SRG WACC - Weighted Average Cost of Capital

The WACC of Seritage Growth Properties (SRG) is 6.9%.

The Cost of Equity of Seritage Growth Properties (SRG) is 6.90%.

The Cost of Debt of Seritage Growth Properties (SRG) is 6.80%.

	Range	Selected
Cost of equity	5.80% - 8.00%	6.90%
Tax rate	0.30% - 0.50%	0.40%
Cost of debt	6.60% - 7.00%	6.80%
WACC	6.0% - 7.7%	6.9%

WACC

SRG WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	0.42	0.55

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.80%	8.00%

Tax rate	0.30%	0.50%
Debt/Equity ratio	0.32	0.32
Cost of debt	6.60%	7.00%

After-tax WACC	6.0%	7.7%


Selected WACC	6.9%

SRG'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 SRG:

cost_of_equity (6.90%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.42) + 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.