1. What is Cash Available for Distribution?

Cash Available for Distribution quantifies the cash on hand that a real estate investment trust (REIT) can distribute in the form of dividends to shareholders.

2. How Does the Calculator Work?

The calculator uses the CAD formula:

Where:

• \( FFO \) — Funds from Operations, a financial metric primarily used by real estate investment trusts (REITs) and other similar entities to measure the cash generated from their core operations
• \( NRI \) — Non-Recurring Items, financial events or transactions that are not expected to recur in the foreseeable future and are considered non-operational or extraordinary in nature
• \( CAPEX \) — Capital Expenditures, funds that a company invests in acquiring, upgrading, or maintaining long-term assets

Explanation: The formula calculates the actual cash available for distribution to shareholders by adding non-recurring items to funds from operations and subtracting capital expenditures.

3. Importance of CAD Calculation

Details: CAD is a crucial metric for REITs and income-focused investors as it indicates the actual cash available for dividend distributions after accounting for necessary capital investments and including one-time financial events.

4. Using the Calculator

Tips: Enter all values in dollars. Funds from Operations and Non-Recurring Items should be positive values. Capital Expenditures represent cash outflows for long-term asset investments.

5. Frequently Asked Questions (FAQ)

Q1: Why is CAD important for REIT investors?
A: CAD provides a more accurate picture of the actual cash available for dividend distributions than traditional earnings metrics, helping investors assess dividend sustainability.

Q2: How does CAD differ from FFO?
A: While FFO measures operational cash generation, CAD adjusts for non-recurring items and subtracts capital expenditures, providing a clearer view of distributable cash.

Q3: What types of items are considered non-recurring?
A: Non-recurring items include one-time gains/losses from asset sales, legal settlements, restructuring charges, or other extraordinary events not expected to repeat.

Q4: How often should CAD be calculated?
A: CAD should be calculated quarterly along with financial reporting to provide current information about dividend-paying capacity.

Q5: Can CAD be negative?
A: Yes, if capital expenditures exceed the sum of FFO and non-recurring items, resulting in negative CAD, which may indicate potential dividend cuts or the need for external financing.