STAR
iStar Inc
Price:  
7.63 
USD
Volume:  
2,059,590.00
United States | Equity Real Estate Investment Trusts (REITs)
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iStar WACC - Weighted Average Cost of Capital

The WACC of iStar Inc (STAR) is 6.9%.

The Cost of Equity of iStar Inc (STAR) is 10.25%.
The Cost of Debt of iStar Inc (STAR) is 5.65%.

Range Selected
Cost of equity 7.60% - 12.90% 10.25%
Tax rate 0.50% - 1.80% 1.15%
Cost of debt 4.30% - 7.00% 5.65%
WACC 5.2% - 8.6% 6.9%
WACC

iStar WACC calculation

Category Low High
Long-term bond rate 4.2% 4.7%
Equity market risk premium 5.0% 6.0%
Adjusted beta 0.68 1.29
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.60% 12.90%
Tax rate 0.50% 1.80%
Debt/Equity ratio 2.54 2.54
Cost of debt 4.30% 7.00%
After-tax WACC 5.2% 8.6%
Selected WACC 6.9%

iStar'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 iStar:

cost_of_equity (10.25%) = risk_free_rate (4.45%) + equity_risk_premium (5.50%) * adjusted_beta (0.68) + 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.