) of investment accounted | ( 3.34 ) | ( 32.14 ) | ( 5.02 ) | ( 1.40 ) |
| Profit / ( Loss ) before exceptional items and tax | 5,068.70 | 5,469.06 | 3,673.17 | 2,070.91 |
| Exceptional items | 1,492.18 | - | - | 2.968.47 |
| Profit / ( Loss ) before tax | 3,576.52 | 5,469.06 | 3,673.17 | ( 897.56 ) |
| Tax expense : | ||||
| Current tax | 1,688.18 | 2,573.66 | 2,183.79 | 1,177.21 |
| Tax adjustments relating to earlier years |
7.54 | 11.34 | ( 88.72 ) | 12.06 |
| Deferred tax ( credit ) / charge | 2.288.47 | ( 480.34 ) | ( 606.84 ) | 127.93 |
| 3,984.19 | 2,104.66 | 1,488.23 | 1,317.20 | |
| Profit / ( Loss ) for the period / year | ( 407.67 ) | 3,364.40 | 2,184.94 | ( 2,214.76 ) |
Promoters & Shareholding of Knowledge Realty Trust
As of date, KRT is a joint venture of Sattva group and Blackstone and here is shareholding pattern of KRT according to DRHP file.
| Shareholder | Percentage Stake |
| Blackstone | 55% |
| Sattva Group | 45% |
Should You Subscribe To Knowledge Realty Trust IPO Or Not:
While investing or subscribing to any IPO, consider the investment rationales related to the company. Hence, here you can find out the strength of the company that will be its growth factors. And also check the risk factors that can affect the growth and operational efficiency of the company.
Competitive Strengths of Knowledge Realty Trust:
Strong growth and stable cash flows
The company portfolio has 37.1 msf of the completed area with 88.9% and 89.9% committed occupancy as of September 30, 2024, and December 31, 2024, respectively. A robust business model with stable cash flows, strong embedded growth, and an established development and acquisition track record helps the company to maintain positive cash flows. The leases business in the company portfolio generally range from 5 to 10 years in which 3 to 5 years initial commitment and further renewal options are available which provides stable growth and cash flows.
Global experience and local knowledge
The company (Knowledge Reality) is co-sponsored by Blackstone and Sattva group, which is one of India's largest real estate development groups as per the CBRE report. Both sponsors of the company have deep knowledge of India's corporate real estate market along with international standards and have good practices in investments, assets management, and development. Sattva Group and Blackstone have worked closely with each other’s over one decade and have made transformational partnership evidenced by building a high-quality and well-performing commercial real estate portfolio.
Largest office REIT in India by GAV and NOI
Knowledge Reality has the leading office platform in the domestic market and after listing, it will be the largest office REIT in India in terms of GAV of ₨594,450 million as of September 30, 2024, and second largest by NOI for FY2024 of ₨28,820.83 million with 48.1 msf of leasable area out of which 37.1 msf of completed, 2.8 msf in under construction and 8.2 msf of the future development area. Knowledge Reality will also be the second largest office platform in Asia and one of the largest REITs globally in terms of leasable area. Approximately 95.85% of the GAV portion of the company portfolio is located in Bengaluru, Mumbai, and Hyderabad.
Well- Diversified tenant base
The company has more than 450 tenants which include Indian corporations (Aditya Birla, HDFC Bank, Phone Pe, and Go Digit) and prominent multinationals like Google Connect, Cisco, Amazon, Siemens Limited, and Novartis. The gross rental for the month of September 2024 is 75.8% attributable to multinational corporate, 38.6% to Fortune 500 companies, and 44.5% to GCCs. Knowledge reality has a well-diversified tenant mix across more than 20 sectors, it provides more stability and resilience to the company portfolio and increases its attractiveness.
Risk Factors of Knowledge Realty Trust:
Borrowing risk
The company is subject to risk associated with debt financing. As of September 30, 2024, and of March 31, 2024, 2023, and 2022 company's current and non-current borrowing amounted (total) to ₨199,482.93 million, ₨202,266.64 million and ₨200,963.89 million respectively which availed primarily as term loans and financial institutions. This risk includes company cash flow may not be sufficient to fulfill principle amount and interest. Along with it company is not in a situation to refinance existing indebtedness.
SEBI restriction
Investments made by the company, are required to adhere certain investment conditions due to restrictions imposed by SEBI REIT regulations. It may limit the company's ability to acquire or dispose of assets. There are also regulatory requirements that impose condition on debt financing and it could affect adversely company ability to raise funds or make investments, including acquisition of assets. Any failure to comply with these requirements creates additional risk and adverse outcomes related to the divestment of certain assets and other statuary actions.
Key dependency risk
Knowledge Reality collects a significant portion of its revenue from leasing activities at certain key portfolio assets which collectively contributed to 65.40% in revenue from operations for six months ended September 30, 2024. However, any adverse developments in the market situation affect the company portfolio negatively for the results of operations and financial condition. Any changes related to occupancy rates, market value, and rental rates will affect the profitability of the business.
Non- profitable & Low occupancy risk
The company incurred losses of ₨407.67 million for six months ended September 2024 and collectively ₨2,214.76 million for FY2022 and there is a probability in the future for experiencing loss in business which could adversely affect cash flows and financial condition. Along with it, the success of a business depends on occupancy levels that affect the amount the company earns through lease. Any opposite change in the occupancy rate of the business could negatively affect the results of revenue from operations and the profit margin of the company.
Knowledge Realty Trust Grey Market Premium
Grey market premium is the premium quoted over the IPO issue price. GMP shows that investors are ready to pay above the upper band of the IPO issue price. GMP is determined in the grey market as per the demand and supply of the shares in the primary market. A grey market is that unofficial ecosystem of unlisted companies' stocks that start trading even before the launch of the IPO to the date of its listing.
Also Read: What is Grey Market Premium in IPO: How is GMP Calculated & Reliable
However, GMP is not a reliable factor, as it keeps fluctuating as per the demand and supply of shares in the primary market. There are numerous factors that affect the stock market in India and individual stock prices of different companies that are already listed and trading in the secondary market. However, for an IPO-bounded company, you can consider the GMP as the speculative listing price of the share
According to various online sources, the Grey Market Premium or GMP of the Knowledge Realty Trust is trading around Rs XX in the grey market. It means shares are trading at the upper band issue price of Rs XX with a premium in the grey market and may list around the same price.
