PEB
Pebblebrook Hotel Trust
Price:  
10.66 
USD
Volume:  
1,176,295
United States | Equity Real Estate Investment Trusts (REITs)

PEB WACC - Weighted Average Cost of Capital

The WACC of Pebblebrook Hotel Trust (PEB) is 7.1%.

The Cost of Equity of Pebblebrook Hotel Trust (PEB) is 10.4%.
The Cost of Debt of Pebblebrook Hotel Trust (PEB) is 5.5%.

RangeSelected
Cost of equity8.6% - 12.2%10.4%
Tax rate0.7% - 0.9%0.8%
Cost of debt4.0% - 7.0%5.5%
WACC5.6% - 8.7%7.1%
WACC

PEB WACC calculation

CategoryLowHigh
Long-term bond rate3.9%4.4%
Equity market risk premium4.6%5.6%
Adjusted beta1.041.31
Additional risk adjustments0.0%0.5%
Cost of equity8.6%12.2%
Tax rate0.7%0.9%
Debt/Equity ratio
1.921.92
Cost of debt4.0%7.0%
After-tax WACC5.6%8.7%
Selected WACC7.1%

PEB'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 PEB:

cost_of_equity (10.40%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.04) + 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.