FFO and AFFO Definitions
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Funds From Operations (FFO) (1)

FFO is a non-IFRS earnings measure developed for publicly traded real estate entities. FFO is frequently used by securities analysts, investors and other interested parties to evaluate the operating performance of a REIT.

FFO, by excluding the impact of depreciation, amortization and gains/losses from property dispositions (which can differ by company), reflects the impact on operations from trends in leasing activity, acquisition activity and interest costs. However, FFO does not represent amounts available for capital requirements, debt service obligations, commitments or uncertainties.

CREIT calculates FFO in accordance with the Real Property Association of Canada (REALpac) White Paper on Funds from Operations as follows:

Net income for the period
Excluding (but not limited to):
(a) the amortization of investment property;
(b) gains and losses from property dispositions;
(c) property acquisition costs on business combinations;
(d) changes in the fair value of financial instruments that do not qualify for hedge accounting;
(e) deferred income tax; and
(f) foreign currency translation.

Adjusted Funds from Operations (AFFO) (1)

AFFO is a financial measure not defined under IFRS. AFFO, as defined by CREIT, may not be comparable to similar measures presented by other REITs or corporations.

CREIT considers AFFO to be a measure of operating cash flow generated from the business, after providing for all operating capital requirements.

While AFFO overcomes the limitations of FFO by considering the impact of capital requirements for operations, it can vary dramatically year over year, depending on the lease expiry profile in any one period.

CREIT calculates AFFO as follows:

FFO (as defined above)
Excluding:
(a) productive capacity maintenance expenditures; and
(b) straight-line rent in excess of contract rent.

(1)  FFO and AFFO should not be considered alternatives to Net Income in accordance with IFRS or as alternatives to cash flow as a measure of       liquidity. FFO and AFFO are additional indicators of operating performance.


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