Our free online AFFO Calculator helps investors quickly determine the Adjusted Funds From Operations for REITs. Understand real cash flow, assess dividend sustainability, and make smarter real estate investment decisions with this essential financial metric.
Formula:
The formula for Adjusted Funds From Operations (AFFO) is:
AFFO = FFO - Recurring Capital Expenditures - Straight-line Rent Adjustments
Where:
- FFO: Funds From Operations. This represents the cash flow from a REIT's operations before deducting capital expenditures.
- Recurring Capital Expenditures: The routine capital expenses necessary to maintain the property and its revenue-generating capacity. This often includes maintenance and minor improvements.
- Straight-line Rent Adjustments: Non-cash adjustments resulting from lease accounting standards, which require averaging rent payments over the life of a lease, even if payments are uneven.