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- Terms Used in the Real Estate
Investment Trust Industry
- Adjusted Funds From Operations (AFFO)
- The term refers to a computation made by analysts and investors to
measure a real estate company's cash flow generated by operations. AFFO
is usually calculated by subtracting from Funds from Operations (FFO)
both (1) normalized recurring expenditures that are capitalized by the
REIT and then amortized, but which are necessary to maintain a REIT's
properties and its revenue stream (e.g., new carpeting and drapes in
apartment units, leasing expenses and tenant improvement allowances) and
(2) "straight-lining" of rents. This calculation also is
called Cash Available for Distribution (CAD) or Funds Available for
Distribution (FAD)
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