LAND WACC - Weighted Average Cost of Capital
The WACC of Gladstone Land Corp (LAND) is 5.5%.
| Range | Selected | |
| Cost of equity | 5.7% - 7.6% | 6.65% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 4.0% - 9.1% | 6.55% |
| WACC | 4.0% - 7.0% | 5.5% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.4 | 0.48 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.7% | 7.6% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 1.64 | 1.64 |
| Cost of debt | 4.0% | 9.1% |
| After-tax WACC | 4.0% | 7.0% |
| Selected WACC | 5.5% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| LAND | Gladstone Land Corp | 1.64 | 0.38 | 0.17 |
| AMT | American Tower Corp | 0.36 | -0.21 | -0.17 |
| APR.UN.TO | Automotive Properties Real Estate Investment Trust | 0.93 | 0.24 | 0.14 |
| CCI | Crown Castle International Corp | 0.55 | -0.09 | -0.06 |
| CORR | CorEnergy Infrastructure Trust Inc | 62.69 | 1.54 | 0.03 |
| CTT | CatchMark Timber Trust Inc | 0.58 | 1.12 | 0.78 |
| FPI | Farmland Partners Inc | 0.39 | 0.42 | 0.33 |
| PW | Power REIT | 10.13 | 0.64 | 0.08 |
| SAFE | Safehold Inc | 3.99 | 0.23 | 0.06 |
| SBAC | SBA Communications Corp | 0.55 | 0 | 0 |
| Low | High | |
| Unlevered beta | 0.05 | 0.1 |
| Relevered beta | 0.1 | 0.22 |
| Adjusted relevered beta | 0.4 | 0.48 |
LAND'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 LAND:
cost_of_equity (6.65%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.4) + 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.