The language of REITs

A definition is
just the beginning.

Quick explanations of 25 common terms, each connected to a full guide with examples and limitations.

25 terms

AFFO: An issuer-defined adjustment to FFO intended to describe recurring performance. Definitions and cash-cost exclusions differ. Explore AFFO in the full guide ↗
Cap rate: Annual property NOI divided by property value or price; a valuation input with sensitivity to both assumptions. Explore Cap rate in the full guide ↗
Common equity: The residual ownership claim after liabilities and senior claims. Common distributions are not guaranteed. Explore Common equity in the full guide ↗
Coverage: An income or cash measure divided by the distribution or expense being tested. The measure and period must match. Explore Coverage in the full guide ↗
Dilution: A reduction in a per-share claim or result as share count grows, depending on what the new capital earns. Explore Dilution in the full guide ↗
Dividend yield: Annual dividends per share divided by price. Identify whether dividends are trailing, indicated or forecast. Explore Dividend yield in the full guide ↗
DRIP: A dividend reinvestment plan that uses distributions to purchase additional shares under stated terms. Explore DRIP in the full guide ↗
Equity REIT: A REIT that generally owns or operates income-producing real estate. Explore Equity REIT in the full guide ↗
FFO: Funds from operations: a supplemental non-GAAP operating-performance measure with specified real-estate adjustments. Explore FFO in the full guide ↗
Interest coverage: A specified earnings measure divided by interest expense; definitions and cash versus accrued bases matter. Explore Interest coverage in the full guide ↗
Lease rollover: The expiration, renewal or replacement of leases, bringing opportunities to reset rents and risks of downtime. Explore Lease rollover in the full guide ↗
Mortgage REIT: A REIT that generally finances real estate through loans or mortgage-backed securities. Explore Mortgage REIT in the full guide ↗
NAV: Estimated net asset value after liabilities and other claims; sensitive to asset valuation assumptions. Explore NAV in the full guide ↗
Net lease: A lease assigning certain property expenses to the tenant as well as rent. The contract determines the allocation. Explore Net lease in the full guide ↗
NOI: Net operating income at the property level, before financing and corporate items; issuer definitions need checking. Explore NOI in the full guide ↗
Payout ratio: Distributions divided by a specified income or cash measure on a consistent basis. Explore Payout ratio in the full guide ↗
Recurring capex: Ongoing capital expenditure needed to maintain earning capacity, distinct from some growth investments. Explore Recurring capex in the full guide ↗
Refinancing: Replacing or renewing financing, potentially changing interest cost, terms, collateral or maturity. Explore Refinancing in the full guide ↗
REIT ETF: An exchange-traded fund holding REIT-related securities according to its stated strategy or index. Explore REIT ETF in the full guide ↗
Same-store NOI: NOI growth for a defined comparable property pool, which can differ between issuers and periods. Explore Same-store NOI in the full guide ↗
Straight-line rent: Accounting recognition that can spread contractual rent over a lease term and differ from cash received. Explore Straight-line rent in the full guide ↗
Tenant concentration: Dependence on a small number of tenants, measured using a disclosed base such as annualized rent. Explore Tenant concentration in the full guide ↗
Total return: The combination of income and value change over a period, with reinvestment treatment stated. Explore Total return in the full guide ↗
Triple-net lease: A net lease generally allocating property taxes, insurance and maintenance obligations to tenants, subject to contract details. Explore Triple-net lease in the full guide ↗
Weighted lease term: An average remaining lease term weighted by a disclosed base; it can conceal near-term concentrations. Explore Weighted lease term in the full guide ↗

These are concise educational explanations. See each linked guide for primary sources, scope and issuer-specific differences.