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DSI REALTY INCOME FUND XI
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
/ x /Annual Report Pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934 [Fee Required] for the fiscal year ended December 31, 2000.
or / /Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required] for the transition period from
____________ to _____________.
Commission File No. 33-26038.
DSI REALTY INCOME FUND XI, a California Limited Partnership
(Exact name of Registrant as specified in governing instruments)
__________California_________________________33-0324161_______
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification
number)
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
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Units.
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 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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 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/
The Registrant is a limited partnership and there is no voting stock. All units
of limited partnership are owned by non-affiliates of the Registrant. All units
sold to date were sold at $500.00 per unit.
DOCUMENTS INCORPORATED BY REFERENCE
Item 8. Registrant's Financial Statements for its fiscal year ended December
31, 2000, incorporated by reference to Form 10-K, Part II.
Item 11. Registrant's Financial Statements for its fiscal year ended December
31, 2000, incorporated by reference to Form 10-K, Part III.
Item 12. Registration Statement on Form S-11, as amended, previously filed with
the Securities and Exchange Commission pursuant to the Securities Act of
1933, as amended, incorporated by reference to Form 10-K, Part III.
Item 13. Registrant's financial statements for its fiscal year ended December
31, 2000, together with report of independent public accountants,
incorporated by reference to Form 10-K, Part III.
PART I
Item l. BUSINESS
Registrant (the "Partnership") is a publicly held limited partnership
organized under the California Uniform Limited Partnership Act pursuant to
Agreement of Limited Partnership (the "Agreement") dated December 7, 1988. The
General Partners are DSI Properties, Inc., a California corporation, ROBERT J.
CONWAY and JOSEPH W. CONWAY. The General Partners are affiliates of the Selling
Agent, Diversified Securities, Inc., a wholly-owned subsidiary of DSI Financial,
Inc. The General Partners provide similar services to other partnerships.
The Partnerships's public offering was completed on February 12, 1991, with
20,000 Units ($10,000,000) of limited partnership interests having been
subscribed for. The General Partners have retained a l% interest in all profits,
losses and distributions (subject to certain conditions) without making any
capital contributions to the Partnership. The General Partners are not required
to make any contributions to capital in the future. The General Partners and the
Partnership have obtained a ruling from the Internal Revenue Service, that under
present provisions of the Internal Revenue Code, current Treasury Regulations
thereunder and the interpretations thereof by the Service and the courts, the
Partnership should be treated for federal income tax purposes as a partnership
and not as an association, which is taxable as a corporation. Such ruling was
based upon certain representations contained in the ruling request.
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 in order to shelter a portion of cash distributed
from taxation. The Partnership has interests in joint ventures which purchased
four mini-storage facilities. See discussion under Item 2 - Properties for
further information.
The Partnership does not intend to sell additional limited partnership
interests in the future. The term of the Partnership is fifty years, however, it
is anticipated that all properties will be sold and/or refinanced prior thereto.
The Partnership is intended to be self-liquidating and it is not anticipated
that proceeds from the sale or refinancing of its operating properties will be
reinvested. The Registrant has no full time employees other than on-site
managers at each mini-storage facility. However, the Partnership shares the
expenses of one or more employees with its various affiliated Limited
Partnerships. The general management and supervision of the business and affairs
of the Registrant is vested exclusively in the General Partners. Limited
Partners have no right to participate in the management or conduct of the
Registrant's 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.
The average occupancy levels for each of the Partnership's four properties
for the years ended December 31, 2000 and December 31, 1999 were as follows:
Location of Property Average Occupancy Average Occupancy
for the Level for the
Year Ended Year Ended
Dec. 31, 2000 Dec. 31, 1999
Whittier, CA(1) 89% 88%
Bloomingdale, IL(2) 83% 84%
Edgewater, NJ(3) 86% 84%
Sterling Heights, MI(4) 85% 84%
(1) The Partnership owns a 90% interest in this property.
(2) The Partnership owns a 90% interest in this property.
(3) The Partnership owns an 85% interest in this property.
(4) The Partnership owns a 75% interest in this property.
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, will compete with a significant number of individuals and
organizations with respect to both the purchase and sale of its properties and
for rentals.
Item 2. PROPERTIES
Location Size of Net Rentable No. of Completion
Parcel Area Rental Date
Whittier, CA(1) 3.92 acres 60,249 513 3/90
Bloomingdale,
IL(2) 3.542 acres 60,624 571 1/31/91
Edgewater,NJ(2) 4.118 acres 52,940 447 8/21/90
Sterling
Heights, MI(4) 3.76 acres 58,198 515 7/17/91
(1) The Partnership owns a 90% interest in this property.
(2) The Partnership owns a 90% interest in this property.
(3) The Partnership owns an 85% interest in this property.
(4) The Partnership owns a 75% interest in this property.
Item 3. LEGAL PROCEEDINGS
Registrant is not a party to any material pending proceedings.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.
Registrant, a publicly-held limited partnership, had approximately 536
Limited Partners at December 31, 2000. The Registrant completed its public
offering of limited partnership Units. There is no public market for the resale
of these Units.
Average cash distributions of $13.75 per Limited Partnership Unit were
declared and paid each quarter for the year ended December 31, 2000 and $12.50
per Limited Partnership Unit were declared and paid each quarter for the year
ended December 31, 1999 and $13.75 per Limited Partnership Unit were declared
and paid each quarter for the year ended December 31, 1998. It is Registrant's
expectations that distributions will continue to be paid in the future.
Item 6. SELECTED FINANCIAL DATA
DSI REALTY INCOME FUND XI
(A California Real Estate Limited Partnership)
- ----------------------------------------------
SELECTED FINANCIAL DATA
FIVE YEARS ENDED DECEMBER 31, 2000
- -----------------------------------------------------------------
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
TOTAL REVENUES
AND OTHER
INCOME $2,181,934 $2,108,447 $1,990,616 $1,903,385 $1,829,360
TOTAL
EXPENSES 1,262,117 1,238,034 1,108,711 1,115,758 1,068,283
MINORITY INTEREST
IN INCOME OF
REAL ESTATE JOINT
VENTURE (194,204) (186,102) (179,154) (171,956) (168,304)
--------- --------- --------- --------- ---------
NET INCOME $ 725,613 $ 684,311 $ 702,751 $ 615,671 $ 592,773
========= ========= ========= ========= =========
TOTAL ASSETS $5,485,221 $5,841,106 $6,152,614 $6,517,581 $6,709,600
========== ========== ========== ========== ==========
CASH FLOWS FROM:
OPERATING $1,287,282 $1,202,051 $1,212,360 $1,095,449 $1,097,502
INVESTING (18,864) - (53,786) - (13,634)
FINANCING (1,305,315) (1,196,203) (1,265,013) ( 980,036) ( 976,385)
NET INCOME
PER LIMITED
PARTNERSHIP
UNIT $ 35.92 $ 33.87 $ 34.79 $ 30.48 $ 29.34
======== ========= ======== ======== ========
CASH
DISTRIBUTIONS
PER LIMITED
PARTNERSHIP
UNIT $ 55.00 $ 50.00 $ 55.00 $ 40.00 $ 40.00
======== ======== ======= ======== ========
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
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
facility in Edgewater Park, New Jersey, a 90% interest in an operating mini-
storage facility in Bloomingdale, Illinois and a 75% interest in an operating
facility in Sterling Heights, Michigan. Occupancy levels for the Partnership's
four mini-storage facilities on December 31, 2000, were: Whittier 89%, Edge-
water Park 85%, Bloomingdale 85% and Sterling Heights 85%.
RESULTS OF OPERATIONS
Total revenues increased from $2,101,733 in 1999, to $2,174,004 in 2000, total
expenses increased from $1,238,034 to $1,262,117, other income incresed from
$6,714 to $7,930 and minority interest in real estate joint ventures increased
from $186,102 to $194,204. As a result, net income increased from $684,311 to
$725,163. The approximately $72,300 (3.4%) increase in rental revenues can be
attributed to higher occupancy rates. Occupancy levles for the Partnership's
four mini-storage facilities averaged 86.0% for the year ended December 31,
1999. Operating expenses decreased approximately $23,500 (3.9%) primarily as
a result of decreases in yellow pages advertising costs, repairs and mainten-
ance, real estate tax and power and sweeping expenses, partially offset by
an increase in salaries and wages and workers compensation insurance expenses.
Power and sweeping expenses decreased as the substantial snow removal costs in
the prior year assoiated with the blizzard that hit Illinois and Michigan,
where two of the Partnership's properties are located, did not materialize in
the current year. General and administrative expenses increased approximately
$8,400 as a result of relatively insignificant fluctuations in various expense
accounts. Incentive management fees, which are based on distributions paid to
limited partners, increased as a result of the increase in distributions to
limited partners. Property management fees, which are computed as a percentage
of rental revenues, increased as a result of the increase in rental revenue.
1999 COMPARED TO 1998
Total revenues increased from $1,971,279 in 1998 to $2,101,733 in 1999, total
expenses increased from $1,108,711 to $1,238,034, other income decreased from
$19,337 to $6,714 and minority interest in real estate joint ventures increased
from $179,154 to $186,102. As a result net income decreased from $702,751 to
$684,311. The approximately $130,500 (6.6%) increase in rental revenues can
be attributed to higher unit rental rates as average occupancy levels decreased
from 87.0% for the year ended December 31, 1998 to 85.1% for 1999. Operating
expenses increased approximately $109,100 (22.4%) primarily as a result of
increases in yellow pages and other advertising costs, repairs and maintenance,
salaries and wages, workers compensation insurance and power and sweeping
expenses. Power and sweeping expenses increased as result of the substantial
snow removal costs associated with the blizzard that hit Illinois and Michigan
where two of the Partnership's properties are located. General and administra-
tive expenses remained relatively constant. Incentive management fees, which
are based on distributions paid to limited partners, decreased as a result of
the decrease in distributions to limited partners. Property management fees,
which are computed as a percentage of rental revenues, increased approximately
$26,100 (26.1%).
Operating expenses consists mainly of expenses such as yellow pages and other
advertising costs, utilities, repair 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, postage, accounting services and computer expenses.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities increased by approximately $85,200
(7.1%) in 2000 as a result of the increase in net income, depreciation and
customer deposits and other liaabilities. Net cash provided by operating
activities decreased by approximately $10,300 (0.9%) in 1999 compared to 1998
primarily as a result of the decrease in net income.
Cash used in financing activities consisted of cash distributions to partners
in 2000, 1999 and 1998. Additionally, cash distributions were paid to
the minority interests in the real estate joint ventures in 2000, 1999, and
1998. In December 1998, 1999 and 2000, the General Partners declared and paid
a special distribution equal to 3%, 2% and 3% respectively of capital
contributed by the limited partners. The General Partners determined that
effective with the first quarter 1998 distribution, which was paid on April 15,
1998, distributions to limited partners would be increased to an amount which
yields an 8% annual return on the capital contributed by the limited partners
from an annual return of 7% paid in the prior year.
Cash used in investing activities, as set forth in the statement of cash flows,
consists of acquisitions of equipment for the Partnership's mini storage
facilities in 2000. The Partnership has no material commitments for capital
expenditures.
The General Partners plan to continue their policy of funding the continuing
improvement and maintenance of the 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.
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Summarized quarterly financial data for the years ended December 31, 2000 and
1999 was as follows:
2000 QUARTER ENDED
------------------
March 31, June 30, September 30, December 31,
Total revenues $520,828 $537,386 $568,437 $547,353
Income before
minority interest
in joint venture 213,350 229,668 242,713 234,086
Net income 213,350 229,668 94,659 187,936
Net income per
limited partnership
unit $ 10.56 $ 11.37 $ 4.69 $ 9.30
Weighted average
limited partnership
unit 20,000 20,000 20,000 20,000
1999 QUARTER ENDED
------------------
March 31, June 30, September 30, December 31,
Total revenues $524,347 $525,569 $522,629 $529,188
Income before
minority interest
in joint venture 234,334 209,600 249,875 176,604
Net income 234,334 209,600 112,221 128,156
Net income per
limited partnership
unit $ 11.60 $ 10.38 $ 5.55 $ 6.34
Weighted average
limited partnership
unit 20,000 20,000 20,000 20,000
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Attached hereto as Exhibit l is the information required to be set forth as
item 8, Part II hereof.
Item 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT'S
GENERAL PARTNER
The General Partners of Registrant are the same as when the Partnership was
formed, i.e., DSI Properties, Inc., a California corporation, Robert J. Conway
and Joseph W. Conway, brothers. As of December 31, 2000, Messrs. Robert J.
Conway and Joseph W. Conway, each of whom own approximately 48.4% of the issued
and outstanding capital stock of DSI Financial, Inc., a California corporation,
together with Mr. Joseph W. Stok, currently comprise the entire Board of
Directors of DSI Properties, Inc.
Mr. Robert J. Conway is 67 years of age and is a licensed California real
estate broker, and since 1965 has been President and a member of the Board of
Directors of Diversified Securities, Inc., and since 1973 President, Chief
Financial Officer and a member of the Board of Directors of DSI Properties, Inc.
Mr. Conway received a Bachelor of Science Degree from Marquette University with
majors in Corporate Finance and Real Estate.
Mr. Joseph W. Conway is age 71 and has been Executive Vice President,
Treasurer and a member of the Board of Directors of Diversified Securities, Inc.
since 1965 and since 1973 the Vice President, Treasurer and member of the Board
of Directors of DSI Properties, Inc. Mr. Conway received a Bachelor of Arts
Degree from Loras College with a major in Accounting.
Mr. Joseph W. Stok is age 77 and 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.
Item 11. MANAGEMENT REMUNERATION AND TRANSITIONS
The information required to be furnished in Item 11 of Part III is
contained in Registrant's Financial Statements for its fiscal year ended
December 31, 2000, which together with the report of its independent auditors,
Deloitte & Touche LLP, is attached hereto as Exhibit 1 and incorporated herein
by this reference. In addition to such information:
(a) No annuity, pension or retirement benefits are proposed to be paid by
the Registrant to any of the General Partners or to any officer or
director of the corporate General Partner;
(b) No standard or other agreement exists by which directors of the
Registrant are compensated;
(c) The Registrant has no plan, nor does the Registrant presently propose
a plan, which will result in any remuneration being paid to any
officer or director upon termination of employment.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
As of the December 31, 2000, no person of record owns more than 5% of the
limited partnership units of the Registrant, nor was any person known by the
Registrant to own of record and beneficially, or beneficially only, more than 5%
thereof. The balance of the information required to be furnished in Item 12 of
Part III is contained in the Registrant's Registration Statement on Form S-11,
previously filed pursuant to the Securities Act of 1933, as amended, and which
is incorporated herein by this reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required to be furnished in Item 13 of Part III is
contained in the Registrant's Financial Statements and Financial Statement
Schedule for it fiscal year ended December 31, 2000, attached hereto as Exhibit
l and incorporated herein by this reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K
(a)(l) Attached hereto and incorporated herein by this reference as Exhibit
l are Registrant's Financial Statements for its fiscal year ended
December 31, 2000, together with the reports of its independent
auditors, Deloitte, & Touche LLP.
(a)(2) Attached hereto and incorporated herein by this reference as Exhibit
2 is Registrant's Letter to Limited Partners regarding the Annual
Report for its fiscal year ended December 31, 2000.
(b) There have been no 8K's filed during the last quarter of the period
covered by this Report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
DSI REALTY INCOME FUND XI
by: DSI Properties, Inc., a
California corporation, as
General Partner
By_______________________________ Dated: March 30, 2001
ROBERT J. CONWAY (President,
Chief Executive Officer, Chief
Financial Officer and Director)
By_______________________________ Dated: March 30, 2001
JOSEPH W. CONWAY (Executive
Vice President and Director)
Pursuant to the requirements of the Securities and 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
by: DSI Properties, Inc., a
California corporation, as
General Partner
By_______________________________ Dated: March 30, 2001
ROBERT J. CONWAY (President,
Chief Executive Officer, Chief
Financial Officer and Director)
By______________________________ Dated: March 30, 2001
JOSEPH W. CONWAY (Executive
Vice President and Director)
DSI REALTY INCOME FUND XI
CROSS REFERENCE SHEET
FORM 1O-K ITEMS TO ANNUAL REPORT
PART I, Item 3. There are no legal proceedings pending or threatened.
PART I, Item 4. Not applicable.
PART II, Item 5. Not applicable.
PART II, Item 6. The information required is contained in Registrant's Financial
Statements for its fiscal year ended December 31, 2000, attached as Exhibit l to
Form 10-K.
PART II, Item 8. See Exhibit l to Form 10-K filed herewith.
PART II, Item 9. Not applicable.
EXHIBIT l
DSI REALTY INCOME FUND XI
(A California Real Estate Limited Partnership)
SELECTED FINANCIAL DATA
FIVE YEARS ENDED DECEMBER 31, 2000
- --------------------------------------------------------------------------------
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
TOTAL REVENUES
AND OTHER
INCOME $2,181,934 $2,108,447 $1,990,616 $1,903,385 $1,829,360
TOTAL
EXPENSES 1,262,117 1,238,034 1,108,711 1,115,758 1,068,283
MINORITY INTEREST
IN INCOME OF
REAL ESTATE JOINT
VENTURE (194,204) (186,102) (179,154) (171,956) (168,304)
--------- --------- --------- --------- ---------
NET INCOME $ 725,613 $ 684,311 $ 702,751 $ 615,671 $ 592,773
========= ========= ========= ========= =========
TOTAL ASSETS $5,485,221 $5,841,106 $6,152,614 $6,517,581 $6,709,600
========== ========== ========== ========== ==========
CASH FLOWS FROM:
OPERATING $1,287,282 $1,202,051 $1,212,360 $1,095,449 $1,097,502
INVESTING (18,864) - (53,786) - (13,634)
FINANCING (1,305,315) (1,196,203) (1,265,013) ( 980,036) ( 976,385)
NET INCOME
PER LIMITED
PARTNERSHIP
UNIT $ 35.92 $ 33.87 $ 34.79 $ 30.48 $ 29.34
======== ========= ======== ======== ========
CASH
DISTRIBUTIONS
PER LIMITED
PARTNERSHIP
UNIT $ 55.00 $ 50.00 $ 55.00 $ 40.00 $ 40.00
======== ======== ======= ======== ========
The following are reconciliations between the operating results and partners'
equity per the financial statements and the Partnership's income tax return for
the year ended December 31, 2000.
Net Partners'
Income Equity
Per financial statements $ 725,613 $ 5,140,267
Excess book depreciation 134,706 1,186,489
Deferred rental revenues 19,008 68,995
Accrued distributions to partners 202,021
Accrued incentive management fees 443,214
Acquisition costs capitalized
for tax purposes 1,033,227
----------- -----------
Per Partnership income tax return $ 879,327 $ 8,074,213
=========== ===========
Net Taxable income per limited
partnership unit $ 43.53
===========
DSI REALTY INCOME FUND XI
(A California Real Estate Limited Partnership)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
Page
FINANCIAL STATEMENTS:
Independent Auditors' Report F-1
Consolidated Balance Sheets at December 31, 2000 and 1999 F-2
Consolidated Statements of Income for the Three
Years Ended December 31, 2000 F-3
Consolidated Statements of Changes in Partners' Equity for
the Three Years Ended December 31, 2000 F-4
Consolidated Statements of Cash Flows for the Three Years
Ended December 31, 2000 F-5
Notes to Consolidated Financial Statements F-6
SUPPLEMENTAL SCHEDULE:
Independent Auditors' Report F-8
Schedule XI - Real Estate and Accumulated Depreciation F-9
SCHEDULES OMITTED:
Financial statements and schedules not listed above are omitted because of the
absence of conditions under which they are required or because the
information is included in the financial statements named above, or in the
notes thereto.
INDEPENDENT AUDITORS' REPORT
To the Partners of
DSI Realty Income Fund XI:
We have audited the accompanying balance sheets of DSI Realty Income Fund XI, a
California Real Estate Limited Partnership (the "Partnership") as of December
31, 2000 and 1999, and the related statements of income, changes in partners'
equity (deficit), and cash flows for each of the three years in the period ended
December 31, 2000. Our audits also included the financial statement schedule
listed in the Index at Item 14. These financial statements are the responsi-
bility of the Partnership's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
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, such financial statements present fairly, in all material
respects, the financial position of DSI Realty Income Fund XI at December 31,
2000 and 1999, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2000 in conformity with
accounting principles generally accepted in the United States of America. Also,
in our opinion, such financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, in all material respects,
the information set forth therein.
February 2, 2001
Deloitte Touche LLP
Los Angeles, California
DSI REALTY INCOME FUND XI
(A California Real Estate Limited Partnership)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2000 AND 1999
- -------------------------------------------------------------------------------
ASSETS 2000 1999
CASH AND CASH EQUIVALENTS $ 362,863 $ 399,760
PROPERTY, net (Note 3) 5,077,118 5,402,056
OTHER ASSETS 45,240 39,290
----------- -----------
TOTAL $ 5,485,221 $ 5,841,106
=========== ===========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
LIABILITIES:
Distribution due partners (Note 4) $ 202,020 $ 202,020
Property management
fees payable (Note 1) 11,019 10,387
Other liabilities 131,915 102,934
----------- ----------
Total liabilities 344,954 315,341
----------- ----------
PARTNERS' EQUITY (DEFICIT)(Note 4):
General partners (38,264) (34,409)
Limited partners (20,000 limited
partnership units outstanding
at December 31, 2000 and 1999) 5,178,531 5,560,174
------------ -----------
Total partners' equity 5,140,267 5,525,765
------------ -----------
TOTAL $ 5,485,221 $ 5,841,106
============ ===========
See accompanying notes to consolidated financial statements.
DSI REALTY INCOME FUND XI
(A California Real Estate Limited Partnership)
CONSOLIDATED STATEMENTS OF INCOME
THREE YEARS ENDED DECEMBER 31, 2000
- --------------------------------------------------------------------------------
2000 1999 1998
REVENUES:
Rental revenues $2,174,004 $2,101,733 $1,971,279
---------- ---------- ----------
EXPENSES:
Depreciation 343,802 318,792 319,242
Operating 572,837 596,336 487,225
General and administrative 114,253 105,892 103,731
General partners' incentive
management fee (Note 4) 100,001 90,910 98,511
Property management fees 131,224 126,104 100,002
---------- ---------- ----------
Total expenses 1,262,117 1,238,034 1,108,711
---------- ---------- ----------
OPERATING INCOME 911,887 863,699 862,568
OTHER INCOME -
Interest income 7,930 6,714 19,337
INCOME BEFORE MINORITY INTERESTS
IN INCOME OF REAL ESTATE
JOINT VENTURES 919,817 870,413 881,905
MINORITY INTERESTS IN INCOME OF
REAL ESTATE JOINT VENTURES (194,204) (186,102) (179,154)
---------- ---------- ----------
NET INCOME $ 725,613 $ 684,311 $ 702,751
========== ========== ==========
AGGREGATE NET INCOME ALLOCATED
TO (Note 4):
Limited partners $ 718,357 $ 677,468 $ 695,723
General partners 7,256 6,843 7,028
---------- ---------- ----------
TOTAL $ 725,613 $ 684,311 $ 702,751
========== ========== ==========
NET INCOME PER LIMITED PARTNERSHIP
UNIT (Notes 2 and 4) $ 35.92 $ 33.87 $ 34.79
========== ========== ==========
See accompanying notes to financial statements.
DSI REALTY INCOME FUND XI
(A California Real Estate Limited Partnership)
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIT)
THREE YEARS ENDED DECEMBER 31, 2000
- --------------------------------------------------------------------------------
General Limited
Partners Partners Total
BALANCE, JANUARY 1, 1998 $(27,068) $ 6,286,983 $ 6,259,915
Net income 7,028 695,723 702,751
Distributions (11,111) (1,100,000) (1,111,111)
------- ----------- -----------
BALANCE, DECEMBER 31,1998 $(31,151) $ 5,882,706 $ 5,851,555
Net Income 6,843 677,468 684,311
Distributions (10,101) (1,000,000) (1,010,101)
-------- ----------- -----------
BALANCE, DECEMBER 31, 1999 $(34,409) $ 5,560,174 $ 5,525,765
Net income 7,256 718,357 725,613
Distributions (11,111) (1,100,000) (1,111,111)
-------- ----------- -----------
BALANCE, DECEMBER 31, 2000 $(38,264) $ 5,178,531 $ 5,140,267
======== =========== ===========
See accompanying notes to financial statements.
DSI REALTY INCOME FUND XI
(A California Real Estate Limited Partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE YEARS ENDED DECEMBER 31, 2000
- --------------------------------------------------------------------------------
2000 1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 725,613 $ 684,311 $ 702,751
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 343,802 318,792 319,242
Minority interests in income
of real estate joint ventures 194,204 186,102 179,154
Changes in assets and liabilities:
Other assets (5,950) (1,436) (6,928)
Property management fees payable 632 2,282 649
Customer deposits
and other liabilities 28,981 12,000 17,492
---------- ----------- ----------
Net cash provided by operating
activities 1,287,282 1,202,051 1,212,360
CASH FLOWS FROM INVESTING ACTIVITIES -
Additions to property (18,864) (53,786)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to partners (1,111,111) (1,010,101) (1,085,859)
Distributions paid to minority inter-
ests in real estate joint ventures (194,204) (186,102) (179,154)
----------- ----------- ----------
Net cash used in
financing activities (1,305,315) (1,196,203) (1,265,013)
----------- ----------- ----------
NET(DECREASE)INCREASE IN CASH AND
CASH EQUIVALENTS (36,897) 5,848 (106,439)
CASH AND CASH EQUIVALENTS,
AT BEGINNING OF YEAR 399,760 393,912 500,351
----------- ----------- -----------
CASH AND CASH EQUIVALENTS,
AT END OF YEAR $ 362,863 $ 399,760 $ 393,912
=========== =========== ===========
See accompanying notes to financial statements.
DSI REALTY INCOME FUND XI
(A California Real Estate Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE YEARS ENDED DECEMBER 31, 2000
1. GENERAL
DSI Realty Income Fund XI, a California Real Estate 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 as of December 31, 2000, which were purchased
for $500 a unit. The general partners have made no capital contribution
to the Partnership and are not required to make any capital contribution
in the future. The Partnership has a maximum life of 50 years and was
formed on December 7, 1986 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.
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.
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 pro-
portion to the ownership percentages as specified above. Cash distri-
butions 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, eight percent return
(7.75 percent for the Whittier Mini) from the operation of the joint
ventures. Requirements under the subordination agreement were met
during 2000, 1999 and 1998. A minority interest in real estate joint
venture is recorded to the extent of any distributions due to the Joint
Venture Partners. The Joint Venture Partners are also entitled to receive
a percentage, based upon a pre-determined formula, of the net proceeds
from the sale of the properties.
The Partnership is required by the agreements to pay Dahn a management
fee equal to six percent 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.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principals of Consolidation - The accompanying finacial statements include
the accounts of the Partnership and its joint venture investments. All
significant intercompany balances and transactions have been eliminated.
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 consists
primarily of mini-storage facilities. Depreciation is provided for using
the straight-line method over an estimated useful life of 20 years.
Building improvements are depreciated over a five year period.
Income Taxes - No provision has been made for income taxes in the
accompanying 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 taxable income or loss. The net difference between the basis
of the Partnership's asset and liabilities for federal income tax purposes
and as reported for financial statement purposes is $2,933,946.
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.
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 period (20,000 in 2000, 1999 and 1998).
Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires the Partnership's management to make estimates and assumptions
that affect the reported amounts of 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 Company 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 impair-
ment. No impairment losses were required in 2000, 1999 or 1998.
Fair Value of Financial Instruments - The Company's financial instruments
consist primarily of cash, receivables, accounts payable and accrued
liabilities. The carrying values of all financial instruments are
representative of their fair values due to their short-term maturities.
Concentrations of Credit Risk - Financial instruments that potentially
subject the Partnership to concentrations of crediot risk consist
primarily of cash equivalents and rent receivables. The Partnership
places its cash equivalents with high credit quality institutions.
Recent Accounting Pronouncement - In December 1999, the Securities and
Exchange Commission issued Staff Accounting Bulletin No. 101 ("SAB 101"),
"Revenue Recognition in Financial Statements." The adoption of SAB 101
did not impact the financial statements.
3. PROPERTY
At December 31, 2000 and 1999, the total cost of property and accumulated
depreciation are as follows:
2000 1999
Land $ 1,894,250 $ 1,894,250
Buildings 6,500,799 6,481,935
----------- -----------
Total 8,395,049 8,376,185
Less accumulated depreciation (3,317,931) (2,974,129)
----------- ----------
Property, net $ 5,077,118 $ 5,402,056
=========== ===========
4. ALLOCATION OF PROFITS AND LOSSES
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 equal to nine percent per annum of the Partnership distributions
made from cash available for distribution calculated as cash generated
from operations less capital expenditures.
5. BUSINESS SEGMENT INFORMATION
The following disclosure about segment reporting of the Partnership is
made in accordance with the requirements of Statement of Financial
Accounting Standards No. 131, Disclosures about Segments of an Enterprise
and Related Information. The Partnership operates under 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 pre-
determined rate.
DSI REALTY INCOME FUND XI
(A California Real Estate Limited Partnership)
REAL ESTATE AND ACCUMULATED DEPRECIATION
- --------------------------------------------------------------------------------
Costs Capitalized
Initial Cost to Subsequent to Gross Amount at Which Carried
Partnership Acquisition at Close of Period
------------------- ----------------- -----------------------------
Buildings Buildings Date
and Improve- Carrying and Accum. of Date
Description Encumbrances Land Improvements ments Costs Land Improvements Total Deprec. Const. Acq. Life
MINI-U-STORAGE
Whittier, CA None $845,000 $1,969,083 $11,719 $845,000 $1,980,802 $2,825,802 $1063,577 04/90 03/90 20 Yrs
Edgewater, NJ None 191,250 2,358,780 44,706 191,250 2,403,486 2,594,736 1229,638 06/89 09/90 20 Yrs
Bloomingdale, IL None 442,000 1,579,879 22,800 442,000 1,602,679 2,044,679 791,347 07/88 01/91 20 Yrs
Sterling Heights, MI None 416,000 467,979 45,853 416,000 513,832 929,832 233,369 06/77 07/91 20 Yrs
-------- ---------- ------- -------- ---------- ---------- ----------
$1,894,250 $6,375,721 $125,078 $1,894,250 $6,500,799 $ 8,395,049*$3,317,931
========== ========== ======== ========== ========== =========== ==========
Real Estate Accumulated
at Cost Depreciation
Balance at January 1, 1998 $ 8,322,399 $2,336,095
Additions 53,786 319,242
----------- ----------
Balance at December 31, 1998 $ 8,376,185 $2,655,337
Additions 318,792
----------- ----------
Balance at December 31, 1999 $ 8,376,185 $2,974,129
Additions 18,864 343,802
----------- ----------
Balance at December 31, 2000 $ 8,395,049 $3,317,931
=========== ==========
EXHIBIT 2
March 31, 2000
ANNUAL REPORT TO LIMITED PARTNERS OF
DSI REALTY INCOME FUND XI
Dear Limited Partner:
This report contains the Partnership's balance sheets as of December 31,
2000 and 1999, and the related statements of income, changes in partners' equity
and cash flows for each of the three years in the period ended December 31, 2000
accompanied by an independent auditors' report. The Partnership owns seven
mini-storage facilities, including two in Santa Rosa, California. 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 financial statements and operations of
the Partnership.
Average occupancy levels for each of the Partnership's four properties for
the years ended December 31, 2000 and December 31, 1999 were as follows:
Location of Property Average Occupancy Average Occupancy
Levels for the Levels for the
Year Ended Year Ended
Dec. 31, 2000 Dec. 31, 1999
Whittier, CA(1) 89% 88%
Bloomingdale, IL(2) 83% 84%
Edgewater, NJ(3) 86% 84%
Sterling Heights, MI(4) 85% 84%
(1) The Partnership owns a 90% interest in this property.
(2) The Partnership owns a 90% interest in this property
(3) The Partnership owns an 85% interest in this property
(4) The Partnership owns a 75% interest in this property
We will keep you informed of the activities of DSI Realty Income Fund XI 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, 2000, 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 VI
By: DSI Properties, Inc.
By_______________________________
ROBERT J. CONWAY, President