Adjusted Funds From Operations - AFFO


DEFINITION of 'Adjusted Funds From Operations - AFFO'

A financial 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.

  1. Real Estate Investment Trust - ...

    A REIT is a type of security that invests in real estate through ...
  2. Real Estate

    Land plus anything on it, including buildings and natural resources.
  3. Amortization

    1. The paying off of debt in regular installments over a period ...
  4. Cash Available For Distribution ...

    A real estate investment trust's (REIT's) cash on hand that is ...
  5. Funds From Operations - FFO

    A figure used by real estate investment trusts (REITs) to define ...
  6. Generally Accepted Accounting Principles ...

    The common set of accounting principles, standards and procedures ...
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