T-12 Financial Review

A trailing-twelve-month statement is the working document underneath any replacement property decision, but in a resort market like this one the raw numbers need a second pass before they are comparable to the relinquished property's performance. The review exists to turn a seller's T-12 into a package the investor's lender and CPA can actually rely on. That second pass is what separates a usable underwriting file from a raw spreadsheet handed over by the listing broker, and it is worth doing before an offer is priced, not after.

A complete T-12 package includes monthly income and expense detail rather than annual totals alone, since a Park City-area property's income can swing sharply between ski season, summer festival months, and shoulder season. Expense detail is broken out by category rather than lumped together, since utilities, snow removal, and seasonal staffing costs all move differently across the year.

Snow removal in particular is a line item worth isolating on its own, since it can represent a meaningful share of winter operating cost on a Park City-area property and is sometimes buried inside a general maintenance category, which understates the true seasonal expense pattern.

The review moves through the statement in a fixed order so nothing gets skipped under time pressure. That sequence covers:

• gross revenue by month against occupancy or lease data
• operating expenses by category against prior-year comparisons
• owner add-backs and one-time items
• capital expenditures separated from operating repairs
• net operating income recalculated after adjustments

Each line item is checked against the prior year's statement where available, since a category that jumps sharply year over year usually has an explanation worth documenting rather than an anomaly to ignore.

Why does a T-12 need monthly detail rather than annual totals alone?

A resort-market property's income and expenses can swing sharply between ski season, summer, and shoulder season, so annual totals alone can hide a seasonal pattern that matters for financing and income comparison against the relinquished property. Monthly detail is what makes that pattern visible in the first place.

What is an owner add-back and why does it need adjustment?

An add-back is an expense the seller argues should not count against income, such as a personal cost run through the property, and each one is documented with the seller's explanation before being accepted or excluded from the normalized net operating income.

How is the T-12 checked against the rent roll?

The two documents are cross-referenced so that strong collections shown on the T-12 are tested against actual lease expiration dates, since a healthy-looking trailing statement can still be sitting on leases that are about to roll over. That cross-check happens before the figure is used in any pricing comparison.

Who receives the normalized T-12 findings?

A short memo goes to the investor's lender and CPA together, so financing and tax planning conversations both work from the same adjusted figures rather than separate interpretations of the seller's raw statement, which keeps the numbers from drifting apart later.

Are capital expenditures treated differently than operating expenses in this review?

Yes, capital items are separated out from routine operating repairs so the net operating income figure reflects ongoing operations rather than being distorted by a one-time roof replacement or similar project cost. That separation is documented clearly enough that a lender can trace the adjustment back to its source without a follow-up question.