Funds from Operations
Abbreviation: FFO
Plain-English definition
A supplemental REIT performance measure that adjusts GAAP net income for real-estate depreciation and amortization and specified gains, losses, and impairments under Nareit's definition.
Why it matters
FFO is a performance measure, not a synonym for cash in the bank or cash available for dividends.
Example
In a simplified example, $50 of net income plus $30 of qualifying depreciation minus a $10 qualifying property-sale gain gives $70 of FFO.
How income investors use it
Read the reconciliation and distinguish Nareit FFO from a company's further-adjusted measures.
Fly High perspective
Fly High uses the earnings measure the company identifies as the source of its dividend and keeps that measure consistent across the coverage calculation.
This material is general education, not individualized investment, tax, or legal advice.