American Financial Realty makes accounting change
Philadelphia Business Journal
American Financial Realty Trust said Monday it has finalized a previously announced change to its financial reporting.
While funds from operations is the accepted measure of a real estate investment trust's financial performance, American Financial uses adjusted funds from operations, which is considered a key REIT industry non-GAAP financial reporting metric.
"A significant component of the company's business plan includes the acquisition and disposition of non-core assets acquired in multi-property asset pools and, for this reason, the company has included gains on the sales of real estate in the company's prior reporting of AFFO," said AFR (NYSE:AFR), which buys properties from financial institutions and leases them back to the companies.
"Following discussions with analysts and investors," AFR said, "the company has concluded that analysis of its non-GAAP financial reporting would be improved if it no longer included gains on the sales of assets within AFFO."
The Jenkintown, Pa., company said it will no longer include gains as a component of its core earnings and will realize any gains made from asset sales during a reporting period solely to offset transaction costs incurred on assets sold and impairments taken within the same reporting period.
The change will take effect with third quarter results, which are scheduled for release on Oct. 27.
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