Knowledge Realty Trust Q2 NOI rises 15%, margin hits 90%

Knowledge Realty Trust increased net operating income (NOI) by 15% year on year to Rs 1,140.4 crore in Q2 FY27, ahead of 13% revenue growth, and lifted its NOI margin to 90%. The quarter also produced Rs 764 crore of distributions, up 11%, alongside 0.8 million square feet (msf) of gross leasing.

How did KRT's Q2 FY27 income performance change?

KRT's NOI rose 15% to Rs 1,140.4 crore in Q2 FY27 from Rs 988.1 crore in Q2 FY26, while revenue increased 13% to Rs 1,272.5 crore from Rs 1,123.8 crore. NOI therefore grew 2 percentage points faster than revenue. Management attributed the financial performance to high operating leverage and embedded growth realisation.

Earnings before interest, tax, depreciation and amortisation (EBITDA) increased 13% to Rs 1,094 crore from Rs 966 crore in the year-earlier quarter. Distributions grew at a slower 11% rate, rising to Rs 764 crore from Rs 690 crore. The presentation does not provide a line-by-line reconciliation of operating costs or other expenses behind the changes.

KRT's operating measures also improved over the year to September 2026. Committed occupancy by value increased to 94% in September 2026 from 92% in September 2025, while in-place rent rose 7% to Rs 101 per square foot from Rs 94 per square foot.

Why did KRT's NOI margin reach 90%?

KRT's NOI margin reached 90% in Q2 FY27, up 1 percentage point from 89% in Q1 FY27 and 2 percentage points from 88% in Q4 FY26. The margin expansion occurred as NOI rose 15%, faster than the 13% increase in revenue, though the presentation does not quantify individual cost drivers.

The quarter's leasing and rent metrics provide the disclosed operating context. KRT reported 0.8 msf of gross leasing and a 24% average leasing spread on 0.5 msf. This included a 25% re-leasing spread on 0.4 msf and an 18% spread on 0.1 msf of renewals.

Committed occupancy was 94% by value and 93% by area in Q2 FY27. The 1-percentage-point difference reflects the presentation's separate value and area measures. KRT's September 2026 in-place rent of Rs 101 per square foot was Rs 7 per square foot above the September 2025 level.

What leasing activity supported KRT's quarterly results?

KRT recorded 0.8 msf of gross leasing in Q2 FY27, comprising 0.5 msf of new leasing, 0.1 msf of renewals and 0.2 msf of pre-leasing. The pre-leasing was at Sattva Endeavour. New leasing and pre-leasing together accounted for 0.7 msf.

Tenant expansions represented 54% of new leasing and pre-leasing by gross rents, while new tenants represented 46%. KRT attributed quarterly leasing activity to front-office and global capability centre occupiers, without providing a rent breakdown by occupier category.

Bengaluru and Mumbai each contributed 0.3 msf of leasing in Q2 FY27, followed by Hyderabad at 0.2 msf and the rest of India at 0.04 msf. Bengaluru and Mumbai therefore supplied 0.6 msf of the reported 0.8 msf total, making them the two largest disclosed city contributors.

How did KRT's distribution change in Q2 FY27?

KRT distributed Rs 764 crore in Q2 FY27, 11% more than Rs 690 crore in Q2 FY26, while distribution per unit (DPU) increased to Rs 1.72 from Rs 1.56. The Rs 0.16 per-unit increase accompanied the 15% rise in NOI, although the presentation does not specify a distribution payout ratio.

Dividend accounted for 53% of the Q2 FY27 distribution, interest for 18%, repayment of debt for 28% and other income for 0.1%. KRT stated that 82% of the Rs 1.72 DPU was tax efficient, defining that share as tax-exempt dividend, tax-deferred repayment of debt and tax-exempt other income.

The distribution mix may vary in subsequent periods, according to KRT. Since listing through September 30, 2026, KRT reported total distributions of Rs 3,617.6 crore, net asset value of Rs 127 per unit versus Rs 109 per unit at listing, and unitholder growth to 46,000 from 16,000.

What does Mumbai occupancy indicate for KRT's future rental resets?

KRT's selected Mumbai assets reached 95% occupancy in September 2026, up from 89% in March 2026, an increase of 600 basis points. Prima Bay rose to 100% from 88%, One Unity Center reached 95% from 84%, One BKC rose to 96% from 87%, and One International Center reached 96% from 89%.

KRT reported a 28% spread on 0.6 msf re-leased or renewed in Mumbai during H1 FY27. That exceeded the 24% average spread reported on 0.5 msf across the portfolio in Q2 FY27, but the figures cover different periods and leased areas. KRT linked the Mumbai occupancy ramp-up and mark-to-market (MTM) realisation to front-office demand.

KRT also disclosed that 34% of rentals are due to expire through FY29, with an average future MTM of 31% on those expiries. This identifies potential rental resets within the disclosed period, but the presentation does not state the timing of individual lease expiries or forecast how much of that MTM potential will convert into revenue.

Conclusion

KRT's Q2 FY27 results show NOI growing faster than revenue, with a 15% increase to Rs 1,140.4 crore and a 90% NOI margin. The outcome coincided with 94% committed occupancy by value, a 7% increase in in-place rent to Rs 101 per square foot, and 0.8 msf of quarterly gross leasing.

The next disclosed item to watch is the 34% of rentals due to expire through FY29 and KRT's stated 31% average future MTM on those leases. Subsequent updates can also show whether Mumbai occupancy, which reached 95% in September 2026, and the 82% tax-efficient share of Q2 FY27 DPU are maintained.