8951.T WACC - Weighted Average Cost of Capital
The WACC of Nippon Building Fund Inc (8951.T) is 5.3%.
| Range | Selected | |
| Cost of equity | 5.2% - 6.7% | 5.95% |
| Tax rate | 0.0% - 0.0% | 0% |
| Cost of debt | 4.0% - 4.5% | 4.25% |
| WACC | 4.8% - 5.9% | 5.3% |
| Category | Low | High |
| Long-term bond rate | 1.4% | 1.9% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 0.45 | 0.46 |
| Additional risk adjustments | 1.0% | 1.5% |
| Cost of equity | 5.2% | 6.7% |
| Tax rate | 0.0% | 0.0% |
| Debt/Equity ratio | 0.53 | 0.53 |
| Cost of debt | 4.0% | 4.5% |
| After-tax WACC | 4.8% | 5.9% |
| Selected WACC | 5.3% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 8951.T | Nippon Building Fund Inc | 0.53 | 0.07 | 0.04 |
| 3234.T | Mori Hills Reit Investment Corp | 0.76 | 0.32 | 0.18 |
| 3298.T | Invesco Office J-Reit Inc | 0.63 | 0.76 | 0.47 |
| 8952.T | Japan Real Estate Investment Corp | 0.56 | 0.22 | 0.14 |
| 8954.T | Orix JREIT Inc | 0.61 | 0.2 | 0.12 |
| 8955.T | Japan Prime Realty Investment Corp | 0.64 | 0.15 | 0.09 |
| 8958.T | Global One Real Estate Investment Corp | 0.73 | 0.21 | 0.12 |
| 8961.T | Mori Trust Sogo Reit Inc | 0.96 | 0.33 | 0.17 |
| 8975.T | Ichigo Office REIT Investment Corp | 0.93 | 0.23 | 0.12 |
| 8987.T | Japan Excellent Inc | 0.75 | 0.2 | 0.12 |
| Low | High | |
| Unlevered beta | 0.12 | 0.13 |
| Relevered beta | 0.18 | 0.19 |
| Adjusted relevered beta | 0.45 | 0.46 |
8951.T's CAPM model and how its cost of Equity is calculated
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 8951.T:
cost_of_equity (5.95%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (0.45) + risk_adjustments (1.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.