Ladies and gentlemen, good day and welcome to Knowledge Realty Trust Q4 and FY 2026 Earnings Conference Call. As a reminder, all participants will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Senthil Kumar, Senior Vice President, Investor Relations, Knowledge Realty Trust. Thank you, and over to you, Mr. Senthil.
Thank you, and good evening to everyone joining us today. On behalf of the management team, I would like to extend a warm welcome to all participants of Knowledge Realty Trust Q4 and FY 2026 earnings call. Before we proceed, a couple of important disclaimers. I would like to highlight that the management may make certain comments that may constitute forward-looking statements. Please be advised that our actual results may differ materially from these statements. KRT does not guarantee these statements or results and is not obliged to update them at any point of time. Joining me today on the call are Shirish Godbole, KRT CEO, Quaiser Parvez, our COO, and Neeraj Toshniwal , our CFO. We will start off with brief remarks on the macro environment, our business and financial performance, and then open the floor to questions. Over to you, Shirish.
Thank you, Senthil, and a very warm welcome to everyone joining us for our quarter four and FY 2026 earnings call. The year saw periods of heightened global uncertainty, from tariff-related disruptions to continuing geopolitical tensions in the Middle East. Despite these uncertainties, India's commercial office fundamentals continue to be remarkably resilient, with a record 90 million square feet absorption projected in calendar year 2026. Global corporations continue to deepen their India presence, given India's talent depth, cost competitiveness, and long-term stability. GCCs were projected to generate over $100 billion in revenues by FY 2030. However, it is remarkable to note that this estimate has already been achieved four years in advance, with FY 2026 revenues reaching $98 billion. Coming to KRT, FY 2026 has been a defining year for us.
Revenue for FY 2026 grew 16% year-on-year to approximately INR 4,600 crores, while NOI grew 18% year-on-year to approximately INR 4,048 crores. During the year, KRT distributed INR 2,101.9 crores to its unitholders. Glad to report that distributions for FY 2026 exceeded projections outlined at the time of IPO, reflecting strong operating performance and disciplined cost management. KRT now ranks 197th by market cap in India and is the country's largest REIT with a market cap of over INR 52,000 crores. In FY 2026, we were included in the FTSE All-World and the FTSE Nareit Global REIT indices, important milestones that reflect increasing global investor recognition. Our unitholder base has also expanded by 2.4x since listing and reflects growing participation across investor segments.
Since listing in August 2025, KRT has delivered total returns of about 22%, outperforming broader markets. During the same period, the Nifty REIT and InvITs Index generated returns of around 10%, while the Nifty 50 delivered negative returns of around 5%. As we look ahead, KRT continues to have multiple visible growth levers. We have a sizable mark-to- market potential of 25%, supported by a well-phased lease expiry profile. On the development front, we commenced construction of a new 1.4 million square foot block at Sattva Global City in Bengaluru, over and above our existing under-construction portfolio of 1.2 million square feet. We have a healthy ROFO pipeline of approximately 6.7 million square feet, and we continue to actively evaluate value accretive first-party acquisition opportunities across the markets.
With that summary, I will now hand over to Quaiser for an update on our portfolio performance and operating highlights.
Thank you, Shirish, and good evening, everyone. Before I get into our performance, a quick word on the market backdrop. Post record office absorption of 83 million square foot in the calendar year 2025, the momentum continued in the first quarter of calendar year 2026 with 21 million square foot of absorption. The outlook looks promising with projected absorption of a record 90 million square foot in the calendar year 2026 and reaching 100 million square foot by calendar year 2028. Leading global technology companies are committing hundreds of billions of dollars towards AI infrastructure and talent development. Importantly, this investment cycle is flowing into India through GCC expansion, with global corporations setting up engineering hubs, AI research teams, cybersecurity operations, and data-centric functions. Effectively, AI is increasing the complexity and the value of work carried out of India, driving the demand for better, not less office space.
We are seeing flight to quality in its mind with a strong preference towards high-quality workspaces with a full suite of amenities. Having said that, there continues to be a lot of speculation on the extent of AI's impact on office demand. In that context, I would like to highlight how KRT's portfolio is AI resilient through three distinct themes. Number one is the GCC theme that we spoke about. Nearly 45% of our gross rentals come from GCC occupiers undertaking high-quality, high-value strategic work. Number two, the traditional IT services industry is going through a structural shift towards AI-led technology services model. Amidst this transformation, KRT stands well insulated, given our exposure to the sector is negligible. Number three, 31% of our portfolio by value comprises of front-office assets, which is driven by client-facing strategic functions and are relatively insulated from AI disruption.
To correlate, I would like to highlight the strong performance of our Central Mumbai front-office portfolio. These assets represent some of India's finest business addresses occupied by global consulting firms, multinational corporates, as well as headquarters of major Indian conglomerates. Occupancy in this portfolio increased 10% year-on-year to nearly 90%. More importantly, rentals achieved for leasing during the year were 27% higher year-on-year. Now coming to KRT's performance highlights. In quarter four, we achieved gross leasing of 1.1 million square foot, taking cumulative leasing for the year to 3.5 million square foot and a portfolio occupancy to 92%. During the year, our in-place rents grew 7% and we achieved a strong leasing spread of 26%. Rents on FY 2026 new leasing were at a 5% premium to market rents, reinforcing our superior asset quality and embedded pricing power.
As we have mentioned before, 87% of our FY 2026 leasing had annual escalations, creating a compounded embedded rental growth profile. 56% of our new leasing during the year came from existing occupiers. Also, 44% of 1.8 million square foot of upcoming expiries in FY 2027 is already tied up at 31% spread. This is a strong endorsement of our portfolio quality and tenant satisfaction. Our SEZ exposure is low at 15%, limited to two of our business parks in Bengaluru. During the quarter, we applied for SEZ demarcation for over 0.5 million square foot across the two parks. A key focus area for us continues to be hospitality-led service model. Accordingly, we continue to invest behind elevated service standards, tenant experience, food and beverage offerings, wellness initiatives, and campus infrastructure upgrades.
For instance, we launched the Padel and the Pickleball Courts at One World Center and upgraded our landscaping and arrival experience in some of our Bengaluru and Mumbai assets. As part of our community-building initiative, we have hosted the Hyderabad Literary Festival at Sattva Knowledge City, which saw a turnout of over 100,000 visitors. We also curated tenant engagement activities across our business parks, including flea markets, live music sessions, and interactive conversations with prominent personalities, further strengthening the workplace ecosystem and occupier experience. As we look ahead, our focus remains unchanged. Number one, driving occupancy across the portfolio and delivering superior tenant experience. With that, I will now hand over to Neeraj to walk you through the financial performance in more detail.
Thank you, Quaiser, and good evening, everyone. KRT delivered strong and consistent financial performance for FY 2026. Revenue grew 16% year-on-year to INR 45,772,000,000 . NOI grew 18% year-on-year to INR 40,484,000,000 . For Q4 FY 2026, revenue grew 12% year-on-year to INR 11,965,000,000 . NOI increased 14% year-on-year to INR 10,533,000,000 . Distribution for the quarter stood at INR 1.62 per unit. That is NDCF of INR 71,660,000 . 87% of the distribution for Q4 FY 2026 is tax-exempt or tax deferred in the hands of unitholders. Cumulatively, post-listing, KRT has distributed INR 4.74 per unit across the three quarters of FY 2026, exceeding our IPO projections. On the balance sheet front, we continue to optimize our financing profile. During the year, we raised INR 42,000,000,000 at a blended cost of 7.3%.
Overall, high-cost debt replacement, rate renegotiation, and rate cuts reduced our cost of debt from 8.6% to 7.2% during the year.
We will actively monitor the interest rate environment and calibrate our financing activities in line with market opportunities. With a strong balance sheet, low leverage, and healthy operating cash flows, KRT remains very well-positioned to pursue future growth opportunities while continuing to deliver stable and predictable distributions. With that, I will now hand the call back to the moderator to open the floor for questions.
Thank you very much, sir. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star then one on their touchtone telephone. If you wish to withdraw yourself from the question queue, you may press star then two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from the line of Deep Shah from 360 ONE. Please go ahead.
Yeah, hi, good evening. Thanks for the opportunity. Sir, a couple of questions. First, on Sattva Global. So, within our portfolio, about 80% is roughly occupied, 20% coming up for renewal next year, and you also announced a new project there, or sorry, a new building there. So, if you could explain slightly in detail about what is that you are seeing in this vicinity of Bengaluru, and what are your trends for this micro market? Because quite a sizable investment in a building which has otherwise been less occupancy? So that would be very useful. And second, while if I understand that there could be quarterly differences in share of dividends, it should be fair to assume that over the next year, dividends would be, say, 3/4 of our share of distribution. Would that be a fair assumption? Those are my two questions. Thank you.
Hi, Deep. This is Quaiser, and I will take your questions. The first one, which is on the Sattva Global City. Just to sort of highlight the Sattva Global City occupancy currently is 81%. The way we are approaching this asset is largely through repositioning the campus through a fair bit of CapEx work, SEZ demarcation of a small portion of the area. We are in discussion with some educational institutions, and more so from a BTS kind of opportunities, in terms of how we want to sort of approach this. Particularly the question of 1.4 million square foot of the development. The development is at the back of a combination of phased demand as well as a sort of speculative opportunity. It is not completely a speculative opportunity. It is at the back of some phased demand and speculative opportunity.
We continue to feel very optimistic about this asset because we believe that this is one asset which is in the south of Bengaluru and in that price point, which is a great attraction for educational institutions, for back-office operations, for IT/ITeS who are looking for more campus-like establishments.
Deep, I will answer this question. Senthil here. Deep, you are right. Overall, going forward for FY 2027, the tax efficient portion will be 3/4, somewhere like 75%-78%. In Q4, if you saw, this was 87%. The dividend itself out of that was 61%, right? As we move forward, the first year of distributions obviously had a very high dividend portion because we had opening retained profits and that helped the dividends, right? Overall, also, because we raised debt at the REIT level, that is further passed on to the SPVs as higher interest cost loans. So, that sort of gives us a slightly higher interest income at the REIT level. So, that is why the interest income has gone up and proportionately dividend has come down. But going forward, you will see 75%-78% as a steady-state tax-efficient distribution.
Sure. Senthil, great to hear. Thanks so much for the answers. If I could just squeeze in one more, because you mentioned interest portion. Is there a ballpark of fixed versus floating debt that we have in our mind? Do you think this is the right time to lock in fixed-rate debt in anticipation of what is happening to interest rates? Some clarity here would be very useful. Thank you.
Yeah. Deep, Neeraj here. I will answer this question. We have not given a defined quantum for fixed and floating, but we are closely monitoring the macroeconomic environment. Our approach is to be opportunistic. At the right time, we will raise more fixed coupon debt to lock in the stability.
Sure. Yeah. I understand that. You would be interested to raise fixed debt also at the right price. Fair enough, sir. This is very clear. Thank you so much.
Thank you. Before we move to the next question, a reminder to the participants, to ask a question you may press star then one. Next question is from the line of Simoni Sanghvi from Prospero Tree. Please go ahead.
Hi. Thank you so much for the opportunity. Am I audible?
Yes, please proceed.
My first question is, what is the difference between the committed occupancy and the actual occupancy in both percentage as well as in absolute terms? And then, when that gap will narrow down? Because the rent is generated on the actual occupancy. How much time does it take for the committed occupancy to convert to the actual occupancy?
I will take that question. My name is Quaiser. Our committed occupancy is 92%. Our economic occupancy is six points down at 86%. The difference between committed occupancy is leases signed versus economic occupancy is in terms of rents actually coming in. The third part of the question was that why such a difference? There will always be a structural difference of 3%-4% between committed occupancy and economic occupancy because we will keep signing leases. Those leases/occupiers will take time to do fit-outs. They will take time to use their rent-free period. In our particular case, because of the volume of the leasing, we have narrowed down on this margin from a nine-point difference in the earlier part of the year to a six-point difference because a lot of rent-frees have been burning out and a lot of fit-outs have been completed.
As we speculate and as we look forward, we believe the six-point difference in the subsequent quarters will be a three to four-point difference.
Got it. I have been tracking some other REITs as well, and their difference is about 2%-3%. My question is that when will we be reaching that percentage level? Because the last quarter also, you had told us that the committed was 92% and the actual was 86%. So has there been any changes? If you could state both of those in the absolute terms as well.
For the way we look at it, I will take the first question. In the last quarter, yes, we were at 92%, and we know in this quarter as well, we held steady at 92%. We have done a total leasing of 3.5 million square foot, but we also witnessed an exit of roughly about 700,000, which came in two of our assets. One is in Exora, which is in Bengaluru, and a small part in One BKC. Both these exits present a significant opportunity of a mark-to-market potential in our case, and we obviously have a million square foot of pipeline to add to that. To your second question of when do we think this bridge to be narrowing down, we are quite hopeful that in the subsequent quarter, in the next two quarters, we should have the six points to a two to three point difference.
All right. Okay. Thank you. My next question is that, is there any guidance on the distribution? Like right now, it is at around 5.3% approximately, while I have seen others offering more than 6% of distribution. So from REITs, we expect a 12%-15% yield. So if the distribution is not beating 6%-7%, how do we expect to generate that much yield?
Okay, thanks for the question. Yes. So, in terms of guidance, we do not provide a guidance as a policy. However, our company is only nine months old, and the IPO and RFP documents are available. So, the numbers for FY 2027, we will pretty much keep that as the benchmark for it. That is obviously significantly higher than the DPU that we gave last year, right? So there is obviously much higher growth coming from multiple factors that Quaiser was laying out too, right? So there is both, in terms of the occupancy ramp up, if you see we are at 92%, and we are expecting to do 94%-95% next year. So, that is going to give us a bump. Then there is growth coming from the multiple under-construction projects that we laid out. The highest MTM that we have, we mentioned.
All these growth parameters are going to obviously lead to higher NOI as well as NDCF during next year. That stays as the benchmark for the DPU that we gave during the IPO. In terms of the numbers that you mentioned, 12%-15%, the yield is expected to be in the range of around 6%-7%, plus the price appreciation is the balance, which will make the total return 12%-15%, not just the yield. You see, we've given price return significantly over the last year, right? With that, I think it should be a combined 12%-15% yield.
Correct. My last question is that how much area will be under re-leasing in FY 2027, and what's the possibility for escalation?
Interesting question. On an average, we have about 1.5 million square foot which sort of expires every year. As an earlier part of our explanation, out of the 1.5 million square foot, 44% of the area has already been tied up for what's coming up in FY 2027. That being said, two important data points. Out of the 1.5 million square foot, which on an average for at least for the next two years which expires almost 3/4 of that area or value comes from Mumbai. Mumbai presents a significant mark-to-market opportunity because of two reasons, because our historical rents are low, our marginal rents are significantly higher, and our leases are shorter. In addition to that, Hyderabad also has a massive mark-to-market potential but seems lower from a lower lease term expiry.
While it has great MTM potential, the realization may be lower because the expiries are less. Bengaluru is again, a strong complementary stable market for us. Mumbai will account for roughly about 3/4 of the mark-to-market potential in the next two years.
Okay. And the possibility for escalation?
87% of the leases which we have done in FY 2026 is on annual escalation. We continue to believe that escalations will move in line with a 5%, with on average 4.5%-5%, which is pretty much the norm in the market.
Okay. Thank you. That is it from my side.
Thank you. Participants, if you wish to join the question queue, you may press star and one. Next question is from the line of Mohit Agarwal from IIFL. Please go ahead.
Yeah. Thanks for the opportunity and congratulations on delivering a very healthy DPU in FY 2026. My first question is just as a clarification. Quaiser, you mentioned that 87% of incremental leases are annual escalations. What would be that as a percentage of the total portfolio right now?
I don't have that number handy, but it'll be in the zip code of roughly about 40%-45% of our leases will be on annual escalations.
Okay. This will progressively increase as we incrementally increase the share. Okay. My second question is actually on the, when I look at your GAV numbers, the asset wide GAV numbers that you disclosed. For some of the assets in Bengaluru, I see the year-on-year growth to be sub 5%. Look at Cessna or Exora and all of that. What's happening there in terms of, let's say, what are the assumptions? If you also maybe want to talk about a little bit about the assumptions in terms of has there been changes to cap rates or WACC or the rental assumptions. Also a couple of assets in Mumbai as well.
The second part of that question is that for Hyderabad also while the numbers look healthy, but when I compare it to some of your peers in Hyderabad, they have reported much more steeper , NAV growth on a year-on-year basis. Maybe you want to run through some of the assumptions that you've taken or some color on that.
Okay. I'll just sort of divide the questions, Mohit, between Senthil and I. I'll take Hyderabad first. You're absolutely right. Hyderabad is 99% occupied. It does have approximately about 41% mark-to-market potential. It has a great revenue, higher rent potential within the portfolio. But it just so happens most, and Hyderabad is also the epicenter of a lot of GCC activity and those such GCC activities at the back of long leases. There are lower near-term expiries in Hyderabad, which in some ways are not sort of helping us to kind of really get the MTM potential, which is available in that market. Because our historical in-place rent in Hyderabad is about INR 78, INR 79, where the marginal rents are in the zip code of INR 135, INR 140. And that's a big delta which we need to cover as and when the expiry comes.
This is one market, in a slightly way, if there is expiry in this diversification, it's a great news, right? It's a great opportunity, right? Senthil over to you.
Yeah. Hi, Mohit, Senthil here. Mohit , in terms of the GAV growth, you're right. Overall, we had a growth of about 4.5% in GAV. And where it has come from, primarily is the market rental growth, right? And again, like Quaiser was saying, it's varying from city to city, right? So, Hyderabad obviously saw a significant jump in rental. And as you know, the market has also gone through a huge positivity. And in terms of Bangalore, the market rent for our assets we've kept them flat. So if you see Cessna or Exora, there's been no change.
Whereas Mumbai has gone through quite a bit of change because as you know, the majority of our premiums to market rentals are also coming from Mumbai. So Mumbai has seen a market rental uptick. So about 50%- 60% of our GAV movement is coming from the market rental movement, right? And secondly, about 30% is coming from the rolls forward itself, right? Over the last six months in terms of slightly higher occupancies and other factors. And a small percentage is coming from the cap rate reductions, only like three, four assets we changed some cap rates, which is really around 10% of the overall GAV movement. Does that answer your question?
Yeah. I was just going to say, comparing it to others is subjective, right? You have to look at the assets on each portfolio and look at the appreciation during that time period in those assets. Yeah?
Yeah, absolutely. Just clarifying, the carpet efficiency ratios have reduced in the last one year.
It has not changed from the valuations for what we considered the last time till now. That being said, in Bengaluru we have sort of reduced the efficiency for some of the new leases.
Understood. My last question is on your acquisition strategy. Considering that you are a brand agnostic platform, some of the office deals that we hear about are currently happening at, in our view, really at peak cap rates. In that context, how are you looking at acquisitions in the market? Also considering that interest rates are also now looking to go up. How do you think about your acquisition strategy and some color on that would be helpful.
Mohit , we are quite active in the space, looking for opportunity, which is a strategic fit to the portfolio. In fact, we are casting the net as wide as possible. There is barely an opportunity which we would not have evaluated. But again, it is a cusp of what is a fit to the portfolio and also the price it sort of comes in. I would like to draw your attention to the fact that, and particularly this may be slightly different, but Blackstone as one of the sponsors of the REIT has acquired 200 million square foot in the last decade and so, right? Acquisition is something which we obviously think we have great finesse on, and we have massive coverage on. Hence, we don't want to be in a rush but only chase opportunities which is a valuable and a great fit to the portfolio.
That being said, we obviously have organic drivers within the portfolio in terms of our 25% MTM, in terms of our ROFO assets, in terms of our under construction, and the future development which is expected in the portfolio.
Sure, But do you find the valuations cheap right now or are they fair?
Mohit, the question is relative to the fact of where the asset is located and which market, right? One is in Bengaluru could be a very different way to sort of evaluating what's in Hyderabad or perhaps in Mumbai. Having said that, we have not made an acquisition, right? So, that answers some of the discipline that you are trying to hear. So, that answers some of that question, right?
Yeah. Thanks a lot. All the best, and those were my questions.
Mohit, just to add on to it, I guess the visibility on the ROFO pipeline, you see certain assets which are listed, but I think Image Tower, as you know, you have the background, is something which is getting completed somewhere like early, mid-next year, right? So that's a 1.6 million square feet occupied, sitting next to Knowledge City, which is completely 99% occupied. So Image Tower is seeing massive traction in terms of rentals and it's going at INR 140, INR 150. While it is not in the ROFO, I think that's probably the first asset which is going to come into the REIT. We will give you more updates, but at the same time, I think—
Mohit, first asset from the sponsors.
From the sponsors. Yeah. Coming to the REIT.
Great. That's useful. Thank you.
Thank you. Next question is from the line of Parvez Qazi from Nuvama Group. Please go ahead.
Hi, good afternoon. Thanks for taking my question. Couple of questions from my side. I mean, you have mentioned and we have done great as far as improving the portfolio by asset as a whole. But one can also notice that between March 2025 and March 2026, the occupancy in our Bengaluru assets, especially Cessna, Exora, Sattva Knowledge Court has gone down. What are our views on this? Bengaluru as a market is doing well, does this present us with an opportunity to maybe get higher rentals than when we leased them? That's my first question.
Parvez, do you want to finish all the questions and we can take it one by one, or should we just go one by one? Which way you prefer?
Sure. My second question is, I mean, we have four different assets under construction, Spectrum, Endeavour, and then two buildings in Sattva Global City. What are the timelines for their completion? The third one is on the cash tax rate. I mean, that kind of reduced QoQ and Q4. I just wanted to get some color on future cash tax rate. That's it. Thank you.
Okay. I will take the under construction question first, and then we will follow it along. The under construction, 9.2 million square foot, actually split in two parts. 1.2 million square foot is under construction, expected to be onboarded in the portfolio by Q2 of FY 2026/2027. It is in the final stages of the construction. We continue to be absolutely optimistic about the pre-leasing commitments and the pre-leasing status of these two assets. Out of the remaining 8 million square foot in the Sattva Global City, 1.4 million square foot is a phased plus BTS opportunity development which we are looking at and that is something which we will commence construction within this fiscal year. That is on the under construction. That being said, just sort of talking about the occupancy statistic, you are right.
Cessna and Exora, if you just look at Bengaluru, if I, for a moment, not consider GVTP and Exora, our occupancy is 91%. That essentially means that these are the two assets which we need to focus on. I will cover each of these assets one by one. GVTP is 81% occupied. The vacant space is from the SEZ area, and that is something which we are demarketing in addition to obviously looking at BTS opportunities in the phased development. Within Exora, we have had an exit of an occupier, which is to the tune of roughly about 450,000. That is something which again, presents a great mark-to-market opportunity because that was in the rents of about INR 70 to INR 75, whereas the market in Exora today is in the zip code of 95 to 100. So that is a great MTM opportunity Exora has presented.
Bengaluru's portfolio is a very stable portfolio save and except leaving opportunities which has presented itself in Exora and GVTP. GVTP is a repositioning example, and Exora is an example of how we want to sort of complete with the leasing on the ORR stretch, and that is something which we feel very confident about. Followed by Cessna. Cessna is 94% occupied, also presents a 34% mark-to-market opportunity, but has a long lease of Cisco, and Cisco occupies roughly about 2.7 million square foot out of the 4.2 million square foot campus. Cisco has very recently renewed their options of continuing with us. While the mark-to-market opportunity is there, but may not be quickly realizable in the case of Cessna.
Just to add to that also, Parvez, if you really look at it, there were two things. One is there is a client called Juniper. Globally, Juniper was acquired by HP in a very large deal. That is one of the reasons why they have left. I think there were a couple of gaming companies both in Mumbai as well as in Bengaluru, which also added about 2.5 lakh sq ft of exit during this quarter. But very state specific. Like Quaiser rightly said, there is a huge MTM opportunity which has come because of this. That is the reason you see a transitory dip, but that is the opportunity that we have seen. Coming to your question on the tax.
Tax overall, I think in the next few years, the tax range is expected to be about 10%-12% bracket on a percentage of EBITDA.
Sure. Thanks and all the best.
Thank you. Participants, if you wish to join the question queue, you may press star and one. Next question is from the line of Tanvi Suri, who is an individual investor. Please go ahead.
Yeah. Hi, thank you for taking my question. I just have a quick question around PM Modi's announcement recently regarding work from home. Any signs or any hints from any of clients of taking this up and working from home, and how would that impact occupancy? Anything of concern? Second question was around acquisitions, third party or sponsored, anything that is in the pipeline right now?
Hi, Tanvi. I will take these questions. My name is Quaiser. I will take the first question. The recent advisory from Honorable Prime Minister Modi around work from home. Number one, it is an advisory. Number two, even if it is in the larger geopolitical situation, even if it comes through, we see this more as a timing issue than a structural issue. Which means that if a work from home has to be reinstated and has to be sort of promulgated in few cities or in some parts of the country, it is probably very temporary, very transient phenomena, and may not really be structural, which can sort of impact the attractiveness of the office. That being said, my personal view is that the work from home may not have a huge widespread adoption, perhaps during the time as we may have seen in the pandemic era.
With regards to your—
Acquisitions, third party.
With regards to your question on acquisition, as I sort of detailed out earlier, we have organic levers and we have inorganic levers. On the inorganic levers, we are casting a net as wide as possible, but we want to be sensible on what it costs, and more importantly, how well does it fit to the portfolio. We have always been following the qualifiers of the fact that it needs to be in the right city, it has to be in the right sub-market, and more importantly, it has to be a fit to the portfolio in terms of the kind of occupier or the building quality which adds to our portfolio.
At the right price. Yeah. Okay. Thank you.
Thank you. Next question is from the line of Rishith Shah from Axis Capital. Please go ahead.
Yes. Thanks for the opportunity, sir. Just one question. Can you throw some light about the pre-leasing at the two upcoming assets? Thanks.
Out of the 1.2 million square foot, we are in active discussions for Spectrum for roughly about 250,000 square foot of pre-leasing in that asset. That being said, I also want to highlight that in these two assets, we are very mindful of not breaking down the leasing into smaller denominations because that limits our possibility of leasing this to a larger anchor tenant and hence at a pre-leasing stage, we want to ensure that we are able to attract larger anchor tenants rather than breaking it down into smaller leasing denominations.
Sure, sir. How are you looking at the rates for that?
The rates are more between both the assets. I would probably give you a wider zip code. They are in the range of INR 60-INR 75.
Fair enough, sir. Thanks. Thank you for the answer .
Thank you. Next question is from the line of Sumit Kumar from JM Financial. Please go ahead.
Hi. Good evening and thanks for the opportunity. My question would be on the Mumbai office market. Given that a lot of the expiries are sort of concentrated in Mumbai, what sort of RFPs or discussions do you have presently in the market, especially in the front office sort of segment?
I will take that question. Mumbai is really our core growth engine. The reason why I say that, particularly if we look at the next two years for FY 2026/2027 and FY 2027/2028, roughly about 3.2 million square foot is expiring. On an average 1.5 million square foot expiring every year. 77% of that mark-to-market potential, and that is roughly about 3/4 of the mark-to-market potential, actually comes from Mumbai. If I have to put it in value terms, roughly about INR 150 crores is the value of the future rent, and out of which roughly about INR 116 crores comes from Mumbai. So that is really the importance of Mumbai from an MTM perspective.
That is also one of the reasons why we have seen strong momentum in the Mumbai market where quarter- on- quarter, at least in this fiscal year, we are seeing Mumbai occupancy swell by 500 basis points in the whole market. Today we are closer to a 90% occupancy in Mumbai, and we are hopeful of achieving 92%-93% in the next couple of months.
Any indicative number that you can share on what is in the pipeline and any number of RFPs that are floating around for, especially front office corporate demand?
Mumbai is traditionally not a market where you have a lot of RFPs. Mumbai traditionally, again, has been a just-in-time kind of a market where occupiers need space and end up taking space in absolutely basis availability. There is not a whole lot of RFPs available in Mumbai if you compare it to what we see in Hyderabad and in Bengaluru. But that being said, there is roughly about a 1.5 million square foot of organized RFC between a pharmaceutical company and a banking company which is available in Mumbai.
Sure. Okay. That's helpful. Thank you and all the best.
Thank you.
Participants, if you wish to join the question queue, you may press star and one. Ladies and gentlemen, anyone who wishes to ask a question may press star and one on their touch phone telephone. Ladies and gentlemen, to join the question queue, you may press star and one. As there are no further questions from the participants, on behalf of Knowledge Realty Trust, that concludes this conference. Thank you all for joining us and you may now disconnect your lines.