UE WACC - Weighted Average Cost of Capital
The WACC of Urban Edge Properties (UE) is 7.3%.
| Range | Selected | |
| Cost of equity | 7.3% - 9.0% | 8.15% |
| Tax rate | 4.7% - 6.0% | 5.35% |
| Cost of debt | 4.0% - 9.1% | 6.55% |
| WACC | 5.8% - 8.8% | 7.3% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.74 | 0.75 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.3% | 9.0% |
| Tax rate | 4.7% | 6.0% |
| Debt/Equity ratio | 0.73 | 0.73 |
| Cost of debt | 4.0% | 9.1% |
| After-tax WACC | 5.8% | 8.8% |
| Selected WACC | 7.3% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| UE | Urban Edge Properties | 0.73 | 0.62 | 0.37 |
| AKR | Acadia Realty Trust | 0.63 | 0.73 | 0.46 |
| ALX | Alexander's Inc | 0.9 | 0.56 | 0.3 |
| CRR.UN.TO | Crombie Real Estate Investment Trust | 1.53 | 0.97 | 0.4 |
| CRT.UN.TO | CT Real Estate Investment Trust | 1.83 | 0.98 | 0.36 |
| KRG | Kite Realty Group Trust | 0.69 | 0.61 | 0.37 |
| ROIC | Retail Opportunity Investments Corp | 0.62 | 0.3 | 0.19 |
| RPAI | Retail Properties of America Inc | 0.62 | 1.74 | 1.1 |
| SITC | Site Centers Corp | 0.5 | 0.52 | 0.36 |
| SKT | Tanger Factory Outlet Centers Inc | 0.44 | 0.4 | 0.29 |
| Low | High | |
| Unlevered beta | 0.36 | 0.37 |
| Relevered beta | 0.61 | 0.63 |
| Adjusted relevered beta | 0.74 | 0.75 |
UE'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 UE:
cost_of_equity (8.15%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.74) + 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.