FFO Calculator — Funds From Operations (REIT)
FFO (Funds From Operations) is the primary performance metric for real estate investment trusts (REITs), replacing GAAP net income with a measure that adds back real estate depreciation. Enter net income, D&A, and property sale gains to compute FFO, FFO per share, and the P/FFO valuation multiple.
FFO = Net Income + D&A − Gains on Property Sales
- 1
Net income (GAAP)
3 000 000 - 2
Add real estate D&A
3 000 000 + 6 000 000 = 9 000 000Depreciation is a non-cash charge — adding it back restores the cash that was never spent. - 3
Subtract property sale gains
9 000 000 − 500 000 = 8 500 000
Hur fungerar denna kalkylator?
FFO = Net Income + Real Estate Depreciation − Gains on Property Sales. It corrects GAAP earnings for the large non-cash D&A charges that understate REIT cash generation. FFO per share = FFO ÷ shares; P/FFO = price ÷ FFO per share. Historical REIT P/FFO averages ~15–20x, varying by sector and interest rates.
Formel
How this is calculated
GAAP accounting requires real estate to be depreciated over time — typically 27.5 years for US residential properties and 39 years for commercial. This creates large non-cash depreciation charges that reduce reported net income even as the underlying properties frequently appreciate in value, making GAAP earnings a poor measure of actual cash generation for REITs.
The National Association of Real Estate Investment Trusts (NAREIT) developed FFO in 1991 to correct for this distortion. FFO adds back real estate depreciation and amortization to net income and removes gains (or losses) from selling properties, on the grounds that property disposals are not part of recurring operations. The result is a truer picture of the income-generating capacity of the real estate portfolio.
FFO per share (FFO divided by weighted-average diluted shares outstanding) allows comparison across REITs of different sizes. The P/FFO multiple — stock price divided by FFO per share — is the REIT equivalent of the price-to-earnings ratio and is the standard valuation benchmark used by REIT analysts. Historical P/FFO averages vary by sector: industrial and residential REITs have often traded at 20–30x, while office and retail have traded lower. FFO is not a GAAP measure; for a more conservative metric that also deducts maintenance capital expenditure, see AFFO.
Vanliga frågor
Real estate depreciation is a large non-cash charge that reduces GAAP net income but does not represent cash leaving the business — and properties often appreciate, not depreciate, over time. FFO adds back this non-cash cost and removes one-time property sale gains, giving a cleaner picture of recurring operating cash generation.
P/FFO multiples for US REITs have historically averaged around 15–20x, but they vary significantly by property type and interest-rate environment. Industrial and residential REITs often command premiums (20–30x); retail and office REITs often trade at discounts. Compare against sector peers and the REIT's own history rather than using a single threshold.
FFO adds back all real estate D&A and removes property sale gains from net income. AFFO goes further by also deducting maintenance capital expenditure (the cash needed to keep properties in rentable condition) and making additional adjustments for non-cash items like straight-line rent. AFFO is a more conservative, cash-closer metric and is the better proxy for dividend sustainability.
Även känt som
TG we-Calculate Editorial Team. (2026). FFO Calculator — Funds From Operations (REIT) [Online calculator]. TG we-Calculate. https://we-calculate.com/sv/calculator/ffo-calculator
TG we-Calculate Editorial Team. "FFO Calculator — Funds From Operations (REIT)." TG we-Calculate. 2026. https://we-calculate.com/sv/calculator/ffo-calculator.
TG we-Calculate Editorial Team, "FFO Calculator — Funds From Operations (REIT)," TG we-Calculate, 2026. [Online]. Available: https://we-calculate.com/sv/calculator/ffo-calculator
@misc{wecalculate_ffo_calculator, title = {FFO Calculator — Funds From Operations (REIT)}, author = {{TG we-Calculate Editorial Team}}, howpublished = {\url{https://we-calculate.com/sv/calculator/ffo-calculator}}, year = {2026}, note = {TG we-Calculate} }
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