The WACC of Firm Capital Apartment Real Estate Investment Trust (FCA.UN.V) is 5.1%.
Range | Selected | |
Cost of equity | 6.0% - 7.6% | 6.8% |
Tax rate | 26.2% - 27.0% | 26.6% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 4.7% - 5.4% | 5.1% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 5.1% | 6.1% |
Adjusted beta | 0.42 | 0.45 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 6.0% | 7.6% |
Tax rate | 26.2% | 27.0% |
Debt/Equity ratio | 1.25 | 1.25 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 4.7% | 5.4% |
Selected WACC | 5.1% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
FCA.UN.V | Firm Capital Apartment Real Estate Investment Trust | 1.25 | 0.14 | 0.07 |
BRG | Bluerock Residential Growth REIT Inc | 1.68 | 0.83 | 0.37 |
BRT | BRT Apartments Corp | 1.58 | 0.82 | 0.38 |
CLPR | Clipper Realty Inc | 20.26 | 0.31 | 0.02 |
ELS | Equity LifeStyle Properties Inc | 0.27 | 0.01 | 0.01 |
ERE.UN.TO | European Residential REIT | 2.31 | 1.42 | 0.53 |
MRTI | Maxus Realty Trust Inc | 2.84 | 0.3 | 0.1 |
SELF | Global Self Storage Inc | 0.27 | 0.06 | 0.05 |
SUI | Sun Communities Inc | 0.45 | 0.13 | 0.1 |
UMH | UMH Properties Inc | 0.43 | 0.08 | 0.06 |
Low | High | |
Unlevered beta | 0.07 | 0.1 |
Relevered beta | 0.13 | 0.18 |
Adjusted relevered beta | 0.42 | 0.45 |
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 FCA.UN.V:
cost_of_equity (6.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.60%) * adjusted_beta (0.42) + 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.