Adjusted Funds From Operations (AFFO) Calculator
Calculate Adjusted Funds From Operations (AFFO) for a REIT by adding depreciation back to net income and subtracting capital expenditures and straight-line rent adjustments.
How to use this tool
- Enter net income, depreciation & amortization, capital expenditures (capex) and straight-line rent adjustments in the fields above.
- Results update instantly as you type — or click Calculate.
- Read your adjusted funds from operations (affo) and the full breakdown beneath it.
Formula
FFO = Net Income + Depreciation & Amortization
AFFO = FFO − CapEx − Straight-Line Rent Adjustments
How it works
Funds From Operations (FFO) adjusts GAAP net income by adding back real estate depreciation, which is a non-cash charge that overstates the true economic cost for properties that typically appreciate in value. Adjusted Funds From Operations (AFFO) further refines FFO by subtracting recurring capital expenditures needed to maintain the properties and removing straight-line rent adjustments that do not reflect actual cash collected. AFFO is considered a better proxy for a REIT's sustainable cash flow and dividend-paying capacity than either FFO or GAAP net income.
Worked example
REIT with $100,000 Net Income
- Start with net income: $100,000
- Add back depreciation & amortization: $100,000 + $50,000 = $150,000 (FFO)
- Subtract capital expenditures: $150,000 − $30,000 = $120,000
- Subtract straight-line rent adjustments: $120,000 − $5,000 = $115,000 (AFFO)
AFFO = $115,000
Key terms
- FFO (Funds From Operations)
- A REIT performance measure equal to net income plus real estate depreciation and amortization, intended to reflect operating cash flow more accurately than GAAP net income.
- AFFO (Adjusted Funds From Operations)
- FFO further adjusted by subtracting recurring capital expenditures and straight-line rent adjustments to approximate true distributable cash flow.
- Straight-Line Rent
- An accounting method that spreads total lease payments evenly over the lease term, creating a non-cash revenue item when actual rent received differs from the recognized amount.
- Capital Expenditures (CapEx)
- Spending on maintaining or improving physical assets such as buildings; recurring CapEx is subtracted in the AFFO calculation because it represents real cash outflows.
- Distributable Cash Flow
- The cash available for distribution to investors; AFFO is frequently used as a proxy for this figure in REITs.