REIT Metrics: Key Numbers to Evaluate Real Estate Investments

When you invest in a REIT, a Real Estate Investment Trust that owns and operates income-producing properties like apartments, offices, or warehouses. Also known as real estate stock, it lets you own pieces of buildings without managing tenants or repairs. But not all REITs are created equal. The stock price alone won’t tell you if it’s a good buy. You need to look at the numbers behind the scenes—metrics that reveal how much cash it actually generates, how safe its dividends are, and whether it’s overpriced. These aren’t just Wall Street jargon. They’re the real signs of whether a REIT can keep paying you and grow over time.

The most important metric is Funds From Operations (FFO), a standardized way to measure a REIT’s cash flow after accounting for property depreciation and other non-cash expenses. Unlike regular companies, REITs own buildings that lose value on paper over time. FFO strips that out so you see the real cash coming in from rent. Even better is Adjusted Funds From Operations (AFFO), a refined version that also subtracts recurring maintenance costs like roof repairs or elevator upgrades. If a REIT’s AFFO is growing year after year, it means it’s not just collecting rent—it’s making more money after keeping its properties in good shape. Then there’s dividend yield, the annual dividend divided by the stock price. A high yield sounds great, but if AFFO can’t cover it, the dividend might get cut. Look for yields that are comfortably below AFFO payout ratios—usually under 80%. And don’t ignore property valuation, how much the buildings are actually worth compared to what the REIT paid for them. If the market value of its assets is rising, the REIT’s underlying wealth is growing, even if the stock price hasn’t caught up yet.

These numbers connect directly to the posts you’ll find below. You’ll see how REIT metrics help you spot hidden risks in high-yield stocks, how they compare to other income investments like bonds or dividend ETFs, and why some REITs perform better during inflation or rate hikes. You’ll learn how to read financial statements like a pro, not just rely on headlines. Whether you’re checking a REIT you already own or looking at new ones, these metrics turn guesswork into decisions. The right numbers don’t guarantee success—but the wrong ones guarantee trouble.