REITs
FFO Payout Ratio
Dividends per share as a percentage of FFO per share.
Definition
The share of a REIT's funds from operations paid out as dividends. REITs must distribute most of their taxable income, so the payout is high by design.
Formula
(Dividends Per Share ÷ FFO per Share) × 100
Why it matters
Payout on EPS would read over 100% for most REITs, because depreciation is not a cash cost. On FFO, a payout well under 100% leaves room to reinvest and to survive a bad year; above 100% the dividend is paid from borrowing or asset sales.
How Standard Equity uses it
Takes the payout ratio's place for REITs in the main table and the Company Note. The estimate years use FFO per share; the history before them still uses GAAP EPS, since FFO history is not available for every year, so the row changes basis at the first estimate.
The metric
| Category | REITs |
|---|---|
| Unit | % |
| Applies to | REITs only |