Hotel Ownership: Properly accounting for maintenance cap-ex

[Laxputs]

It seems big ticket items like roof repairs and major hotel renovations are not included in AFFO. Even though the difference between FFO and AFFO is "adjustments made for recurring capital expenditures". The adjustments are for FF&E. Big ticket items may not be "recurring", but when they happen, have a very material affect on that year's FCF, and hence also on the average for a 5 year FCF number.

 

Does anybody have a good/commonly accepted method to adjust for these big ticket items as a relation to every year's annual revenues to arrive at a more accurate 'Adjusted'-AFFO or true Owners Earnings?

 

 

TIA

[cayale]

I've been told that capex on a hotel equals D&A.  It merely manifests itself on about a 7 year cycle.