Financial Management Rate Of Return - FMRR

DEFINITION of 'Financial Management Rate Of Return - FMRR'

A metric used to evaluate the performance of a real estate investment and pertains to a real estate investment trust (REIT). REITs are shares offered to the public by a real estate company or trust that holds a portfolio of income-producing properties and/or mortgages. The FMRR is similar to the internal rate of return and takes into account the length and risk of the investment. The FMRR specifies cash flows (inflows and outflows) at two distinct rates known as the safe rate and the reinvestment rate.

BREAKING DOWN 'Financial Management Rate Of Return - FMRR'

Because the calculation for financial management rate of return is so complex, many real estate professionals and investors choose to use other metrics for real estate analysis. The benefit in using FMRR is that it allows investors to compare investment opportunities on par with one another.