Funds from Operations

A widely accepted metric used to analyze the performance of a REIT. Funds from Operations, or FFO, accounts for the fact that net income on a REIT’s income statement may be an inaccurate representation of the REIT’s true performance. As such, net income is adjusted as follows to arrive at FFO:

FFO = Net Income + Depreciation + Amortization – Gain/Loss on Sale of Properties.

Funds from Operations is comparable to the Cash Flow from Operations metric, used in analyzing individual properties.