Knowledge Realty Trust (KRT) has received a Buy rating from ICICI Securities, which has initiated coverage on the REIT with a target price of ₹130, against a report price of ₹112. The target implies around 16% upside. The brokerage is positive on KRT’s office portfolio, tenant quality and improving operating metrics.
KRT had a total leasable area of 46.5 million sq ft as of June 2026, spread across 29 Grade A office assets. Of this, 37.3 million sq ft was completed while another 9.2 million sq ft represented under-construction future development area. Around 96% of the portfolio’s gross asset value is located in Hyderabad, Mumbai and Bengaluru.
“We expect KRT’s NOI CAGR of 9% over FY26-29E to be primarily driven by likely narrowing of the gap between committed occupancy and economic occupancy over FY27-28E, in addition to contractual/mark-to-market rental escalations,” said ICICI Securities.
Investment Rationale
A key part of the investment case is the potential improvement in occupancy. KRT’s committed occupancy stood at 93%, while economic occupancy was 87% in June 2026 and 88% in July 2026. The REIT manager expects economic occupancy to cross 90% by March 2027 as large clients progressively ramp up their occupied space.
“KRT’s economic occupancy stood at 87% in Jun’26 and 88% in Jul’26 vs. a committed portfolio occupancy of 93%. As large clients ramp up occupancy in a staggered manner, the REIT manager expects economic occupancy to cross 90% by Mar’27,” it noted.
The brokerage expects the firm to be supported by the narrowing gap between committed and economic occupancy, contractual and mark-to-market rental escalations, as well as KRT’s development pipeline. The portfolio also has a 25% mark-to-market potential, according to the report.
The brokerage also points to the structure of REIT returns, where investors benefit from both distributions and potential capital appreciation.
“Hence, the total return offered by a REIT could be measured as a mix of annual distributions and capital appreciation of the units of the REIT. On balance, we prefer a DCF-based approach,” it added.
Target and yield
ICICI Securities values KRT at 1x FY27E NAV of ₹130 per unit. At the report price of ₹112, the brokerage estimates distribution yields of 6.2% in FY27, 6.8% in FY28 and 7.3% in FY29, with an 8.7% DPU CAGR over FY26-29E.
“We initiate coverage on Knowledge Realty Trust (KRT) with a BUY rating, valuing the company at 1x FY27E NAV of INR 130/unit. At CMP of INR 112, KRT offers FY27/28/29E distribution yield of 6.2/6.8/7.3%,” said the brokerage.
The report assumes a 7% cap rate, a 6% in-place rental escalation from FY26 onwards and a 10.5% WACC for its valuation. ICICI Securities has identified rising vacancies across assets and a fall in lease rentals as key risks to its view.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
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