In Practice
A T12, short for trailing twelve months, is a month-by-month operating statement covering the last full year. It lists income, expenses and net operating income so a buyer, lender or owner can see how a property has really performed. Unlike an annual report, the window rolls forward every month, so it always reflects the latest year.
Managers are asked for T12s when a property is being sold, refinanced or reviewed. The buyer's analyst will line up the T12 against the rent roll and look for gaps. If your income does not match your rent roll or an expense looks odd, expect questions. Clean coding all year makes T12 requests painless.
An example: a T12 ending in October runs from November of last year through October of this year. If a big one-time expense, such as a flood repair, sits in the middle, the analyst will want a note explaining it and whether it will repeat.
A common mistake is sending a T12 with unexplained spikes, miscoded capital items or months that do not tie to the bank. Another is using it as a guide to the future when the property has changed. A strong summer and a weak winter can both distort the picture, so context matters.
How to build it
Take the most recent twelve completed months of income and expense by line item, in month columns, with a total column. Example only: for a report dated November, use the previous November through October.
Not to Be Confused With
A T12 reports what already happened over the last twelve months. A pro forma projects what is expected to happen.
T12: Common Questions
What is the difference between a T12 and a T3?
A T12 covers twelve months and shows seasonality. A T3 covers the last three months and shows the recent trend.
Why do buyers ask for a T12?
It shows a full year of actual income and expenses, which is more reliable than a forecast.
