UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 2O549
FORM
10-K
[x] Annual Report Pursuant to Section 13 or 15 (d) of the Securities and Exchange Act of 1934
For the fiscal year ended December 31, 2009
[ ] Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from ________________ to _______________
Commission File No. 0-18286.
DSI
REALTY INCOME FUND XI
a
California Limited Partnership
California |
|
33-0324161 |
(State or other jurisdiction of incorporation or organization) |
|
(I.R.S. Employer Identification No.) |
6700 E. Pacific Coast Hwy., Long Beach, California 90803
(Address of principal executive offices)
Registrant’s telephone number, including area code (562) 493-8881
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interests
Indicate
by check mark if registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes [ ] No [X]
Indicate
by check mark whether the registrant (l) 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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ ] No [X]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]
Indicate
by check mark whether the
registrant is
a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company.
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]
Certain
statements contained in this discussion or elsewhere in this report
may be deemed “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995 and
Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. Words and phrases such as
“expects”, “anticipates”, “intends”,
“plans”, “believes”, “seeks”,
“estimates”, “designed to achieve”,
variations of such words and similar expressions are intended to
identify such forward-looking statements, which generally are not
historical in nature. All statements that address operating
performance, events or developments that we expect or anticipate will
occur in the future – including statements relating to
rent and occupancy growth, general conditions in the geographic areas
where we operate – are forward-looking statements. These
statements are not guarantees of future performance and involve
certain risks, uncertainties and assumptions that are difficult to
predict.
Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be attained and therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Many of the factors that may affect outcomes and results are beyond our ability to control.
PART I
ITEM l. BUSINESS
DSI Realty Income Fund XI (the "Partnership") is a publicly-held limited partnership organized under the California Uniform Limited Partnership Act pursuant to a Certificate and Agreement of Limited Partnership (hereinafter referred to as "Agreement") dated December 7, 1988. The General Partners are DSI Properties, Inc., a California corporation and Robert J. Conway and Joseph W. Conway, brothers. The General Partners are affiliates of Diversified Securities, Inc., a wholly-owned subsidiary of DSI Financial, Inc. The General Partners provide similar services to other partnerships. Through its public offering of Limited Partnership Units, Registrant sold twenty thousand (20,000) units of limited partnership interests aggregating Ten Million Dollars ($10,000,000). The General Partners have retained a one percent (1%) interest in all profits, losses and distributions (subject to certain conditions) without making any capital contribution to the Partnership. The General Partners are not required to make any capital contributions to the Partnership in the future.
The Partnership is engaged in the business of investing in and operating mini-storage facilities with the primary objectives of generating, for its partners, cash flow, capital appreciation of its properties, and obtaining federal income tax deductions so that during the early years of operations, all or a portion of such distributable cash may not represent taxable income to its partners. Funds obtained by Registrant during the public offering period of its units were used to acquire mini-storage facilities. Registrant does not intend to sell additional limited partnership units. The term of the Partnership is fifty years, but it is anticipated that the Partnership will sell and/or refinance its properties prior to the termination of the Partnership. The Partnership is intended to be self-liquidating and it is not intended that proceeds from the sale or refinancing of its operating properties will be reinvested. Registrant has no full time employees but shares one or more employees with other limited partnerships sponsored by the General Partners.
The General Partners are vested with authority as to the general management and supervision of the business and affairs of the Partnership. Limited Partners have no right to participate in the management or conduct of such business and affairs. An independent management company has been retained to provide day-to-day management services with respect to all of the Partnership's investment properties.
Please refer to the discussion appearing elsewhere herein under the caption Management's Discussion and Analysis of Financial Condition and Results of Operations for a detailed analysis of the results of operations of the Partnership's properties.
The business in which the Partnership is engaged is highly competitive. Each of its mini-storage facilities is located in or near a major urban area, and accordingly, competes with a significant number of individuals and organizations with respect to both the purchase and sale of its properties and for rentals. Generally, the Partnership's business is not affected by the change in seasons.
ITEM 1A. RISK FACTORS
Not required.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not required.
ITEM 2. PROPERTIES
The
Partnership owns a fee interest in
the
following
mini-storage facilities, none of which are subject to long-term
indebtedness. The following table sets forth information
regarding properties owned by the Partnership.
|
|
|
2009 |
2008 |
||||
|
Parcel |
|
(Average) |
(Average) |
||||
|
Size |
Date |
Rentable |
Revenue |
|
Rentable |
Revenue |
|
Location |
(Acres) |
Opened |
Sq. Ft. |
Sq. Ft. |
Occ % |
Sq. Ft. |
Sq. Ft. |
Occ % |
Bloomingdale, IL |
3.54 |
Mar-87 |
58,243 |
8.65 |
76.4 |
58,459 |
10.00 |
86.1 |
Edgewater Park, NJ |
4.12 |
Oct-89 |
53,714 |
7.49 |
67.0 |
54,144 |
8.31 |
71.7 |
Sterling Heights, MI |
3.76 |
Jul-91 |
57,850 |
7.65 |
79.0 |
57,998 |
7.60 |
77.0 |
Whittier, CA |
3.92 |
Mar-90 |
58,554 |
12.73 |
80.0 |
58,554 |
14.63 |
86.8 |
ITEM 3. LEGAL PROCEEDINGS
The Partnership is not a party to any material pending legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during 2009.
PART
II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market
Information
The
Partnership is a limited partnership and thus has no common stock.
There is no established trading market for limited partnership
interests in the Partnership and it is not anticipated that any such
public market will develop. The Limited Partnership Agreement
effectively prevents the transfer of Limited Partnership Interests
except under very limited circumstances. In order to transfer a
Limited Partnership Interest, a Limited Partner must obtain the
consent of the General Partners of the Partnership, which have the
absolute right to refuse any request for a transfer. In addition, the
proposed transferee must meet all applicable suitability standards
and agree to be bound by the Limited Partnership Agreement.
Approximate Number of Security Holders
As of December 31, 2009, there were approximately 506 holders of Limited Partnership Interests.
Distributions
Average cash distributions of $8.76 per Limited Partnership Unit were declared and paid each quarter for the year ended December 31, 2009 and $10.00 per Limited Partnership Unit were declared and paid each quarter for the year ended December 31, 2008. It is the Partnership’s expectation that distributions will continue to be paid in the future.
ITEM 6. SELECTED FINANCIAL DATA
Not Required.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Critical Accounting Policies
Revenue recognition - Revenue is recognized using the accrual method based on contractual amounts provided for in the lease agreements, which approximates recognition on a straight-line basis. The term of the lease agreements is usually less than one year.
RESULTS OF OPERATIONS
2009 COMPARED TO 2008
Total revenues decreased from $2,331,094 in 2008 to $2,094,402 in 2009, total expenses decreased from $1,756,703 to $1,559,786, and the net income attributable to the noncontrolling interest idecreased from $157,554 to $141,604. As a result, net income attributable to the partnership decreased from $416,837 to $393,012. Rental revenues decreased primarily as a result of decreased occupancy rates and poor economic conditions nationwide. Occupancy levels for the Partnership’s mini-storage facilities averaged 75.6% for the year ended December 31, 2009, compared to 80.4% for the year ended December 31, 2008. Operating expenses decreased approximately $80,228 (8.8%) primarily as a result of decreases in advertising, maintenance and repairs, and salaries and wages expenses. General and administrative expenses decreased approximately $58,432 (22.2%) primarily as a result of decreases in office supplies, other taxes and licenses, partially offset by legal and professional expenses. Incentive management fees, which are based on distributions paid to limited partners, decreased as a result of the decrease in distributions to limited partners.
Operating expenses consist mainly of expenses such as yellow pages and other advertising, utilities, and maintenance, real estate taxes, salaries and wages and their related expenses. General and administrative expenses consist mainly of expenses such as legal and professional, office supplies, accounting services and computer expenses.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities decreased approximately $160,750 (17.0%) in 2009 compared to 2008 primarily due to the decrease in net income and an increase in customer deposits and other liabilities.
Cash used
in investing activities, consists of acquisition of property or capital
improvements to the Partnership's mini storage facilities. There were no
material investing activities in either 2008 or 2009. The Partnership currently
has no material commitments for capital expenditures. Cash
used in financing activities, as set forth in the statements of cash
flows, has consisted solely of cash distributions to partners in 2008
and 2009 and payments on capital lease obligations. 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 anticipates that cash
flows generated from operations of the Partnership's rental real
estate operations will be sufficient to cover operating expenses and
distributions for the next twelve months and beyond. The
General Partners are not aware of any environmental problems
which could have a material adverse effect upon the financial
position of the Partnership. LONG-TERM
LIABILITIES, CONTRACTUAL OBLIGATIONS,
Long-Term
Liabilities and Contractual Obligations.
None. QUARTERLY
FINANCIAL INFORMATION (UNAUDITED) Summarized
quarterly financial data for the year ended December 31, 2009 was as
follows:
2009
Quarter Ended: March
31 June
30 September
30 December
31 Total revenues 514,334 569,766 514,779 495,523 Net income 125,441 182,868 50,172 34,531 Net
income per limited $
6.21 $
9.05 $
2.48 $
1.71 Weighted
average number 20,000 20,000 20,000 20,000 ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Not
Required. ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA DSI
REALTY INCOME FUND XI INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE FINANCIAL
STATEMENTS: Report
of Independent Registered Public Accounting Firm
F-1
Consolidated Balance
Sheets as of December 31, 2009 and 2008 F-2
Consolidated Statements
of Income for the Years Ended December 31, 2009 and 2008 F-3
Consolidated
Statements
of Changes in Partners' Equity (Deficit) for
The
Years Ended December 31, 2009 and 2008
F-4
Consolidated Statements
of Cash Flows for the Years Ended December 31, 2009 and 2008 F-5
Notes
to
Consolidated Financial Statements
F-6
SUPPLEMENTAL
SCHEDULE: Schedule
III - Real Estate and Accumulated Depreciation as of December 31,
2009 F-8 ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL
DISCLOSURE
None. ITEM
9A. CONTROLS AND PROCEDURES No
response required ITEM
9A (T). CONTROLS
AND PROCEDURES The
Partnership’s management, with the participation of the
principal executive officer and principal financial officer of DSI
Properties, Inc., its General Partner, who are the equivalent of the
Partnership’s principal executive officer and principal
financial officer, respectively, has evaluated the effectiveness of
the Partnership’s disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the “Exchange
Act”))
as of the end of the period covered by this report. Based on such
evaluation, the principal executive officer and principal financial
officer of the General Partner, who are the equivalent of the
Partnership’s principal executive officer and principal
financial officer, respectively, have concluded that, as of the end
of such period, the Partnership’s disclosure controls and
procedures are effective. Management’s
Report on Internal Control Over Financial Reporting The
Partnership’s management is responsible for establishing and
maintaining adequate internal control over financial reporting.
Internal control over financial reporting is defined in Rule
13a-15(f) and 15d-15(f) under the Exchange Act as a process designed
by, or under the supervision of, the principal executive and
principal financial officers of the General Partner, who are the
equivalent of the Partnership’s principal executive officer and
principal financial officer, respectively, and effected by the
Partnership’s management and other personnel to provide
reasonable assurance regarding the reliability of financial reporting
and the preparation of consolidated financial statements for external
purposes in accordance with generally accepted accounting principles
and includes those policies and procedures that: pertain
to the maintenance of records that in reasonable detail accurately
and fairly reflect the transactions and dispositions of assets; provide
reasonable assurance that transactions are recorded as necessary to
permit preparation of consolidated financial statements in
accordance with generally accepted accounting principles, and that
receipts and expenditures are being made only in accordance with
authorizations of the Partnership’s management; and provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of assets that could
have a material effect on the consolidated financial statements. Because
of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Projections of any
evaluation of effectiveness to future periods are subject to the
risks that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or
procedures may deteriorate. The
Partnership's management assessed the effectiveness of the Partnership's
internal control over financial reporting as of December 31, 2009. In making
this assessment, the Partnership's management used the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
Internal Control-Integrated Framework. Based on
their assessment, the Partnership's management concluded that, as of December
31, 2009, the Partnership's internal control over financial reporting was
effective. This
annual report does not include an attestation report of the
Partnership’s registered public accounting firm regarding
internal control over financial reporting. Management’s report
was not subject to the attestation by the Partnership’s
registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the Partnership to
provide only management’s report in this annual report. Changes
in Internal Control Over Financial Reporting. There
have been no significant changes in the Partnership’s internal
control over financial reporting (as defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act) during the fourth quarter of 2009
that have materially affected, or are reasonably likely to materially
affect, the Partnership’s internal control over financial
reporting. ITEM
9B. OTHER INFORMATION None.
PART
III ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. The
Partnership has no directors or executives officers of its own.
The following biographical information is presented for the officers
of DSI Properties, Inc., a General Partner of the Partnership, and
Robert J. Conway and Joseph W. Conway, brothers. The General Partners
have principal responsibility for the Partnership’s affairs. DSI
Properties, Inc.
Robert
J. Conway,
75, has been President, Chief Financial Officer and a member of the
Board of Directors of DSI Properties, Inc. since 1973.He has also
been President and a member of the Board of Directors of Diversified
Securities, Inc., since 1965. Mr. Conway is also a licensed
California real estate broker, and received a Bachelor of Science
Degree from Marquette University with majors in Corporate Finance and
Real Estate.
Joseph
W. Conway,
80, has been Vice President, Treasurer and member of the Board of
Directors of DSI Properties, Inc. since 1973. He has also been
Executive Vice President, Treasurer and a member of the Board of
Directors of Diversified Securities, Inc. since 1965. Mr. Conway
received a Bachelor of Arts Degree from Loras College with a major in
Accounting.
Joseph
W. Stok,
86, has been a member of the Board of Directors of DSI Properties,
Inc. since 1994, a Vice President of Diversified Securities, Inc.
since 1973, and an Account Executive with Diversified Securities,
Inc. since 1967.
As
the Partnership has no directors or executive officers, it has no
audit, nominating or other committees. ITEM
11. EXECUTIVE COMPENSATION
None
of the directors or officers of the General Partners received any
direct remuneration from the Partnership during the years ended
December
31, 2009
or 2008. ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS The
following table sets forth certain information regarding the
beneficial ownership of the Partnership's limited partnership units
as of December 31, 2009 by (i) each person known to beneficially own
more than 5% of the Partnership's limited partnership units, and (ii)
each officer of the General Partners of the Partnership. Title
of Class Name
of Beneficial Owner Number
of LP Units Beneficially Held (1) Percent
of Class Limited
Partnership Interest Robert J. Conway 405
- Direct 2.0 Limited
Partnership Interest Joseph W. Conway 183
- Direct Less
than 1% Total 588 -
Direct 2.9% (1)
Unless otherwise indicated, the address for each listed director or
officer is c/o 6700 E. Pacific Coast Hwy. #150, Long Beach, CA 90803.
As used in this table, "beneficial ownership" means the
sole or shared power to vote or direct the voting or to dispose or
direct the disposition of any security.
(2)
As of December 31, 2009, no person owned more than 5% of the limited
partnership units of record, nor was any person known by the
Partnership to beneficially own more than 5% thereof. ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE The
Partnership has no employees and depends on the General Partners and
their affiliates for the management and administration of all
Partnership activities. The Partnership Agreement provides for
certain payments to affiliates for services and reimbursement of
certain expenses incurred by affiliates on behalf of the Partnership.
Under
the Agreement of Limited Partnership, the General Partners are
allocated 1% of the net profits or losses from operations of the
Partnership. During 2009 an aggregate of $66,587 was allocated to the
General Partners, and during 2008 an aggregate of $63,438 was
allocated to the General Partners. In addition, under the Limited
Partnership Agreement the General Partners are
entitled to receive a percentage of any cash distribution from the
sale, other disposition, or refinancing of properties of the
Partnership, based on a formula set forth in the Limited Partnership
Agreement.
As there were no sales or refinancings of Partnership properties
during 2009 or 2008, no such fees were paid during these periods. In
addition, the general partners are entitled to receive an incentive
management fee for supervising the operations of the Partnership,
equal to 9% per annum of the cash available for distribution on a
cumulative basis, calculated as cash generated from operations less
capital expenditures. During 2009 the Partnership paid the General
Partners an incentive management fee of $63,636, and during 2008 the Partnership
paid the General Partners an incentive management fee of $72,727. All
of the Partnership’s properties were purchased from Dahn
Corporation ("Dahn"). Dahn is not affiliated with the
Partnership, but is affiliated with other partnerships in which DSI
Properties, Inc. is a general partner The Partnership has entered
into management agreements with Dahn to operate its mini-storage
facilities. Each agreement provides for a management fee equal to 6%
of gross revenue from operations, defined as the entire amount of all
receipts from the renting or leasing of storage compartments and sale
of locks. The management agreements are renewable annually. During
2009 and 2008 the Partnership paid Dahn management fees of $125,113
and $139,155, respectively. Amounts payable to Dahn at December 31, 2009 and
2008, were $9,754 and $14,318, respectively. None
of the General Partner's directors is “independent” under
the independence standards established by the Securities and Exchange
Commission, as all directors are employed by a General Partner. ITEM
14. PRINCIPAL ACCOUNTING FEES AND SERVICES Audit
Fees The
aggregate fees for professional services rendered by Cacciamatta
Accountancy Corporation for the audit of the Partnership's annual
financial statements and for reviews of the financial statements
included in the Partnership's Quarterly Reports on Form 10-Q for 2009
were $39,700 and for 2008 were $49,400. Other
Fees The
Partnership did not pay Cacciamatta Accountancy Corporation any
Non-Audit Related Fees, Tax Fees, or other fees during 2009 and 2008.
PART
IV ITEM
15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES (1)
Consolidated Financial Statements See
Index to
Consolidated Financial Statements and Supplemental Schedule in Item 7. (2)
Consolidated Financial Statement Schedules See
Index to
Consolidated Financial Statements and Supplemental Schedule in Item 7. (3)
Exhibits
13 Annual Report Letter
to Limited Partners
31.1 Rule
13a-14(a)/15d-14(a) Certification: Principal Executive Officer
31.2 Rule
13a-14(a)/15d-14(a) Certification: Principal Financial Officer
32.1 Section 1350
Certification: Principal Executive Officer
32.2 Section 1350
Certification: Principal Financial Officer SIGNATURES Pursuant
to the requirements of Section 13 or 15 (d) 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
/s/ ROBERT J. CONWAY By_____________________________
Dated: March 31, 2010
ROBERT
J. CONWAY, President
/s/ JOSEPH W. CONWAY By_____________________________
Dated: March 31, 2010
JOSEPH
W. CONWAY, (Executive Vice
President and Director) Pursuant
to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the
registrant and in the capacities and on the date indicated. DSI
REALTY INCOME FUND XI, a
California Limited Partnership by:
DSI Properties, Inc., a California corporation,
/s/
ROBERT J. CONWAY By_____________________________
Dated: March 31, 2010 ROBERT
J. CONWAY, President /s/
JOSEPH W. CONWAY By_____________________________
Dated: March 31, 2010 JOSEPH
W. CONWAY, (Executive
Vice
President and Director) EXHIBIT
1 ITEM
15(1)
2009
ANNUAL REPORT TO LIMITED PARTNERS OF DSI
REALTY INCOME FUND XI
Financial Statements for its fiscal year ended December 31, 2009 REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To
the Partners of DSI Realty Income Fund XI: We
have audited the accompanying
consolidated
balance sheets of DSI Realty Income
Fund XI, a California Limited Partnership (the "Partnership")
as of December 31, 2009 and 2008 and the related consolidated
statements of
income, changes in partners' equity (deficit), and cash flows for
each of the years in the two year period ended December 31, 2009. Our
audits also included the supplemental schedule listed in the Index at
Item 15(2). These consolidated
financial statements and the supplemental schedule
are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these consolidated
financial statements
and supplemental schedule based on our audits. We
conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. The Partnership is not required to have, nor were we
engaged to perform, an audit of its internal control over financial
reporting. Our audits included consideration of internal control
over financial reporting as a basis for designing audit procedures
that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Partnership's
internal control over financial reporting. Accordingly, we express no
such opinion. An
audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion. In our
opinion, the consolidated
financial statements referred to above present fairly, in all material respects, the
financial position of DSI Realty Income Fund XI at December 31, 2009 and 2008,
and the results of its operations and its cash flows for each of the years in
the two year
period ended December 31, 2009, in conformity with accounting principles
generally accepted in the United States of America. Also, in our opinion, the
supplemental schedule referred to above, when considered in relation to the basic financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein. /s/
Cacciamatta Accountancy Corporation Santa
Ana, California March
31, 2009 Page
F-1 DSI
REALTY INCOME FUND
XI CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31
2009
2008 ASSETS Cash and cash
equivalents $
304,234 $
392,942 Property,
Net (Note 3)
2,189,412
2,517,107 Uncollected rental
revenue 77,111 92,877 Prepaid
advertising 6,992 38,326 Other
assets 28,640 28,640 TOTAL
2,606,389
3,069,892 LIABILITIES AND
PARTNERS' EQUITY LIABILITIES: Distribution due
to partners (Note 4) $
151,515 $
202,020 Incentive management
fee payable to general partners
(Note 4)
(2,273)
18,182 Property
management fees payable (Note 6) 9,754 14,318 Customer deposits
and other liabilities 77,430 79,075 Deferred income 34,680 53,886 Accrued expenses 27,267 62,436 Capital
lease obligations (Note 3) - 17,086 Total
liabilities 298,373 447,003 PARTNERS'
EQUITY (DEFICIT) (Note 4): General partners
(66,587)
(63,438) Limited Partners
2,374,603
2,686,327 Total partners'
equity
2,308,016
2,622,889 Total equity
2,308,016
2,622,889 TOTAL
$2,606,389
$3,069,892 The
accompanying notes are an integral part of these Consolidated Financial Statements Page
F-2 DSI
REALTY INCOME FUND
XI CONSOLIDATED STATEMENTS OF
INCOME FOR THE YEARS ENDED DECEMBER 31
2009
2008
REVENUES: Self-storage
rental income
$
1,951,467
$
2,169,088 Ancillary
operating revenue 142,623 161,671 Interest and other
income 312 335 Total revenues
2,094,402
2,331,094 EXPENSES: Depreciation 334,490 372,370 Operating 829,697 909,925 General and
administrative 205,193 263,625 Interest 1,657 (1,099) General
partners' incentive management fee
(Note 4) 63,636 72,727 Property
management fee (Note 6) 125,113 139,155 Total expenses
1,559,786
1,756,703 NET INCOME: $ 534,616 $ 574,391 LESS: net income
attributable to the noncontrolling interest
(141,604)
(157,554) NET INCOME
ATTRIBUTABLE TO THE PARTNERSHIP: $ 393,012 $ 416,837
NET INCOME ATTRIBUTABLE TO THE
PARTNERSHIP ALLOCATED
TO (Note 4): General partners
3,930
4,169 Limited partners
389,082
412,668 TOTAL
$393,012
$416,837
Number of limited
partnership units outstanding 20,000 20,000 NET
INCOME PER LIMITED PARTNERSHIP UNIT (Notes 2 and 4)
$19.45
$20.63 The
accompanying notes are an integral part of these Consolidated Financial Statements Page
F-3
DSI
REALTY INCOME FUND XI CONSOLIDATED STATEMENTS OF
CHANGES IN PARTNERS' EQUITY (DEFICIT) General Limited Partners Partners Total BALANCE DECEMBER
31, 2007
$ (59,526)
$ 3,073,659
$ 3,014,133 Net income
allocation 4,169 412,668 574,391 Distributions
(8,081) (800,000)
(965,635) BALANCE DECEMBER
31, 2008
$ (63,438)
$ 2,686,327
$ 2,622,889 Net income
allocation 3,930 389,082 534,616 Distributions
(7,079)
(700,806)
(849,489) BALANCE
DECEMBER 31, 2009 $ (66,587) $ 2,374,603
$ 2,308,016 The
accompanying notes are an integral part of these Consolidated Financial Statements Page
F-4 DSI
REALTY INCOME FUND
XI CONSOLIDATED STATEMENTS OF
CASH FLOWS FOR THE YEARS ENDED
DECEMBER 31
2009
2008 CASH FLOWS FROM
OPERATING ACTIVITIES: Net income
$ 393,012
$ 416,837 Adjustments
to reconcile net income to net cash provided by operating
activities: Depreciation
334,490
372,370
Net income attributable to the noncontrolling
interest
141,604
157,554 Changes in assets
and liabilities: Other assets
47,100
(14,352) Incentive
management fee payable to
general partners
(20,455)
18,182 Property
management fees payable
(4,564)
3,252 Customer deposits
and other liabilities
(106,525)
(8,431) Net
cash provided by operating activities
784,662
945,412 CASH FLOWS FROM
INVESTING ACTIVITIES: Additions to
property
(6,795)
(15,173) Net
cash used in investing activities
(6,795)
(15,173) CASH FLOWS FROM
FINANCING ACTIVITIES: Distributions to
partners
(707,885)
(808,081) Distributions
paid to the noncontrolling interest
(141,604)
(157,554) Payments on
capital lease
obligations
(17,086)
(42,118) Net cash used in
financing activities
(866,575)
(1,007,753) NET DECREASE IN CASH
AND CASH
EQUIVALENTS
(88,708)
(77,514) CASH AND CASH
EQUIVALENTS, BEGINNING OF
YEAR
392,942
470,456 CASH AND CASH
EQUIVALENTS, END OF YEAR
$ 304,234
$ 392,942 SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for
interest
$ 1,657
$ (1,099) NON CASH
INVESTING AND FINANCING ACTIVITIES: Distribution
due partners included in partners' equity
$ 151,515 $
202,020 The
accompanying notes are an integral part of these Consolidated Financial Statements Page
F-5 DSI
REALTY INCOME FUND XI NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009 1.
GENERAL DSI
Realty Income Fund XI, a California Limited Partnership (the
"Partnership"), has three general partners (DSI Properties,
Inc., Robert J. Conway and Joseph W. Conway) and limited partners
owning 20,000 limited partnership units, which were purchased for
$500 per unit. The general partners have made no capital
contributions to the Partnership and are not required to make any
capital contributions in the future. The Partnership has a maximum
life of 50 years and was formed on December 7, 1988, under the
California Uniform Limited Partnership Act for the primary purpose of
acquiring and operating real estate. 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cash
and Cash Equivalents - The Partnership classifies its short-term
investments purchased with an original maturity of three months or
less as cash equivalents. Property
and Depreciation - Property is recorded at cost and is composed
primarily of mini-storage facilities. Depreciation is provided using
the straight-line method over an estimated useful life of 20 years
for the facilities. Building improvements are depreciated over a
five year period. Property under capital leases is amortized over the
lesser of the lives of the respective leases or the estimated useful
lives of the assets. Income
Taxes - No provision has been made for income taxes in the
accompanying consolidated financial statements. The taxable income or loss of
the Partnership is allocated to each partner in accordance with the
terms of the Agreement of Limited Partnership. Each partner's tax
status, in turn, determines the appropriate income tax for its
allocated share of the Partnership's taxable income or loss. The
net difference between the basis of the Partnership's assets and
liabilities for federal income tax purposes and as reported for
financial statement purposes for the year ended December 31, 2009 and 2008 is $(100,243)
and $(121,155), respectively.
Noncontrolling Interest - The Partnership reports noncontrolling interests in
real estate joint ventures as a separate component within equity, in accordance
with ASC 810-10 (formerly SFAS No. 160, "Noncontrolling Interests in
Consolidated Financial Statements").
Revenues
- Rental revenue is recognized using the accrual method based on
contractual amounts provided for in the lease agreements, which
approximates recognition on a straight-line basis. The term of the
lease agreements is usually less than one year.
Advertising Expense - Costs related to advertising in Yellow Pages are
capitalized and amortized over 12 months. All other advertising costs are
expensed as incurred. Advertising expense for the years ended December 31, 2009
and 2008 were $69,582 and $99,571
respectively. Net
Income per Limited Partnership Unit - Net income per
limited partnership unit is computed by dividing net income
allocated to the limited partners by the weighted average number
of limited partnership units outstanding during each year. Estimates
- The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America requires the Partnership to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ
from those estimates. Impairment
of Long-Lived Assets - The Partnership regularly reviews long-lived
assets for impairment whenever events or changes in circumstances
indicate that the carrying amount of the asset may not be
recoverable. If the sum of the expected undiscounted future cash flow
is less than the carrying amount of the asset, the Partnership would
recognize an impairment loss to the extent the carrying value
exceeded the fair value of the property. No impairment losses were
required in 2009 or 2008.
Fair
Value of Financial Instruments - For all financial instruments,
including cash and cash equivalents, other assets, distributions due
to partners, incentive management fee payable to general partners,
property management
fee payable, and customer deposits and other liabilities, carrying
values approximate fair values because of the short maturity of those
instruments. The carrying value of the capital lease obligations
approximates fair value because the terms of the instrument are
similar to terms available to the Partnership for similar types of
leasing agreements. Page
F-6 Concentrations
of Credit Risk - Financial instruments that potentially subject the
Partnership to concentrations of credit risk consist primarily of
cash and cash equivalents and rent receivables. The Partnership
places its cash and cash equivalents with high credit quality
institutions.
Recent Accounting Pronouncements In April
2009, the FASB issued ASC 825-10 (formerly FASB Staff Position No. FAS 107-1 and
APB 28-1, Interim Disclosures about Fair Value of Financial Instruments) ("ASC
825-10"), which requires that the fair value disclosures required for all financial
instruments within the scope of SFAS 107, "Disclosures about Fair Value of
Financial Instruments," be included in interim financial statements. This FSP
also requires entities to disclose the method and significant assumptions used
to estimate the fair value of financial instruments on an interim and annual
basis and to highlight any changes from prior periods. ASC 825-10 was effective
for interim periods ending after June 15, 2009, with early adoption permitted.
The adoption of ASC 825-10 did not have a material impact on the Partnership's
consolidated financial statements. 3.
PROPERTY The
total cost of property and accumulated depreciation were as follows as
of December 31:
2009
2008
Land
$
1,894,250
$1,894,250 Buildings and
improvements
6,671,496 Rental trucks
under capital leases
163,382 Total
8,734,993
8,729,128
Less accumulated
depreciation
(6,545,581)
(6,212,021) Property –
net
$2,517,107 Depreciation
expense of $1,660 and $40,863 was recorded on the rental trucks
under capital leases in 2009 and 2008. 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 distributed to the
limited partners. 5.
BUSINESS SEGMENT INFORMATION The
following disclosure about segment reporting of the Partnership is made in
accordance with the requirements of ASC 280-10 (formerly SFAS No. 131,
"Disclosures About Segments of an Enterprise and Related Information") The
Partnership operates in a single segment; storage facility operations, under
which the Partnership rents its storage facilities to its customers on a need
basis and charges rent on a predetermined rate. 6.
RELATED-PARTY TRANSACTIONS The
partnership has entered into management agreements with Dahn to
operate its mini-storage facilities. The management agreements
provide 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 agreements are renewable annually. Dahn earned
management fees equal to $125,133 and $139,155 for the years ended
December 31, 2009 and 2008, respectively. Amounts payable to Dahn at
December 31, 2009 and 2008, were $9,754 and $14,318, respectively. Page
F-7
ITEM 15(2) (A
California Real Estate Limited Partnership) SCHEDULE
III REAL
ESTATE AND ACCUMULATED DEPRECIATION
As of December 31, 2009
Gross
Carrying Amount
Initial
Cost
Costs
at December 31, 2009
Description
Acqui-sition
Date
Land
Buildings
and Improve-ments
Subse-quent
to Acqui-sition
Land
Buildings
and
Total
Accumulated
Depreciation
Whittier,
CA
03/90
$
845,000
$
1,969,083
$
34,025
$
845,000
$
2,003,108
$
2,848,108
($1,969,776)
Bloomingdale,
IL
01/91
442,000
1,579,879
84,956
442,000
1,664,835
2,106,835
($1,573,677)
Edgewater,
NJ
09/90
191,250
2,400,712
80,958
191,250
2,481,670
2,672,920
($2,347,809)
Sterling
Hts., MI
07/91
416,000
467,979
59,769
416,000
527,748
943,748
($490,937)
$1,894,250
$6,417,653
$259,708
$1,894,250
$6,677,361
$8,571,611
($6,382,199)
Notes:
Depreciation expense is
computed using the straight-line method over an estimated useful
life of 20 years for the buildings. There
are no encumbrances. Page
F-8 EXHIBIT
13
2009
ANNUAL REPORT TO LIMITED PARTNERS OF Dear
Limited Partner: This
report contains the Partnership's
consolidated balance sheets as of December 31,
2009 and 2008, and the related
consolidated statements of income, changes in partners'
equity (deficit) and cash flows for each of the two years ended
December 31, 2009 accompanied by a report of Independent Registered
Public Accounting firm. The Partnership's properties were each
purchased for all cash and funded solely from subscriptions for
limited partnership interests without the use of mortgage financing. Your
attention is directed to the section entitled Management's Discussion
and Analysis of Financial Condition and Results of Operations for the
General Partners' discussion and analysis of the
consolidated financial statements
and operations of the Partnership. Average
occupancy levels and revenue per square foot for each of the
Partnership's properties for the years ended December 31, 2009 and
2008 were as follows:
2009
2008 Parcel (Average) (Average) Size Date Rentable Revenue Rentable Revenue Location (Acres) Opened Sq.
Ft. Sq.
Ft. Occ
% Sq.
Ft. Sq.
Ft. Occ
% Bloomingdale,
IL 3.54 Mar-87 58,243
8.65
76.4 58,459 10.00 86.1 Edgewater
Park, NJ 4.12 Oct-89
53,714
7.49
67.0 54,144 8.31 71.7 Sterling
Heights, MI 3.76 Jul-91 57,850
7.65
79.0 57,998 7.60 77.0 Whittier,
CA 3.92 Mar-90 58,554
12.73
80.0 58,554 14.63 86.8 We
will keep you informed of the activities of your Fund as they
develop. If you have any questions, please contact us at your
convenience at (562) 493-3022. If you would like a copy of the
Partnership's Annual Report on Form 10-K for the year ended December
31, 2009, which was filed with the Securities and Exchange Commission
(which report includes the enclosed Financial Statements), we will
forward a copy of the report to you upon written request.
Very
truly yours,
DSI
REALTY INCOME FUND XI /s/
ROBERT J. CONWAY
By_______________________________
ROBERT
J. CONWAY, President
EXHIBIT
31.1 I,
Robert J. Conway, certify that: 1.
I have reviewed this annual report on Form 10-K 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
covered 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 officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15e and 15d-15e) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)), for the registrant and have: a)
designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, 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 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;
c)
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
d)
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 an annual report) that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting. 5.
The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit
committee of the registrant's board of directors (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
internal control over financial reporting. Date:
March 31, 2010 /s/
ROBERT J. CONWAY Robert
J. Conway
EXHIBIT
31.2 I,
Richard P. Conway, certify that: 1.
I have reviewed this annual report on Form 10-K 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
covered 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 officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15e and 15d-15e) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)), for the registrant and have: a)
designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, 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 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;
c)
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
d)
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 an annual report) that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting. 5.
The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit
committee of the registrant's board of directors (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
internal control over financial reporting.
Date: March 31,
2010
/s/
RICHARD P. CONWAY Richard
P. Conway
EXHIBIT
32.1 CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002 (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 Robert
J. Conway
EXHIBIT
32.2 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 Annual Report of DSI
Realty Income Fund XI
(the "Partnership") on Form 10-K for the period ending
December 31, 2009 as filed with the Securities and Exchange
Commission on the date hereof (the "Report"), I, Richard P.
Conway, Senior Vice President of DSI Properties, Inc., General
Partner of
the
Partnership, and performing the functions of chief financial 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.
/s/
RICHARD P. CONWAY
Richard
P. Conway
March 31, 2010
AND
OFF-BALANCE SHEET ARRANGEMENTS
partnership unit
of
limited partnership
units outstanding
(A
California Real Estate Limited Partnership)
by:
DSI Properties, Inc., a California corporation,
as
General Partner
(Chief
Executive Officer, Chief Financial
Officer, and Director)
as General
Partner
(Chief
Executive Officer, Chief Financial
Officer, and Director)
(A
California Real Estate Limited Partnership)
(A
California Real Estate Limited Partnership)
(A
California Real Estate Limited Partnership)
Noncontrolling
Interest
$ -
157,554
(157,554)
$ -
141,604
(141,604)
$ -
(A
California Real Estate Limited Partnership)
(A
California Real Estate Limited Partnership)
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.
Under the terms of the property purchase agreements, the Partnership and its
joint venture partners (Whittier Mini, Bloomingdale Mini, Edgewater Mini, and
Sterling Heights Mini, each a California Limited Partnership and an affiliate of
Dahn, and hereinafter referred to as the "Joint Venture Partners") own an
undivided interest in the mini-storage facilities as follows:
Joint Venture
Mini-Storage Property
Partnership Partner
Whittier, CA
90%
10%
Bloomingdale, IL
90%
10%
Edgewater, NJ
85%
15%
Sterling Heights, MI
75%
25%
The Joint Venture Partners have made no cash contributions to any of the joint
ventures. Rather, each Joint Venture Partner's interest in each respective
mini-storage property was obtained in consideration of a reduction in the
purchase price of the property by Dahn. The Partnership has control over the
business and operations of the mini-storage facilities (see Note 6).
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 above. 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 2009 and 2008. A
noncontrolling 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.
In May 2009, the FASB issued ASC 855-10 (formerly Statement No. 165, Subsequent
Events) ("ASC 855-10"). ASC 855-10 establishes general standards of accounting for and
disclosure of events that occur after the balance sheet date but before
financial statements are issued or are available to be issued. In accordance
with this Statement, entities should apply the requirements to interim or annual
financial periods ending after June 15, 2009. The adoption of this statement
did not have a material impact on the Partnership's consolidated financial statements.
In June 2009, the FASB approved its Accounting Standards Codification, or
Codification, as the single source of authoritative United States accounting and
reporting standards applicable for all non-governmental entities, with the
exception of the SEC and its staff. The Codification, which changes the
referencing of financial standards, is effective for interim or annual financial
periods ending after September 15, 2009. Therefore, starting from the third
quarter of fiscal year 2009, all references made to US GAAP will use the new
Codification numbering system prescribed by the FASB. As the Codification is
not intended to change or alter existing US GAAP, it did not have any impact on
the Partnership's consolidated financial statements.
As a result of the Partnership's implementation of the Codification during the
year ended December 31, 2009, previous references to new accounting
standards and literature are no longer applicable. In the current
consolidated financial statements, the Partnership will provide reference to both new and old
guidance to assist in understanding the impact of recently adopted accounting
literature, particularly for guidance adopted since the beginning of the current
fiscal year but prior to the Codification.
In August 2009, the FASB issued Accounting Standards Update No. 2009-05 ("ASU
2009-05"), "Fair Value Measurements and Disclosures (Topic 820) - Measuring
Liabilities at Fair Value." ASU 2009-05 amends Subtopic 820-10, "Fair Value
Measurements and Disclosures - Overall," and provides clarification for the fair
value measurement of liabilities. ASU 2009-05 is effective for the first
reporting period including interim period beginning after issuance. The
Partnership does not expect the adoption of ASU 2009-05 to have a material
impact on its consolidated financial statements.
6,677,361
163,382
$2,189,412
DSI
REALTY INCOME FUND
XI
Improve-ments
DSI
REALTY INCOME FUND XI
By:
DSI Properties, Inc.
Rule
13a-14(a)/15d-14(a) Certification
_______________________________
President
of DSI Properties, Inc., General Partner (chief executive officer)
Rule
13a-14(a)/15d-14(a) Certification
__________________________________
Senior
Vice President of DSI Properties, Inc., General Partner (chief
financial officer)
In
connection with the Annual Report of DSI
Realty Income Fund XI
(the "Partnership") on Form 10-K for the period ending
December 31, 2009 as filed with the Securities and Exchange
Commission on the date hereof (the "Report"), I, Robert J.
Conway, President of DSI Properties, Inc., General Partner of the
Partnership, and performing the functions of 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:
___________________________________
President
of DSI Properties, Inc., General Partner (chief executive officer)
March 31, 2010
__________________________________
Senior
Vice President of DSI Properties, Inc., General Partner (chief
financial officer)