CSR WACC - Weighted Average Cost of Capital
The WACC of Investors Real Estate Trust (CSR) is 8.2%.
| Range | Selected | |
| Cost of equity | 5.8% - 8.7% | 7.25% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 4.0% - 20.9% | 12.45% |
| WACC | 4.4% - 11.9% | 8.2% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.43 | 0.69 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.8% | 8.7% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 0.95 | 0.95 |
| Cost of debt | 4.0% | 20.9% |
| After-tax WACC | 4.4% | 11.9% |
| Selected WACC | 8.2% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| CSR | Investors Real Estate Trust | 0.95 | 0.61 | 0.36 |
| AIV | Apartment Investment and Management Co | 0.97 | 0.62 | 0.36 |
| CLPR | Clipper Realty Inc | 20.97 | 0.34 | 0.02 |
| ELS | Equity LifeStyle Properties Inc | 0.27 | 0.03 | 0.02 |
| ERE.UN.TO | European Residential REIT | 2.41 | 1.42 | 0.51 |
| FCA.UN.V | Firm Capital Apartment Real Estate Investment Trust | 1.24 | 0.14 | 0.07 |
| MRG.UN.TO | Morguard North American Residential Real Estate Investment Trust | 2.76 | 0.92 | 0.3 |
| NXRT | NexPoint Residential Trust Inc | 1.74 | 0.78 | 0.34 |
| SUI | Sun Communities Inc | 0.46 | 0.13 | 0.09 |
| UMH | UMH Properties Inc | 0.44 | 0.08 | 0.06 |
| Low | High | |
| Unlevered beta | 0.09 | 0.32 |
| Relevered beta | 0.15 | 0.54 |
| Adjusted relevered beta | 0.43 | 0.69 |
CSR'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 CSR:
cost_of_equity (7.25%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.43) + 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.