Knowledge Realty Trust — Q3 FY26 earnings call

Call held 5 Feb 2026

Management summary

Knowledge Realty Trust reported strong Q3 FY26 results, with revenue up 21% YoY to INR11,787 million and NOI up 19% YoY to INR10,407 million. The company declared a DPU of INR1.57 and reduced its cost of debt by 19 bps to 7.25%. Management highlighted robust leasing momentum, a 22% embedded mark-to-market potential, and an optimistic outlook for occupancy growth to 93% by March 2026.

Highlights

  • Revenue grew 21% year-on-year to INR11,787 million, demonstrating strong financial performance.

  • Net Operating Income (NOI) increased 19% year-on-year to INR10,407 million, reflecting robust operational efficiency.

  • Declared a Distribution Per Unit (DPU) of INR1.57 for Q3 FY26, translating to INR6,953 million in distributions.

  • Achieved a 19 bps reduction in the average cost of debt, bringing it down to 7.25%.

  • Portfolio occupancy is projected to increase to 93% by the end of March 2026, driven by a healthy leasing pipeline of 1 million square feet.

Concerns

  • Cessna asset experienced a marginal occupancy dip from 97% to 95% this quarter due to a couple of exits, leading to a slight NOI dip.

Key financials

  1. Revenue 11,787 Mn +21%YoY
  2. NOI 10,407 Mn +19%YoY
  3. DPU ₹1.57
  4. NDCF 6,953 Mn
  5. Cost of Debt 7.3%
  6. NAV ₹118

What they filed

₹ Cr · quarterly
Line itemQ2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue671 1,179 1,197 1,243
EBITDA541 961 956 1,047
Net profit63 206 107 251
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Order book

high confidence

Total value

2.4 million sq ft

as of 2025-12-31 quantified

Inflow this quarter

0.6 million sq ft

Composition

  • GCCs and front office occupiers (client type)

Pipeline

other

healthy leasing pipeline

Cancellations & deferrals

  • cancelled: Cessna occupancy dipped from 97% to 95% due to a couple of exits.
Strong leasing momentum with new leasing at 6% premium to market and renewals at 26% spread, contributing to 19% YoY NOI growth.

Source: Prepared remarks

Capital allocation

high confidence
  • Debt Debt disclosed Cost 7.2%
    • Rate reset 19 bps reduction in average cost of debt from 7.44% to 7.25% due to higher floating grade debt composition and repayment of higher cost borrowings.
    During the quarter, our higher floating grade debt composition and repayment of higher cost borrowings resulted in a 19 bps reduction in our average cost of debt from 7.44% to 7.25%.
  • Dividend ₹1.57/share (interim)
    the board has approved a distribution of INR1.57 per unit, that is NDCF of INR6,953 million for Q3 FY '26.
  • Liquidity Liquidity disclosed Low LTV of 18% provides room for disciplined inorganic growth. Actively seeking accretive acquisitions, but focused on core institutional office assets.
    With a low LTV of 18%, we remain well positioned to pursue disciplined inorganic growth.

Guidance & targets

DPU

  • DPU for FY26 DPU · FY26 · High confidence INR6.2 per unit
    our distribution for FY '26 was projected around INR6.2 per unit for the whole year.

    — Senthil Kumar

  • DPU for FY27 DPU · FY27 · High confidence INR7.03 per unit
    What I meant is FY '27 will be higher than that, which was projected at around INR7.03.

    — Senthil Kumar

Distribution Tax Exemption

  • Tax exempt/deferred portion of distribution Distribution Tax Exemption · full year FY26 · High confidence 86% to 91%
    We expect this figure to normalize around 86% to 91% for the full year FY '26.

    — Neeraj Toshniwal

Occupancy

  • Portfolio Occupancy Occupancy · by end of March 2026 · High confidence 93%

    Previously 92% → 93%

    we expect our occupancy which should swell to 93% which will have its own impact in terms of our NOI.

    — Quaiser Parvez

Occupancy Gap

  • Committed vs. Actual Occupancy Difference Occupancy Gap · next two to three quarters · Medium confidence 3-4 points

    Previously 6 points → 3-4 points

    we think this 6 point difference will narrow down to a 3 to 4 point difference in the probably next two to three quarters.

    — Quaiser Parvez

Asset Commissioning

  • Under-construction asset commissioning Asset Commissioning · early FY27 · Medium confidence early FY27
    And we believe that by in the early part of FY27 we should be able to sort of commission it.

    — Quaiser Parvez

Leasing

  • Leasing of under-construction asset Leasing · next two quarters · Medium confidence report in next two quarters
    we will be happy to report it probably in the in the next two quarters which hopefully will coincide with the onboarding of the asset into the portfolio.

    — Quaiser Parvez

ROFO Pipeline

  • ROFO pipeline crystallization ROFO Pipeline · next two to three years · Medium confidence 6.7 million sq ft
    we also have a ROFO pipeline of 6.7 million square foot which will crystallize in the next two to three years.

    — Quaiser Parvez

What to watch in Q4 FY26

FY26 DPU Achievement

next quarter (Q4 FY26 results)
Current INR1.57 DPU for Q3 FY26
Target INR6.2 per unit for full year FY26

Why it matters

Verifying if the company meets its full-year DPU projection is crucial for investor confidence and income predictability.

our distribution for FY '26 was projected around INR6.2 per unit for the whole year.

Risks & concerns

  • Cessna Occupancy Dip

    low

    Cessna asset experienced a marginal occupancy dip from 97% to 95% in Q3 FY26 due to a couple of exits, leading to a slight NOI dip.

    So if you see the occupancy, there was a marginal dip from 97% to 95% in Cessna during this quarter. So there were a couple of exits. That is the occupancy dip and hence the NOI dip slightly.

    Management acknowledged

Q&A highlights

6 direct
Distribution vs. Borrowing Cost Reduction Partial
So what has happened in terms of borrowings is yes we've had some savings but if you see majority of the rate reductions have come in the fag end of the year. For example there was a rate cut in December. After the lag of transmission, the full year effects only be in Q4.

Analyst questioned why DPU didn't increase despite lower borrowing costs, management explained the timing lag of rate cut benefits.

Asked by Nilesh Doshi

Committed vs. Actual Occupancy Gap Direct
The difference between committed occupancy and the actual occupancy is essentially the occupancy versus the rent generating occupancy. Traditionally, the difference between committed occupancy or actual/economic occupancy is roughly about 3% to 4%. In our particular case, our difference as of March was 9 point difference, which has narrowed down to a 6 point difference today.

Clarified the difference between committed (92%) and actual (86%) occupancy, and provided a timeline for narrowing this gap.

Asked by Nilesh Doshi

FY27 DPU Projections Direct
Just to clarify, what I meant for the earlier question is, our distribution for FY '26 was projected around INR6.2 per unit for the whole year. What I meant is FY '27 will be higher than that, which was projected at around INR7.03.

Management clarified specific DPU projections for both FY26 and FY27, providing clear forward guidance.

Asked by Pritesh Sheth

Revenue Growth Drivers Direct
Pritesh, broadly as Quaiser was explaining the economic occupancy to committed occupancy delta used to be about 9% last year when we were talking about these revenue numbers. And that has shrunk to now 6% gap. So naturally that is a contributing factor in a big way. And second like you rightly said there have been improvements in contractual escalations and mark-to-market rentals. Those are the large three breakups.

Management detailed the key factors contributing to the 21% YoY revenue growth, including occupancy delta reduction and mark-to-market rentals.

Asked by Pritesh Sheth

Upcoming Expiries and Renewal Spreads Direct
On the 0.9 million square foot of expiries which is expected in Q4, happy to inform that 42% of that area is already renewed or re-leased. The remaining 0.5 million square foot is under advanced discussion of being re-leased and we believe much of it will happen within the Q4 of this fiscal year or early Q1 FY27. In fact noteworthy here is that all our recent renewals has happened at an average spread of about 28%.

Provided specific details on Q4 and next year's lease expiries, renewal rates, and the strong re-leasing spreads achieved.

Asked by Pritesh Sheth

Bangalore Occupancy and Under-construction Assets Direct
we believe the next quarter we'll see a huge recovery in our in our Bangalore occupancy because we have had some of the deals which is pushed through from Q3 to Q4. As regards our under-construction asset, we are in the final stages of handing over this asset. And we believe that by in the early part of FY27 we should be able to sort of commission it.

Addressed concerns about Bangalore occupancy and provided timelines for commissioning and leasing of under-construction assets.

Asked by Murtuza Arsiwalla

Acquisition Strategy and Data Centers Direct
So given again that we have recently listed, our focus is very much to keep to our core and our core is institutional office. And so that is what we are going to sort of focus on... and that the data center business over time we will review, but at today's point there is no intent to acquire something like that.

Management clarified its disciplined acquisition strategy, focus on core institutional office, and current lack of intent to enter the data center business despite market incentives.

Asked by Tanveer

Debt Strategy and MAT Amendment Partial
So we are watching very closely this interest movement. And at the opportune time we will plan to move a portion of our debt into fixed bucket. And the key point is in our portfolio 65% is linked to repo which looks very stable at least in FY27 also at least in first half it looks stable. And regarding the MAT, we have recently listed and we do not expect significant impact on our portfolio from not carrying forward the MAT credit.

Management outlined its approach to debt management (fixed vs. floating) and provided initial assessment of the MAT amendment's impact.

Asked by Parvez Qazi

3 min read 6 chapters

Detailed narrative

Q3 FY26 Financial Performance Overview

Knowledge Realty Trust reported robust financial results for Q3 FY26, with revenue growing 21% year-on-year to INR11,787 million. Net Operating Income (NOI) also saw a significant increase of 19% year-on-year, reaching INR10,407 million. The board approved a distribution of INR1.57 per unit, totaling INR6,953 million for the quarter, with 92% of this distribution being tax exempt or deferred. The company also successfully reduced its average cost of debt by 19 basis points, from 7.44% to 7.25%.

Operating Performance and Leasing Momentum

The portfolio maintained a stable occupancy of 92%, supported by a healthy leasing pipeline of approximately 1 million square feet. During Q3, KRT completed 0.6 million square feet of gross leasing, contributing to a cumulative 2.4 million square feet for the first nine months of FY26. New leasing achieved a 6% premium to market rates, while renewals saw an impressive 26% spread. Management noted that over 90% of year-to-date leasing is on an annual escalation basis, providing greater visibility for compounding rent growth.

Market Dynamics and Strategic Positioning

India's office market recorded 82 million square feet of absorption in calendar year 2025, with Global Capability Centers (GCCs) accounting for 40% of demand, reinforcing the structural growth of the sector. KRT, with its 46 million square foot portfolio, is the largest REIT in India by market cap (over INR50,000 crores) and is geographically diversified, with over 95% of its value in Mumbai, Hyderabad, and Bangalore. The company was included in the FTSE EPRA Nareit Global REITs Index in December 2025, reflecting growing global recognition.

Capital Structure and Acquisition Strategy

KRT maintains a low Loan-to-Value (LTV) of 18%, positioning it well for disciplined inorganic growth. While actively seeking accretive acquisitions, the company remains focused on its core institutional office assets. Management stated there is currently no intent to acquire data center assets, despite market incentives, as it is a different asset profile. The company evaluates potential acquisitions based on NAV and DPU accretiveness, and has a strong ROFO pipeline of 6.7 million square feet expected to crystallize in the next 2-3 years.

Occupancy Management and Asset Performance

The difference between committed and actual occupancy has narrowed from 9 points in March to 6 points currently, with committed occupancy at 92% and actual at 86%. This gap is expected to further narrow to 3-4 points in the next 2-3 quarters. Mumbai assets saw a 100 basis points QoQ occupancy increase to 89%. In Bangalore, a recovery is expected next quarter. The Cessna asset experienced a marginal dip from 97% to 95% due to a couple of exits, while Sattva Global City's occupancy stood at 79%, with 0.7 million sq ft re-leased out of 0.9 million sq ft de-notified.

Future Outlook and Growth Drivers

KRT anticipates its portfolio occupancy to swell to 93% by the end of March 2026. The company expects its DPU for FY27 to be higher than the projected INR6.2 per unit for FY26, reaching around INR7.03 per unit. An under-construction asset is in its final stages and is expected to be commissioned in early FY27, with leasing updates anticipated in the next two quarters. The embedded mark-to-market potential across the portfolio remains at 22%, providing a significant organic growth lever.

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