Blackstone-Sattva JV to launch India's biggest REIT IPO, aims to raise ₹6,200 cr

Despite a sluggish initial public offering (IPO) market where many companies are postponing their listings due to market volatility and low investor confidence, private equity giant Blackstone, in partnership with Bengaluru-based real estate developer Sattva Group, is moving forward with plans for a major public offering. The Blackstone-Sattva joint venture has filed draft papers for their upcoming Real Estate Investment Trust (REIT), named Knowledge Realty Trust. The Knowledge Realty Trust IPO is expected to be the largest REIT IPO in India, with an issue size of over ₹6,200 crore. The REIT is proposed to be listed on the BSE and NSE.

If successfully listed, Knowledge Realty Trust will become the largest office REIT in India with gross asset value of ₹59,445 crore as of September 30, 2024. It is also touted to be the second-largest in Asia and among the largest globally by leasable area.

The REIT is an investment instrument, similar to mutual funds, that was introduced in India a few years ago to attract investment in the real estate sector by monetising rent-yielding assets. It allows individuals to invest in large-scale real estate projects without having to purchase and manage properties directly.

Blackstone: A pioneer in evolution of REIT in India

Blackstone has played a key role in the development of REITs in India and is involved in the listing of several major REITs. The U.S.-based PE firm sponsored Nexus Select Trust REIT, the country’s first retail property REIT, while it co-sponsored Embassy Office Parks REIT. Besides, it invested in Mindspace Business Parks REIT sponsored by Mumbai-based K Raheja Corp.

This is Blackstone’s fourth REIT in India after Nexus Select Trust REIT, Embassy Office Parks, and Mindspace Business Parks. The American private equity firm launched India's first REIT Embassy Office Parks in April 2019 after raising about ₹4,750 crore through a public issue. Mindspace Business Parks was the second REIT that was listed in August 2022 following fundraising of ₹4,500 crore via the IPO route. Nexus Select Trust REIT raised ₹3,200 via IPO route and got listed in May 2023.

Here’s all you need to know about Knowledge Realty Trust IPO:

Blackstone will own a majority stake of 55% in Knowledge Realty Trust, while Sattva will hold the remaining shares in the REIT.

The proposed REIT has total leasable space of 48 million sq ft (msf) with gross asset value of ₹59,445 crore as of September 30, 2024. The portfolio consists of 30 "Grade A" office assets of which 37.1 msf is completed, 2.8 msf is under construction, and 8.2 msf is for future development. It is one of the most geographically diverse office REIT in India, with properties in 6 major cities, covering over 87% of India's office supply and absorption. It has 24 business parks/centers and a diverse tenant base of over 450 companies, including Fortune 500 companies, Global Capability Centers (GCCs), and major Indian companies.

The price band and the minimum bid size will be announced later. As per document filed with SEBI, the company had reserved up to 75% of the offer for qualified institutional investors (QIBs) and 25% for non-institutional investors (NIIs). The issue may also include participation by strategic investors.

“The Issue was authorised and approved by the board of directors of the manager on February 26, 2025, and by the REIT IPO committee on March 6, 2025,” the DRHP noted.

Out of the proposed issue size of ₹6,200 crore, REIT proceeds worth around ₹5,800 crore will be primarily used for partial or full repayment of certain financial indebtedness of the asset special purpose vehicles (SPVs) and the investment entities. The remaining capital will be used to meet general corporate purposes.

For first half of the financial year 2024-25 (H1 FY25), its net operating income (NOI) was ₹1,632.38 crore, and ₹2,882 crore for FY24.

As of September 30, 2024, the total amount of outstanding net borrowings availed by the asset SPVs and investment entities was ₹20,197.45 crore. Of this, the total amount of outstanding loans availed by the asset SPVs from banks and NBFCs was ₹19,901.35 crore, while that of the investment entities stood at ₹2.85 crore.

Post listing of the units, the Knowledge Realty Trust proposes to enter into the shareholder debt documentation with the asset SPVs. As per the indicative terms, the debt will be provided for 10-15 years, carrying an interest in the range of 12-14% per annum.

In terms of the SEBI REIT Regulations, the Blackstone Sponsor together with the Sattva Sponsor will hold at least 15% of total outstanding units of the Knowledge Realty Trust.

Morgan Stanley, Kotak Investment Banking, Axis Capital, and BofA Securities India, ICICI Securities, IIFL Capital, JM Financial, and SBI Capital Markets are the bankers for the proposed public issue, while Kfin Technologies is the registrar to the IPO.