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

The WACC of Nexus Real Estate Investment Trust (NXR.UN.TO) is 10.6%.

The Cost of Equity of Nexus Real Estate Investment Trust (NXR.UN.TO) is 11.20%.

The Cost of Debt of Nexus Real Estate Investment Trust (NXR.UN.TO) is 14.10%.

	Range	Selected
Cost of equity	9.70% - 12.70%	11.20%
Tax rate	25.90% - 26.50%	26.20%
Cost of debt	5.00% - 23.20%	14.10%
WACC	5.7% - 15.6%	10.6%

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	1.29	1.4

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.70%	12.70%

Tax rate	25.90%	26.50%
Debt/Equity ratio	2.03	2.03
Cost of debt	5.00%	23.20%

After-tax WACC	5.7%	15.6%


Selected WACC	10.6%

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 (11.20%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (1.29) + 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.