PW WACC - Weighted Average Cost of Capital
The WACC of Power REIT (PW) is 4.3%.
| Range | Selected | |
| Cost of equity | 6.2% - 8.6% | 7.4% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 4.0% - 7.0% | 5.5% |
| WACC | 3.3% - 5.4% | 4.3% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.5 | 0.66 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.2% | 8.6% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 9.6 | 9.6 |
| Cost of debt | 4.0% | 7.0% |
| After-tax WACC | 3.3% | 5.4% |
| Selected WACC | 4.3% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| PW | Power REIT | 9.6 | 0.67 | 0.08 |
| AMT | American Tower Corp | 0.37 | -0.16 | -0.13 |
| APR.UN.TO | Automotive Properties Real Estate Investment Trust | 0.95 | 0.24 | 0.14 |
| CCI | Crown Castle International Corp | 0.54 | -0.06 | -0.04 |
| CORR | CorEnergy Infrastructure Trust Inc | 62.69 | 1.54 | 0.03 |
| FPI | Farmland Partners Inc | 0.42 | 0.42 | 0.32 |
| LAND | Gladstone Land Corp | 1.66 | 0.36 | 0.16 |
| SAFE | Safehold Inc | 3.85 | 0.18 | 0.05 |
| SBAC | SBA Communications Corp | 0.54 | 0.04 | 0.03 |
| SELF | Global Self Storage Inc | 0.27 | 0 | 0 |
| Low | High | |
| Unlevered beta | 0.03 | 0.06 |
| Relevered beta | 0.25 | 0.49 |
| Adjusted relevered beta | 0.5 | 0.66 |
PW'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 PW:
cost_of_equity (7.40%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.5) + 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.