REIT IPO: In a significant move within India’s real estate sector, global private equity giant Blackstone, in partnership with the Bengaluru-based Sattva Group, is all set to file the draft papers for their much-anticipated Real Estate Investment Trust (REIT) IPO. The filing is expected to take place by mid-February, with the companies looking to raise a hefty sum of Rs 7,000 crore. According to sources familiar with the development, the REIT, named Knowledge Realty Trust, promises to be the largest of its kind in India and the second largest in Asia.
A Game-Changer for India’s REIT Market
If the IPO goes ahead as planned, Knowledge Realty Trust will significantly alter the landscape of India’s real estate investment trust market. The trust’s portfolio will comprise a remarkable 48 million square feet of leasable space, making it the biggest REIT in India. Furthermore, it will be the second largest in Asia, following closely behind a few global giants.
The REIT will primarily focus on office spaces spread across six major cities, including some of India’s most vibrant commercial hubs: Mumbai, Bengaluru, Hyderabad, and Pune. In total, it will manage 30 office properties, which includes well-known and prestigious landmarks such as One BKC and One International Centre in Mumbai, Sattva Knowledge City and Sattva Knowledge Park in Hyderabad, and Cessna and Exora Business Parks in Bengaluru.
For real estate enthusiasts and investors alike, the inclusion of these high-demand office spaces in a single REIT makes the Knowledge Realty Trust a particularly attractive proposition. These assets are not only in some of the country’s most sought-after locations, but they also represent a key part of India’s growing commercial real estate sector.
Ownership and Structure of the Trust
The joint venture between Blackstone and Sattva will see Blackstone holding a majority stake in the trust, with a 55 percent ownership. The remaining 45 percent will be held by Sattva Group. As is typical with such partnerships, Blackstone’s role in the venture as the lead investor and sponsor brings a level of expertise and credibility that is sure to attract investors to the IPO.
Despite being one of the largest players in India’s commercial real estate market, Blackstone, along with Sattva, has declined to comment on any further details of the IPO at this stage. However, what is certain is that the IPO launch is expected to happen by June 2025, making it a much-awaited event for investors and market watchers alike.
Blackstone’s Dominance in the Indian REIT Market
The Blackstone-Sattva REIT will be the fifth real estate investment trust to be launched in India and marks Blackstone’s fourth offering in this space. The private equity firm has established itself as a dominant force in the Indian real estate market, particularly in the commercial office segment. Blackstone launched India’s first-ever REIT in March 2019 through the Embassy Office Parks IPO, which raised a substantial Rs 4,750 crore. Embassy REIT’s portfolio manages 38.4 million square feet of leasable space, making it one of the largest in the country.
Following this, Blackstone partnered with K Raheja Corp to launch Mindspace Business Parks REIT, which raised Rs 4,500 crore. Mindspace REIT’s portfolio includes 34.8 million square feet of office space, further solidifying Blackstone’s strong presence in the Indian market.
In addition to office space-focused REITs, Blackstone has also ventured into the retail sector with Nexus Select Trust, a REIT that manages 9.9 million square feet of commercial real estate, including 17 malls, a few hotels, and office assets.
The Competition
While Blackstone has been the leading player in the Indian REIT market, it is not the only private equity firm involved in the space. Brookfield, another global private equity giant, raised Rs 3,800 crore in February 2021 through the IPO of its Brookfield India Real Estate Trust. This trust manages a portfolio of 28.9 million square feet, making it a significant player in the market, though it still lags behind Blackstone’s portfolio in terms of size.
Despite the competition, Blackstone’s continued involvement in the market and its ability to launch multiple REITs demonstrates the immense potential of India’s commercial real estate sector, which is becoming increasingly attractive to institutional investors globally.
Looking Ahead
The upcoming IPO of Knowledge Realty Trust is expected to mark another milestone in Blackstone’s strategy of building a robust real estate portfolio in India. With commercial office space continuing to be a high-demand sector, particularly in cities like Bengaluru, Mumbai, and Hyderabad, the IPO is likely to attract considerable attention from both institutional and retail investors.
The success of this REIT will be pivotal in determining the future trajectory of REITs in India, potentially opening the door for more large-scale offerings in the commercial real estate sector. With the planned public offer slated for June, the market is eagerly awaiting more details about the subscription process, pricing, and the potential impact this IPO will have on India’s broader real estate ecosystem.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.