LADR WACC - Weighted Average Cost of Capital
The WACC of Ladder Capital Corp (LADR) is 10.6%.
| Range | Selected | |
| Cost of equity | 5.7% - 7.4% | 6.55% |
| Tax rate | 3.0% - 3.5% | 3.25% |
| Cost of debt | 4.8% - 20.9% | 12.85% |
| WACC | 4.9% - 16.2% | 10.6% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.39 | 0.45 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.7% | 7.4% |
| Tax rate | 3.0% | 3.5% |
| Debt/Equity ratio | 2.25 | 2.25 |
| Cost of debt | 4.8% | 20.9% |
| After-tax WACC | 4.9% | 16.2% |
| Selected WACC | 10.6% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| LADR | Ladder Capital Corp | 2.25 | 0.36 | 0.11 |
| ARI | Apollo Commercial Real Estate Finance Inc | 4.69 | 0.6 | 0.11 |
| CHMI | Cherry Hill Mortgage Investment Corp | 12.41 | 0.06 | 0 |
| ECRO | ECC Capital Corp | 302.06 | -0.55 | 0 |
| IVR | Invesco Mortgage Capital Inc | 9.49 | 0.51 | 0.05 |
| JERT | JER Investors Trust Inc | 106974 | 0.82 | 0 |
| KREF | KKR Real Estate Finance Trust Inc | 8.02 | 0.53 | 0.06 |
| LOAN | Manhattan Bridge Capital Inc | 0.37 | -0.16 | -0.12 |
| MFA | MFA Financial Inc | 9.25 | 0.44 | 0.04 |
| RC | Ready Capital Corp | 10.08 | 0.89 | 0.08 |
| Low | High | |
| Unlevered beta | 0.03 | 0.05 |
| Relevered beta | 0.09 | 0.18 |
| Adjusted relevered beta | 0.39 | 0.45 |
LADR'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 LADR:
cost_of_equity (6.55%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.39) + 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.