A T-12, or trailing twelve months statement, shows a property's income and operating expenses for the most recent twelve months, month by month. It is the owner's actual history, as opposed to a budget or a pro forma.
What it contains
Rental and other income by line, vacancy and concessions, and operating expenses: taxes, insurance, utilities, repairs and maintenance, payroll, management fee, administrative and common area costs. The bottom line is the NOI for the period, before debt service and capital items.
Why the monthly view matters
Twelve separate months show trends a single total hides: a revenue line that is rising or collapsing, one month with a large repair or a catch-up tax bill, seasonality in utilities, and the date on which a renovation program began to show in rents.
How it is normalized
An underwritten NOI starts from the T-12 and adjusts for what the history does not represent:
- One-time items. A legal settlement or an unusual repair is removed, and a missing recurring cost is added.
- Real estate taxes. Often reset to what the buyer will pay after a sale, which can be far above the seller's bill.
- Insurance. Updated to a current quote, not last year's premium.
- Management and payroll. A market management fee is imposed if the owner does not charge one.
- Reserves. A replacement reserve is added if the convention in use includes it.
What to compare it with
The rent roll for income, the offering memorandum for the stated NOI, and prior years where available. The offering memorandum's NOI is usually a pro forma and sits above the T-12 by design; the question is by how much and on what grounds.