ADC WACC - Weighted Average Cost of Capital
The WACC of Agree Realty Corp (ADC) is 7.0%.
| Range | Selected | |
| Cost of equity | 6.0% - 8.7% | 7.35% |
| Tax rate | 1.8% - 1.9% | 1.85% |
| Cost of debt | 4.4% - 7.5% | 5.95% |
| WACC | 5.6% - 8.3% | 7.0% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.47 | 0.68 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.0% | 8.7% |
| Tax rate | 1.8% | 1.9% |
| Debt/Equity ratio | 0.35 | 0.35 |
| Cost of debt | 4.4% | 7.5% |
| After-tax WACC | 5.6% | 8.3% |
| Selected WACC | 7.0% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| ADC | Agree Realty Corp | 0.35 | -0.05 | -0.04 |
| BFS | Saul Centers Inc | 1.81 | 0.49 | 0.18 |
| FCR.UN.TO | First Capital Real Estate Investment Trust | 1.06 | 1.06 | 0.52 |
| GTY | Getty Realty Corp | 0.6 | 0.09 | 0.06 |
| NNN | National Retail Properties Inc | 0.54 | 0.17 | 0.11 |
| RPT | RPT Realty | 5.83 | 0.59 | 0.09 |
| SITC | Site Centers Corp | 0.5 | 0.56 | 0.38 |
| SRC | Spirit Realty Capital Inc | 0.6 | 1.57 | 0.99 |
| SRU.UN.TO | SmartCentres Real Estate Investment Trust | 1.36 | 0.97 | 0.41 |
| WRI | Weingarten Realty Investors | 0.46 | 1.61 | 1.11 |
| Low | High | |
| Unlevered beta | 0.15 | 0.39 |
| Relevered beta | 0.21 | 0.52 |
| Adjusted relevered beta | 0.47 | 0.68 |
ADC'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 ADC:
cost_of_equity (7.35%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.47) + 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.