BRT WACC - Weighted Average Cost of Capital
The WACC of BRT Apartments Corp (BRT) is 6.7%.
| Range | Selected | |
| Cost of equity | 6.8% - 9.5% | 8.15% |
| Tax rate | 1.2% - 1.4% | 1.3% |
| Cost of debt | 4.7% - 7.0% | 5.85% |
| WACC | 5.5% - 7.9% | 6.7% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.64 | 0.83 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.8% | 9.5% |
| Tax rate | 1.2% | 1.4% |
| Debt/Equity ratio | 1.58 | 1.58 |
| Cost of debt | 4.7% | 7.0% |
| After-tax WACC | 5.5% | 7.9% |
| Selected WACC | 6.7% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| BRT | BRT Apartments Corp | 1.58 | 0.82 | 0.32 |
| AIV | Apartment Investment and Management Co | 0.96 | 0.63 | 0.32 |
| BRG | Bluerock Residential Growth REIT Inc | 1.68 | 0.83 | 0.31 |
| CLPR | Clipper Realty Inc | 20.26 | 0.31 | 0.01 |
| ERE.UN.TO | European Residential REIT | 2.31 | 1.42 | 0.43 |
| FCA.UN.V | Firm Capital Apartment Real Estate Investment Trust | 1.25 | 0.14 | 0.06 |
| MRG.UN.TO | Morguard North American Residential Real Estate Investment Trust | 2.73 | 0.92 | 0.25 |
| MRTI | Maxus Realty Trust Inc | 2.84 | 0.3 | 0.08 |
| NXRT | NexPoint Residential Trust Inc | 1.7 | 0.76 | 0.28 |
| UMH | UMH Properties Inc | 0.43 | 0.08 | 0.06 |
| Low | High | |
| Unlevered beta | 0.18 | 0.29 |
| Relevered beta | 0.46 | 0.75 |
| Adjusted relevered beta | 0.64 | 0.83 |
BRT'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 BRT:
cost_of_equity (8.15%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.64) + 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.