The Jhunjhunwala family is set to pocket Rs 13.65 crore gains in FY27 from their Rs 195 crore anchor investment in the Knowledge Realty Trust REIT IPO, riding on a projected 7% payout yield that comfortably outpaces the current 6.25% fixed deposit rates offered by banks such as SBI, underscoring the growing allure of REITs as an income-generating alternative under a falling interest rate regime.
On August 4, the anchor book of Knowledge Realty Trust REIT saw Rakesh Jhunjhunwala’s family take up 1.95 crore units at Rs 100 each, amounting to a Rs 195 crore investment spread equally across three discretionary trusts named after his children, Nishtha, Aryaman, and Aryavir Jhunjhunwala.
At the upper band of Rs 100 per unit, and with Knowledge Realty Trust projecting a FY27 payout yield of 7%, this would translate to an annual distribution of Rs 13.65 crore to the Jhunjhunwala family in that fiscal year alone, through a combination of dividends, loan interest, and principal repayments. That’s significantly higher than the 6.25% interest offered by a 1-2 year SBI fixed deposit as of July 15, 2025.
Investor appetite strong
Investor interest has followed suit. The REIT IPO, which opened on August 5 and closes Thursday, was subscribed 6.91 times as of 1:40 PM on August 7, which is the final day of bidding, receiving bids for over 143.92 crore units against the 20.8 crore on offer, per BSE data. The price band has been fixed between Rs 95 and Rs 100, with a minimum bid lot of 150 units.
The REIT raised Rs 1,620 crore from 63 anchor investors earlier this week, following a Rs 1,200 crore round from strategic investors. Total fundraising—including anchor, strategic, and IPO—is expected to hit Rs 6,200 crore, with proceeds directed toward debt repayment of Rs 4,640 crore and general corporate purposes.
What the REIT holds
Sponsored by Sattva Developers and Blackstone, Knowledge Realty Trust owns and manages India’s largest office REIT portfolio. As of March 31, 2025, the portfolio comprised 29 Grade A commercial assets totaling 46.3 million square feet (msf), with 37.1 msf completed and 91% occupancy across Mumbai, Bengaluru, Hyderabad, Chennai, Gurugram, and GIFT City.
With a Gross Asset Value (GAV) of Rs 61,998.9 crore and FY25 revenue from operations of Rs 39,301.01 crore, the REIT represents a large-scale bet on India’s booming commercial real estate segment. The trust currently holds Rs 19,815 crore in debt, which is expected to reduce materially post IPO.
Higher yield than FDs, with tax efficiency
Based on a projected Net Distributable Cash Flow (NDCF) of Rs 2,750 crore for FY26 and 443.44 crore outstanding units, FY26 distribution per unit (DPU) is pegged at Rs 6.20, implying yield of 6.2%. For FY27, the DPU is expected to rise to Rs 7 per unit, equating to a 7% yield on the upper price band of Rs 100 per unit.
For high net-worth investors like the Jhunjhunwala family, the post-tax yield from the REIT investment is expected to remain attractive, particularly when compared with fixed income instruments, which offer lower returns and fewer tax advantages.
Falling rates regime
The Reserve Bank of India reduced the repo rates by 100 basis points in successive MPC meetings till June this year from 6.5% to 5.5%.
In its latest policy review on Wednesday, the RBI's Monetary Policy Committee (MPC), chaired by Governor Sanjay Malhotra, unanimously decided to keep the repo rate unchanged at 5.5%.
This pause follows three consecutive rate cuts since February, totaling 100 basis points, and comes just ahead of the festive season, a period when credit demand typically rises. The committee also retained its 'neutral' stance.
As a result, the Standing Deposit Facility (SDF) rate remains at 5.25% and the marginal standing facility (MSF) and bank rate stay at 5.75%. Repo rate is the key rate at which the central bank lends money to commercial banks.
Why REITs are gaining ground
Real Estate Investment Trusts (REITs), regulated by Sebi, allow retail and institutional investors to access professionally managed, income-generating real estate assets without owning physical property. They distribute at least 90% of their net income, typically on a quarterly basis in India, and are taxed in a more efficient manner than traditional fixed-income options.
Listed REITs in India, Embassy, Mindspace, Brookfield, and Nexus Select, collectively distributed Rs 4,259 crore in the first nine months of FY25, a 15% rise from a year earlier. The listing of Knowledge Realty Trust now marks the country’s fifth publicly traded REIT.
A debt-like instrument with equity-like upside
REITs function as a hybrid between debt and equity. While the returns aren’t guaranteed, they are regular and relatively stable, making them attractive for long-term investors seeking predictability with some room for capital appreciation. REITs also tend to perform well in declining interest rate cycles, making the current macroeconomic environment favorable.
In addition to quarterly income, REIT investors can benefit from capital appreciation, typically 3-5% annually, thanks to rising asset values. Gains from sale of units held over a year are taxed as long-term capital gains, currently at 10% without indexation.
With the Jhunjhunwala family locking in a 7% payout stream from Knowledge Realty Trust REIT in FY27, their investment offers a compelling case for high-yield-seeking investors looking to move beyond traditional fixed deposits. As the REIT market matures in India, the lines between fixed income and real estate continue to blur, offering new avenues for smart capital allocation.
Also read | NSDL shares jump over 13% in 2 days after market debut. Time to lock in gains or hold on?
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
On August 4, the anchor book of Knowledge Realty Trust REIT saw Rakesh Jhunjhunwala’s family take up 1.95 crore units at Rs 100 each, amounting to a Rs 195 crore investment spread equally across three discretionary trusts named after his children, Nishtha, Aryaman, and Aryavir Jhunjhunwala.
At the upper band of Rs 100 per unit, and with Knowledge Realty Trust projecting a FY27 payout yield of 7%, this would translate to an annual distribution of Rs 13.65 crore to the Jhunjhunwala family in that fiscal year alone, through a combination of dividends, loan interest, and principal repayments. That’s significantly higher than the 6.25% interest offered by a 1-2 year SBI fixed deposit as of July 15, 2025.
Investor appetite strong
Investor interest has followed suit. The REIT IPO, which opened on August 5 and closes Thursday, was subscribed 6.91 times as of 1:40 PM on August 7, which is the final day of bidding, receiving bids for over 143.92 crore units against the 20.8 crore on offer, per BSE data. The price band has been fixed between Rs 95 and Rs 100, with a minimum bid lot of 150 units.
The REIT raised Rs 1,620 crore from 63 anchor investors earlier this week, following a Rs 1,200 crore round from strategic investors. Total fundraising—including anchor, strategic, and IPO—is expected to hit Rs 6,200 crore, with proceeds directed toward debt repayment of Rs 4,640 crore and general corporate purposes.
What the REIT holds
Sponsored by Sattva Developers and Blackstone, Knowledge Realty Trust owns and manages India’s largest office REIT portfolio. As of March 31, 2025, the portfolio comprised 29 Grade A commercial assets totaling 46.3 million square feet (msf), with 37.1 msf completed and 91% occupancy across Mumbai, Bengaluru, Hyderabad, Chennai, Gurugram, and GIFT City.
With a Gross Asset Value (GAV) of Rs 61,998.9 crore and FY25 revenue from operations of Rs 39,301.01 crore, the REIT represents a large-scale bet on India’s booming commercial real estate segment. The trust currently holds Rs 19,815 crore in debt, which is expected to reduce materially post IPO.
Higher yield than FDs, with tax efficiency
Based on a projected Net Distributable Cash Flow (NDCF) of Rs 2,750 crore for FY26 and 443.44 crore outstanding units, FY26 distribution per unit (DPU) is pegged at Rs 6.20, implying yield of 6.2%. For FY27, the DPU is expected to rise to Rs 7 per unit, equating to a 7% yield on the upper price band of Rs 100 per unit.
For high net-worth investors like the Jhunjhunwala family, the post-tax yield from the REIT investment is expected to remain attractive, particularly when compared with fixed income instruments, which offer lower returns and fewer tax advantages.
Falling rates regime
The Reserve Bank of India reduced the repo rates by 100 basis points in successive MPC meetings till June this year from 6.5% to 5.5%.
In its latest policy review on Wednesday, the RBI's Monetary Policy Committee (MPC), chaired by Governor Sanjay Malhotra, unanimously decided to keep the repo rate unchanged at 5.5%.
This pause follows three consecutive rate cuts since February, totaling 100 basis points, and comes just ahead of the festive season, a period when credit demand typically rises. The committee also retained its 'neutral' stance.
As a result, the Standing Deposit Facility (SDF) rate remains at 5.25% and the marginal standing facility (MSF) and bank rate stay at 5.75%. Repo rate is the key rate at which the central bank lends money to commercial banks.
Why REITs are gaining ground
Real Estate Investment Trusts (REITs), regulated by Sebi, allow retail and institutional investors to access professionally managed, income-generating real estate assets without owning physical property. They distribute at least 90% of their net income, typically on a quarterly basis in India, and are taxed in a more efficient manner than traditional fixed-income options.
Listed REITs in India, Embassy, Mindspace, Brookfield, and Nexus Select, collectively distributed Rs 4,259 crore in the first nine months of FY25, a 15% rise from a year earlier. The listing of Knowledge Realty Trust now marks the country’s fifth publicly traded REIT.
A debt-like instrument with equity-like upside
REITs function as a hybrid between debt and equity. While the returns aren’t guaranteed, they are regular and relatively stable, making them attractive for long-term investors seeking predictability with some room for capital appreciation. REITs also tend to perform well in declining interest rate cycles, making the current macroeconomic environment favorable.
In addition to quarterly income, REIT investors can benefit from capital appreciation, typically 3-5% annually, thanks to rising asset values. Gains from sale of units held over a year are taxed as long-term capital gains, currently at 10% without indexation.
With the Jhunjhunwala family locking in a 7% payout stream from Knowledge Realty Trust REIT in FY27, their investment offers a compelling case for high-yield-seeking investors looking to move beyond traditional fixed deposits. As the REIT market matures in India, the lines between fixed income and real estate continue to blur, offering new avenues for smart capital allocation.
Also read | NSDL shares jump over 13% in 2 days after market debut. Time to lock in gains or hold on?
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
You may also like
UAE President Sheikh Mohamed bin Zayed meets President Putin during official visit to Russia
EastEnders fans 'figure out' Ben Mitchell twist as pictures confirm return
Carlos Baleba to Man Utd: Brighton set valuation as player makes feelings clear
Pregnant mum went from McDonald's drive thru to fighting for her life in hospital
Destination X viewers left frustrated as contestants miss 'obvious' clue
