Funds from operations (FFO) is a measure of the cash flow generated by a real estate investment trust (REIT). It is calculated by adding depreciation and amortization to net income, and then subtracting any gains or losses on the sale of assets.
FFO is a more accurate measure of the cash flow generated by a REIT than net income, because it takes into account the non-cash expenses of depreciation and amortization. This makes FFO a more useful metric for investors who are interested in the financial performance of a REIT.
In the context of Core Property and property research, FFO can be used to:
- Compare the performance of different REITs. By comparing the FFO of different REITs, you can get a better understanding of their financial performance.
- Identify undervalued REITs. REITs with high FFO and low share prices may be undervalued.
- Track the performance of a particular REIT. You can track the FFO of a particular REIT over time to see how its financial performance is changing.