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 March 31, 2007
/___/ 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 Limited Partnership)
BALANCE SHEETS (UNAUDITED)
MARCH 31, 2007 AND DECEMBER 31, 2006
March 31, December 31,
2007 2006
ASSETS
CASH AND CASH EQUIVALENTS $ 592,528 $ 475,705
PROPERTY,NET 3,158,355 3,248,480
OTHER ASSETS 121,743 121,743
---------- ----------
TOTAL $3,872,626 $3,845,928
========== ==========
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES
Distribution to Partners $202,020 $202,020
Incentive management fee
payable to general partners 18,182 -
Property management fee payable 13,058 12,224
Customer deposits and
other liabilities 198,864 189,825
Capital lease obligation 85,645 93,630
-------- --------
Total liabilities 517,769 497,699
---------- ----------
PARTNERS' EQUITY (DEFICIT):
General Partners (56,119) (56,185)
Limited Partners (20,000
limited partnership units
outstanding at March 31,
2007 and December 31, 2006) 3,410,976 3,404,414
---------- ----------
Total partners' equity 3,354,857 3,348,229
---------- ----------
TOTAL $3,872,626 $3,845,928
========== ==========
See accompanying notes to financial statements (unaudited).
STATEMENTS OF INCOME (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006
March 31, March 31,
2007 2006
REVENUES:
Rental Income $ 595,816 $ 595,706
---------- ----------
EXPENSES:
Operating 324,894 326,697
General and administrative 64,357 56,258
---------- ----------
Total expenses 389,251 382,955
OPERATING INCOME 206,565 212,751
OTHER INCOME
Interest 83 83
---------- ----------
INCOME BEFORE MINORITY
INTEREST IN INCOME OF
REAL ESTATE JOINT VENTURE 208,648 212,834
MINORITY INTEREST IN INCOME
OF REAL ESTATE JOINT VENTURE 0 0
---------- ----------
NET INCOME $ 208,648 $ 212,834
========== ==========
AGGREGATE NET INCOME ALLOCATED TO:
Limited partners $ 206,562 $ 210,706
General partners 2,086 2,128
---------- ----------
TOTAL $ 208,648 $ 212,834
========== ==========
NET INCOME PER LIMITED
PARTNERSHIP UNIT $ 10.33 $ 10.54
========== ==========
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 THREE MONTHS ENDED MARCH 31, 2007
GENERAL LIMITED
PARTNERS PARTNERS TOTAL
BALANCE AT JANUARY 1, 2007 ($56,185) $3,404,414 $3,348,229
NET INCOME 2,086 206,562 208,648
DISTRIBUTIONS (2,020) (200,000) (202,020)
-------- ---------- ----------
BALANCE AT MARCH 31, 2007 ($56,119) $3,410,976 $3,354,857
======== ========== ==========
See accompanying notes to financial statements (unaudited).
STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006
March 31, March 31,
2007 2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 208,648 $ 212,834
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 90,125 79,696
Changes in assets and liabilities:
Increase in incentive
management fees payable
to general partners 18,182 18,182
Increase in property
management fee payable 834 (334)
Increase in customer deposits
and other liabilities 9,039 60,996
--------- ---------
Net cash provided by
operating activities 326,828 371,374
CASH FLOWS FROM FINANCING ACTIVITIES -
Distributions to partners (202,020) (202,020)
Payment on capital
lease obligations (7,985) (9,000)
--------- ---------
Net cash used in
financing activities (210,005) (211,020)
--------- ---------
NET INCREASE IN CASH AND
CASH EQUIVALENTS 116,823 160,354
CASH AND CASH EQUIVALENTS:
At beginning of period 475,705 439,781
--------- ---------
At end of period $ 592,528 $ 600,135
========= =========
SUPPLEMENTALDISCLOSURE OF CASH
FLOW INORMATION -
Cash paid for interest $ 1,016 $ 1,476
========= =========
NONECASH FINANCING ACTIVITIES -
Distributions due partners
included in partners' equity $ 202,020 $ 202,020
========= =========
See accompanying notes to financial statements (unaudited).
DSI REALTY INCOME FUND XI
(A 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.
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 2006, 2005 and 2004. 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 accompanying interim financial statements have been prepared by the
Company's management in accordance with accounting principles generally
accepted in the United States of America ("GAAP") and in conjunction with
the rules and regulations of the Securities and Exchange Commission ("SEC").
Certain information and footnote disclosures required for annual financial
statements have been condensed or excluded pursuant to SEC rules and regu-
lations. Accordingly, the interim financial statements do not include all
of the information and footnotes required by GAAP for complete financial
statements. In the opinion of management, the accompanying interim financial
statements reflect all adjustments of a normal and recurring nature which are
considered necessary for a fair presentation of the results for the interim
periods presented. However, the results of operations for the interim periods
are not necessarily indicative of the results that may be expected for the
year ending December 31, 2007. These financial statements should be read in
conjunction with the audited consolidated financial statements and notes
thereto included in the Company's annual report on Form 10-K for the year
ended December 31, 2006.
2. PROPERTY
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.
The total property cost and accumulated depreciation are as follows:
March 31, December 31,
2006 2005
Land $ 1,894,250 $ 1,894,250
Buildings and improvements 6,622,462 6,622,462
Rental trucks
under capital leases 163,382 163,382
------------ ------------
Total 8,680,094 8,680,094
Less: Accumulated Depreciation ( 5,521,739) (5,431,614)
------------ ------------
Property - Net $ 3,158,355 $ 3,248,480
============ ============
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.
5. RELATED-PARTY TRANSACTIONS
The Partnership has entered into a management agreement with Dahn to
operate its mini-storage facilities. The management agreement provides
for a management fee equal to 6% of gross revenue from operations, which
is defined as the entire amount of all receipts from the renting or
leasing of storage compartments and sale of locks. The management
agreement is renewable annually. Dahn earned management fees equal to
$36,205 and $35,742, for the three month periods ended March 31, 2007
and 2006, respectively. Amounts payable to Dahn at March 31, 2007 and
December 31, 2006, were $13,058 and $12,224, respectively.
In 2004, the Partnership entered into truck lease agreements with KMD
Trucks, LLC ("KMD"). The president of Dahn, Brian Dahn, is also a
member of KMD. Trucks are leased under 48-month leases with total
monthly payments in the amount of $3,750.
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 March 31, 2007. 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 March 31, 2007 and 2006, total revenues
increased 0.02% from $595,706 to $595,816, total expenses increased 1.6%
from $382,955 to $389,251 and other income remained at $83. As a result,
net income decreased 2.0% from $212,834 for the three-month period ended
March 31, 2006, to $208,648 for the same period in 2007. Rental revenue
remained relatively constant. Occupancy levels for the Partnership's four
mini-storage facilities averaged 79.0% for the three month period ended
March 31, 2007 as compared to 80.4% for the same period in 2006. The
Partnership is continuing its marketing efforts to attract and keep new
tenants in its various mini-storage facilities. Operating expenses remained
constant as decreases in advertising, maintenance and repair and salaries and
wages expenses was offset by increases in legal, other taxes and licenses and
power and sweeping expenses. General and administrative expenses increased
approximately $8,100 (14.4%) primarily as a result of increases in legal and
professional and administrative fee expenses.
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 30,
2007. 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 March 31,
2007.
(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: May 15, 2007 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: May 15, 2007 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 report on Form 10-Q for the quarter ended
March 31, 2007 of DSI Realty Income Fund XI;
2. Based on my knowledge, this 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 report.
3. Based on my knowledge, the financial statements and other financial
information included in this 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 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: May 15, 2007
Robert J. Conway
Chief Executive Officer
CERTIFICATIONS
I, Richard P. Conway, certify that:
1. I have reviewed this report on Form 10-Q for the quarter ended
March 31, 2007 of DSI Realty Income Fund XI;
2. Based on my knowledge, this 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 report.
3. Based on my knowledge, the financial statements and other financial
information included in this 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 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: May 15, 2007
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 March 31, 2007 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
May 15, 2007
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 March 31, 2007 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
May 15, 2007