JBGS WACC - Weighted Average Cost of Capital

The WACC of JBG SMITH Properties (JBGS) is 11.8%.

The Cost of Equity of JBG SMITH Properties (JBGS) is 8.10%.

The Cost of Debt of JBG SMITH Properties (JBGS) is 13.95%.

	Range	Selected
Cost of equity	6.50% - 9.70%	8.10%
Tax rate	0.90% - 2.40%	1.65%
Cost of debt	4.00% - 23.90%	13.95%
WACC	4.8% - 18.8%	11.8%

WACC

JBGS WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	0.58	0.86

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.50%	9.70%

Tax rate	0.90%	2.40%
Debt/Equity ratio	2.02	2.02
Cost of debt	4.00%	23.90%

After-tax WACC	4.8%	18.8%


Selected WACC	11.8%

JBGS'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 JBGS:

cost_of_equity (8.10%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.58) + 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.