How is the performance of a REIT most commonly measured?

The performance of a REIT (Real Estate Investment Trust) is most commonly measured using specific financial metrics that provide insights into its operational efficiency and profitability. Metrics such as Funds From Operations (FFO), Net Asset Value (NAV), and dividend yield are crucial because they offer a comprehensive view of a REIT's performance beyond the simple calculation of profit.

FFO is particularly important as it adjusts net income for depreciation and gains or losses on sales, providing a clearer picture of cash flow generated by the REIT's properties. NAV represents the difference between the value of the REIT's assets and its liabilities, serving as a measure of intrinsic value that investors often use to assess whether a REIT is undervalued or overvalued. Dividend yield shows the income return on an investment, indicating how much cash investors can expect to receive relative to their investment in the REIT.

These metrics are widely used by investors and analysts to evaluate a REIT's financial health, sustainability of distributions, and overall investment potential, making them the most reliable means of measuring REIT performance.