Adjusted Funds from Operations (AFFO)

RECENT NEWS
newratings.com  Nov 3  Comment 
WASHINGTON (dpa-AFX) - Lamar Advertising Co. (LAMR), an operator of outdoor advertising and logo sign displays, Thursday said it expects to finish the year at the upper end of previously provided Adjusted Funds From Operations, or AFFO guidance...




 

A measure of a Real Estate Investment Trust (REIT)'s financial performance. This metric takes into account a REIT's Funds From Operations (FFO) and adjusts for recurring spending the company does to maintain the quality of its underlying real estate assets.

This measure was used instead of FFO because it was found that FFO overstates the economic profitability over time of a REIT. There are expenses like real depreciation and cap-ex which also need to be considered to find the true earnings power of a real estate asset. Whether it is the replacement of carpets, doors etc. in apartments or concession given to the tenants in form of Tenant improvements, these are economic expenses and thus need to be deducted from FFO for a true earnings measure.

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