Adjusted Funds From Operations - AFFO

What are 'Adjusted Funds From Operations - AFFO'

Adjusted funds from operations (AFFO) refer to thefinancial performance measure primarily used in the analysis of real-estate income trusts (REITs). The AFFO of a REIT, though subject to varying methods of computation, is generally equal to the trust's funds from operations (FFO) with adjustments made for recurring capital expenditures used to maintain the quality of the REIT's underlying assets. The calculation takes in the adjustment to GAAP straight-lining of rent, leasing costs and other material factors.

BREAKING DOWN 'Adjusted Funds From Operations - AFFO'

Regardless of how industry professionals choose to compute AFFO, it is considered a more accurate measure of residual cash flow for shareholders than simple FFO. This provides for a more accurate base number when estimating present values and a better predictor of the REIT's future ability to pay dividends. This is a non-GAAP measure.

RELATED TERMS
  1. Funds Available For Distribution ...

    An informal measure of the amount of capital that is on hand ...
  2. Real Estate Investment Trust - ...

    A REIT is a type of security that invests in real estate through ...
  3. Funds From Operations - FFO

    A figure used by real estate investment trusts (REITs) to define ...
  4. REIT ETF

    Exchange-traded funds that invest the majority of assets in equity ...
  5. Cash Available For Distribution ...

    A real estate investment trust's (REIT's) cash on hand that is ...
  6. Funds From Operations Per Share ...

    A metric for the performance of a real estate investment trust ...
Related Articles
  1. Investing Basics

    Calculating Funds from Operations

    Funds from operations (FFO) measures the performance of a real estate investment trust (REIT) and other similar types of investments.
  2. Investing Basics

    5 Types of REITs And How To Invest In Them

    Real estate investment trusts are historically one of the best-performing asset classes around. There are many types of REITs available.
  3. Products and Investments

    REITs: Still a Viable Investment?

    Are REITs viable investments now? Here's a look at the history of REITs' performance during rocky economic times and other factors that may impact returns.
  4. Mutual Funds & ETFs

    Analyzing REITs And REIT Performance

    Analyzing REITs And REIT Performance
  5. Options & Futures

    20 Investments: Real Estate Investment Trusts (REITs)

    What Is It? What if you want to invest in the real estate sector, but you either already have a house or don't have enough money to buy one right now? The answer is REITs. REITs sell like stocks ...
  6. Mutual Funds & ETFs

    REITs vs. REIT ETFs: How They Compare

    Learn about the difference in investing in a REIT for a single real estate company versus investing in a REIT ETF that tracks a larger REIT index.
  7. Bonds & Fixed Income

    Are REITs Beneficial During A High-Interest Era?

    Amid expectations of high interest rates, do REITs offer a viable investment option? Investoepdia studies the historical data to decide.
  8. Investing

    REITs 101: How They're Regulated

    Here's everything you need to know about REITs in less than five minutes.
  9. Investing Basics

    The Basics of Reinvesting REIT Dividends

    Learn the essentials of dividend reinvestment in real estate investment trusts and how a dividend reinvestment plan can magnify your long-term returns.
  10. Investing

    What Is a REIT and Does It Belong in My Portfolio?

    Real estate investment trusts offer a unique way for investors to own a real estate portfolio without the risks of owning single properties.
RELATED FAQS
  1. What is the difference between adjusted and regular funds from operations?

    Understand a REIT's regular funds from operations and its adjusted funds from operations. Learn what each is used to measure ... Read Answer >>
  2. What security should I use funds from operations for?

    Find out what sorts of securities are evaluated using funds from operations. Learn how FFO is calculated and why it is relevant ... Read Answer >>
  3. What are the potential pitfalls of owning REITs?

    Learn about pitfalls to investing in REITs, such as investors having to pay income tax, the REIT having to pay property tax ... Read Answer >>
  4. What are the pros and cons of owning an equity REIT versus a mortgage REIT? (AEC, ...

    Learn about investing in equity, mortgage and hybrid REITs. Explore the different strategies REITs employ to generate income ... Read Answer >>
  5. What is the difference between funds from operations per share and earnings per share?

    Find out how funds from operations (FFO) differs from net income. Learn how FFO is calculated and why REITs are evaluated ... Read Answer >>
  6. What is the difference between a REIT and a real estate fund?

    A real estate fund invests in securities offered by public real estate properties directly or indirectly through Real Estate ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center