PSA
Public Storage
Price:  
300.15 
USD
Volume:  
1,290,514.00
United States | Equity Real Estate Investment Trusts (REITs)
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PSA WACC - Weighted Average Cost of Capital

The WACC of Public Storage (PSA) is 6.8%.

The Cost of Equity of Public Storage (PSA) is 7.20%.
The Cost of Debt of Public Storage (PSA) is 4.40%.

Range Selected
Cost of equity 6.30% - 8.10% 7.20%
Tax rate 0.10% - 0.30% 0.20%
Cost of debt 4.00% - 4.80% 4.40%
WACC 5.9% - 7.6% 6.8%
WACC

PSA WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.52 0.58
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.30% 8.10%
Tax rate 0.10% 0.30%
Debt/Equity ratio 0.18 0.18
Cost of debt 4.00% 4.80%
After-tax WACC 5.9% 7.6%
Selected WACC 6.8%

PSA'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 PSA:

cost_of_equity (7.20%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.52) + 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.