AFFO Calculator

What is adjusted funds from operations (AFFO)?

Adjusted funds from operations (AFFO) is a REIT cash-flow metric. It starts with funds from operations (FFO), then subtracts recurring spending needed to keep properties rentable. Analysts use AFFO, and AFFO per share, as a closer read of dividend-paying capacity than GAAP net income. All math runs in your browser.

GAAP net income is the starting point. Build that figure from revenue and explicit costs with the accounting profit calculator. Real estate depreciation is then added back because historical-cost depreciation often overstates the economic wear of buildings. The accumulated depreciation calculator totals that contra-asset under common book methods. Because FFO still includes non-cash rent smoothing, the accrual ratio calculator is a useful companion screen for how much reported earnings depend on accruals rather than cash. AFFO is not the same as additional funds needed (AFN), a corporate planning identity; if you are sizing a growth financing gap, use the additional funds needed calculator.

How FFO is calculated

Nareit defines FFO as GAAP net income excluding gains and losses from sales of certain real estate assets, plus real estate depreciation and amortization, with further lines for impairments, changes in control, and unconsolidated ventures. This calculator uses the core identity that appears in textbooks and in Nareit's glossary:

NI is GAAP net income. D is real estate depreciation. A is real estate amortization. G is gains from property sales. L is losses from property sales. Nareit is explicit that FFO is a supplemental operating measure, not a substitute for GAAP, and not by itself a measure of cash generated or of dividend capacity. Investopedia works a REIT with $2,000,000 of net income, $50,000 of depreciation, $35,000 of amortization, $400,000 of sale gains, and $100,000 of sale losses. Net sale gains are $300,000, so FFO is $1,785,000.

How AFFO is calculated

There is no single official AFFO formula. The common textbook version used here adds cash rent increases and subtracts recurring capital expenditures and routine maintenance:

R is net rent increases. C is recurring capital expenditures (roof replacements, recarpeting, tenant improvements that keep the portfolio competitive). M is routine maintenance. Continuing Investopedia's example, rent increases of $40,000, capital expenditures of $75,000, and maintenance of $30,000 produce AFFO of $1,720,000. Corporate Finance Institute writes a close variant that subtracts recurring capex and the GAAP straight-line rent adjustment instead of adding a cash rent-increase line. Those two rent adjustments point at the same idea: undo non-cash rent smoothing so the figure is closer to cash received.

Why AFFO matters for REIT dividends

U.S. REITs must distribute most taxable income, so investors watch whether operations cover the dividend. FFO removes large non-cash depreciation charges, but a REIT still spends cash each year to keep buildings leased. AFFO deducts that recurring spend. A payout ratio above 100% of AFFO is a warning that the dividend may depend on asset sales, new issuance, or deferred maintenance. Compare issuers only after reading each supplemental reconciliation, because AFFO definitions differ. For a household screening rent against income rather than a listed REIT, the 3x rent calculator applies a tenant affordability rule instead of this portfolio cash-flow identity.

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