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Adjusted Funds From Operations (AFFO)

This term refers to a computation made by analysts and investors to measure a real estate companys cash flow generated by operations. AFFO is usually calculated by subtracting from Funds from Operations (FFO) both (1) normalized recurring expenditures that are capitalized by the REIT and then amortized, but which are necessary to maintain a REITs properties and its revenue stream (e.g. new carpeting and drapes in apartment units, leasing expenses and tenant improvement allowances) and (2) straight-lining of rents. This calculation also is called Cash Available for Distribution (CAD) or Funds Available for Distribution (FAD).

Capitalization Rate (Cap Rate)

The capitalization rate (or cap rate) for a property is determined by dividing the propertys net operating income by its purchase price. Generally, high cap rates indicate higher returns and greater perceived risk.

Cash (or Funds) Available for Distribution

Cash (or Funds) available for distribution (CAD or FAD) is a measure of a REITs ability to generate cash and to distribute dividends to its shareholders. In addition to subtracting from FFO normalized recurring real estate-related expenditures and other non-cash items to obtain AFFO, CAD (or FAD) is usually derived by also subtracting nonrecurring expenditures.

Cost of Capital

The cost to a company, such as a REIT, of raising capital in the form of equity (common or preferred stock) or debt. The cost of equity capital generally is considered to include both the dividend rate as well as the expected equity growth either by higher dividends or growth in stock prices. The cost of debt capital is merely the interest expense on the debt incurred.

EBITDA

Earnings before interest, taxes, depreciation and amortization. This measure is sometimes referred to as Net Operating Income (NOI).

Enterprise Value (also referred to as Total Market Cap)

The total market value of a REITs (or other companys) outstanding common stock and indebtedness.

Equity Market Cap (also referred to as Market Cap)

The market value of all outstanding common stock of a company.

Equity REIT

A REIT which owns, or has an equity interest in, rental real estate (rather than making loans secured by real estate collateral).

Freestanding Retail

The category of retail stores in which National Retail Properties invests. Freestanding retail, also known as stand-alone stores, are a sublevel of the retail niche and different than strip centers, power centers or regional malls.

Funds From Operations (FFO)

The most commonly accepted and reported measure of REIT operating performance. Equal to a REITs net income, excluding gains or losses from sales of property, and adding back real estate depreciation.