Several of the financial metrics used throughout this wiki, and defined in detail in Commercial Real Estate Financial Metrics, are not measures defined or required by International Financial Reporting Standards. Real estate reporting practice relies on a set of industry-standard supplementary measures because IFRS-defined net income does not, by itself, capture the operating performance metrics that commercial real estate investors, lenders, and appraisers use to evaluate a property. This article explains what a non-IFRS measure is, which measures used in this wiki fall into that category, and how they relate to the audited IFRS financial statements.

What makes a measure "non-IFRS"

A non-IFRS measure — sometimes called a non-GAAP measure in other jurisdictions — is a financial metric that is not defined under the applicable accounting standard, is calculated using a methodology that may vary between companies, and is presented in addition to, not in place of, the standardized measures required by IFRS. Because non-IFRS measures are not standardized, a measure with the same name calculated by two different companies may not be directly comparable unless each company's calculation methodology is disclosed and reviewed.

Non-IFRS measures used in this wiki

Net operating income (NOI). Income from property operations after operating expenses but before debt service, capital expenditure, depreciation, and tax. NOI is not an IFRS line item; it is a supplementary operating measure used to evaluate a property independent of its financing structure and capital expenditure decisions. See Commercial Real Estate Financial Metrics for the full definition, including the distinction between cash NOI and GAAP NOI.

Funds from operations (FFO) and adjusted funds from operations (AFFO). FFO and AFFO are standard real estate industry measures of distributable income that adjust IFRS net income by removing non-cash depreciation and, for AFFO, normalizing maintenance capital expenditure. Neither measure is defined under IFRS; both follow industry-standard definitions established by real estate industry associations, applied consistently across the metrics used in this wiki.

Capitalization rate (cap rate). A market-derived valuation ratio — NOI divided by market value — used to estimate or interpret property value. Capitalization rate is a valuation tool drawn from observed market transactions, not an IFRS-defined accounting measure.

Interest coverage ratio (ICR). The ratio used as the distribution-gating covenant throughout the Direct-Hold Solutions structure — net operating income divided by interest obligations — is a covenant and operating metric, not an IFRS-defined measure, although it is calculated from figures that trace back to the audited financial statements.

Reconciliation to IFRS measures

Where a non-IFRS measure is presented in a formal disclosure document, applicable securities law requires a reconciliation showing how the non-IFRS measure is derived from the most directly comparable IFRS measure — typically net income. This wiki's articles describe how each non-IFRS measure is calculated in general terms; the specific reconciliation for a given reporting period appears in the financial statements and MD&A filed for that period, not in this wiki.

These measures supplement, not replace, IFRS statements

Non-IFRS measures used throughout this wiki are presented as a supplement to, and are not a substitute for, the audited financial statements prepared in accordance with IFRS. They should not be considered in isolation from, or as a substitute for, the IFRS measures reported in a reporting issuer's financial statements, and they may not be comparable to similarly titled measures presented by other companies.

See also

• Commercial Real Estate Financial Metrics — full definitions of NOI, FFO, AFFO, and related measures
• Financial Reporting — the IFRS financial statements these measures supplement
• Forward-Looking Statements Advisory — the companion advisory for forward-looking language