FFO payout ratio

← All five bases

What it measures

A REIT's earnings are swamped by depreciation on buildings that are not, in fact, wearing out on that schedule, so the earnings payout ratio for a REIT is close to meaningless and routinely reads over 200%. Funds from operations adds that depreciation back.

FFO is non-GAAP and does not exist as a tag in SEC XBRL. It is built here from its components — net income, real estate depreciation, gains on sale, diluted shares — and the methodology page says so. Gains are subtracted, so a missing gains figure would inflate FFO and understate the payout; that list is checked rather than assumed.

REITs are required to distribute most of their taxable income, so a high FFO payout ratio is ordinary rather than alarming. Judging one against an industrial company's free cash flow ratio is the single most common way to misread a REIT.

The distribution

Across every company here whose filings support this basis, whether or not it is the one that applies to them.

Where it is the basis that applies

46 companies here are read on funds from operations rather than on anything else, because that is what their own filings support. Among them the median payout is 65.5%, a quarter pay out less than 54.2% and a quarter more than 78.3%. They are concentrated in Real estate (46).