UHT WACC - Weighted Average Cost of Capital

The WACC of Universal Health Realty Income Trust (UHT) is 6.4%.

The Cost of Equity of Universal Health Realty Income Trust (UHT) is 7.45%.

The Cost of Debt of Universal Health Realty Income Trust (UHT) is 6.55%.

	Range	Selected
Cost of equity	6.40% - 8.50%	7.45%
Tax rate	26.20% - 27.00%	26.60%
Cost of debt	4.00% - 9.10%	6.55%
WACC	5.1% - 7.8%	6.4%

WACC

UHT WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	0.56	0.65

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.40%	8.50%

Tax rate	26.20%	27.00%
Debt/Equity ratio	0.65	0.65
Cost of debt	4.00%	9.10%

After-tax WACC	5.1%	7.8%


Selected WACC	6.4%

UHT'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 UHT:

cost_of_equity (7.45%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.56) + 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.