Adjusted Funds From Operations Yield - Highland Equity Group Real Estate Glossary
     
 


Adjusted Funds From Operations Yield

In addition to being one measure of valuation, AFFO yield is often used as a proxy for a company's per-share AFFO estimate by its stock price. If a company with an AFFO yield of 6.5% buys a property at a going-in stabilized return of 7.5%, it has acquired the property at a 100 basis point (or one percentage point) positive spread to its nominal cost of capital.

Highland’s investment philosophy is radically different from many of its competitors. Rather than a narrow and formulistic acquisition criteria, Highland weighs all factors of a transaction including Adjusted Funds From Operations Yield, tenant quality, asset location, value, quality of the lease and price. Thus, a short-term lease with an excellent tenant and priced realistically may have as much appeal as an investment-grade rated twenty-year bond type lease transaction.


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Atlanta, GA 30305

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NNN stands for net, net, net. Here are more definitions including Adjusted Funds From Operations Yield below. An Absolute NNN lease equals zero landlord responsibilities. The tenant pays directly all real estate property taxes and insurance, HVAC, parking lot, CAM, roof and structure. A Triple-net (NNN) lease the landlord pays for structure only. A Double-net (NN) lease means that the landlord is responsible for roof and structure.

Adjusted Funds From Operations Yield
In addition to being one measure of valuation, AFFO yield is often used as a proxy for a company's per-share AFFO estimate by its stock price. If a company with an AFFO yield of 6.5% buys a property at a going-in stabilized return of 7.5%, it has acquired the property at a 100 basis point (or one percentage point) positive spread to its nominal cost of capital.



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