On the quality of FFO forecasts

Downs D. H., Guner Z. N.

JOURNAL OF REAL ESTATE RESEARCH, vol.28, no.3, pp.257-274, 2006 (SSCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 28 Issue: 3
  • Publication Date: 2006
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus
  • Page Numbers: pp.257-274
  • Middle East Technical University Affiliated: Yes


This paper is the first attempt to provide an objective assessment of the quality of real estate funds from operations (FFO) forecasts. The work, which looks past the more primitive question concerning the appropriate measure for real estate earnings, quantifies and tests the quality of real estate investment trust (REIT) FFO forecasts relative to the net income forecasts of several comparison groups. The results show the high quality of REIT forecasts are remarkably robust and are not driven by the level of analyst attention. Investors in a post-Enron and Sarbanes-Oxley era may find the implications for high quality forecasts of real estate earning to be an appealing investment concept.