What is AFFO (Adjusted Funds From Operations)?

AFFO — Adjusted Funds From Operations — is a non-GAAP measure of a REIT's recurring, normalized cash flow. Nareit (the National Association of Real Estate Investment Trusts) describes it as Funds From Operations (FFO) minus (1) normalized recurring expenditures that are capitalized but necessary to maintain the REIT's properties and revenue stream — such as tenant improvements, leasing commissions and replacement carpeting — and (2) the adjustment to GAAP revenue that 'straight-lines' rents. Investors use it to gauge the cash a REIT can sustainably distribute as dividends.

How do you calculate AFFO?

First compute FFO: FFO = Net income + Real estate depreciation & amortization − Gains on sales of property. Then: AFFO = FFO − Recurring (maintenance) capital expenditures − Straight-line rent adjustment ± Other recurring adjustments. This calculator performs both steps and shows every line of the reconciliation so you can audit the arithmetic.

Is there one official AFFO formula?

No. Nareit states explicitly that 'there is no standardized definition of AFFO,' so different REITs define it slightly differently — for example, some fold leasing commissions and tenant improvements into maintenance capex while others list them as separate adjustments. Always check how a specific company defines the measure in its filings before comparing AFFO figures across REITs.

What is the difference between FFO and AFFO?

FFO (Funds From Operations, defined by NAREIT) starts from GAAP net income, adds back real estate depreciation and amortization, and removes gains and losses from property sales — one-time events that do not reflect operating performance. AFFO refines FFO further by deducting the recurring cash costs of keeping properties income-producing (maintenance capex) and removing non-cash straight-line rent revenue. Think of FFO as operating performance and AFFO as the closer proxy for cash available to pay dividends — the REIT equivalent of free cash flow.

What is a good AFFO payout ratio?

As a rule of thumb — not advice: an AFFO payout ratio below about 85% is commonly viewed as comfortable dividend coverage, 85–100% means thin coverage, and above 100% means dividends exceed AFFO, which cannot continue indefinitely. Many REIT investors grow cautious as the ratio approaches 90% or more. Context matters: growth REITs retain more cash, while mature REITs distribute more.

What does the price-to-AFFO (P/AFFO) ratio tell me?

P/AFFO = share price ÷ AFFO per share. It is the REIT analogue of the P/E ratio: how many currency units of price you pay per unit of recurring cash flow. Because GAAP earnings are distorted by real estate depreciation, REIT investors generally prefer P/AFFO (and P/FFO) over P/E when comparing valuations.

Why is the straight-line rent adjustment subtracted?

Under GAAP, leases with scheduled rent increases are recognized evenly ('straight-lined') over the lease term, so reported rent revenue can exceed the cash actually received early in a lease. That excess is non-cash revenue. AFFO removes it to reflect cash economics. In this calculator, enter the amount by which GAAP straight-line rent exceeds cash rent — use a negative number if cash rent was higher, which adds it back.

Maintenance capex vs growth capex — which one is deducted?

Only maintenance (recurring) capex is deducted — spending required to keep existing properties and their income stream intact, such as roof replacements, recarpeting and tenant improvements. Growth capex (developments, acquisitions and expansions that add new income) is not deducted, because it represents investment rather than the cost of sustaining current cash flow.

Can AFFO be negative?

Yes. If recurring capex and adjustments exceed FFO — for example during heavy renovation programs or periods of high vacancy — AFFO can turn negative, signalling the REIT is burning cash on its existing portfolio rather than generating distributable income.

AFFO Calculator

Adjusted Funds From Operations — the REIT equivalent of free cash flow. Reconcile FFO from net income, subtract maintenance capex and the straight-line rent adjustment, then turn it into per-share metrics, P/AFFO, yield and dividend payout ratio.

🔒 100% client-side — your numbers never leave this browser 📐 Full FFO → AFFO reconciliation 📊 Per-share, P/AFFO, yield & payout ratio

Educational estimate — not professional advice. This tool does arithmetic on numbers you enter. AFFO is a non-GAAP measure with no standardized definition (per Nareit) — companies define it differently. It cannot tell you whether a REIT is a good investment. Consider a qualified financial professional for personal advice.

01 — FFO → AFFO reconciliation

Enter the REIT's figures (any currency, consistent units). Empty fields are treated as zero.

Net income (GAAP)Starting point of the NAREIT FFO definition Real estate depreciation & amortizationAdded back — a non-cash charge Gains on sales of propertySubtracted — one-time, non-operating. Enter a negative number for a loss.

Recurring (maintenance) capital expendituresRoofs, recarpeting, tenant improvements, leasing commissions — the cost of keeping the income stream Straight-line rent adjustmentAmount by which GAAP straight-line rent exceeds cash rent. Negative if cash rent was higher. Other recurring adjustmentsSigned: + adds to AFFO, − subtracts (e.g. recurring items a specific REIT discloses)

Currency (display only)

03 — Worked examples

Two fully-worked presets (figures in $ millions). Load one, inspect the reconciliation, then substitute your own numbers.

Office REIT: net income 85 + D&A 120 − gains 30 → FFO 175; 175 − capex 45 − straight-line 12 + other (−3) → AFFO 115. Residential REIT: 40 + 95 − 10 → FFO 125; 125 − 30 − 8 + 0 → AFFO 87.

04 — Formula reference

The exact arithmetic this page performs — no black boxes:

FFO = net income + real estate depreciation & amortization − gains on sales of property

AFFO = FFO − recurring (maintenance) capex − straight-line rent adjustment + other recurring adjustments

AFFO per share = AFFO ÷ shares outstanding

P/AFFO = share price ÷ AFFO per share · AFFO yield = AFFO per share ÷ share price × 100

AFFO payout ratio = dividends ÷ AFFO × 100

Honest note on definitions. Nareit defines FFO precisely, but states there is no standardized definition of AFFO — REITs differ on what goes into "recurring capex" (some include tenant improvements and leasing commissions, others break them out) and on extra adjustments. This calculator uses the most common form (CFI/Wall Street Prep convention). When comparing REITs, use each company's own reported AFFO reconciliation from its filings.

📚 — Where the definitions come from

Step	Definition	Source
FFO	Net income (GAAP), excluding real-estate depreciation & amortization, gains/losses from sales of certain real estate assets, change-in-control gains/losses, and directly-attributable impairment write-downs.	Nareit FFO definition (via Nareit glossary)
AFFO	FFO minus (1) normalized recurring capitalized expenditures needed to maintain properties and revenue stream (carpeting, drapes, leasing expenses, tenant improvement allowances) and (2) the GAAP straight-line rent adjustment. No standardized definition — users must understand each company's definition.	Nareit glossary: "Adjusted Funds from Operations (AFFO)"
Per-share	FFO per share and AFFO per share give a clearer view of cash-generating capacity than EPS for REITs; P/FFO and P/AFFO replace the traditional P/E ratio for valuation.	Industry convention (analyst practice)

Simplifications in this tool: the FFO step uses the compact form (net income + D&A − gains); full Nareit FFO also adjusts for change-in-control and qualifying impairments — fold those into "other recurring adjustments" if material. Impairments and change-in-control items are company-specific; check the filing.

Related nrtechstudio finance tools

Rent vs Buy CalculatorCompare renting against buying a home Property Tax LabEstimate property tax by value and rate House Flip LabProfit math for flipping properties Retirement Savings CalculatorProject long-term savings growth

AFFO questions, answered

Free tool by NRTechStudio

AFFO Calculator

01 — FFO → AFFO reconciliation

✓ — Show your work

03 — Worked examples

04 — Formula reference

📚 — Where the definitions come from

Related nrtechstudio finance tools

AFFO questions, answered

More Finance Calculators & Tools

Startup Valuation Calculator — Pre/Post-Money, SAFE Note, Cap Table Dilution

Student Loan Calculator — Payment, Payoff, IDR, PSLF & Refinance Estimator

SUVAT Calculator

Swing Set Size Calculator — Yard Fit, Fall Zone & Mulch Planner

Take-Home Pay Calculator (2026) — Net Paycheck After Federal, State & FICA Taxes

India TDS Interest Calculator — Late Deduction & Late Deposit (Section 201(1A))

Report an issue

AFFO Calculator

01 — FFO → AFFO reconciliation

✓ — Show your work

02 — Per-share & valuation

📊 — Results

03 — Worked examples

04 — Formula reference

📚 — Where the definitions come from

Related nrtechstudio finance tools

AFFO questions, answered

More Finance Calculators & Tools

Startup Valuation Calculator — Pre/Post-Money, SAFE Note, Cap Table Dilution

Student Loan Calculator — Payment, Payoff, IDR, PSLF & Refinance Estimator

SUVAT Calculator

Swing Set Size Calculator — Yard Fit, Fall Zone & Mulch Planner

Take-Home Pay Calculator (2026) — Net Paycheck After Federal, State & FICA Taxes

India TDS Interest Calculator — Late Deduction & Late Deposit (Section 201(1A))