U.S. equity REITs are currently required to pay out 90 percent of taxable income to shareholders in the form of dividends to maintain their REIT status. These steady dividend streams are important to REIT investors, so many analysts will look at AFFO payout ratios to determine whether REITs will be able to maintain their current dividend levels going forward. AFFO (also known as funds or cash available for distribution) adjusts funds from operations for non-cash items such as straightlining of rents and non-revenue-generating capital expenditures to get to an earnings metric that is a good proxy for cash flow per…

U.S. equity REITs are currently required to pay out 90 percent of taxable income to shareholders in the form of dividends to maintain their REIT status. These steady dividend streams are important to REIT investors, so many analysts will look at AFFO payout ratios to determine whether REITs will be able to maintain their current dividend levels going forward. AFFO (also known as funds or cash available for distribution) adjusts funds from operations for non-cash items such as straightlining of rents and non-revenue-generating capital expenditures to get to an earnings metric that is a good proxy for cash flow per…