AFFO (Adjusted Funds From Operations) Calculator

Finance

The AFFO Calculator works out a REIT's Adjusted Funds From Operations, a refined measure of the cash available to pay dividends. It starts from FFO and subtracts recurring capital expenditure and the straight-line rent adjustment: AFFO = FFO − recurring CAPEX − straight-line rent adjustment.

Formula

AFFO = FFO − Recurring CAPEX − Straight-line Rent Adjustment
  • AFFO refines Funds From Operations (FFO) into a closer measure of recurring, distributable cash.
  • Formula: AFFO = FFO − recurring CAPEX − straight-line rent adjustment.
  • Recurring CAPEX is the routine spending needed to maintain properties; the straight-line rent adjustment removes non-cash smoothing of rent.
  • AFFO is widely used to assess REIT dividend sustainability and the AFFO payout ratio.

Example Calculation

Inputs
  • FFO (PKR): 1800000
  • Recurring CAPEX (PKR): 250000
  • Straight-line Rent Adj (PKR): 50000

With FFO of 1,800,000, recurring CAPEX of 250,000, and a straight-line rent adjustment of 50,000: AFFO = 1,800,000 − 250,000 − 50,000 = 1,500,000.

Frequently asked questions

What is AFFO?
Adjusted Funds From Operations is a REIT metric that refines FFO into a closer estimate of the recurring cash available to pay dividends.
How does AFFO differ from FFO?
AFFO subtracts recurring capital expenditure and the straight-line rent adjustment from FFO, making it a more conservative cash-flow measure.
What is the straight-line rent adjustment?
It is a non-cash item that averages contractual rent over a lease term. Removing it leaves AFFO closer to actual cash rent received.
Why does AFFO matter for dividends?
Because AFFO approximates distributable cash, analysts compare dividends to AFFO (the AFFO payout ratio) to judge dividend sustainability.
Is there one standard AFFO definition?
No. AFFO is not GAAP-defined, so different REITs may include slightly different adjustments. Always check the company's stated method.