Category	Low	High

Long-term bond rate	4.2%	4.7%
Equity market risk premium	5.0%	6.0%
Adjusted beta	26.28	30.11

Additional risk adjustments	0.0%	0.5%
Cost of equity	135.6%	185.8%

Tax rate	26.2%	27.0%
Debt/Equity ratio	136.27	136.27
Cost of debt	4.0%	20.2%

After-tax WACC	3.9%	16.0%


Selected WACC	9.9%

PEI WACC - Detailed calculations of Beta

		Debt/Equity		Unlevered
Peers	Company Name	ratio	Beta	beta

PEI	Pennsylvania Real Estate Investment Trust	136.27	2.59	0.03
BFS	Saul Centers Inc	1.92	0.44	0.18
CBLAQ	CBL & Associates Properties Inc	34.64	1.35	0.05
CDR	Cedar Realty Trust Inc	1.34	1.17	0.59
CRT.UN.TO	CT Real Estate Investment Trust	1.85	0.98	0.42
PLZ.UN.TO	Plaza Retail REIT	1.58	0.88	0.41
SGR.UN.TO	Slate Grocery REIT	1.88	0.92	0.39
SRG	Seritage Growth Properties	1.44	0.67	0.33
UBA	Urstadt Biddle Properties Inc	0.4	0.79	0.61
WPG	Washington Prime Group Inc	153.93	1.55	0.01
WSR	Whitestone REIT	0.49	0.36	0.26

	Low	High

Unlevered beta	0.26	0.39
Relevered beta	38.73	44.45
Adjusted relevered beta	26.28	30.11

PEI'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 PEI:

cost_of_equity (160.70%) = risk_free_rate (4.45%) + equity_risk_premium (5.50%) * adjusted_beta (26.28) + 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.