SMU.UN seems to have a good portion of its industrial lease renewals coming soon. In fact, 25% in 2022, 40% in 2023, and 29% in 2024. In a very tight leasing market, where vacancy rate is <1%, such as GTA, GMA, these lease renewals could potentially bring in 20%, 33%, and 29% (corresponding to each of the three years) to the overall revenue without any major added operating expenses. Theoretically, do you foresee the current P/E at about $20 justified or understated on this growth potential?
SMU has shown solid revenue growth, improving margins, growing free cash flow, and improving debt and coverage ratios. The REIT services a 'cyclical' sector and with the recent popularity of cyclicals, SMU has also seen a jump in valuations. Given the track record, growth prospects, and peers, we think there is still room for growth expansion and we think the current multiple is justifed.
Provided yesterday by the team at 5iResearch. GLTA