AFFO
See Adjusted Funds From Operations.
Frequently Asked Questions about AFFO (Adjusted Funds from Operations)
What does AFFO stand for?
AFFO stands for Adjusted Funds from Operations. It is a financial metric used primarily to evaluate the performance of real estate investment trusts (REITs).
How is AFFO different from FFO?
While FFO (Funds from Operations) measures net income excluding depreciation and gains on sales, AFFO adjusts FFO by subtracting maintenance costs, capital expenditures (CAPEX), and straight line rent adjustments to reflect true cash flow.
Why is AFFO a preferred metric for REIT analysis?
AFFO is preferred because it accounts for the actual ongoing expenses needed to maintain and operate real estate assets, offering a more accurate and sustainable view of income available for distribution.
Is AFFO the same as net operating income (NOI)?
No. While AFFO is similar in concept to NOI in reflecting cash flow, AFFO is used at the REIT or portfolio level, and includes additional adjustments such as CAPEX and rent smoothing.
Where can I learn more about AFFO?
You can refer to the glossary entries on Adjusted Funds from Operations, its Spanish equivalent (Fondos Ajustados de Operaciones), and related concepts such as REITs and real estate investment funds.
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