REIT Question

Water Cooler Investing
#1

REIT question guys -

I am looking back at financial statements of a REIT from 2004-2006, and in several of those years they show net income of say $20 million, but only pay dividends of $3mm. Don’t they HAVE to pay out 90% of their taxable income to shareholders?

confused.

#2

Net income for accounting GAAP purposes is not the same as taxable income. REITs will often quote their dividend payout ratio in terms of AFFO or Adjusted Funds from Operations. This is the industry standard measure of cash flow.