Funds From Operations. A financial measure used by REITs to define their operating...
funds from operations. Used by REITs to define the cash flow from their operations. It is calculated by adding depreciation and amortization expenses to earnings.
Net income calculated in accordance with Generally Accepted Accounting Principles, including depreciation of real estate but excluding gains or losses from sales of property or from debt restructuring. While AMB reports FFO figures each quarter, we prefer and have been an industry advocate for the reporting of EPS figures, because we believe that EPS is a more consistently accurate, and therefore more useful valuation tool for real estate companies.
See Funds From Operations.
Funds From Operations. A measure of financial performance used by Real Estate Investment Trusts. It consists of net earnings with some depreciation and amortization charges added back. It does not equate to GAAP earnings or cash flow. FFO is sometimes criticized because it is subject to some manipulation in how it is applied. GAAP earnings, however, are also subject to manipulation. If conservatively applied, FFO is a fair and useful measurement in light of the fact that real estate has important attributes not shared by other investments.
A ratio intended to highlight the amount of cash generated by a company's real estate portfolio relative to its total operating cash flow. FFO is equal to net income, excluding gains (or losses) from debt restructuring and sales of property, plus depreciation and amortization.
FUNDS FROM OPERATION. Represents net income or loss computed in accordance with GAAP, minus gains or losses from debt restructuring and property sales, plus certain depreciation and amortization, and after adjustment for unconsolidated partnerships and co-investments, if any. As defined by NAREIT, FFO is generally considered by industry analysts as an appropriate measure of performance of an equity REIT. Results from unconsolidated partnerships and co-investments, if any, will be adjusted to apply a comparable calculation to its results. FFO does not represent cash generated from operating activities in accordance with GAAP, nor should it be considered an alternative to net income as an indication of performance, or an alternative to cash flows as a measure of liquidity.
FUNDS FROM OPERATIONS. Used by real estate and other investment trusts to define the cash flow from trust operations. It is earnings with depreciation and amortization added back. A similar term increasingly used is Funds Available for Distribution (FAD), which is FFO less capital investments in trust property and the amortization of mortgages.
Funds From Operations. The most commonly accepted and reported measure of REIT operating performance. Equal to a REIT's net income, excluding gains or losses from sales of property or debt restructuring, and adding back real estate depreciation.
Funds from operations. Cash flow from operations less net interest income from operations.
Funds From Operations. The cash flow derived from trust operations, usually in relation to investment trusts.