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Investopedia and other websites state that REITs are required to disclose their Funds From Operations (FFO) on their financial statements. I looked at the 10-Ks from two of them (ARI and KKR) and can't find it (I searched the entire documents for ffo and "funds from"). Where can I find this?

Thanks,

Jim

Chris W. Rea
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1 Answers1

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You should easily be able to find an equity Reits (eReit) reported FFO calculation on their income statement, and sites like seekingalpha list this metric on the main page for each and every equity Reit.

However, the two you listed, KKR and ARI are commercial mortgage Reits (mReits) and as such do not operate and lease real estate, but instead lend money to property owners and/or buy mortgage securities and receive interest payments. So they generally don't use the FFO metric. Why? FFO is useful because it adds back depreciation which greatly detracts from GAAP EPS but in reality is a non-cash expense which would under-estimate the dividend-paying ability of an equity Reit. But depreciation is only a factor for property owners (equity Reits) and since mortgage Reits have little/no depreciation expenses they don't use FFO.

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