§ 01
| Metric | Calculation | Use |
|---|---|---|
| FFO | Net Income + Depreciation + Amortization − Gains on Sales | Standard REIT profitability (NAREIT definition) |
| AFFO | FFO − Recurring CapEx − Straight-line Rent Adjustments | True cash available for dividends |
| NAV | Fair Value of Properties − Liabilities | What the REIT’s assets are actually worth |
§ 02
AFFO = FFO − Maintenance CapEx − Straight-line Rent Adj.
§ 03
P/FFO is the REIT equivalent of P/E. A REIT trading at 15x FFO is comparable to a stock at 15x earnings. P/AFFO is more conservative and reflects true cash generation after maintenance spending.
§ 04
Look up a REIT in **Fundamentals**. Compare its P/E to its P/FFO. The P/E will look artificially low because depreciation depresses net income — P/FFO gives the true picture.
§ 05
A REIT reports net income of $80M and FFO of $200M. The difference is mostly depreciation. Which is the better profitability measure?
§ 06
§ 07
A REIT reports Net Income of $100M and FFO of $180M. What explains the $80M gap, and why do REIT investors prefer FFO?
Five questions · AI feedback
Sit with the ideas.
A healthcare REIT reports net income of $120M, depreciation of $300M, and a $40M gain from selling an old medical office building. Recurring capex is $80M. What are FFO and AFFO?
Why: