How is Performance Measured in REITs?
A. Like other public companies, REITs use net income as defined under Generally Accepted Accounting Principles (GAAP) as the primary operating performance. REITs also use Funds From Operations (FFO) as a measure of a REIT’s operating performance. The National Association of Real Estate Investment Trusts defines FFO as net income (computed in accordance with GAAP) excluding gains or losses from sales of most property and depreciation of real estate.
