UNITED STATES
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, 2008.
________________
/__/ Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange 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 or organization) Identification No.)
6700 E. Pacific Coast Hwy, Long Beach, California 90803
__________________________________________________________________
(Address of principal executive offices) (Zip Code)
(562)493-8881
__________________________________________________________________
(Registrant's telephone number, including area code)
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 [ ]
Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a smaller reporting company.
See the definitions of "large accelerated filer," "accelerated filer" and
"smaller reporting company in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]
The issuer is a limited partnership. All 20,000 limited partnership units
originally sold for $500 per unit. There is no trading market for the limited
partnership units.
PART I - FINANCIAL INFORMATION
DSI REALTY INCOME FUND XI
(A Limited Partnership)
BALANCE SHEETS (UNAUDITED)
MARCH 31, 2008 AND DECEMBER 31, 2007
March 31, December 31,
2007 2007
ASSETS
CASH AND CASH EQUIVALENTS $ 482,614 $ 470,456
PROPERTY,NET 2,772,206 2,874,304
OTHER ASSETS 140,608 145,491
---------- ----------
TOTAL $3,395,428 $3,490,251
========== ==========
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES
Distribution to Partners $202,020 $202,020
Incentive management fee 18,182 -
Property management fee payable 11,814 11,066
Customer deposits and
other liabilities 169,004 203,828
Capital lease obligation 50,014 59,204
-------- --------
Total liabilities 451,034 476,118
---------- ----------
PARTNERS' EQUITY (DEFICIT):
General Partners (60,223) (59,526)
Limited Partners (20,000
limited partnership units
outstanding at March 31,
2008 and December 31, 2007) 3,004,617 3,073,659
---------- ----------
Total partners' equity 2,944,394 3,014,133
---------- ----------
TOTAL $3,395,428 $3,490,251
========== ==========
See accompanying notes to financial statements (unaudited).
STATEMENTS OF INCOME (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
March 31, March 31,
2008 2007
REVENUES:
Rental Income $ 544,538 $ 560,461
Ancillary operating revenue 38,030 37,355
Interest and other income 83 83
---------- ----------
Total revenues 582,651 597,899
EXPENSES:
Operating 385,563 324,894
General and administrative 64,807 64,357
---------- ----------
Total expenses 450,370 389,251
---------- ----------
INCOME BEFORE MINORITY
INTEREST IN INCOME OF
REAL ESTATE JOINT VENTURE 132,281 208,648
MINORITY INTEREST IN INCOME
OF REAL ESTATE JOINT VENTURE 0 0
---------- ----------
NET INCOME $ 132,281 $ 208,648
========== ==========
AGGREGATE NET INCOME ALLOCATED TO:
Limited partners $ 130,958 $ 206,562
General partners 1,323 2,086
---------- ----------
TOTAL $ 132,281 $ 208,648
========== ==========
NET INCOME PER LIMITED
PARTNERSHIP UNIT $ 6.55 $ 10.33
========== ==========
LIMITED PARTNERSHIP UNITS
USED IN PER UNIT CALCULATION 20,000 20,000
====== ======
See accompanying notes to financial statements (unaudited).
See accompanying notes to financial statements (unaudited).
STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIT)(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2008
GENERAL LIMITED
PARTNERS PARTNERS TOTAL
BALANCE AT JANUARY 1, 2008 ($59,526) $3,073,659 $3,014,133
NET INCOME 1,323 130,958 132,281
DISTRIBUTIONS (2,020) (200,000) (202,020)
-------- ---------- ----------
BALANCE AT MARCH 31, 2008 ($60,223) $3,004,617 $2,944,394
======== ========== ==========
See accompanying notes to financial statements (unaudited).
STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
March 31, March 31,
2008 2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 132,281 $ 208,648
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 102,098 90,125
Changes in assets and liabilities:
Decrease in other assets 4,883 0
Increase in incentive
management fees payable
to general partners 18,182 18,182
Increase in property
management fee payable 748 834
(Decrease) increase in
customer deposits
and other liabilities (34,824) 9,039
--------- ---------
Net cash provided by
operating activities 223,368 326,828
CASH FLOWS FROM FINANCING ACTIVITIES -
Distributions to partners (202,020) (202,020)
Payment on capital
lease obligations (9,190) (7,985)
--------- ---------
Net cash used in
financing activities (211,210) (210,005)
--------- ---------
NET INCREASE IN CASH AND
CASH EQUIVALENTS 12,158 116,823
CASH AND CASH EQUIVALENTS:
At beginning of period 470,456 475,705
--------- ---------
At end of period $ 482,614 $ 592,528
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INORMATION -
Cash paid for interest $ 560 $ 1,016
========= =========
NONCASH 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,
2008 2007
Land $ 1,894,250 $ 1,894,250
Buildings and improvements 6,622,462 6,656,324
Rental trucks
under capital leases 163,382 163,382
------------ ------------
Total 8,680,094 8,713,956
Less: Accumulated Depreciation ( 5,907,888) (5,839,652)
------------ ------------
Property - Net $ 2,772,206 $ 2,874,304
============ ============
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
$35,618 and $36,204, for the three month periods ended March 31, 2008
and 2007, respectively. Amounts payable to Dahn at March 31, 2008 and
December 31, 2007, were $11,814 and $11,066, 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, 2008. 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, 2008 and 2007, total revenues
decreased 2.6% from $597,899 to $582,651 and total expenses increased 15.7%
from $389,251 to $450,370. As a result, net income decreased 36.6% from
$208,648 for the three-month period ended March 31, 2007, to $132,281 for
the same period in 2008. Rental revenue decreased primarily as a result
of lower rental rates. Occupancy levels for the Partnership's four mini-
storage facilities averaged 80.1% for the three month period ended March 31,
2008 as compared to 79.0% for the same period in 2007. The Partnership is
continuing its marketing efforts to attract and keep new tenants in its
various mini-storage facilities. Operating expenses increased approximately
$60,700 (18.7%) primarily as a result of increases in maintenance and repair,
salaries and wages and power and sweeping expenses. General and administra-
tive expenses remained constant.
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-KSB filed on April 15,
2008. 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
(a) Exhibits
31.1 Rule 13a-14(a)/15d-14(a) Certifications of Chief Executive Officer
31.2 Rule 13a-14(a)/15d-14(a) Certifications of Principal Financial
Officer
32.1 Section 1350 Certifications by Principal Executive Officer and
Principal Financial Officer
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DSI REALTY INCOME FUND XI,
a California Limited Partnership
by: DSI Properties, Inc., a
California corporation,
as General Partner
/s/ ROBERT J. CONWAY
By_____________________________
Dated: May 15, 2008
ROBERT J. CONWAY, President,
Chief Executive Officer, Chief
Financial Officer, and Director
/s/ JOSEPH W. CONWAY
By_____________________________
Dated: May 15, 2008
JOSEPH W. CONWAY, Executive
Vice President and Director
EXHIBIT 31.1
RULE 13A-14(A)/15D-14(A) CERTIFICATION
BY CHIEF EXECUTIVE OFFICER
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 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 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 adversely affect the registrant's ability to
record, process, 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, 2008
/s/ ROBERT J. CONWAY
By_____________________________
ROBERT J. CONWAY, President,
Chief Executive Officer, Chief
Financial Officer, and Director
EXHIBIT 31.2
RULE 13A-14(A)/15D-14(A) CERTIFICATION
BY PRINCIPAL FINANCIAL OFFICER
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 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 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 adversely affect the registrant's ability to
record, process, 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, 2008
/s/ RICHARD P. CONWAY
By_____________________________
RICHARD P. CONWAY, SR. VICE PRESIDENT
(PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)
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, 2008 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Robert J. Conway, Chief Executive Officer 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.
/s/ ROBERT J. CONWAY
By_____________________________
ROBERT J. CONWAY,
Chief Executive Officer
May 15, 2008
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, 2008 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Richard P. Conway, Senior 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.
/s/ RICHARD P. CONWAY
By_____________________________
Richard P. Conway
Senior Vice President
(Principal Financial and Accounting Officer)
May 15, 2008