The WACC of Firm Capital Property Trust (FCD.UN.TO) is 5.6%.
Range | Selected | |
Cost of equity | 6.4% - 9.7% | 8.05% |
Tax rate | 25.9% - 26.5% | 26.2% |
Cost of debt | 4.1% - 6.8% | 5.45% |
WACC | 4.4% - 6.9% | 5.6% |
Category | Low | High |
Long-term bond rate | 3.2% | 3.7% |
Equity market risk premium | 5.1% | 6.1% |
Adjusted beta | 0.64 | 0.9 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 6.4% | 9.7% |
Tax rate | 25.9% | 26.5% |
Debt/Equity ratio | 1.5 | 1.5 |
Cost of debt | 4.1% | 6.8% |
After-tax WACC | 4.4% | 6.9% |
Selected WACC | 5.6% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
FCD.UN.TO | Firm Capital Property Trust | 1.5 | 0.37 | 0.18 |
AX.UN.TO | Artis Real Estate Investment Trust | 1.58 | 0.8 | 0.37 |
BTB.UN.TO | BTB Real Estate Investment Trust | 2.35 | 1.14 | 0.42 |
CUF.UN.TO | Cominar REIT | 1.65 | 1.37 | 0.62 |
HR.UN.TO | H&R Real Estate Investment Trust | 1.39 | 1.25 | 0.62 |
MR.UN.TO | Melcor Real Estate Investment Trust | 5.56 | 0.62 | 0.12 |
MRT.UN.TO | Morguard Real Estate Investment Trust | 3.21 | 0.22 | 0.07 |
NET.UN.V | Canadian Net Real Estate Investment Trust | 1.51 | 0.35 | 0.17 |
PRV.UN.TO | PRO Real Estate Investment Trust | 1.55 | 1.03 | 0.48 |
Low | High | |
Unlevered beta | 0.22 | 0.41 |
Relevered beta | 0.46 | 0.85 |
Adjusted relevered beta | 0.64 | 0.9 |
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 FCD.UN.TO:
cost_of_equity (8.05%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.64) + 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.