Calculate affo for real estate investments and properties
Enter Funds From Operations (FFO) and subtract recurring capital expenditures and maintenance costs to calculate Adjusted Funds From Operations (AFFO), a key REIT metric.
If FFO is $10 million and recurring capex is $1.5 million, AFFO is $8.5 million, showing true cash available for dividends.
FFO (Funds From Operations) is net income plus depreciation. AFFO subtracts recurring capital expenditures to show true cash available for distributions.
AFFO is a better measure of dividend sustainability than FFO because it accounts for necessary recurring capital spending.
Most healthy REITs maintain AFFO payout ratios between 70-85%, leaving room for growth while providing attractive dividends.