Kotak Institutional Equities has initiated coverage on Knowledge Realty Trust with an 'add' rating and target price of ₹132.00, positioning the real estate investment trust as a strategic play on India's recovering office market. The brokerage expects the REIT to deliver strong growth driven by favorable market dynamics and operational improvements.

Portfolio Overview and Market Position

Knowledge Realty Trust operates as one of India's largest office REITs, managing a comprehensive portfolio across six cities. The company's asset base demonstrates strong fundamentals with high occupancy rates and strategic development pipeline.

Financial Projections and Growth Outlook

Kotak projects robust financial performance for Knowledge Realty Trust, expecting a 14% compound annual growth rate in net operating income over FY2025-28E. The brokerage estimates revenue from operations will expand significantly during this period.

Kotak estimates that by September 2027, the gross asset value will reach ₹69,500.00 crore, with 91% contribution from office assets and the balance from solar power and maintenance services.

Key Growth Drivers

The brokerage has identified several factors that will drive Knowledge Realty Trust's performance over the forecast period. These growth catalysts reflect both contractual advantages and market opportunities.

• Contractual rent escalations: ₹580.00 crore in secured rental increases
• Occupancy expansion: Leasing 3.20 million sq. ft of vacant completed space
• Mark-to-market opportunity: 22% potential upside on current rental rates
• New development leasing: 1.20 million sq. ft Bengaluru project completion

Market Dynamics and Sector Outlook

Kotak highlights the robust fundamentals of India's office real estate sector, noting significant expansion over the past 25 years. The office stock has grown 35 times, reaching 887 million sq. ft by March 2025, with projections to exceed 1 billion sq. ft by 2027E. Demand is expected to outpace new supply, creating favorable conditions for existing players like Knowledge Realty Trust.

Global capability centres are anticipated to remain the primary demand driver for Indian office space, supporting sustained occupancy growth and rental escalations across major markets.

Risk Factors and Considerations

Despite the positive outlook, Kotak has identified several risks that could impact Knowledge Realty Trust's performance. The brokerage particularly flags slower-than-expected occupancy improvement as a key concern.

Key downside risks include:

• Decline in occupancy at leased assets
• Non-renewal or termination of existing leases
• Tenant concentration risks across the portfolio
• Geographic dependence on select cities

Kotak views Knowledge Realty Trust as a leveraged opportunity on India's deepening office demand cycle, supported by global capability centre expansion, rental escalations, and new leasing activity, while acknowledging the recovery remains sensitive to occupancy trends.

Market Performance

Shares of Knowledge Realty Trust were trading 0.76% higher at ₹125.27 apiece, outperforming the broader market which saw the BSE Sensex decline 0.14% during the same period.

Knowledge Realty Trust has secured a CRISIL A1+ credit rating for its commercial paper programme valued at ₹500 crores, as disclosed to the stock exchanges on December 15, 2025. The rating reflects the trust's strong creditworthiness and financial stability in the real estate investment trust sector.

Credit Rating Details

CRISIL Ratings Limited assigned the CRISIL A1+ rating to Knowledge Realty Trust's commercial paper programme following comprehensive evaluation. The rating agency confirmed that securities with this rating are considered to have very strong degree of safety regarding timely payment of financial obligations and carry the lowest credit risk.

Rating Validity and Terms

The rating letter carries specific validity terms for the commercial paper programme. For issuance purposes, the rating remains valid for 60 calendar days from December 1, 2025. Should the company not place the programme within this period or make changes to the size or structure of the proposed issue, the rating will require review and revalidation.

Once the commercial paper is issued, the CRISIL A1+ rating remains valid throughout the programme's life, subject to ongoing surveillance, with a maximum maturity period of one year. CRISIL Ratings reserves the right to withdraw or revise the rating based on new information or changing circumstances that may impact the assessment.

Regulatory Compliance

The trust disclosed the credit rating information to both NSE and BSE as part of its regulatory obligations under Regulation 30. Knowledge Realty Trust trades on NSE with scrip code KRT and on BSE with scrip codes 544481 for units and 977158 for non-convertible debentures.

The complete credit rating report issued by CRISIL Ratings Limited has been made available on the company's website at www.knowledgerealtytrust.com for stakeholder reference. This disclosure ensures transparency and provides investors with comprehensive information about the trust's credit assessment and commercial paper programme details.

The CRISIL A1+ rating indicates a very strong degree of safety for timely payment obligations, further solidifying Knowledge Realty Trust's financial position in the market.