The second trigger is the growth pipeline. The company has an agreement with Embassy Group to give Embassy REIT the right of first offer on new assets. Of the 43-million sq. ft total new pipeline, 6.2 million sq. ft is operational and 3.1 million sq. ft is under construction. This, according to analysts at Axis Securities, offers long-term visibility.
While the company has received some proposals, at what valuations these will be acquired will be key. The management has indicated that a new property (such as Embassy TechVillage in Bengaluru) has to be yield-accretive for unit holders (current yield at 5.6 per cent).
What will be of help when the REIT looks at new assets is its low debt-to-equity ratio. Analysts at ICICI Securities say that the low leverage ratio of 0.2x net debt-to-equity ratio puts Embassy REIT in prime position to expand its asset portfolio through further acquisitions.
Finally, value-added services, such as hotels and solar power, which accounted for 26 per cent year-on-year growth in the first half of 2019-20, add to the margin and growth profile of the company. Investors can add the stock to their portfolios on dips.