NXR.UN.TO WACC - Weighted Average Cost of Capital

The WACC of Nexus Real Estate Investment Trust (NXR.UN.TO) is 6.8%.

The Cost of Equity of Nexus Real Estate Investment Trust (NXR.UN.TO) is 12.20%.

The Cost of Debt of Nexus Real Estate Investment Trust (NXR.UN.TO) is 6.80%.

	Range	Selected
Cost of equity	9.90% - 14.50%	12.20%
Tax rate	25.90% - 26.50%	26.20%
Cost of debt	5.20% - 8.40%	6.80%
WACC	5.4% - 8.3%	6.8%

WACC

NXR.UN.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	1.33	1.69

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.90%	14.50%

Tax rate	25.90%	26.50%
Debt/Equity ratio	2.96	2.96
Cost of debt	5.20%	8.40%

After-tax WACC	5.4%	8.3%


Selected WACC	6.8%

NXR.UN.TO'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 NXR.UN.TO:

cost_of_equity (12.20%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (1.33) + 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.