ONL WACC - Weighted Average Cost of Capital

The WACC of Orion Office Reit Inc (ONL) is 7.4%.

The Cost of Equity of Orion Office Reit Inc (ONL) is 12.90%.

The Cost of Debt of Orion Office Reit Inc (ONL) is 6.20%.

	Range	Selected
Cost of equity	10.90% - 14.90%	12.90%
Tax rate	0.20% - 0.30%	0.25%
Cost of debt	5.40% - 7.00%	6.20%
WACC	6.4% - 8.4%	7.4%

WACC

ONL WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	1.53	1.79

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.90%	14.90%

Tax rate	0.20%	0.30%
Debt/Equity ratio	4.57	4.57
Cost of debt	5.40%	7.00%

After-tax WACC	6.4%	8.4%


Selected WACC	7.4%

ONL'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 ONL:

cost_of_equity (12.90%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.53) + 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.