SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
/_x_/ Quarterly report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934.
For the quarterly period ended June 30, 2006
/___/ Transition report pursuant to Section 13 or 15(d) of the
Securities Act of 1934
for the transition period from ______________ to ________________.
Commission File Number 33-26038
DSI REALTY INCOME FUND XI, A California Limited Partnership
(Exact name of registrant as specified in its charter)
California_______________________________________33-0324161
(State or other jurisdiction of (I.R.S. Employer
incorporation) Identification No.)
6700 E. Pacific Coast Hwy, Long Beach, California 90803
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code-(562)493-8881
_________________________________________________________________
Former name, former address and former fiscal year, if changed
since last report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes _x_. No__.
PART I - FINANCIAL INFORMATION
DSI REALTY INCOME FUND XI
(A California Real Estate Limited Partnership)
BALANCE SHEETS(UNAUDITED)
JUNE 30, 2006 AND DECEMBER 31, 2005
June 30, December 31,
2006 2005
ASSETS
CASH AND CASH EQUIVALENTS $ 594,986 $ 439,781
PROPERTY,NET 3,364,754 3,535,858
OTHER ASSETS 55,460 55,460
---------- ----------
TOTAL $4,015,200 $4,031,099
========== ==========
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES
Distribution to Partners $202,020 $202,020
Capital lease obligation 109,242 124,398
Other liabilities 202,095 188,509
-------- --------
Total liabilities 513,357 514,927
---------- ----------
PARTNERS' EQUITY(DEFICIT):
General Partners (54,648) (54,505)
Limited Partners 3,556,491 3,570,677
---------- ----------
Total partners' equity 3,501,843 3,516,172
---------- ----------
TOTAL $4,015,200 $4,031,099
========== ==========
See accompanying notes to financial statements(unaudited).
STATEMENTS OF INCOME (UNAUDITED)
FOR THE THREE MONTHS ENDED JUNE 30, 2006 AND 2005
June 30, June 30,
2006 2005
REVENUES:
Rental Income $ 606,671 $ 604,656
---------- ----------
EXPENSES:
Operating 359,797 356,979
General and administrative 70,079 62,392
---------- ----------
Total expenses 429,876 419,371
OPERATING INCOME 176,795 185,285
OTHER INCOME
Interest 82 82
---------- ----------
INCOME BEFORE MINORITY
INTEREST IN INCOME OF
REAL ESTATE JOINT VENTURE 176,877 185,367
MINORITY INTEREST IN INCOME
OF REAL ESTATE JOINT VENTURE 0 0
---------- ----------
NET INCOME $ 176,877 $ 185,367
========== ==========
AGGREGATE NET INCOME ALLOCATED TO:
Limited partners $ 176,108 $ 183,513
General partners 1,769 1,854
---------- ----------
TOTAL $ 177,877 $ 185,367
========== ==========
NET INCOME PER LIMITED
PARTNERSHIP UNIT $ 8.81 $ 9.18
========== ==========
LIMITED PARTNERSHIP UNITS
USED IN PER UNIT CALCULATION 20,000 20,000
====== ======
See accompanying notes to financial statements(unaudited).
STATEMENTS OF INCOME (UNAUDITED) FOR THE SIX MONTHS
ENDED JUNE 30, 2006 AND 2005
June 30, June 30,
2006 2005
REVENUES:
Rental income $1,202,377 $1,185,511
---------- ----------
EXPENSES:
Operating 686,494 665,753
General and administrative 126,337 122,168
---------- ----------
Total expenses 812,831 787,921
OPERATING INCOME 389,546 397,590
OTHER INCOME
Interest 165 164
---------- ----------
INCOME BEFORE MINORITY INTEREST
IN INCOME OF REAL
ESTATE JOINT VENTURE 389,711 397,754
MINORITY INTEREST IN INCOME
OF REAL ESTATE JOINT VENTURE 0 0
---------- ----------
NET INCOME $ 389,711 $ 397,754
========== ==========
AGGREGATE NET INCOME ALLOCATED TO:
Limited Partners 385,814 393,776
General Partners 3,897 3,978
---------- ----------
TOTAL $ 389,711 $ 397,754
========== ==========
NET INCOME PER LIMITED
PARTNERSHIP UNIT $19.29 $19.69
====== ======
LIMITED PARTNERSHIP UNITS
USED IN PER UNIT CALCULATION 20,000 20,000
====== ======
See accompanying notes to financial statements(unaudited).
STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIT)(UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2006
GENERAL LIMITED
PARTNERS PARTNERS TOTAL
BALANCE AT JANUARY 1, 2006 ($54,505) $3,570,677 $3,516,172
NET INCOME 3,897 385,814 389,711
DISTRIBUTIONS (4,040) (400,000) (404,040)
-------- ---------- ----------
BALANCE AT JUNE 30, 2006 ($54,648) $3,556,491 $3,501,843
======== ========== ==========
See accompanying notes to financial statements(unaudited).
STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
June 30, June 30,
2006 2005
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 389,711 $ 397,754
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 179,705 173,405
Changes in assets and
liabilities:
Increase(decrease) in liabilities 13,586 (36,907)
--------- ---------
Net cash provided by
operating activities 583,002 534,252
CASH FLOWS FROM INVESTING ACTIVITIES -
Additions to property (8,601) 0
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES -
Distributions to partners (404,040) (404,040)
Payments on capital
lease obligations (15,156) 0
--------- ---------
Net cash provided by
financing activities (419,196) (404,040)
NET INCREASE IN CASH AND
CASH EQUIVALENTS 155,205 130,212
CASH AND CASH EQUIVALENTS:
At beginning of period 439,781 335,279
--------- ---------
At end of period $ 594,986 $ 465,491
========= =========
See accompanying notes to financial statements(unaudited).
DSI REALTY INCOME FUND XI
(A California Real Estate Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. GENERAL
DSI Realty Income Fund XI (the "Partnership"), a limited partnership, has
three general partners (DSI Properties, Inc., Robert J. Conway and
Joseph W. Conway) and limited partners owning 20,000 limited partnership
units. The Partnership was formed under the California Uniform Limited
Partnership Act for the primary purpose of acquiring and operating real
estate.
The Partnership has entered into four joint venture arrangements with
affiliates of Dahn Corporation ("Dahn"). The Partnership and its joint
venture partners have acquired four mini-storage properties located in
Whittier, California; Edgewater, New Jersey; Bloomingdale, Illinois; and
Sterling Heights, Michigan. The properties were acquired from Dahn. The
Partnership holds a 90% interest in a joint venture that owns a mini-
storage facility in Whittier, California; an 85% interest in an operating
mini-storage in Edgewater Park, New Jersey; a 90% interest in an operating
mini-storage facility in Bloomingdale, Illinois; and a 75% interest in an
operating mini-storage in Sterling Heights, Michigan.
Pursuant to the terms of each joint venture agreement, annual profits
(before depreciation) of each joint venture will be allocated to the Joint
Venture Partners on the basis of actual distributions received, while annual
losses (before depreciation) are to be allocated in proportion to the
ownership percentages as specified below. Cash distributions are to be
made to each Joint Venture Partner based upon each Joint Venture Partner's
ownership percentage. However, the Joint Venture Partners have subordinated
their rights to any distributions to the Partnership's receipt of an annual,
noncumulative, 8% return (7.75% for the Whittier Mini) from the operation
of the joint ventures. Requirements under the subordination agreement were
met during 2005, 2004 and 2003. A minority interest in real estate joint
venture is recorded to the extent of any distributions due to the Joint
Venture Partners. The Joint Venture Partners are also entitled to receive
a percentage, based upon a pre-determined formula, of the net proceeds from
the sale of the properties. The Partnership is required by the agreements to
pay Dahn a management fee equal to 6% of gross revenue from operations, de-
fined as the entire amount of all receipts from the renting or leasing of
storage compartments and sale of locks.
The accompanying financial information is unaudited. Such financial
information includes all adjustments which are considered necessary by
the Partnership's management for a fair presentation of the results for
the periods indicated.
2. PROPERTY
Properties owned by the Partnership are all mini-storage facilities.
Depreciation is calculated using the straight line method over the estimated
useful life of 20 years. The total cost of property and accumulated
depreciation is as follows:
June 30, December 31,
2006 2005
Land $ 1,894,250 $ 1,894,250
Buildings and improvements 6,585,119 6,576,518
Rental trucks
under capital leases 163,382 163,382
------------ ------------
Total 8,642,751 8,634,150
Less: Accumulated Depreciation ( 5,277,997) (5,098,292)
------------ ------------
Property - Net $ 3,364,754 $ 3,535,858
============ ============
3. NET INCOME PER LIMITED PARTNERSHIP UNIT
Net income per limited partnership unit is calculated by dividing the
net income allocated to the limited partners by the number of limited
partnership units outstanding during the period.
4. ALLOCATION OF PROFITS AND LOSSES AND GENERAL PARTNERS' INCENTIVE
MANAGEMENT FEE
Under the Agreement of limited Partnership, the general partners are to
be allocated 1% of the net profits or losses from operations, and the
limited partners are to be allocated the balance of the net profits or
losses from operations in proportion to their limited partnership
interests.
The General Partners are also entitled to receive a percentage, based on
a predetermined formula, of any cash distribution from the sale, other
disposition or refinancing of the project.
In addition, the General Partners are entitled to receive an incentive
management fee for supervising the operations of the Partnership. The
fee is to be paid in an amount equal to 9% per annum of the cash available
for distribution on a cumulative basis, calculated as cash generated from
operations less capital expenditures.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
We are pleased to enclose the Partnership's unaudited financial statements
for the period ended June 30, 2006. The following is Management's
discussion and analysis of the Partnership's financial condition and
results of its operations.
For the three month periods ended June 30, 2006 and 2005, total revenues
increased 0.3% from $604,656 to $606,671 and total expenses increased 2.5%
from $419,371 to $429,876 and other income remained constant at $82. As a
result, net income decreased 4.6% from $185,367 for the three-month period
ended June 30, 2005, to $176,877 for the same period in 2006. Rental revenue
remained constant as a decrease in occupancy rates was offset by higher unit
rental rates. Occupancy levels for the Partnership's four mini-storage
facilities averaged 83.7% for the three-month period ended June 30, 2006 as
compared to 86.7% for the same period in 2005. The Partnership is continuing
its marketing efforts to attract and keep new tenants in its various mini-
storage facilities. Operating expenses remained relatively constant, as
increases in advertising, legal, purchase of locks and packing materials and
real estate tax expenses, was offset by a decrease in maintenance and repair
and salaries and wages expenses. General and administrative expenses in-
creased approximately $7,700 (12.3%) primarily due to an increase in legal
and professional expense and state tax payments.
For the six-month periods ended June 30, 2006 and 2005, total revenues
increased 1.4% from $1,185,511 to $1,202,377 and total expenses increased
3.2% from $787,921 to $812,831 and other income increased from $164 to $165.
As a result, net income decreased 2.0% from $397,754 for the six-month period
ended June 30, 2005, to $389,711 for the same period in 2006. Rental revenue
increased as a result of higher unit rental rates. Operating expenses in-
creased approximately $20,700 (3.1%) primarily as a result of increases in
advertising, legal, real estate tax and depreciation expense, was partially
offset by decreases in purchase of locks and packing materials, maintenance
and repair and salaries and wages expenses. General and administrative ex-
penses increased approximately $4,200 (3.4%) primarily as a result of in-
creases in legal and professional expense and state tax payments, partially
offset by a decrease in equipment and computer lease expense.
The General Partners plan to continue their policy of funding the continuing
improvement and maintenance of Partnership properties with cash generated
from operations. The Partnership's financial resources appear to be adequate
to meet its needs.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
NONE
Item 4. CONTROLS AND PROCEDURES
The Partnership evaluated the effectiveness of its disclosure controls and
procedures. This evaluation was performed by the Partnership's Controller
with the assistance of the Partnership's President and the Chief Executive
Officer. These disclosure controls and procedures are designed to ensure
that the information required to be disclosed by the Partnership in its
periodic reports filed with the Securities and Exchange Commission (the
Commission) is recorded, processed, summarized and reported, within the time
periods specified by the Commission's rules and forms, and that the inform-
ation is communicated to the certifying officers on a timely basis. Based on
this evaluation, the Partnership concluded that its disclosure controls and
procedures were effective. There have been no significant changes in the
Partnership's internal controls or in other factors that could significantly
affect the internal controls subsequent to the date of their evaluation.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Registrant is not a party to any material pending legal proceedings.
Item 1A. Risk Factors
Please refer to the risk factors disclosed by the partnership in
response to Item 1A, part I of the Form 10-K filed on March 27,
2006. There has been no material change to the risk factors
disclosed therein.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
NONE
Item 3. Defaults Upon Senior Securities
NONE
Item 4. Submission of Matters to a Vote of Security Holders
NONE
Item 5. Other Information
NONE
Item 6. Exhibits and Reports on Form 8K.
(a) Attached hereto as Exhibit "20" is Registrant's Quarterly
Report to Limited Partners for the period ended June 30,
2006.
(B) Registrant did not file any reports on Form 8-K for the
period reported upon.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Dated: July 31, 2006 DSI REALTY INCOME FUND XI
A California Limited Partnership
(Registrant)
By____\s\ Robert J. Conway_____
DSI Properties, Inc., as General
Partner by ROBERT J. CONWAY,
President and Chief Financial Officer
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Dated: July 31, 2006 DSI REALTY INCOME FUND XI
A California Limited Partnership
(Registrant)
By__\s\ Robert J. Conway________
DSI Properties, Inc., as General
Partner by ROBERT J. CONWAY,
President and Chief Financial Officer
CERTIFICATIONS
I, Robert J. Conway, certify that:
1. I have reviewed this quarterly report on Form 10-Q of DSI Realty Income
Fund XI;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period cover-
ed by this quarterly report.
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15e and 15d-15e) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our super-
vision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this
annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures as of the end
of the period covered by this report based on such evaluation; and
c) disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of our annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation of internal control over financial reporting,
to the registrant's auditors and general partners (or persons performing
the equivalent functions):
a) all significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to affect the registrant's ability to record, pro-
cess, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's in-
ternal controls over financial reporting.
Date: July 31, 2006
Robert J. Conway
Chief Executive Officer
CERTIFICATIONS
I, Richard P. Conway, certify that:
1. I have reviewed this quarterly report on Form 10-Q of DSI Realty Income
Fund XI;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period cover-
ed by this quarterly report.
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15e and 15d-15e) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our super-
vision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this
annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures as of the end
of the period covered by this report based on such evaluation; and
c) disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of our annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation of internal control over financial reporting,
to the registrant's auditors and general partners (or persons performing
the equivalent functions):
a) all significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to affect the registrant's ability to record, pro-
cess, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's in-
ternal controls over financial reporting.
Date: July 31, 2006
Richard P. Conway
Vice President
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of DSI Realty Income Fund XI (the
"Partnership") on Form 10-Q for the period ending June 30, 2006 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Robert J. Conway, Chief Executive Officer of the Partnership, certify,
pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley
Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Partnership.
Robert J. Conway
Chief Executive Officer
July 31, 2006
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of DSI Realty Income Fund XI (the
"Partnership") on Form 10-Q for the period ending June 30, 2006 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Richard P. Conway, Vice President of the Corporate General Partner, certify,
pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley
Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Partnership.
Richard P. Conway
Vice President
July 31, 2006