tag:blogger.com,1999:blog-21846828.post114019891638854162..comments2024-01-14T16:01:08.962-08:00Comments on The Rational Realist: Rational Realisthttp://www.blogger.com/profile/08886526093283532105noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-21846828.post-69711989216070338882009-07-24T13:39:42.079-07:002009-07-24T13:39:42.079-07:00Thanks for the comment. This an old post and I am...Thanks for the comment. This an old post and I am not sure what the current FFO multiples would indicate. I am not aware of any non-traded REITs that had very positive FFOs and then slashed dividends. I am aware of non-traded REITs that subsidized dividends from offering proceeds or borrowings and then cut dividends. Agree about the accounting slight of hand regarding leases, which is why I also look at operating cash flow and look further if it deviates too much from FFO. Small REITs are at a disadvantage to the bigger marketing machines. The FFO multiples don't consider growth, which like a P/E would allow for a higher multiple. Most non-traded REITs that I have seen have not had significant growth in FFO, but this would be important to track.Rational Realisthttps://www.blogger.com/profile/08886526093283532105noreply@blogger.comtag:blogger.com,1999:blog-21846828.post-80719846952889577552009-07-24T13:24:34.932-07:002009-07-24T13:24:34.932-07:00How can this be a valuable measure given the fact ...How can this be a valuable measure given the fact that many of these Non-Traded REITS had very positive FFO multiples weeks before slashing their dividends or shutting down their offerings altogether? FFO multiples can easily be manipulated due to GAAP Accounting Standards. Dividends are not "secure" just because of a positive FFO multiple. There is "phantom" income that can be booked by using Long Term Leases, and "Cash Received" seems to be a much better indicator. Also, smaller REITS are at much more of a disadvantage in the early years given the huge start up costs associated to get them up and running. Someone needs to try to understand what is "behind" these numbers, because they are misleading and no better of an indicator of solid long term performance tha a P/E multiple is for equities. Also, what happens if a REIT negotiates a purchase price with a seller of less than appraised value?Anonymousnoreply@blogger.com