Adjusted Funds from Operations (AFFO) is a real estate investment metric that measures the financial performance of REIT or property investment trust.

It is derived by deducting recurring capital expenditures, leasing costs and other material factors from the REIT’s or property trust’s funds from operations.

Adjusted Funds from Operations is a term that is more commonly used in Canada and the United States. In other parts of the world with a sizeable REIT or property trust markets, such as Singapore and Malaysia, the term distributable income may be used instead.

AFFO is considered a good measure of residual cash flow that is to be distributed to unitholders of the REIT of property trust. It must also be noted that as AFFO is not a term that is recognised by the Generally Accepted Accounting Principles (GAAP) framework. As such, different finance professionals may have different methods of computing Adjusted Funds from Operations.

AFFO has also been referred to in certain investment literatures in the United States as Cash Available for Distribution (CAD) or Funds Available for Distribution (FAD).


This entry is part of REITsWeek's glossary of REITs and real estate investment terms.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.

5 thoughts on “Adjusted Funds From Operations (AFFO)”
  1. […] REITs investors. However, more discerning investors may prefer a more precise metric known as the AFFO. This post is part of Assets.SG’s REITs 101 Investment Glossary series. […]

  2. […] In securities analysis, EBITDA is a very commonly used metric to gauge the financial performance of a company or asset. In some jurisdictions, EBITDA can also be used to measure the performance of a REIT. However seasoned REIT investors, especially those in the United States, are more accustomed to measuring the performance of a REIT by looking at its Funds from Operations (FFO) or Adjusted Funds from Operations (AFFO). […]

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