What is a T12 (Trailing 12 Months) Statement?
A T12, short for Trailing 12 Months, is a financial statement that shows the actual income and operating expenses of a commercial property over the past 12 consecutive months.
It’s one of the most important documents in commercial real estate underwriting, and it’s used by lenders, investors, and buyers to evaluate the current performance of a property. Think of it as a snapshot of what’s really happening instead of just what the seller or broker says could happen.
What Does a T12 Statement Include?
Income
- Gross scheduled rent
- Rent collected (may show loss-to-lease or vacancy)
- Other income such as
- Laundry/vending
- Parking
- Pet fees
- Storage rentals
- Late fees
Operating Expenses
- Property taxes
- Insurance
- Repairs and maintenance
- Utilities (water, gas, electricity)
- Property management fees
- Legal and accounting
- Administrative costs
- Advertising/marketing
The T12 usually ends with a Net Operating Income (NOI) figure, which is a key number used to calculate cap rates, loan sizing, and debt service coverage ratios (DSCR).
What the T12 Does Not Include
The T12 is not a complete picture of the property’s financial reality. Some important expenses are often excluded from the T12.
The following are not typically included in a T12:
- Existing debt service (mortgage payments)
- Capital expenditures (CapEx) – large, one-time expenses like, roof replacements, HVAC replacements, major plumbing or structural repairs
- Owner distributions
- Depreciation (non-cash expense)
- Personal expenses (for mom-and-pop operators)
These exclusions are important when reviewing a deal because they can dramatically affect cash flow and overall ROI. Smart investors and lenders often make adjustments to the T12 to account for these hidden or unreported costs.
How Lenders Use the T12
When you’re applying for commercial real estate financing, lenders will almost always request the T12 early in the underwriting process.
Lenders use the T12 Statement to:
- Calculate Net Operating Income (NOI)
- Determine Debt Service Coverage Ratio (DSCR)
- Evaluate property stability and trends
- Assess whether the property qualifies for the requested loan amount
They may also compare the T12 to:
- The rent roll (to verify occupancy and income)
- The broker’s offering memorandum (OM) (to verify claims)
- The pro forma (to assess upside or risk)
Pro Tip: What Makes a “Good” T12?
- Not all T12s are created equal. A high-quality T12 is:
- Clean and well-formatted (Excel or PDF
- Broken down by month
- Detailed enough to separate income types and expense categories
- Ideally includes year-to-date (YTD) totals for quick analysis
If a seller or broker is reluctant to provide a T12, or if the numbers look overly simplified or inconsistent, it is a red flag.
Final Thoughts: Why It Matters
The T12 statement is one of the most important documents in commercial real estate—especially when you’re applying for financing. It provides the real numbers behind the deal and gives both lenders and savvy investors the confidence to move forward.
At i95 Capital, we work with commercial real estate owners every day to review T12s and structure deals that close quickly and efficiently. Whether you’re buying, refinancing, or need cash-out equity, we can help.
