Detailed Rationale

Crisil Ratings has converted its provisional rating assigned to corporate credit rating to a final rating of ‘Crisil AAA/Stable' for Knowledge Realty Trust (KRT), sponsored by BREP Asia SG L&T Holdings (NQ) Pte Ltd (part of the Blackstone group) and the Sattva group. Knowledge Realty Office Management Services Pvt Ltd is the investment manager. Crisil Ratings has also assigned its ‘Crisil AAA/Stable’ rating to non-convertible debentures (NCDs) of Rs 1,600 crore.

 

The rating action follows receipt of requisite documents and completion of the following pending steps

 

• Listing of the Real estate investment trust (REIT) and raising of the funds: KRT filed the final offer document with Securities and Exchange Board of India (SEBI) on July 28, 2025, and subsequently was listed on August 18, 2025. Company raised Rs. 6190 crores (Rs. 1390 crores pre-IPO and Rs. 4800 crores during the IPO)

 

• Acquisition of the SPVs by the REIT: KRT has acquired 100% shareholding in 34 special-purpose vehicles (SPVs) comprising 29 office assets (including commercial office, information technology (IT) parks and special economic zone (SEZ) assets), 4 solar assets and 4 facility management SPVs.

 

• Prepayment/refinancing of part of the existing debt at underlying SPVs: Company has utilized the proceeds for prepayment of the debt lying in the SPVs and the debt has been reduced to ~ Rs. 13,900 crore from Rs ~20,830 crore pre-initial public offer (IPO).

 

The company is also in the process of raising debt of Rs 3,200 crore at the REIT (including secured, rated NCDs of Rs 1,600 crore) for the purpose of refinancing external debt at some of the SPVs. Consolidated debt, overall loan-to-value (LTV) ratio and the debt protection metrics are expected to remain comfortable.

 

The rating also reflects a strong and diversified portfolio of office assets, stable revenue profile of the assets, given the high occupancy levels and benefits from geographic diversification. These strengths are partially offset by susceptibility to volatility in the real estate sector, resulting in fluctuations in rental rates and occupancy and exposure to the refinancing risk.

Analytical Approach

For arriving at the rating, Crisil Ratings has combined the business and financial risk profiles of KRT with those of its SPVs, in line with its criteria for rating entities in homogeneous groups. This is because KRT have direct control over the SPVs and will support them in the event of any exigency. Additionally, as per the SEBI REIT Regulations, 2014, KRT and its SPVs are mandated to distribute at least 90% of their net distributable cash flow. Also, the cap on borrowing by the REIT has been defined at a consolidated level (equivalent to 49% of the aggregate value of assets).

 

Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key Rating Drivers & Detailed Description

Strengths:

• Stable revenue of asset SPVs (part of REIT): KRT REIT’s entire revenue comes from 27 fully operational assets with leasable area of 37.1 million square feet (msf), 4 CAM entities and 1 solar asset. Consolidated revenue from the portfolio is expected to further grow with increase in occupancy, rent escalations and completion of 1.2 msf of under-construction office space. The portfolio assets enjoy a robust committed occupancy at around 88% as of March 2025, have a healthy track record of rental collection, high mark-to-market potential for rentals given the superior asset and service quality, favourable location in prime areas of Bengaluru, Hyderabad and Mumbai, robust demand in respective markets, and competitive rental rates.

 

• Strong tenant profile with a well-diversified portfolio: KRT has robust portfolio of 29 high-quality assets (operational and under-construction), spanning an operational area of 37.1 msf. The portfolio is well-diversified, with assets strategically located across seven cities, and a strong client base of over 400 relationships across various industries. Notably, the top 10 tenants contribute around 30% to the company's gross rentals, ensuring a stable and balanced revenue stream. The company also has an under-construction area of 1.2 msf and a significant development potential of around 8.0 msf which will further increase the diversification going forward.

 

• Comfortable debt protection metrics: KRT REIT is expected to maintain a healthy financial position, with a comfortable average consolidated debt service coverage ratio (DSCR) throughout the debt tenure, including for additional financing requirements for construction and working capital in the underlying SPVs as well as factoring the refinancing of the bullet maturity of the planned NCD. The trust’s consolidated gross debt currently stands at ~ Rs. 13,900 crore and is expected to remain stable at similar levels by the end of fiscal 2026. Furthermore, the proposed NCD issue, which will be used to repay part of the external debt at the SPVs, is expected to optimize the trust's debt structure. With a comfortable LTV ratio of around 22%, based on the external valuation of the combined SPVs as of August 2025. Company has outstanding free cash balance of Rs. 2,100 crore as of August 2025. The company plans to utilize a part of the same for further debt repayment at SPV level. Due to comfortable LTV, KRT REIT is well-positioned to mitigate the risk of declining property prices and associated refinancing risks, providing a cushion for investors.

 

Weakness:

• Susceptibility to volatility in the real estate sector: Rental collection remains susceptible to economic downturns, which may constrain the tenant’s business risk profile and, therefore, limit occupancy and rental rates. 26% of the gross contracted rentals will be due for renewal by fiscal 2028, and strong weighted average lease expiry (WALE) of 8.4 years provides comfort. While most of the tenants are established corporates and may continue to occupy the property, any industry shock leading to vacancies may make it difficult to find alternate lessees within the stipulated timeframe. This could adversely impact cash flow and hence, will be a key rating sensitivity factor.

 

• Exposure to refinancing risk: Proposed NCD issue by the trust is planned to have a bullet payment at the time of redemption, exposing the REIT to the risk of refinancing. Active and timely treasury management remains essential for the refinancing of the loan. The trust's low consolidated leverage protects investors from the risk of decline in property prices and its consequent impact on refinancing. This, along with experienced management team provide comfort. The trust also has the flexibility to raise lease rental discounting (LRD) loans from banks through SPVs, and the trust can also explore new avenues of capital, such as investments from pension funds, insurance companies, and foreign portfolio investors, which can help mitigate the refinancing risk. However, timely refinancing of the loans will remain a monitorable.

Liquidity: Superior

Liquidity is supported by stable cash flows from underlying assets. Debt level remains moderate for REIT with gross LTV (based on external valuation) at 22%. DSCR is expected to remain comfortable factoring refinancing of bullet maturities (as the planned NCD is non-amortising). Though bullet maturity of the NCDs expose the debenture-holders to refinancing risk, however, the conditions around redemption provide the REIT with sufficient time to arrange for refinancing. Furthermore, Crisil Ratings sensitized LTV of the REIT is expected to remain below 40%, protecting investors from the risk of decline in property prices and the consequent impact on refinancing. The cash balance (excluding debt service reserve account) stood at ~Rs. 2,100 crores as on August 31, 2025.

Outlook: Stable

Crisil Ratings believes KRT REIT will continue to benefit from the quality of its underlying assets over the medium term.

Rating Sensitivity Factors

Downward Factors:

• Decline in the value of the underlying assets or higher-than-expected incremental borrowings resulting in Crisil Ratings-sensitised LTV ratio of 40% or above
• Weakening of operating performance leading to lower-than-expected occupancy levels
• Significant delay in completion and leasing of under-construction assets or acquisition of lower quality assets affecting portfolio health
• Any impact on independence of REIT operations due to, but not limited to, change in sponsorship of the trust or ownership of the REIT manager.

About the Trust

KRT REIT is registered as an irrevocable trust under the Indian Trust Act, 1882, and as a REIT with SEBI’s Real Estate Investment Trust Regulations, 2014, as amended. KRT REIT’s portfolio assets held through the asset SPVs as mentioned below. KRT has been listed on August 18, 2025.

 

The broad details of the Trust assets are as follows:

 

SPVs	Asset	Location	Asset Type	Leasable Area (Msf)^
Devbhumi Realtors Pvt Ltd	Sattva Knowledge City	Hyderabad	Business Park	7.3
Worldwide Realcon Pvt Ltd	Sattva Knowledge Park	Hyderabad	Business Park	3.3
i. Darshita Infrastructure Pvt. Ltd.	Sattva Knowledge Capital	Hyderabad	Business Park	2.3
ii. Sattva Knowledge Centre Pvt. Ltd.
One BKC Realtors Pvt. Ltd.	One BKC	Mumbai	Office Building	0.7
One World Center Pvt. Ltd.	One World Center	Mumbai	Office Building	1.7
One International Center Pvt. Ltd.	One International Center	Mumbai	Office Building	1.8
One International Center Pvt. Ltd.	One Unity Center	Mumbai	Office Building	1.0
Prima Bay Pvt. Ltd.	Prima Bay	Mumbai	Business Park	0.8
Cessna Garden Developers Pvt. Ltd.	Cessna Business Park	Bengaluru	Business Park	4.2
Exora Business Park Pvt. Ltd.	Exora Business Park	Bengaluru	Business Park	2.2
GV Techparks Pvt. Ltd.	Sattva Global City*	Bengaluru	Business Park	12.1*
Softzone Tech Park Limited	Sattva Softzone	Bengaluru	Business Park	1.0
Darshita Hi-Rise Pvt. Ltd.	Sattva Knowledge Court	Bengaluru	Business Park	0.9
Salarpuria Griha Nirman Pvt. Ltd.	Sattva Techpoint	Bengaluru	Business Center	0.3
Pluto Business Parks Pvt. Ltd.	One Trade Tower	Bengaluru	Office Building	0.2
Sattva Horizon Pvt. Ltd.	Sattva Horizon	Bengaluru	Business Center	0.6
Softzone Tech Park Limited	Sattva Touchstone	Bengaluru	Business Center	0.3
Quadro Info Technologies Pvt. Ltd.	Sattva Infozone	Bengaluru	Business Center	0.4
i. Darshita Edifice Pvt. Ltd.	Sattva Magnificia I	Bengaluru	Business Center	0.1
ii. Softzone Tech Park Limited	Sattva Magnificia II	Bengaluru	Business Center	0.1
Jaganmayi Real Estates Pvt. Ltd.	Sattva South Avenue	Bengaluru	Business Center	0.3
Debonair Realtors Pvt. Ltd.	Sattva Eminence	Bengaluru	Business Center	0.2
Harkeshwar Realtors Pvt. Ltd.	Sattva Cosmo Lavelle	Bengaluru	Office Building	0.1
Salarpuria Developers Pvt. Ltd.	Sattva Premia	Bengaluru	Business Center	0.1
Softzone Tech Park Limited	Sattva Supreme	Bengaluru	Business Center	0.1
Darshita Housing Pvt. Ltd.	Sattva Endeavour&	Bengaluru	Business Center	0.7&
Softzone Tech Park Limited	Sattva Spectrum&	Bengaluru	Business Center	0.5&
Kosmo One Business Park Pvt. Ltd.	Kosmo One	Chennai	Business Park	1.9
One Qube Realtors Pvt. Ltd.	One Qube	Gurugram	Business Park	0.6
Pluto Atriza Business Parks Pvt. Ltd.	Fintech One	GIFT City, Ahmedabad	Business Center	0.5
Shirasa Regency Park Pvt. Ltd.	Karnataka Solar—I	Dhule	Solar Plant	30.8 MW
NABS Data Zone Pvt. Ltd.	Karnataka Solar—II	Dhule	Solar Plant	24.2 MW*
One BKC Solar Energy Pvt. Ltd.	One BKC Solar&	Chitradurga	Solar Plant	3.9 MW&
Prima Bay Solar Energy Pvt. Ltd.	Prima Bay Solar&	Chitradurga	Solar Plant	4.1 MW&
BSP Office Management Services Pvt Ltd	CAM Asset	Mumbai	-	-
Sattva Properties Management Pvt Ltd	CAM Asset	Bengaluru	-	-
Pluto Solista Business Parks Pvt Ltd	CAM Asset	Bengaluru	-	-
Sattva Infra Management Pvt Ltd	CAM Asset	Hyderabad	-	-
Total				46.3 msf / 63.0 MW

^Total Operational leasable area is 37.1 msf & 30.8 MW

*Sattva Global City has Operational leasable area of 4.1 msf and rest 8.0 msf is future development. Karnataka Sola – II 24.3 MW is future development.

&Sattva Endeavor, Sattva Spectrum, One BKC Solar and Prima Bay Solar are under construction.

• All the solar power plants to be utilised for captive consumption
• BSP Office Management Services Pvt Ltd, Pluto Solista Business Parks Pvt Ltd, Sattva Infra Management Pvt Ltd, and Sattva Properties Management Pvt Ltd shall provide services for asset under the REIT. These services will include housekeeping, management of equipment, facade cleaning, security expenses, repair and maintenance, and maintenance of common areas.

Any other information: Not Applicable