Why do you subtract capital gains and add capital losses to GAAP net income in REITs?
I'm reading about REITs, and I see that the formula for Funds From Operations (FFO) is net income - gain from sale of property + loss from sale of property + D&A
Wouldn't gains from sales be a cash inflow and losses be a cash outflow? Why don't you add gains and subtract losses?
Edit: Nevermind. I figured it out. For anyone who's wondering, its because gains are added into net income and losses are subtracted from it, but because both are non reoccurring, you have to remove gains and add back losses to find FFO.
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