AAT
American Assets Trust Inc
Price:  
19.04 
USD
Volume:  
361,770.00
United States | Equity Real Estate Investment Trusts (REITs)
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AAT WACC - Weighted Average Cost of Capital

The WACC of American Assets Trust Inc (AAT) is 5.4%.

The Cost of Equity of American Assets Trust Inc (AAT) is 7.35%.
The Cost of Debt of American Assets Trust Inc (AAT) is 5.75%.

Range Selected
Cost of equity 5.80% - 8.90% 7.35%
Tax rate 26.20% - 27.00% 26.60%
Cost of debt 4.00% - 7.50% 5.75%
WACC 4.0% - 6.7% 5.4%
WACC

AAT WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.43 0.71
Additional risk adjustments 0.0% 0.5%
Cost of equity 5.80% 8.90%
Tax rate 26.20% 27.00%
Debt/Equity ratio 1.72 1.72
Cost of debt 4.00% 7.50%
After-tax WACC 4.0% 6.7%
Selected WACC 5.4%

AAT'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 AAT:

cost_of_equity (7.35%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.43) + 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.