DHC
Diversified Healthcare Trust
Price:  
2.96 
USD
Volume:  
1,125,736.00
United States | Equity Real Estate Investment Trusts (REITs)
Valuation
Overview
Financials
Forecast
Compare
Historical Price
SolvencyDividends
Transactions
People

DHC WACC - Weighted Average Cost of Capital

The WACC of Diversified Healthcare Trust (DHC) is 6.6%.

The Cost of Equity of Diversified Healthcare Trust (DHC) is 7.90%.
The Cost of Debt of Diversified Healthcare Trust (DHC) is 6.40%.

Range Selected
Cost of equity 6.10% - 9.70% 7.90%
Tax rate 0.50% - 0.90% 0.70%
Cost of debt 5.80% - 7.00% 6.40%
WACC 5.8% - 7.4% 6.6%
WACC

DHC WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.49 0.85
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.10% 9.70%
Tax rate 0.50% 0.90%
Debt/Equity ratio 5.31 5.31
Cost of debt 5.80% 7.00%
After-tax WACC 5.8% 7.4%
Selected WACC 6.6%

DHC'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 DHC:

cost_of_equity (7.90%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.49) + 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.