HR.UN.TO WACC - Weighted Average Cost of Capital
The WACC of H&R Real Estate Investment Trust (HR.UN.TO) is 6.8%.
| Range | Selected | |
| Cost of equity | 8.8% - 11.5% | 10.15% |
| Tax rate | 9.6% - 19.7% | 14.65% |
| Cost of debt | 4.1% - 6.3% | 5.2% |
| WACC | 5.8% - 7.7% | 6.8% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 1.1 | 1.21 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.8% | 11.5% |
| Tax rate | 9.6% | 19.7% |
| Debt/Equity ratio | 1.42 | 1.42 |
| Cost of debt | 4.1% | 6.3% |
| After-tax WACC | 5.8% | 7.7% |
| Selected WACC | 6.8% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| HR.UN.TO | H&R Real Estate Investment Trust | 1.42 | 1.25 | 0.55 |
| BELP | Belpointe Reit Inc | 0.3 | 0.93 | 0.73 |
| CLNY | Colony Capital Inc | 1.92 | 1.98 | 0.73 |
| CUF.UN.TO | Cominar REIT | 1.65 | 1.37 | 0.55 |
| ESRT | Empire State Realty Trust Inc | 2.01 | 0.76 | 0.27 |
| FCD.UN.V | Firm Capital Property Trust | 1.1 | 1.25 | 0.63 |
| NXR.UN.TO | Nexus Real Estate Investment Trust | 2.88 | 1.51 | 0.42 |
| PSB | PS Business Parks Inc | 0.01 | 0.44 | 0.44 |
| STAR | iStar Inc | 2.54 | 1.28 | 0.39 |
| WRE | Washington Real Estate Investment Trust | 0.36 | 0.89 | 0.68 |
| Low | High | |
| Unlevered beta | 0.51 | 0.58 |
| Relevered beta | 1.15 | 1.31 |
| Adjusted relevered beta | 1.1 | 1.21 |
HR.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 HR.UN.TO:
cost_of_equity (10.15%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (1.1) + 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.