DLR WACC - Weighted Average Cost of Capital
The WACC of Digital Realty Trust Inc (DLR) is 6.3%.
| Range | Selected | |
| Cost of equity | 5.5% - 7.7% | 6.6% |
| Tax rate | 7.5% - 8.0% | 7.75% |
| Cost of debt | 4.0% - 7.0% | 5.5% |
| WACC | 5.1% - 7.4% | 6.3% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.36 | 0.51 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.5% | 7.7% |
| Tax rate | 7.5% | 8.0% |
| Debt/Equity ratio | 0.3 | 0.3 |
| Cost of debt | 4.0% | 7.0% |
| After-tax WACC | 5.1% | 7.4% |
| Selected WACC | 6.3% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| DLR | Digital Realty Trust Inc | 0.3 | 0.73 | 0.57 |
| AMT | American Tower Corp | 0.35 | -0.16 | -0.12 |
| CCI | Crown Castle International Corp | 0.53 | -0.05 | -0.03 |
| CORR | CorEnergy Infrastructure Trust Inc | 62.69 | 1.54 | 0.03 |
| EXR | Extra Space Storage Inc | 0.4 | 0.53 | 0.39 |
| IRM | Iron Mountain Inc | 0.48 | 1.08 | 0.75 |
| PSA | Public Storage | 0.18 | 0.36 | 0.31 |
| SBAC | SBA Communications Corp | 0.53 | 0.05 | 0.03 |
| UNIT | Uniti Group Inc | 5.23 | 0.2 | 0.03 |
| VICI | VICI Properties Inc | 0.52 | 0.23 | 0.15 |
| Low | High | |
| Unlevered beta | 0.03 | 0.21 |
| Relevered beta | 0.04 | 0.27 |
| Adjusted relevered beta | 0.36 | 0.51 |
DLR'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 DLR:
cost_of_equity (6.60%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.36) + 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.