NET.UN.V WACC - Weighted Average Cost of Capital

The WACC of Canadian Net Real Estate Investment Trust (NET.UN.V) is 7.9%.

The Cost of Equity of Canadian Net Real Estate Investment Trust (NET.UN.V) is 9.70%.

The Cost of Debt of Canadian Net Real Estate Investment Trust (NET.UN.V) is 6.55%.

	Range	Selected
Cost of equity	8.10% - 11.30%	9.70%
Tax rate	0.40% - 0.90%	0.65%
Cost of debt	4.00% - 9.10%	6.55%
WACC	5.7% - 10.0%	7.9%

WACC

NET.UN.V WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.83	1.05

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.10%	11.30%

Tax rate	0.40%	0.90%
Debt/Equity ratio	1.34	1.34
Cost of debt	4.00%	9.10%

After-tax WACC	5.7%	10.0%


Selected WACC	7.9%

NET.UN.V'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 NET.UN.V:

cost_of_equity (9.70%) = risk_free_rate (4.15%) + equity_risk_premium (5.60%) * adjusted_beta (0.83) + 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.