Build the AFFO-style bridge
Construct an AFFO-style bridge from FFO using recurring cash adjustments.
A REIT reports $246M of FFO and pays $216M in dividends. It also reports $18M recurring maintenance capex, $14M tenant improvements, $9M leasing commissions, and $22M one-time redevelopment capex. FFO -> recurring cash adjustments -> dividend coverage The common trap is subtracting every capital dollar from dividend capacity or subtracting none. Separate recurring asset-sustaining costs from one-time growth investment. Step 1 Start with FFO: $246M Dividend: $216M FFO payout = $216M / $246M = 88% This is the headline performance coverage. It is useful, but not enough for sustainable cash coverage. Step 2 Subtract recurring cash adjustments: $18M maintenance capex…
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