Funds Available For Distribution - FAD

DEFINITION of 'Funds Available For Distribution - FAD'

An informal measure of the amount of capital that is on hand for paying out to shareholders. Funds available for distribution is a term that 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. Most of a REIT's profits must be distributed as dividends. There is no standardized method for calculating funds available for distribution, however many calculate FAD by adjusting the funds from operations value for straight-line rents, leases and any recurring real estate related expenses.

BREAKING DOWN 'Funds Available For Distribution - FAD'

The funds available for distribution value represents a measurement of a REIT's cash flow for shareholders and investors. The FAD is a metric used in evaluating the current and future health of a REIT. Other widely used metrics include adjusted funds from operations (AFFO) and cash available for distribution (CAD).