(4) This expense represents the difference between the stated interest rate and the estimated market interest rate on assumed notes or seller notes issued, as of the date of acquisition. Such amounts have been excluded from MFFO because we believe MFFO provides useful supplementary information by focusing on operating fundamentals, rather than events not related to our normal operations. We are responsible for managing interest rate risk and do not rely on another party to manage such risk.
(5) These amounts primarily relate to transactions with our non-U.S. functional currency entities. The gains and losses are the result of fluctuations between the U.S. dollar and the Canadian dollar. Such amounts have been excluded from MFFO because we believe MFFO provides useful supplementary information by focusing on operating fundamentals, rather than events not related to our normal operations. We are responsible for managing hedge and foreign exchange risk and do not rely on another party to manage such risk.
(6) We believe that adjusting for the gain or loss on extinguishment of debt provides useful information because such gain or loss on extinguishment of debt may not be reflective of on-going operations.
Non-cash Items Included in Net Loss:
Provided below is additional information related to selected non-cash items included in net loss above, which may be helpful in assessing our operating results:
•Amortization of deferred financing costs of approximately $0.6 million and $0.5 million was recognized as interest expense for the three months ended December 31, 2012 and 2011, respectively; and $3.5 million and $1.3 million was recognized as interest expense for the years ended December 31, 2012 and 2011, respectively.
Three Months Three Months Ended Ended December 31, September 30, 2012 2012 ------------- -------------Net loss attributable to Strategic Storage Trust, Inc $ (3,843,894) $ (4,610,650)Add: Depreciation 3,794,626 3,474,214 Amortization of intangible assets 2,736,224 2,723,705Deduct: Adjustment for noncontrolling interests (80,312) (79,801) ------------- -------------FFO 2,606,644 1,507,468Other Adjustments: Acquisition expenses 1,536,584 1,369,125 Amortization of fair value adjustments of secured debt 54,614 (21,219) Realized and unrealized (gains) losses on foreign exchange holdings 59,583 (165,232) Adjustment for noncontrolling interests (21,515) (19,786) ------------- -------------MFFO $ 4,235,910 $ 2,670,356 ============= =============
Net Operating Income ("NOI")
NOI is a non-GAAP measure that we define as net income (loss), computed in accordance with GAAP, generated from properties before corporate general and administrative expenses, asset management fees, interest expense, depreciation, amortization, acquisition expenses and other non-property related expenses. We believe that net operating income is useful for investors as it provides a measure of the operating performance of its operating assets because net operating income excludes certain items that are not associated with the operation of the properties. Additionally, we believe that NOI is a widely accepted measure of comparative operating performance in the real estate community. However, our use of the term NOI may not be comparable to that of other real estate companies as they may have different methodologies for computing this amount.