AFFO Calculator

What AFFO is trying to measure

Adjusted funds from operations, or AFFO, is a REIT analysis metric used to move closer to recurring distributable cash flow than plain FFO. Nareit-defined FFO is useful because it removes some GAAP distortions such as real-estate depreciation and gains or losses on property sales, but many analysts and issuers still think FFO is too early in the cash-flow bridge because it can leave in non-cash straight-line rent and ignore recurring property-level cash spending.

That is why AFFO starts from FFO and then deducts or normalizes the recurring items that matter to the real cash economics of a leased property portfolio. Common deductions include straight-line rent adjustments, maintenance-style capital expenditures, recurring tenant improvements, and recurring leasing commissions. Some issuers also make other recurring or non-cash adjustments, which is why AFFO is widely used but not standardized in exactly the same way as Nareit-defined FFO.

For investors, the practical question is usually not just What is AFFO? but What does that imply for the dividend? A useful AFFO calculator therefore needs to go beyond one headline number and show how the adjustments changed FFO, what AFFO looks like on a per-share basis, and whether the annual common dividend is still covered once those recurring cash demands are recognized.

How the AFFO worksheet on this page works

This calculator begins with entered FFO and then removes straight-line rent, recurring capital expenditures, recurring tenant improvements, and recurring leasing commissions. A final other-adjustments field lets you add back or deduct a recurring item that belongs in your issuer's own AFFO reconciliation but is not hard-coded here. The result is a planning estimate of AFFO based on the cash adjustments most often highlighted in REIT supplemental disclosures.

From there, the page can also calculate AFFO per share when diluted shares outstanding are entered. If you enter either total annual common dividends or an annual dividend per share, the worksheet adds a payout ratio, retained cash after dividends, a coverage ratio, and the cash dividend amount being modeled. If you also enter a share price, the page can show both an AFFO yield estimate and a price-to-AFFO multiple based on the resulting AFFO per share.

The important interpretive point is that the optional market metrics are only as reliable as the underlying AFFO definition. Two REITs can report identical FFO but very different AFFO because their leasing intensity, recurring capital burden, and issuer-specific adjustment policy differ. That is why this page is best used as a reconciliation and comparison aid, not as a substitute for the company's own non-GAAP disclosure note.

Worked example: 26.5 million of FFO with recurring leasing costs

Suppose a REIT reports 26.5 million of FFO. You then remove 0.7 million of straight-line rent, 2.5 million of recurring capital expenditures, 0.6 million of recurring tenant improvements, and 0.35 million of recurring leasing commissions, while adding back 0.15 million of other AFFO adjustments. Net adjustments are therefore negative 4.0 million, producing AFFO of 22.5 million.

If diluted shares outstanding are 9.5 million, AFFO per share is about 2.37. Enter annual common dividends of 21.0 million and the payout ratio is about 93.3%, which implies that most of the estimated AFFO is being distributed. At a share price of 18.50, the same worksheet implies an AFFO yield of about 12.8% and a price-to-AFFO multiple of roughly 7.8x.

That example shows why AFFO is often more informative than FFO alone for dividend analysis. FFO can look comfortable until recurring tenant-improvement and leasing costs are deducted. Once those items are recognized, the coverage margin can narrow materially, which is exactly the pattern dividend-focused REIT investors usually want to test.

Using total dividends versus dividend per share

Competitor explanations often stop at the AFFO formula, but REIT investors usually approach dividend coverage in two different ways. If you are reading a full annual report or supplemental package, you may already have total common dividends paid for the period. If you are screening a quoted REIT, you may only know the annualized dividend per share. This calculator supports both routes so the payout ratio can be tied either to reported company-level cash distributions or to the per-share dividend a public investor normally sees.

The per-share route still depends on diluted shares outstanding because the page needs to translate the dividend per share back into a total dividend burden before comparing it with total AFFO. That also makes the coverage margin easier to interpret: a positive margin means estimated AFFO exceeds the modeled dividend burden, while a negative margin means the dividend is above this simplified AFFO estimate. The result should then be checked against management's own AFFO reconciliation, debt maturity schedule, and any one-time items before drawing a dividend-safety conclusion.

Price-to-AFFO and AFFO yield add a valuation lens, but they should not be read as guarantees of return. A low price-to-AFFO multiple can reflect undervaluation, higher property risk, leverage concerns, weak leasing prospects, or a market expectation that AFFO will fall. Use the valuation outputs as a comparison prompt rather than a standalone buy-or-sell signal.

What this AFFO estimate does not standardize for you

This page does not replace the issuer's own AFFO reconciliation. REIT management teams do not all define AFFO the same way, and some use closely related labels such as CAD or cash available for distribution. One issuer may treat certain tenant-related spending as recurring while another may separate growth and maintenance more aggressively. That means the real analytical work still lies in reading the reconciliation note and deciding whether the company is being conservative, aggressive, or merely different from peers.

The model also does not start from GAAP net income and rebuild FFO for you. It assumes the FFO input already reflects the issuer's reported or analyst-derived FFO number. It does not model property-level same-store trends, debt maturities, rate hedges, capital-raising needs, or whether an elevated payout ratio is acceptable because acquisitions, asset sales, or non-recurring items are about to change. Use it to understand the bridge from FFO to distributable cash, then compare that bridge with the full filing and supplemental package before making an investment decision.