Trailing 12 Months Definition and Explanation
A trailing twelve months, T12, or TTM, is a financial statement that shows a multifamily property’s previous 12 months of operations. Find out more on our commercial mortgage quick reference guide.
Trailing 12 Months (T12)
In the world of finance, the abbreviation T12 tends to come up a lot. T12, or sometimes TTM, stands for “trailing 12 months” and often refers to a financial statement that represents the entity’s performance over the past year.
A trailing twelve months, T12, or TTM, is a financial statement that shows a multifamily property’s previous twelve months of operations. A T12 is generally used for apartment buildings and other types of multifamily properties, but not for other types of commercial real estate, such as retail or office properties, as tenants for these types of properties typically have leases that extend beyond twelve months. A property’s T12, along with its rent roll and T3 (trailing 3-month financial statement) are some of the most important forms of documentation that a borrower will need to show a lender. In regards to their personal finances, a borrower will also generally need to show a PFS (personal financial statement), and an SREO (schedule of real estate owned).
A TTM report can be utilized in many different ways. Additionally, since the purpose of the trailing twelve month statement varies between situations, the TTM can be calculated using a multitude of different data. The figures that make up a TTM can come from balance sheets, income statements, cash flow statements, and various other financial statements. It is important to ascertain what kind of data needs to be scrutinized when compiling a Trailing Twelve month report for this reason.
How Do Investors and Lenders Calculate a Property’s T12?
A T12 can generally be calculated by looking at a property’s financial statements, such as balance sheets and income statements. The process of calculating a property’s trailing twelve months may via its income statements may vary slightly, depending on whether the property records its income semi-annually, quarterly, or monthly. As balance sheets are more commonly updated on a monthly basis, one can generally just use the previous twelve months of information to calculate a property’s T12.
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