8977.T WACC - Weighted Average Cost of Capital
The WACC of Hankyu Hanshin REIT Inc (8977.T) is 5.0%.
| Range | Selected | |
| Cost of equity | 4.7% - 6.5% | 5.6% |
| 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 | 0.54 | 0.58 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 4.7% | 6.5% |
| Tax rate | 0.1% | 0.1% |
| Debt/Equity ratio | 0.85 | 0.85 |
| 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 |
| 8977.T | Hankyu Hanshin REIT Inc | 0.85 | 0.42 | 0.23 |
| 3279.T | Activia Properties Inc | 0.96 | 0.31 | 0.16 |
| 3309.T | Sekisui House Reit Inc | 0.77 | 0.28 | 0.16 |
| 3451.T | Tosei REIT Investment Corp | 0.89 | 0.28 | 0.15 |
| 3453.T | Kenedix Retail Reit Corp | 0.77 | 0.49 | 0.28 |
| 3459.T | Samty Residential Investment Corp | 1.18 | 0.32 | 0.15 |
| 3468.T | Star Asia Investment Corp | 0.82 | 0.32 | 0.17 |
| 3492.T | Takara Leben Real Estate Investment Corp | 0.98 | 0.4 | 0.2 |
| 8960.T | United Urban Investment Corp | 0.7 | 0.41 | 0.24 |
| 8966.T | Heiwa Real Estate REIT Inc | 0.74 | 0.35 | 0.2 |
| Low | High | |
| Unlevered beta | 0.17 | 0.2 |
| Relevered beta | 0.31 | 0.37 |
| Adjusted relevered beta | 0.54 | 0.58 |
8977.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 8977.T:
cost_of_equity (5.60%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (0.54) + 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.