FFO Calculator – Funds From Operations for REITs (FFO per share, P/FFO, payout)

Understanding the FFO calculator — concept and principle

This calculator works out funds from operations (FFO) for a real estate investment trust (REIT) using Nareit's definition, plus FFO per share, EPS, price-to-FFO, the dividend payout on FFO, FFO relative to net income and the P/E ratio. Use it to analyse REITs, compare them with each other and see why net income understates their cash earnings.

FFO adds back real-estate depreciation and removes one-off property gains, so it is far above net income.

How it is calculated

FFO = net income + real estate depreciation and amortization − gains on sales of real estate (+ losses) + impairment write-downs of real estate.
FFO per share = FFO ÷ shares; EPS = net income ÷ shares.
P/FFO = price ÷ FFO per share; P/E = price ÷ EPS.
Payout = dividend per share ÷ FFO per share.

The principle

Accounting rules depreciate buildings every year, but well-located real estate often keeps or gains value. For REITs, depreciation therefore makes net income look smaller than the cash the business generates. Nareit's FFO adds back real estate depreciation and removes gains or losses from selling properties, so that one-time sales do not distort recurring results. FFO per share and P/FFO then play the role that EPS and P/E play for other companies. FFO still ignores the capital spending needed to maintain the properties; AFFO adjusts for that.

Worked example

Default inputs: net income $50,000,000, depreciation $40,000,000, gains on sales $8,000,000, impairments $2,000,000, 60,000,000 shares, price $25, dividend $1.10.

FFO = 50 + 40 − 8 + 2 = $84,000,000.
FFO per share = 84 ÷ 60 = $1.40; EPS = 50 ÷ 60 ≈ $0.83.
P/FFO = 25 ÷ 1.40 ≈ 17.9; P/E = 25 ÷ 0.8333 = 30.
Payout = 1.10 ÷ 1.40 ≈ 78.6%.
FFO ÷ net income = 84 ÷ 50 = 1.68.

Each point is the calculator re-run with only “Net income (GAAP)” changed; the gold point is the default example. Change the inputs above and this chart follows your numbers.

Net income (GAAP)	Funds from operations (FFO)
1.25e+07	$46,500,000
2.5e+07	$59,000,000
3.75e+07	$71,500,000
5e+07	$84,000,000
6.25e+07	$96,500,000
7.5e+07	$109,000,000
1e+08	$134,000,000

How to read the result

For REITs, P/FFO is usually more meaningful than P/E: here the P/E of 30 looks expensive, but the P/FFO of 17.9 tells a different story. A payout well below 100% of FFO leaves room for maintenance spending; check AFFO for a stricter view. Compare REITs within the same property sector.

Common mistakes

Adding back depreciation on non-real-estate assets.
Forgetting to remove gains on property sales, which can inflate FFO.
Treating FFO as free cash flow; it ignores maintenance capital spending.
Comparing P/FFO across very different REIT sectors.

Keep in mind: Companies may report adjusted FFO measures that differ from Nareit's definition. Use each REIT's reconciliation. This is not investment advice.

Frequently asked questions

Why do REITs use FFO instead of net income?

Net income is reduced by large depreciation charges on buildings that may not lose value.

What is a good P/FFO?

It varies by sector and interest rates; compare with similar REITs and their history.

What is the difference between FFO and AFFO?

AFFO also subtracts recurring capital spending and leasing costs and adjusts rent to cash.

Sources: Nareit, "Funds From Operations (FFO)" glossary and Nareit FFO White Paper (2018 restatement)

Checked 9 Nov 2026. Nareit, glossary “Funds From Operation (FFO)” (reit.com) and the Nareit FFO White Paper (2018 restatement): net income (GAAP) excluding real-estate depreciation and amortization, gains and losses from sales of certain real estate and from change in control, and impairment write-downs of certain real estate.

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