XHR WACC - Weighted Average Cost of Capital
The WACC of Xenia Hotels & Resorts Inc (XHR) is 9.4%.
| Range | Selected | |
| Cost of equity | 9.1% - 11.8% | 10.45% |
| Tax rate | 5.5% - 7.6% | 6.55% |
| Cost of debt | 5.7% - 12.4% | 9.05% |
| WACC | 7.1% - 11.6% | 9.4% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.14 | 1.24 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.1% | 11.8% |
| Tax rate | 5.5% | 7.6% |
| Debt/Equity ratio | 1.11 | 1.11 |
| Cost of debt | 5.7% | 12.4% |
| After-tax WACC | 7.1% | 11.6% |
| Selected WACC | 9.4% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| XHR | Xenia Hotels & Resorts Inc | 1.11 | 1.28 | 0.63 |
| CXP | Columbia Property Trust Inc | 0.57 | 1.18 | 0.77 |
| DRH | Diamondrock Hospitality Co | 0.71 | 0.9 | 0.54 |
| HST | Host Hotels & Resorts Inc | 0.47 | 0.96 | 0.67 |
| INN | Summit Hotel Properties Inc | 2.84 | 1.26 | 0.34 |
| PEB | Pebblebrook Hotel Trust | 2.1 | 1.37 | 0.46 |
| RLJ | RLJ Lodging Trust | 2 | 0.97 | 0.34 |
| RPAI | Retail Properties of America Inc | 0.62 | 1.74 | 1.1 |
| SHO | Sunstone Hotel Investors Inc | 0.47 | 0.98 | 0.68 |
| WRE | Washington Real Estate Investment Trust | 0.36 | 0.89 | 0.67 |
| Low | High | |
| Unlevered beta | 0.6 | 0.67 |
| Relevered beta | 1.21 | 1.36 |
| Adjusted relevered beta | 1.14 | 1.24 |
XHR'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 XHR:
cost_of_equity (10.45%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.14) + 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.