Glossary › REITs (FFO and AFFO) › FFO and AFFO

FFO and AFFO: how to value a REIT

Short answer

FFO is a real estate trust's (REIT's) earnings cleaned of building depreciation and one-off gains from property sales. Ordinary REIT earnings are understated by depreciation although buildings do not really lose value, so REITs are compared on P/FFO and P/AFFO rather than P/E.

Formula

FFO = net income + real estate depreciation − gains on property sales
AFFO = FFO − maintenance capex − straight-line rent adjustments
P/FFO = share price ÷ FFO per share

How to read it

Why not P/E. Building depreciation eats earnings on paper, so a REIT's P/E looks higher than the business is worth.
AFFO is closer to cash. It subtracts the money still spent on repairing and maintaining properties.
A dividend above AFFO is a bad sign. REITs pay out most of their earnings. If the payout exceeds AFFO, it is funded with debt.

Live exampletrailing 12 months · data as of Nov 5, 2026

Ticker	P/FFO	P/AFFO	P/E
PLD	21.3	24.5	29.6
O	13.8	13.4	40.2
WELL	40.1	46.5	107.7
EQIX	33.7	24.4	59.0
SPG	18.2	18.8	40.9

REIT P/E is noticeably higher than P/FFO: that is building depreciation, which reduces earnings only on paper.

Rows in the terminal

P / FFO (TTM) — price to FFO

Price to “REIT earnings”: net income plus real estate depreciation minus gains on property sales. Buildings lose value on schedule in the accounts while in reality they appreciate — so an ordinary P/E overstates real estate funds, and this replaces it.

P / AFFO (TTM) — price to AFFO

The main REIT multiple — their version of P/E. AFFO is FFO minus maintenance capital spending, i.e. the part of the cash the fund can really distribute to owners without eating into its properties.

FFO Growth (YoY) — FFO growth over the year

Growth of “REIT earnings” year over year — before subtracting maintenance capital spending, which AFFO removes.

AFFO Growth (YoY) — AFFO growth over the year

Growth of the cash a REIT can distribute to owners without eating into its properties. For a real estate fund this is what EPS growth is for an ordinary company.

Frequently asked questions

What is a REIT?

A company that owns and leases real estate: warehouses, housing, offices, data centers. US REITs must pay out most of their earnings to shareholders.

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