HT WACC - Weighted Average Cost of Capital

The WACC of Hersha Hospitality Trust (HT) is 9.1%.

The Cost of Equity of Hersha Hospitality Trust (HT) is 10.85%.

The Cost of Debt of Hersha Hospitality Trust (HT) is 8.20%.

	Range	Selected
Cost of equity	9.60% - 12.10%	10.85%
Tax rate	2.40% - 3.10%	2.75%
Cost of debt	4.00% - 12.40%	8.20%
WACC	6.1% - 12.0%	9.1%

WACC

HT WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	1.24	1.28

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.60%	12.10%

Tax rate	2.40%	3.10%
Debt/Equity ratio	1.56	1.56
Cost of debt	4.00%	12.40%

After-tax WACC	6.1%	12.0%


Selected WACC	9.1%

HT'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 HT:

cost_of_equity (10.85%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.24) + 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.