What is TTM in Commercial Real Estate?
TTM, or trailing twelve months, is the measurement of a project's financial data for the last 12 months. TTM figures do not always represent the last fiscal year, though they might. It is simply a snapshot of the last 12 months of financial activity. Taking a look at an existing commercial real estate project's TTM and rent roll, is one of the best ways to determine the property's potential profitability.
How is TTM Calculated?
Investors, lenders, and others often calculate TTM for documents such as income statements, balance sheets, and cash flow statements. TTM for income statements is calculated by adding the last 12 months of income statements together (if income is recorded monthly), the last four quarterly statements (if it's recorded quarterly), or the last two semi-annual statements (if recorded twice a year).
The same goes for cash flow statements. However, balance sheet information can be simply taken directly from the last 12 months of records. This is because balance sheets provide a current "snapshot" of a project's assets, liabilities, and shareholder equity.
Looking at a property's TTM is important for a variety of different property types, including office, self-storage, and multifamily developments. While TTM is a fantastic tool, investors looking for a more recent measurement of a commercial real estate project's finances may want to look at a property's T3, or trailing three months. A T3 looks at the last three months of a property's financial data.