Bob's Daily Buzzword: `AFFO'

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Aug. 26 (Bloomberg) -- Bob Rice, general managing partner with Tangent Capital Partners LLC, explains "AFFO." (Source: Bloomberg)

We will bring you his comments as soon as he starts.

In the meantime is time for bob's buzz word.

Bob rice is here from tainting capital park -- partners.

Affo, investors are inches the looking for an alternative to bonds.

They are, and they will idea about reit is that how sustainable is the dividend flow you think you are buying into as the bond substitute?

Affo, adjusted funds from operation, is probably the single thing that the pros look at the most when they are trying to figure that out.

Why don't they do it with three reit's then?

-- why don't they do it >reit's then?

Ryding we need a special set of terms or metrics for those at that?

The answer is because you are normally talking non-operating companies.

Real-estate investment companies have huge variability in appreciation and depreciation.

Neither one of those are actually paying dividends.

You want to get into the cash flow that this particular organization has and from which they will be able to sustain the dividend payments.

If you are looking for just a plain, simple, fun for operation kind of never, where do you look?

You take the net income and you add back depreciation.

And you subtract appreciation and any other extraordinary things like actual sales.

And then you get to a number that will give you a good indication of how much cash is coming into that organization so they can pay you out.

Basically, you want to know how safe the future dividends are.

That is the most important ticked away.

-- take away.

That is the most important take away.

And then you want to go to the adjusted affo.

This text has been automatically generated. It may not be 100% accurate.

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