KRT expects Image Tower acquisition in late 2027 as pipeline waits

Knowledge Realty Trust expects Image Tower to join its portfolio in the second half of calendar 2027, potentially in the third or fourth quarter, while its 1.4 million-square-foot Global City block is about three years from completion. KRT said construction has not started on the remaining 6 million square feet of development capacity.

When does KRT expect to acquire Image Tower?

KRT expects Image Tower to be acquired during the second half of calendar 2027, with management indicating the third or fourth quarter as the likely window. The proposed timing places the Hyderabad asset ahead of the 2028-29 completion schedule for the Global City block, although management did not disclose a signed transaction, purchase price, area or financing terms.

Management said Image Tower would add capacity in Hyderabad's high-tech city market. KRT reported Hyderabad occupancy of 99% and said proactive churn across 600,000 square feet had produced a 41% rental spread. The spread reflected seven or eight leases rather than one or two transactions, according to management, which said the result showed broad-based growth potential in the market.

Image Tower is one of several opportunities being considered, rather than the only potential acquisition. KRT said it was in conversations with sponsors and external market participants, including possible asset and landowner consolidations. Management said individual opportunities could not yet be named or timed beyond Image Tower because negotiations and valuations were still being assessed.

How long will KRT's development pipeline take?

KRT's development programme has three distinct timeframes: 1.2 million square feet at Sattva Endeavour and Sattva Spectrum is due to become operational in Q3 and Q4, the 1.4 million-square-foot Global City block is about three years from completion, and 6 million square feet remains unstarted. Management described the Global City block, also called GVTPL, as a 2028-29 schedule from the time of the call.

The 6 million square feet beyond Global City has not commenced construction, so management placed it beyond the 2028-29 timeframe. An analyst referred to 6.7 million square feet, but management separated the 1.4 million-square-foot Global City block from the balance 6 million square feet that has not yet started. That distinction makes the 6 million square feet longer-dated capacity, not current construction supply.

The disclosed sequence means the two Sattva projects are the immediate internal additions, followed potentially by Image Tower in late 2027 and then the Global City block. The difference between 1.2 million square feet nearing operations and 6 million square feet without construction activity is material to the timing of future portfolio growth.

What leasing has KRT secured for new development assets?

KRT has pre-leased 25% of Sattva Endeavour before its planned Q3 operational date, while Sattva Spectrum is due in Q4 and remains in discussions with multiple prospective tenants. Management said Endeavour should show further traction after its first lease, whereas Spectrum had discussions for a potential whole-building lease but no transaction to report at the time of the call.

The Global City block has no current leasing discussions because it has only just started and remains about three years from completion. That contrasts with Endeavour and Spectrum, where leasing activity started before operations. The different status means KRT has disclosed a signed pre-lease only for Endeavour, not for the 1.4 million-square-foot Global City project.

Existing Bangalore vacancy is also part of the leasing task. KRT cited about 0.8 million square feet of vacant space across Exora, Cessna and Softzone, along with a similar 0.8 million square feet at Global City. Management said it was in advanced discussions for large take-ups at the outer-ring-road assets and targeted Bangalore occupancy closer to 90%, from 86% at the time of the discussion.

KRT said Global City occupancy was 80%, while Mumbai occupancy was 95%. It also said 0.5 million square feet across Global City and Cessna was being demarcated as, or had completed demarcation from, special economic zone, or SEZ, status. Management linked the lower Global City occupancy to the overall Bangalore result but said the immediate focus was raising occupancy over the next couple of quarters.

How could acquisitions alter KRT's growth schedule?

KRT said acquisitions could supplement internal development before much of the 6 million-square-foot unstarted pipeline is built. Management expects Image Tower in the second half of calendar 2027 and said it was reviewing both sponsor-linked and third-party opportunities, but it did not provide a timetable or a specific asset name for any additional transaction.

Management said acquisition pricing would need to be appropriate and that it intended to remain disciplined on valuations in the context of rising rates. It also referred to available debt capacity, but gave no transaction-specific borrowing plan for Image Tower. The stated financing approach therefore supports the possibility of acquisitions without establishing committed funding for a particular deal.

The operating base gives context to that strategy. KRT reported committed occupancy of 93% by square footage and 94% by value, and management said it was looking for the square-footage measure to reach roughly 94% to 95% by March FY27 on a same-store basis. It cautioned that additions of Bangalore assets could reduce reported overall occupancy by about 1 percentage point.

Management also said 46% of revenue came from global capability centres, while another 30% came from front-office occupiers serving India-facing clients. These revenue shares do not determine the timing of Image Tower, but they describe the existing tenant base alongside a programme that combines leasing of current vacancy, near-term completions and potential acquisitions.

Conclusion

KRT's disclosed timetable puts Image Tower ahead of the main internal development queue, subject to an expected acquisition in the third or fourth quarter of calendar 2027. Sattva Endeavour and Sattva Spectrum are due first in Q3 and Q4, while the Global City block is about three years from completion and the remaining 6 million square feet has not begun construction.

The next disclosed milestones are further leasing at Endeavour, where 25% is already pre-leased, and progress at Spectrum, where management is speaking with multiple clients. Investors can also watch for an update on the potential financing transaction management said was in advanced stages, as well as confirmation of whether the expected Image Tower acquisition closes in the second half of 2027.