PCT.NZ WACC - Weighted Average Cost of Capital
The WACC of Precinct Properties New Zealand Ltd (PCT.NZ) is 7.0%.
| Range | Selected | |
| Cost of equity | 7.1% - 9.7% | 8.4% |
| Tax rate | 8.2% - 11.4% | 9.8% |
| Cost of debt | 4.0% - 7.0% | 5.5% |
| WACC | 5.7% - 8.3% | 7.0% |
| Category | Low | High |
| Long-term bond rate | 4.3% | 4.8% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.54 | 0.72 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.1% | 9.7% |
| Tax rate | 8.2% | 11.4% |
| Debt/Equity ratio | 0.71 | 0.71 |
| Cost of debt | 4.0% | 7.0% |
| After-tax WACC | 5.7% | 8.3% |
| Selected WACC | 7.0% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| PCT.NZ | Precinct Properties New Zealand Ltd | 0.71 | 0.91 | 0.55 |
| 3298.T | Invesco Office J-Reit Inc | 0.63 | 0.76 | 0.49 |
| 8958.T | Global One Real Estate Investment Corp | 0.68 | 0.17 | 0.1 |
| 8961.T | Mori Trust Sogo Reit Inc | 0.92 | 0.33 | 0.18 |
| 8975.T | Ichigo Office REIT Investment Corp | 0.87 | 0.22 | 0.12 |
| 8987.T | Japan Excellent Inc | 0.73 | 0.21 | 0.13 |
| BTOU.SI | Manulife US Real Estate Investment Trust | 6.37 | 1.36 | 0.2 |
| KPG.NZ | Kiwi Property Group Ltd | 0.85 | 0.74 | 0.42 |
| PFI.NZ | Property for Industry Ltd | 0.58 | 0.47 | 0.31 |
| VHP.NZ | Vital Healthcare Property Trust | 0.95 | 0.86 | 0.46 |
| Low | High | |
| Unlevered beta | 0.19 | 0.35 |
| Relevered beta | 0.31 | 0.58 |
| Adjusted relevered beta | 0.54 | 0.72 |
PCT.NZ'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 PCT.NZ:
cost_of_equity (8.40%) = risk_free_rate (4.55%) + equity_risk_premium (5.60%) * adjusted_beta (0.54) + 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.