CIO
City Office REIT Inc
Price:  
5.72 
USD
Volume:  
140,756
Canada | Equity Real Estate Investment Trusts (REITs)

CIO WACC - Weighted Average Cost of Capital

The WACC of City Office REIT Inc (CIO) is 8.6%.

The Cost of Equity of City Office REIT Inc (CIO) is 7.25%.
The Cost of Debt of City Office REIT Inc (CIO) is 12.5%.

RangeSelected
Cost of equity6.3% - 8.2%7.25%
Tax rate26.2% - 27.0%26.6%
Cost of debt4.1% - 20.9%12.5%
WACC3.9% - 13.4%8.6%
WACC

CIO WACC calculation

CategoryLowHigh
Long-term bond rate3.9%4.4%
Equity market risk premium4.6%5.6%
Adjusted beta0.530.6
Additional risk adjustments0.0%0.5%
Cost of equity6.3%8.2%
Tax rate26.2%27.0%
Debt/Equity ratio
2.872.87
Cost of debt4.1%20.9%
After-tax WACC3.9%13.4%
Selected WACC8.6%

CIO'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 CIO:

cost_of_equity (7.25%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.53) + 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.