The National Association of Real Estate Investment Trusts (NAREIT) developed FFO as a relative non-GAAP financial measure of performance of an equity REIT in order to recognize that income-producing real estate historically has not depreciated on the basis determined under GAAP. FFO is a widely used measure of the operating performance of real-estate companies and is provided as a supplemental measure to U.S. generally accepted accounting principles (GAAP) net income available to common shareholders and earnings per share. FFO, as defined under the revised NAREIT definition, is net income available to common shareholders, computed in accordance with GAAP, excluding gains and losses from sales of depreciable operating properties, plus real-estate related depreciation and amortization, and after adjustments for unconsolidated partnerships, joint ventures and other affiliates. Adjustments for unconsolidated partnerships, joint ventures and other affiliates are calculated to reflect FFO on the same basis. FFO is a non-GAAP financial measure. FFO does not represent cash flows from operations as defined by GAAP and is not indicative that cash flows are adequate to fund all cash needs and is not to be considered an alternative to net income or any other GAAP measure as a measurement of the results of our operations or our cash flows or liquidity as defined by GAAP. It should also be noted that not all REITs calculate FFO the same way, so comparisons with other REITs may not be meaningful.
For further definitions and additional information, please visit NAREIT’s website at www.reit.com.*
* Clicking on this link will take you to a site operated by a party that is independent of EPR or its affiliates. This link is provided for your reference only. EPR does not control the NAREIT web site, and is not responsible for its content.
