The WACC of Escon Japan Reit Investment Corp (2971.T) is 5.0%.
Range | Selected | |
Cost of equity | 4.7% - 6.4% | 5.55% |
Tax rate | 0.1% - 0.1% | 0.1% |
Cost of debt | 4.0% - 4.5% | 4.25% |
WACC | 4.4% - 5.6% | 5.0% |
Category | Low | High |
Long-term bond rate | 1.4% | 1.9% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.55 | 0.56 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 4.7% | 6.4% |
Tax rate | 0.1% | 0.1% |
Debt/Equity ratio | 0.72 | 0.72 |
Cost of debt | 4.0% | 4.5% |
After-tax WACC | 4.4% | 5.6% |
Selected WACC | 5.0% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
2971.T | Escon Japan Reit Investment Corp | 0.72 | 0.38 | 0.22 |
3296.T | Nippon REIT Investment Corp | 0.82 | 0.29 | 0.16 |
3459.T | Samty Residential Investment Corp | 1.1 | 0.34 | 0.16 |
3468.T | Star Asia Investment Corp | 0.77 | 0.34 | 0.19 |
3470.T | Marimo Regional Revitalization REIT Inc | 1.09 | 0.39 | 0.19 |
3488.T | Xymax Reit Investment Corp | 0.69 | 0.34 | 0.2 |
3492.T | Takara Leben Real Estate Investment Corp | 0.92 | 0.4 | 0.21 |
8956.T | Premier Investment Corp | 0.78 | 0.26 | 0.15 |
8957.T | Tokyu REIT Inc | 0.57 | 0.43 | 0.27 |
8966.T | Heiwa Real Estate REIT Inc | 0.65 | 0.36 | 0.22 |
Low | High | |
Unlevered beta | 0.19 | 0.2 |
Relevered beta | 0.33 | 0.34 |
Adjusted relevered beta | 0.55 | 0.56 |
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for 2971.T:
cost_of_equity (5.55%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (0.55) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.