BHR WACC - Weighted Average Cost of Capital
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 |
BHR'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 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.