SLG WACC - Weighted Average Cost of Capital
The WACC of SL Green Realty Corp (SLG) is 8.2%.
| Range | Selected | |
| Cost of equity | 5.8% - 8.8% | 7.3% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 4.2% - 20.9% | 12.55% |
| WACC | 4.5% - 11.9% | 8.2% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.41 | 0.7 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.8% | 8.8% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 0.92 | 0.92 |
| Cost of debt | 4.2% | 20.9% |
| After-tax WACC | 4.5% | 11.9% |
| Selected WACC | 8.2% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| SLG | SL Green Realty Corp | 0.92 | 1.23 | 0.73 |
| CMCT | CIM Commercial Trust Corp | 102.32 | 2.02 | 0.03 |
| CUZ | Cousins Properties Inc | 0.66 | 0.79 | 0.54 |
| DEI | Douglas Emmett Inc | 2.26 | 0.99 | 0.37 |
| HIW | Highwoods Properties Inc | 1.02 | 0.63 | 0.36 |
| HPP | Hudson Pacific Properties Inc | 13.22 | 1.08 | 0.1 |
| JBGS | JBG SMITH Properties | 2.18 | 0.78 | 0.3 |
| OPI | Office Properties Income Trust | 133.62 | 0.99 | 0.01 |
| PSTL | Postal Realty Trust Inc | 0.82 | -0.02 | -0.01 |
| SOT.UN.TO | Slate Office REIT | 29.33 | 0.73 | 0.03 |
| Low | High | |
| Unlevered beta | 0.07 | 0.33 |
| Relevered beta | 0.12 | 0.55 |
| Adjusted relevered beta | 0.41 | 0.7 |
SLG'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 SLG:
cost_of_equity (7.30%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.41) + 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.