Definitions for "Funds From Operations"
Keywords:  reit, ffo, depreciation, fad, gaap
FFO. A financial measure used by REITs to define their operating performance....
Used by REITs to define the cash flow from their operations. It is calculated by adding depreciation and amortization expenses to earnings.
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.