REITs
P/FFO — Price-to-FFO
Stock price divided by FFO per share.
Definition
P/FFO is the REIT version of P/E. Because EPS is reduced by real-estate depreciation, a REIT's P/E looks far higher than what investors pay for its rents; P/FFO prices the stock on funds from operations instead.
Formula
Stock Price ÷ FFO per Share
Why it matters
Compare REITs on P/FFO, not P/E. Like P/E it bakes in growth and risk expectations, and it differs by property type: net-lease and data-centre REITs trade at higher multiples than office or retail.
How Standard Equity uses it
Takes P/E's place for REITs in the main table (average historical P/FFO), the header (P/FFO and P/FFO TTM, a dash if the REIT has no FFO, never the GAAP P/E), the Peers column (ranked against REIT peers by P/FFO), the SE Grade's price position (against the REIT's own 10-year P/FFO) and the Reference Value's multiple. The weekly Catalogue Class ignores a REIT's GAAP P/E, since it has no P/FFO history.
The metric
| Category | REITs |
|---|---|
| Unit | x |
| Applies to | REITs only |