The WACC of Braemar Hotels & Resorts Inc (BHR) is 14.4%.
Range | Selected | |
Cost of equity | 12.4% - 23.9% | 18.15% |
Tax rate | 4.1% - 6.3% | 5.2% |
Cost of debt | 5.7% - 23.9% | 14.8% |
WACC | 6.2% - 22.5% | 14.4% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 4.6% | 5.6% |
Adjusted beta | 1.84 | 3.4 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 12.4% | 23.9% |
Tax rate | 4.1% | 6.3% |
Debt/Equity ratio | 7.92 | 7.92 |
Cost of debt | 5.7% | 23.9% |
After-tax WACC | 6.2% | 22.5% |
Selected WACC | 14.4% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
BHR | Braemar Hotels & Resorts Inc | 7.92 | 1.3 | 0.15 |
CDOR | Condor Hospitality Trust Inc | 1.57 | 1.42 | 0.57 |
CLDT | Chatham Lodging Trust | 1.17 | 1.13 | 0.53 |
DRH | Diamondrock Hospitality Co | 0.71 | 0.9 | 0.54 |
HOT.UN.TO | American Hotel Income Properties REIT LP | 17.27 | 1.19 | 0.07 |
HT | Hersha Hospitality Trust | 1.56 | 1.37 | 0.55 |
IHT | InnSuites Hospitality Trust | 0.53 | 0.17 | 0.11 |
INN | Summit Hotel Properties Inc | 2.84 | 1.26 | 0.34 |
SOHO | Sotherly Hotels Inc | 10.67 | 0.45 | 0.04 |
XHR | Xenia Hotels & Resorts Inc | 1.11 | 1.28 | 0.62 |
Low | High | |
Unlevered beta | 0.26 | 0.53 |
Relevered beta | 2.25 | 4.58 |
Adjusted relevered beta | 1.84 | 3.4 |
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 BHR:
cost_of_equity (18.15%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.84) + 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.