What is a T12 in real estate? and how to check one

A T12 runs from income down to net operating income (NOI), one column per month:

• Income: gross potential rent, less vacancy, concessions and bad debt, plus other income such as parking, laundry or fees. In commercial property, this also includes expense reimbursements from tenants.
• Operating expenses: real estate taxes, insurance, property management, payroll, repairs and maintenance, utilities, marketing and administration.
• NOI: income less operating expenses.
• Below the line: debt service, capital expenditures and, often, replacement reserves. These come after NOI.

Download a blank T12 template (CSV). It opens in Excel and has the lines above.

1. Check that it adds up. Monthly columns should tie to the totals, and the stated NOI should equal income less expenses.
2. Read across, not just down. The annual total hides a roof repair in August or a tax bill paid in one month. Look for spikes and blanks.
3. Compare the last 3 months with the 12. A gap tells you something changed. Find out what, and whether it lasts.
4. Check it against other documents. Rent should tie to the rent roll, and collections to bank statements. Taxes should tie to tax bills.
5. Rebuild it for your ownership. Ask what changes when you buy: taxes may be reassessed, insurance repriced, and management priced at market. Your Year 1 is not the seller's last year.

• Repairs moved below the line. Calling a repair a capital item raises NOI. Ask for the capital ledger.
• A missing management fee. An owner who manages the property may show none, but you will likely pay one.
• One-off income. A lease termination fee or insurance payout lifts income once. Take it out of your run rate.
• Cash or accrual timing. A cash-basis statement shows bills when they are paid, so one month can hold a whole year's tax or insurance. Ask which basis it uses.
• Concessions out of sight. Free rent can sit in a separate line, or inside rent. Compare collected rent with the rent roll.

To compare the T12 with the broker's numbers, use the offering memorandum checker.

An AI assistant can do the first pass, as long as it quotes the line and month for every finding, so you can check its work. Check your plan's data terms before you upload a deal document: see is AI safe for CRE deal documents? Here is a prompt to start with:

Review this T12 for a commercial real estate deal.
Check that the monthly columns add up to the stated totals.
List any expense line with an unusual month.
Name the line and month for each finding. If you cannot read a value, say so.

To go further, the Claude underwriting workflow covers the T12 with the OM and rent roll, and the CRE AI Institute's free lesson shows how the training works.