October 29, 1999
QUARTERLY REPORT TO THE LIMITED PARTNERS
OF DSI REALTY INCOME FUND IX
DEAR LIMITED PARTNERS:
We are pleased to enclose the Partnership's unaudited financial
statements for the period ended September 30, 1999. 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 September 30, 1999 and 1998, total
revenues increased 1.0% from $720,419 to $727,838 and total expenses increased.
4.1% from $410,827 to $427,707. Minority interest in income of real estate
joint venture increased 2.2% from $31,688 to $32,377. As a result, net income
decreased 3.7% from $277,904 to $267,754 for the three-month period ended
September 30, 1999, as compared to the same period in 1998. Rental revenue
increased as a result of higher unit rental rates. Occupancy levels for the
Partnership's six mini-storage facilities averaged 82.3% for the three month
period ended September 30, 1999 as compared to 85.3% for the same period in
1998. The Partnership is continuing its marketing efforts to attract and keep
new tenants in its various mini-storage facilities. Operating expenses
increased approximately $11,500 (3.1%) due primarily to an increase in
maintenance and repair expense, partially offset by a decrease in yellow pages
advertising costs. General and administrative expenses increased approximately
$5,300 (13.7%) as a decrease in legal and professional expense was offset by
an increase in equipment and computer lease expenses and relatively
insignificant increases in various other expense accounts. Minority interest
in income of real estate joint venture remained relatively constant.
For the nine-month periods ended September 30, 1999, and 1998, total revenues
increased 5.4% from $2,060,579 to $2,171,466 and total expenses increased 9.2%
from $1,259,492 to $1,375,270. Minority interest in income of real estate
joint venture increased 4.9% from $83,512 to $87,602. As a result, net income
decreased 1.3% from $717,575 to $708,594 for the nine-month period ended
September 30, 1999, as compared to the same period in 1998. The increase in
revenue is primarily due to the increase in rental income as a result of higher
occupancy and unit rental rates, partially offset by a decrease in U-Haul
commission income. Operating expenses increased approximately $113,300 (10.4%)
due primarily to increases in maintenance and repair, salaries and wages,
workers compensation, power and sweeping expenses and property management fees,
partially offset by a decrease in yellow pages advertising costs. Property
management fees, which are based on rental revenue, increased as a result of
the increase in rental revenue. Power and sweeping expense increased as a
result of the substantial snow removal costs associated with the blizzard that
hit Illinois, where two of the Partnership's properties are located. General
and administrative expenses increased approximately $2,400 (1.4%) for the same
reasons as discussed above. Minority interest in income of real estate joint
venture increased primarily as a result of higher rental revenue partially
offset by an increase in maintenance and repair expense.
The General Partners will continue their policy of funding improvements
and maintenance of Partnership properties with cash generated from
operations. The Partnership's financial resources appear to be adequate
to meet its needs. The General Partners anticipate distributions to Limited
Partners to remain at the current level for the foreseeable future.
The Year 2000 issue refers to the inability of certain computer systems to
recognize a date using "00" as the Year 2000. The Partnership has implemented
a Year 2000 program, which has three phases: (1) identification;
(2) remediation; and (3) testing and verification. The Partnership, as well
as the property management company and the Partnership's warehouse facilities
have completed those phases. Computer programs have been upgraded and tested
to function properly with respect to the dates in the Year 2000 and thereafter.
Year 2000 compliance costs are nominal and have been expensed in the regular
course of business. The Partnership provides no assurance that third-party
suppliers and customers will be compliant. Nevertheless, the Partnership
does not believe that the Year 2000 issue will have a material advrse effect
on its financial condition or results of operations.
We are not enclosing a copy of the Partnership Form 10-Q as filed with the
Securities and Exchange Commission since all the information set forth
therein is contained either in this letter or in the attached financial
statements. However, if you wish to receive a copy of said report, please
send a written request to DSI Realty Income Fund IX, P.O. Box 357, Long
Beach, California 90801.
Very truly yours,
DSI REALTY INCOME FUND IX
By: DSI Properties, Inc., as
General Partner
By /s/ Robert J. Conway
____________________________
ROBERT J. CONWAY, President