BRG WACC - Weighted Average Cost of Capital
The WACC of Bluerock Residential Growth REIT Inc (BRG) is 6.1%.
| Range | Selected | |
| Cost of equity | 6.9% - 9.6% | 8.25% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 4.0% - 9.1% | 6.55% |
| WACC | 4.4% - 7.8% | 6.1% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.66 | 0.85 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.9% | 9.6% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 1.68 | 1.68 |
| Cost of debt | 4.0% | 9.1% |
| After-tax WACC | 4.4% | 7.8% |
| Selected WACC | 6.1% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| BRG | Bluerock Residential Growth REIT Inc | 1.68 | 0.83 | 0.37 |
| AIV | Apartment Investment and Management Co | 0.96 | 0.63 | 0.37 |
| BRT | BRT Apartments Corp | 1.58 | 0.82 | 0.38 |
| CLPR | Clipper Realty Inc | 20.26 | 0.31 | 0.02 |
| ERE.UN.TO | European Residential REIT | 2.31 | 1.42 | 0.53 |
| FCA.UN.V | Firm Capital Apartment Real Estate Investment Trust | 1.25 | 0.14 | 0.07 |
| MRG.UN.TO | Morguard North American Residential Real Estate Investment Trust | 2.73 | 0.92 | 0.31 |
| MRTI | Maxus Realty Trust Inc | 2.84 | 0.3 | 0.1 |
| NXRT | NexPoint Residential Trust Inc | 1.7 | 0.76 | 0.34 |
| UMH | UMH Properties Inc | 0.43 | 0.08 | 0.06 |
| Low | High | |
| Unlevered beta | 0.22 | 0.35 |
| Relevered beta | 0.49 | 0.78 |
| Adjusted relevered beta | 0.66 | 0.85 |
BRG'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 BRG:
cost_of_equity (8.25%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.66) + 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.