SAFE WACC - Weighted Average Cost of Capital
The WACC of Safehold Inc (SAFE) is 7.4%.
| Range | Selected | |
| Cost of equity | 8.9% - 12.7% | 10.8% |
| Tax rate | 0.4% - 1.6% | 1% |
| Cost of debt | 4.0% - 9.1% | 6.55% |
| WACC | 5.0% - 9.7% | 7.4% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.1 | 1.4 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.9% | 12.7% |
| Tax rate | 0.4% | 1.6% |
| Debt/Equity ratio | 3.85 | 3.85 |
| Cost of debt | 4.0% | 9.1% |
| After-tax WACC | 5.0% | 9.7% |
| Selected WACC | 7.4% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| SAFE | Safehold Inc | 3.85 | 0.18 | 0.04 |
| COR | CoreSite Realty Corp | 0.08 | 0.11 | 0.1 |
| CTT | CatchMark Timber Trust Inc | 0.58 | 1.12 | 0.71 |
| EPR | EPR Properties | 0.69 | 0.53 | 0.31 |
| FCPT | Four Corners Property Trust Inc | 0.41 | 0.21 | 0.15 |
| FPI | Farmland Partners Inc | 0.42 | 0.42 | 0.3 |
| LAND | Gladstone Land Corp | 1.66 | 0.36 | 0.14 |
| LSI | Life Storage Inc | 0.15 | 1.04 | 0.9 |
| NSA | National Storage Affiliates Trust | 0.72 | 0.61 | 0.36 |
| QTS | QTS Realty Trust Inc | 0.31 | 0.56 | 0.43 |
| Low | High | |
| Unlevered beta | 0.24 | 0.33 |
| Relevered beta | 1.15 | 1.6 |
| Adjusted relevered beta | 1.1 | 1.4 |
SAFE'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 SAFE:
cost_of_equity (10.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.1) + 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.