Businesses that make money primarily through real estate organize in a particular way. Those companies form what's called a Real Estate Investment Trust, or REIT.
REITs have a number of financial statistics particular to them. Most companies use pretty much the same measures of financial health...things like revenue, gross margin, operating income, earnings per share, etc. However, REITs have some stats that are all their own.
One of these REIT-centric figures is called "funds available for distribution." This number measures the amount of money the company has available to pay out to shareholders. The REIT brings in money through rent, and pays the various costs associated with owning the properties: the interest cost, the maintenance people, the rental agents, etc. Whatever is left over forms a pot of money for distribution to shareholders.
The government sets some rules for a company to qualify as a REIT. One of the regulations requires the company to distribute no less than 90% of its taxable income to its shareholders. FAD represents an internal measure of how much money is in the pot, ready to get handed out to the REIT investors.
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Finance: What is Distribution?14 Views
finance a la shmoop. what is distribution? alright ,you've made this awesome movie
guaranteed to make audiences laugh and cry and vomit yep in the same scene too. [woman turns green]
sorry it's hard to do Steven Spielberg to do that but well anyway you know all
the things teenagers want when they go to the movies, aside from you know making
out in the back row just below the projection, that's where nobody can see.
so you knock on the door of AMC ,10th century then sci-fi or the sci-fi
channel then Fox then Hulu theater. you know that. one with a combo of arrogance
and ignorance and a whole lot of bravado you then show that in your film, and they [woman in top hat pitches film]
all agree it's wonderful. then they smile and they tell you to
leave and then no they don't validate parking.
you can't believe it. why wouldn't they want your movie? this makes no sense
whose fault it is you don't know but it's definitely not yours that your
movie didn't just make bank so you sheepishly ask why, they say why?
distribution. huh well Disney for example Disney has a stream of 40 big movies a
year ,and most are gently some are good. Disney has distribution. they have a team [Disney blockbusters pictured]
of salespeople who relentlessly give out Lakers tickets to the theater managers
and owners, and unlike you Disney has the muscle the threatened to hold back the
next Star Wars sequel if the theater manager doesn't book boss baby 4: the
bloodletting, for 12 weeks with minimum. money guarantees got it ?so Disney has
distribution and you don't. that's distribution .power. power to book films
into theaters so Disney's films get paid for made and seen by millions while
yours well they never leave the cutting room floor , ie your parents basement.
well maybe next life, go to law school. [girl smiles from parent's basement]
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