ERE.UN.TO
European Residential REIT
Price:  
2.54 
CAD
Volume:  
33,300.00
Canada | Equity Real Estate Investment Trusts (REITs)
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ERE.UN.TO WACC - Weighted Average Cost of Capital

The WACC of European Residential REIT (ERE.UN.TO) is 9.8%.

The Cost of Equity of European Residential REIT (ERE.UN.TO) is 8.35%.
The Cost of Debt of European Residential REIT (ERE.UN.TO) is 15.30%.

Range Selected
Cost of equity 7.10% - 9.60% 8.35%
Tax rate 24.40% - 33.80% 29.10%
Cost of debt 7.40% - 23.20% 15.30%
WACC 6.1% - 13.6% 9.8%
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 0.78 0.89
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.10% 9.60%
Tax rate 24.40% 33.80%
Debt/Equity ratio 2.27 2.27
Cost of debt 7.40% 23.20%
After-tax WACC 6.1% 13.6%
Selected WACC 9.8%

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 (8.35%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.78) + 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.