AHH WACC - Weighted Average Cost of Capital
The WACC of Armada Hoffler Properties Inc (AHH) is 8.9%.
| Range | Selected | |
| Cost of equity | 5.8% - 9.3% | 7.55% |
| Tax rate | 1.2% - 2.0% | 1.6% |
| Cost of debt | 4.0% - 15.6% | 9.8% |
| WACC | 4.6% - 13.2% | 8.9% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.43 | 0.79 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.8% | 9.3% |
| Tax rate | 1.2% | 2.0% |
| Debt/Equity ratio | 1.84 | 1.84 |
| Cost of debt | 4.0% | 15.6% |
| After-tax WACC | 4.6% | 13.2% |
| Selected WACC | 8.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| AHH | Armada Hoffler Properties Inc | 1.84 | 0.72 | 0.26 |
| ALEX | Alexander & Baldwin Inc (Hawaii) | 0.37 | 0.32 | 0.24 |
| AX.UN.TO | Artis Real Estate Investment Trust | 1.58 | 0.8 | 0.31 |
| CUF.UN.TO | Cominar REIT | 1.65 | 1.37 | 0.52 |
| FREVS | First Real Estate Investment Trust of New Jersey | 1.1 | -0.02 | -0.01 |
| GNL | Global Net Lease Inc | 2.48 | 0.12 | 0.03 |
| MRT.UN.TO | Morguard Real Estate Investment Trust | 3.21 | 0.22 | 0.05 |
| PINE | Alpine Income Property Trust Inc | 1.44 | -0.08 | -0.03 |
| SQFT | Presidio Property Trust Inc | 11.83 | 0.62 | 0.05 |
| STAR | iStar Inc | 2.54 | 1.28 | 0.36 |
| Low | High | |
| Unlevered beta | 0.05 | 0.24 |
| Relevered beta | 0.15 | 0.69 |
| Adjusted relevered beta | 0.43 | 0.79 |
AHH'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 AHH:
cost_of_equity (7.55%) = 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.