SUI WACC - Weighted Average Cost of Capital
The WACC of Sun Communities Inc (SUI) is 6.4%.
| Range | Selected | |
| Cost of equity | 5.7% - 7.8% | 6.75% |
| Tax rate | 1.6% - 2.8% | 2.2% |
| Cost of debt | 4.0% - 7.5% | 5.75% |
| WACC | 5.2% - 7.6% | 6.4% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.41 | 0.53 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.7% | 7.8% |
| Tax rate | 1.6% | 2.8% |
| Debt/Equity ratio | 0.46 | 0.46 |
| Cost of debt | 4.0% | 7.5% |
| After-tax WACC | 5.2% | 7.6% |
| Selected WACC | 6.4% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| SUI | Sun Communities Inc | 0.46 | 0.13 | 0.09 |
| CLPR | Clipper Realty Inc | 19.55 | 0.25 | 0.01 |
| ELS | Equity LifeStyle Properties Inc | 0.26 | 0.01 | 0.01 |
| ESS | Essex Property Trust Inc | 0.36 | 0.75 | 0.56 |
| FCA.UN.V | Firm Capital Apartment Real Estate Investment Trust | 2.31 | 0.14 | 0.04 |
| INVH | Invitation Homes Inc | 0.39 | 0.39 | 0.29 |
| MAA | Mid-America Apartment Communities Inc | 0.26 | 0.49 | 0.39 |
| MRTI | Maxus Realty Trust Inc | 3.04 | 0.24 | 0.06 |
| UDR | UDR Inc | 0.42 | 0.63 | 0.45 |
| VICI | VICI Properties Inc | 0.52 | 0.23 | 0.15 |
| Low | High | |
| Unlevered beta | 0.08 | 0.2 |
| Relevered beta | 0.12 | 0.3 |
| Adjusted relevered beta | 0.41 | 0.53 |
SUI'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 SUI:
cost_of_equity (6.75%) = 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.