AFFO - Adjusted Funds From Operations Calculator
Calculate Adjusted Funds From Operations for REITs. Analyze cash available for distributions after maintenance capex.
How it works
FFO adds back depreciation to net income. AFFO further adjusts for recurring capital expenditures to show actual cash available for distributions.
Example
Net Income $5M + Depreciation $3M = FFO $8M. FFO $8M - Capex $1M = AFFO $7M available for dividends.
FAQ
What's the difference between FFO and AFFO?
FFO adds back depreciation but AFFO also subtracts recurring capex and maintenance, providing a more accurate picture of distributable cash flow.
Why is AFFO important for REITs?
AFFO better represents the cash available for dividends since it accounts for the capital expenditures needed to maintain properties and income streams.
What capex should be included?
Include recurring maintenance capex like HVAC replacements, roof repairs, and tenant improvements, but exclude one-time development or acquisition costs.
How do investors use AFFO?
Investors use AFFO to evaluate dividend sustainability, compare REIT performance, and assess whether distributions exceed available cash flow.
What's a good AFFO coverage ratio?
A coverage ratio above 1.0x (AFFO exceeding distributions) indicates sustainable dividends. Below 1.0x may signal future dividend cuts or debt financing.