ERE.UN.TO WACC - Weighted Average Cost of Capital

The WACC of European Residential REIT (ERE.UN.TO) is 12.9%.

The Cost of Equity of European Residential REIT (ERE.UN.TO) is 9.35%.

The Cost of Debt of European Residential REIT (ERE.UN.TO) is 20.00%.

	Range	Selected
Cost of equity	7.20% - 11.50%	9.35%
Tax rate	28.60% - 33.80%	31.20%
Cost of debt	16.80% - 23.20%	20.00%
WACC	11.2% - 14.7%	12.9%

WACC

ERE.UN.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.79	1.2

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.20%	11.50%

Tax rate	28.60%	33.80%
Debt/Equity ratio	5.1	5.1
Cost of debt	16.80%	23.20%

After-tax WACC	11.2%	14.7%


Selected WACC	12.9%

ERE.UN.TO'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 ERE.UN.TO:

cost_of_equity (9.35%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.79) + 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.