Trailing Twelve Months (T12)

Trailing twelve months means the most recent twelve months of actual results. In real estate the T12 is the operating statement a seller provides: income and expenses as they really occurred. A cap rate built on T12 NOI is a trailing cap rate, as opposed to one built on a pro forma forecast.

The two can differ a lot. A pro forma assumes full market rents and trimmed expenses; the T12 shows what the property actually did, including the months a unit sat empty. A listing quoted at a 6.5% pro forma cap rate may be closer to 5.5% on its trailing numbers.

Ask for the T12 and a current rent roll together, then rebuild NOI yourself. Add any expenses the owner did not pay but a new owner would, such as management and reserves, and adjust property tax for reassessment. The result is the NOI worth dividing by price.