The WACC of Kite Realty Group Trust (KRG) is 7.2%.
Range | Selected | |
Cost of equity | 6.3% - 8.9% | 7.6% |
Tax rate | 0.8% - 1.6% | 1.2% |
Cost of debt | 4.3% - 9.1% | 6.7% |
WACC | 5.5% - 8.9% | 7.2% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 4.6% | 5.6% |
Adjusted beta | 0.53 | 0.71 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 6.3% | 8.9% |
Tax rate | 0.8% | 1.6% |
Debt/Equity ratio | 0.64 | 0.64 |
Cost of debt | 4.3% | 9.1% |
After-tax WACC | 5.5% | 8.9% |
Selected WACC | 7.2% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
KRG | Kite Realty Group Trust | 0.64 | 0.67 | 0.41 |
AKR | Acadia Realty Trust | 0.64 | 0.75 | 0.46 |
ALX | Alexander's Inc | 0.83 | 0.58 | 0.32 |
BFS | Saul Centers Inc | 1.79 | 0.47 | 0.17 |
CRR.UN.TO | Crombie Real Estate Investment Trust | 1.47 | 0.97 | 0.4 |
GTY | Getty Realty Corp | 0.58 | 0.09 | 0.05 |
ROIC | Retail Opportunity Investments Corp | 0.62 | 0.3 | 0.18 |
RPT | RPT Realty | 5.94 | 0.58 | 0.08 |
UE | Urban Edge Properties | 0.68 | 0.69 | 0.41 |
WPG | Washington Prime Group Inc | 153.93 | 1.55 | 0.01 |
Low | High | |
Unlevered beta | 0.18 | 0.35 |
Relevered beta | 0.3 | 0.57 |
Adjusted relevered beta | 0.53 | 0.71 |
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 KRG:
cost_of_equity (7.60%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.53) + 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.