What this calculator does
Adjusted funds from operations (AFFO) is the metric REIT analysts use to estimate the recurring cash earnings a real estate company actually has available for dividends. It starts from funds from operations (FFO) — the Nareit-standardized measure that takes net income, adds back real estate depreciation and amortization, and removes gains (or adds back losses) on property sales — and then subtracts the cash costs that GAAP earnings hide: recurring capital expenditures and straight-line rent adjustments.
The formulas
- FFO = Net income + real estate depreciation & amortization − gains on property sales. Enter a loss on sales as a negative number and it is added back automatically.
- AFFO = FFO − recurring capital expenditures − straight-line rent adjustment. This is the most common core definition; individual REITs may add further company-specific adjustments.
- Per-share values = FFO or AFFO ÷ shares outstanding, useful for comparing against the dividend per share.
Getting accurate results
- Use figures from the same reporting period — mixing a quarterly net income with annual depreciation is the most common source of errors.
- Use only real estate depreciation and amortization, not depreciation on office equipment or other corporate assets.
- Count only recurring (maintenance) capex — roof replacements, tenant improvements, leasing commissions — not acquisition or development spending.
Interpreting the output
Compare AFFO per share to the dividend per share: if the dividend exceeds AFFO per share, the payout is not covered by recurring cash earnings. The gap between FFO and AFFO also matters — a REIT whose recurring capex consumes a large share of FFO has less genuine cash flow than its FFO headline suggests. Because AFFO is a non-GAAP measure with no single official definition, cross-check any company's own AFFO reconciliation before comparing across REITs, and verify high-stakes conclusions with a licensed professional.