SRG WACC - Weighted Average Cost of Capital

The WACC of Seritage Growth Properties (SRG) is 7.1%.

The Cost of Equity of Seritage Growth Properties (SRG) is 7.65%.

The Cost of Debt of Seritage Growth Properties (SRG) is 6.70%.

	Range	Selected
Cost of equity	6.30% - 9.00%	7.65%
Tax rate	0.30% - 0.50%	0.40%
Cost of debt	6.40% - 7.00%	6.70%
WACC	6.3% - 7.8%	7.1%

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	0.54	0.74

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.30%	9.00%

Tax rate	0.30%	0.50%
Debt/Equity ratio	1.5	1.5
Cost of debt	6.40%	7.00%

After-tax WACC	6.3%	7.8%


Selected WACC	7.1%

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 (7.65%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.54) + 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.