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    • ERE.UN.TO
    European Residential REIT
    Price:  
    2.58 
    CAD
    Volume:  
    65,174
    Canada | Equity Real Estate Investment Trusts (REITs)
    ValuationOverviewFinancialsForecastCompareHistorical PriceDividendsTransactionsPeople
    Valuation Summary
    Discounted Cash Flow
    Trading Multiples
    Peter Lynch Fair Value
    Earnings Power Value
    WACC
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    ERE.UN.TO WACC - Weighted Average Cost of Capital

    The WACC of European Residential REIT (ERE.UN.TO) is 9.4%.

    The Cost of Equity of European Residential REIT (ERE.UN.TO) is 6.95%.
    The Cost of Debt of European Residential REIT (ERE.UN.TO) is 15.3%.

    RangeSelected
    Cost of equity5.7% - 8.2%6.95%
    Tax rate24.4% - 33.8%29.1%
    Cost of debt7.4% - 23.2%15.3%
    WACC5.6% - 13.2%9.4%
    WACC

    ERE.UN.TO WACC calculation

    CategoryLowHigh
    Long-term bond rate3.2%3.7%
    Equity market risk premium5.1%6.1%
    Adjusted beta0.490.66
    Additional risk adjustments0.0%0.5%
    Cost of equity5.7%8.2%
    Tax rate24.4%33.8%
    Debt/Equity ratio
    		2.312.31
    Cost of debt7.4%23.2%
    After-tax WACC5.6%13.2%
    Selected WACC9.4%

    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 (6.95%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * 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.