Blackstone-Backed REIT In Focus As Morgan Stanley Initiates Coverage On Strong GCC Demand
Morgan Stanley initiated coverage with a price target of Rs 122, implying a potential upside of nearly 10%
Knowledge Realty Trust, co-sponsored by Blackstone and Sattva Group, has received an “Overweight” rating from Morgan Stanley, citing its robust fundamentals, strong tenant mix, and attractive dividend yield. The brokerage initiated coverage with a price target of Rs 122, implying a potential upside of nearly 10%, and a total 12-month return of 16% when factoring in dividends.
The brokerage believes that "KRT offers a defensive profile with steadily rising cash flows and acquisition upside potential on a low LTV. Strong GCC-led office demand and KRT's scale, with the highest tax-free yield among Listed India REITs, underpin our OW rating."
Morgan Stanley further added that Knowledge Realty Trust is India's fourth office REIT (listed in August 2025), and the largest by FY25 gross asset value, with a 46.3msf completed portfolio across six cities.
Moreover, KRT's high-performing markets, which include Bangalore, Mumbai, and Hyderabad, account for 96.5% of its GAV, driving a 91.4% occupancy rate. Global capability centres form 44% of its tenant mix, "ensuring sustained leasing momentum", the brokerage noted.
Among other major positives, the brokerage highlighted that last week, SEBI reclassified REITs as equity (from hybrid), a move which is likely to lead to more REIT holdings by Indian mutual funds. It also noted that an RBI rate cut cycle and REITs' defensive profile amid market volatility should add support.
In terms of peer comparison, Morgan Stanley highlighted that KRT stands out for its geographic diversification and highest MTM upside potential. It has the lowest Special Economic Zone (SEZ) area and the highest tax-free dividend component among India's listed REITs.
However, the brokerage also highlighted some key risks and moderation in growth from FY28 with no planned area addition is a risk factor. Secondly, it is already trading at a premium to NAV. It also noted that KRT likely faces sponsor overhang with Blackstone's stake of 47% expected to come down over time. Another risk highlighted by the brokerage was that historically, a few REITs have missed their pre-listing guidance.
