adjusted funds from operations (AFFO)

A measurement of a real estate company's available funds generated by operations. The first part of the calculation subtracts the REIT's Funds From Operations from normalized recurring expenditures that are capitalized by the REIT and then amortized, but which are essential to uphold a REIT's revenue stream and properties. That includes items such as new carpeting in apartment units and leasing expenses. The second facet for calculating AFFO is to subtract what is known as the "straight-lining" of rents from the FFO. A REIT's AFFO is also known as Cash Available for Distribution (CAD).