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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, 1995.
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)
3701 Long Beach Boulevard, Long Beach, California 90807
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code-(213)595-7711
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,
1995, incorporated by reference to Form 10-K, Part II.
Item 11. Registrant's Financial Statements for its fiscal year ended December
31, 1995, 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, 1995, 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, 1995 and December 31, 1994 were as follows:
Location of Property Average Occupancy Average Occupancy
for the Level for the
Year Ended Year Ended
Dec. 31, 1995 Dec. 31, 1994
Whittier, CA(1) 87% 89%
Bloomingdale, IL(2) 88% 88%
Edgewater, NJ(3) 89% 91%
Sterling Heights, MI(4) 83% 85%
(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 583
Limited Partners at December 31, 1995. 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 $10.00 per Limited Partnership Unit were
declared and paid each quarter for the year ended December 31, 1995 and $8.75
per Limited Partnership Unit for the year ended December 31, 1994. 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
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994, 1993, 1992, AND 1991
- -----------------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
REVENUES $1,710,104 $1,596,378 $ 973,811 $ 676,810 $ 615,041
EXPENSES 1,072,358 1,003,797 $ 750,453 490,406 $ 409,269
MINORITY INTEREST
IN EARNINGS OF
REAL ESTATE JOINT
VENTURE (142,554) (134,982) -0- (6,624) -0-
--------- --------- --------- --------- ---------
NET INCOME $ 495,192 $ 457,599 $ 223,358 $ 179,780 $ 205,772
========= ========= ========= ========= =========
TOTAL ASSETS $6,913,137 $7,236,568 $7,517,751 $8,031,229 $8,531,949
========== ========== ========== ========== ==========
NET CASH
PROVIDED BY
OPERATING
ACTIVITIES $ 950,492 $ 897,978 $ 618,343 $ 588,162 $ 494,236
========= ========== ========== ========= =========
NET INCOME
PER LIMITED
PARTNERSHIP
UNIT $ 24.51 $ 22.65 $ 11.06 $ 8.90 $ 10.20
======== ========= ======== ======= ========
CASH
DISTRIBUTIONS
PER $500
LIMITED
PARTNERSHIP
UNIT $ 40.00 $ 35.00 $ 35.00 $ 35.00 (1)
======== ======== ======== ======= ========
(1) Quarterly cash distributions were $8.75 prorated per quarter based upon the
month the Limited Partners were admitted to the Partnership.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
As of December 31, 1993, the Partnership had purchased 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, 1995, were: Bloomingdale 88%, Edgewater Park 89%, Whittier 87%
and Sterling Heights 83%.
RESULTS OF OPERATIONS
1995 COMPARED TO 1994
Total revenues increased from $1,596,378 in 1994 to $1,710,104 in 1995 and
total expenses increased from $1,003,797 to $1,072,358 contributing to an
increase in net income from $457,599 to $495,192. Rental revenues increased
to $1,698,994 in 1995 from $1,582,952 in 1994 while guaranteed payments from
the seller of the properties decreased from $7,300 to zero over the same
periods. These fluctuations were primarily a result of the Edgewater Park and
Bloomingdale properties emergence from their initial operating periods in 1993
and Sterling Heights in 1994. Once the properties emerge from their initial
operating period, guaranteed payments are no longer received from the seller
of the properties, rather, the Partnership begins to recognize the actual
operating revenues and expenses of each property (see notes 1 and 2 to
financial statements). Operating expenses increased approximately $55,000
primarily as a result of properties emergence from their initial operating
periods. General and administrative expenses increased by approximately
$4,000 (2.7%) primarily as a result of higher property management fees, which
are computed as a percentage of rental revenues. The incentive management fee,
which is based on distributions paid to partners, increased approximately
$9,000 (14.1%) as a result of the special distribution declared and paid
December 15, 1995.
1994 COMPARED TO 1993
Total revenues increased from $973,811 in 1993 to $1,596,378 in 1994 and total
expenses increased from $750,453 to $1,003,797 contributing to an increase in
net income from $223,358 to $457,599. Rental revenues increased to $1,582,952
in 1994 from $799,523 in 1993 while guaranteed payments from the seller of the
properties decreased from $170,323 to $7,300 over the same periods. These
fluctuations were primarily a result of the Edgewater Park and Bloomingdale
properties emergence from their initial operating periods in 1993 and Sterling
Heights in 1994. Once the properties emerge from their initial operating
period, guaranteed payments are no longer received from the seller of the
properties, rather, the Partnership begins to recognize the actual operating
revenues and expenses of each property (see notes 1 and 2 to financial
statements). Operating expenses increased approximately $209,000 primarily
as a result of properties emergence from their initial operating periods.
General and administrative expenses increased by approximately $44,000 (43%)
primarily as a result of higher professional and property management fees,
which are computed as a percentage of rental revenues.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities increased by approximately $53,000
in 1995 as compared to 1994 primarily as a result of the increase in net income.
Net cash provided by operating activities increased by approximately $280,000
in 1994 as compared to 1993 as a result of the increase in net income which
was partially offset by net changes in operating assets and liabilities
requiring the use of cash.
Cash flows used in financing activities consisted of cash distributions to
partners in 1995, 1994 and 1993. Additionally, cash distributions were paid to
the minority interests in the real estate joint ventures in 1995, 1994 and
1993. In December 1995, the General Partners declared and paid a special
distribution equal to 1% of capital contributed by the limited partners.
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 1994 and 1995. Cash flows provided by investing activities in
1993 consisted solely of the guaranteed payments received from Dahn. In 1993,
$100,577 of cash was received as guaranteed payments from the seller of the
properties in excess of revenue recognized (see notes 1 and 2 to financial
statements). 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's financial resources appear to be adequate to
meet its needs for the next twelve months.
The General Partners are not aware of any environmental problems which could
have a material adverse effect upon the financial position of the Partnership.
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, 1995, Messrs. Robert J.
Conway and Joseph W. Conway, each of whom own approximately 41.63% 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 62 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 66 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 72 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, 1995, 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, 1995, 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, 1995, 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, 1995, 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, 1995.
(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 28, 1996
ROBERT J. CONWAY (President,
Chief Executive Officer, Chief
Financial Officer and Director)
By_______________________________ Dated: March 28, 1996
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 28, 1996
ROBERT J. CONWAY (President,
Chief Executive Officer, Chief
Financial Officer and Director)
By______________________________ Dated: March 28, 1996
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, 1995, 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, 1995
- --------------------------------------------------------------------------------
1995 1994 1993 1992 1991
REVENUES $1,710,104 $1,596,378 $ 973,811 $ 676,810 $ 615,041
EXPENSES 1,072,358 1,003,797 750,453 490,406 409,269
---------- ---------- ---------- ---------- ----------
MINORITY INTERESTS
IN EARNINGS OF REAL
ESTATE JOINT
VENTURES (142,554) (134,982) (6,624)
---------- ---------- ---------- ---------- ----------
NET INCOME $ 495,192 $ 457,599 $ 223,358 $ 179,780 $ 205,772
========== ========== ========== ========== ==========
TOTAL ASSETS $6,913,137 $7,236,568 $7,517,751 $8,031,229 $8,531,949
========== ========== ========== ========== ==========
NET CASH PROVIDED BY
OPERATING ACTIVITIES $ 950,492 897,978 $ 618,343 $ 588,162 $ 494,236
========== ========== ========== ========== ==========
NET INCOME PER
LIMITED
PARTNERSHIP UNIT $ 24.51 $ 22.65 $ 11.06 $ 8.90 $ 10.20
========== ========== ========== ========== ==========
CASH DISTRIBUTIONS
PER $500 LIMITED
PARTNERSHIP UNIT $ 40.00 $ 35.00 $ 35.00 $ 35.00 $ (1)
========== ========== ========== ========== ==========
(1) Quarterly cash distributions were $8.75, prorated per quarter based upon the
month the limited partners were admitted to the Partnership.
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, 1995.
Operating Partners'
Results Equity
Per financial statements $ 495,192 $ 6,667,632
Excess financial statement depreciation 114,948 604,264
Deferred rental revenues (1,600) 44,500
Accrued incentive management fees 443,214
Capitalization of syndication costs 1,033,223
Accrued partner distributions 176,768
----------- -----------
Per Partnership income tax return $ 608,540 $ 8,969,601
=========== ===========
Net Taxable income per $500 limited
partnership unit $ 30.43
===========
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, 1995 and 1994 F-2
Consolidated Statements of Income for the Three
Years Ended December 31, 1995 F-3
Consolidated Statements of Changes in Partners' Equity for
the Three Years Ended December 31, 1995 F-4
Consolidated Statements of Cash Flows for the Three Years
Ended December 31, 1995 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, 1995 and 1994, 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, 1995. These financial statements are the responsibility 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,
1995 and 1994, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 1995 in conformity with
generally accepted accounting principles.
January 31, 1996
Deloitte Touche LLP
Long Beach, California
DSI REALTY INCOME FUND XI
(A California Real Estate Limited Partnership)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
- --------------------------------------------------------------------------------
ASSETS 1995 1994
CASH AND CASH EQUIVALENTS $ 277,455 $ 299,707
PROPERTY, At cost (net of accumulated
depreciation of $1,692,649
in 1995 and $1,369,539 in 1994)
(Notes 1, 2 and 3) 6,616,116 6,917,295
OTHER ASSETS (Note 2) 19,566 19,566
----------- -----------
TOTAL $ 6,913,137 $ 7,236,568
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES:
Distribution due partners (Note 4) $ 176,768 $ 176,768
Other liabilities 68,737 79,281
----------- -----------
Total liabilities 245,505 256,049
----------- -----------
PARTNERS' EQUITY (Notes 2 and 4):
General partners (22,992) (19,863)
Limited partners (20,000 limited
partnership units outstanding
at December 31, 1995 and 1994) 6,690,624 7,000,382
------------ -----------
Total partners' equity 6,667,632 6,980,519
------------ -----------
TOTAL $ 6,913,137 $ 7,236,568
============ ===========
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, 1995
- --------------------------------------------------------------------------------
1995 1994 1993
REVENUES:
Rental revenues $1,698,994 $1,582,982 $ 799,523
Interest income 11,110 6,126 3,965
Guaranteed payments from Dahn
(Note 1 and 2) 7,300 170,323
---------- ---------- ----------
Total revenues 1,710,104 1,596,378 973,811
---------- ---------- ----------
EXPENSES:
Depreciation and amortization (Note 2) 323,290 322,792 322,792
Operating expenses 526,171 470,926 261,662
General and administrative 150,170 146,443 102,363
General partners' incentive
management fee (Note 4) 72,727 63,636 63,636
---------- ---------- ----------
Total expenses 1,072,358 1,003,797 750,453
---------- ---------- ----------
INCOME BEFORE MINORITY INTERESTS
IN INCOME OF REAL ESTATE
JOINT VENTURES 637,746 592,581 223,358
---------- ---------- ----------
MINORITY INTERESTS IN INCOME OF
REAL ESTATE JOINT VENTURES
(Note 1) (142,554) (134,982)
---------- ---------- ----------
NET INCOME $ 495,192 $ 457,599 $ 223,358
========== ========== ==========
AGGREGATE NET INCOME ALLOCATED
TO (Note 4):
Limited partners $ 490,240 $ 453,023 $ 221,124
General partners 4,952 4,576 2,234
---------- ---------- ----------
TOTAL $ 495,192 $ 457,599 $ 223,358
========== ========== ==========
NET INCOME PER LIMITED PARTNERSHIP
UNIT (Notes 2 and 4) $ 24.51 $ 22.65 $ 11.06
========== ========== ==========
See accompanying notes to financial statements.
DSI REALTY INCOME FUND XI
(A California Real Estate Limited Partnership)
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' EQUITY
THREE YEARS ENDED DECEMBER 31, 1995
- --------------------------------------------------------------------------------
General Limited
Partners Partners Total
BALANCE AT JANUARY 1, 1993 ($12,531) $ 7,726,235 $ 7,713,704
Net income 2,234 221,124 223,358
Distributions (Note 4) (7,071) (700,000) (707,071)
------- ---------- ----------
BALANCE AT DECEMBER 31, 1993 (17,368) 7,247,359 7,229,991
Net income 4,576 453,023 457,599
Distributions (Note 4) (7,071) (700,000) (707,071)
------- ---------- -----------
BALANCE AT DECEMBER 31, 1994 (19,863) 7,000,382 6,980,519
Net income 4,952 490,240 495,192
Distributions (Note 4) (8,081) (799,998) (808,079)
------- ----------- -----------
BALANCE AT DECEMBER 31, 1995 ($22,992) $ 6,690,624 $ 6,667,632
======= =========== ===========
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, 1995
- --------------------------------------------------------------------------------
1995 1994 1993
CASH FLOWS FROM OPERATING ACTIVITIES:
Interest received $ 11,110 $ 6,126 $ 3,965
Guaranteed payments from Dahn 0 29,100 275,623
Cash received from customers 1,698,994 1,582,952 792,057
Cash paid to suppliers and employees (759,612) (720,200) (453,302)
----------- ----------- -----------
Net cash provided by operating
activities 950,492 897,978 618,343
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES -
Distributions to partners (808,079) (707,071) (707,071)
Distributions paid to minority inter-
ests in real estate joint ventures (142,554) (134,982) (6,624)
----------- ----------- -----------
Net cash used in
financing activities (950,633) (842,053) (713,695)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES -
Guaranteed payments received from
Dahn in excess of revenue recognized 100,577
Additions to property (22,111) (16,683)
----------- ----------- -----------
Net cash (used in) provided by
investing activities (22,111) (16,683) 100,577
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (22,252) 39,242 5,225
CASH AND CASH EQUIVALENTS,
AT BEGINNING OF YEAR 299,707 260,465 255,240
----------- ----------- -----------
CASH AND CASH EQUIVALENTS,
AT END OF YEAR $ 277,455 $ 299,707 $ 260,465
=========== =========== ===========
RECONCILIATION OF NET INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
Net income $ 495,192 $ 457,599 $ 223,358
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 323,290 322,792 322,792
Minority interests in income of real
estate joint ventures 142,554 134,982
Changes in assets and liabilities:
Guaranteed payments receivable
from Dahn 21,800 105,300
Other assets (7,484) (9,966)
Incentive management fee payable (63,636) (63,304)
Other liabilities (10,544) 31,925 40,163
----------- ----------- -----------
NET CASH PROVIDED BY OPERATING
ACTIVITIES $ 950,492 $ 897,978 $ 618,343
=========== =========== ===========
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, 1995
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, 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 March 27, 1981
under the California Uniform Limited Partnership Act for the primary
purpose of acquiring and operating real estate. The offering of limited
partnership units was completed on February 12, 1991.
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 Streling Heights Mini, each a California Limited Partnership and
an affiliate od 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.
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 1995. 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 predetermined formula, of the net
proceeds from the sale of the properties.
The mini-storage facilities are operated by Dahn under various management
agreements. In accordance with the agreements, Dahn is to pay all oper-
ating expenses through the construction period and an initial operating
period. In addition, Dahn is required to make guaranteed payments, as
defined, through the same period. The guaranteed payments by Dahn are to
be offset by amounts owed to Dahn representing interest earned on the net
offering proceeds allocable to the purchase of the property less the cash
down payment and progress payments related to each property. The last of
the Partnership's properties to emerge from the initial operating period,
Sterling Heights did so on January 31, 1994.
Once the construction and initial operating periods of the mini-storage
facilities have been completed, the Partnership is required by the
agreements to pay Dahn a management fee equal to 5% of gross revenue from
operations, as defined.
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.
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.
Property and Depreciation - Property is recorded at cost and is comprised
primarily of mini-storage facilities. Depreciation is provided for using
the straight-line method over an estimated useful life of 20 years for the
facilities.
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 1995, 1994 and 1993).
Organization Costs - Organization costs have bee capitalized and are being
amortized using the straight-line method over a five-year period.
Capitalized organization costs are included in other assets in the
accompanying balance sheet.
Guaranteed Payments from Dahn - Guaranteed payments expected to be
received from Dahn during the initial operating period are accrued and
offset against the cost of the related mini-storage property to the
extent that such payments are expected to exceed the forcasted operating
results of the mini-storage property during the initial operating
period.
Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles 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.
3. PROPERTY
At December 31, 1995 and 1994, the total cost of property and accumulated
depreciation are as follows:
1995 1994
Land $ 1,894,250 $ 1,894,250
Buildings 6,414,515 6,392,404
----------- -----------
Total 8,308,765 8,286,654
Less accumulated depreciation (1,692,649) (1,369,359)
----------- ----------
Property, net $ 6,616,116 $ 6,917,295
=========== ===========
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.
The general partners are entitled to receive an incentive management fee
for supervising the operations of the Partnership. The fee is equal to 9%
per annum of the Partnership distributions made from cash available for
distribution from operations, as defined.
INDEPENDENT AUDITORS' REPORT
To the Partners of
DSI Realty Income Fund XI:
We have audited the financial statements of DSI Realty Income Fund XI (the
"Partnership") as of December 31, 1995 and 1994, and for each of the three years
in the period ended December 31, 1995, and have issued our report thereon dated
January 31, 1996; such report is included elsewhere in this Form 10-K. Our
audits also included the financial statements schedule of DSI Realty Income Fund
XI, listed in Item 14. This financial statement schedule is the responsibility
of the Partnership's management. Our responsibility is to express an opinion
based on our audits. In our opinion, such financial statements schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects, the information set forth therein.
January 31, 1996
Deloitte Touche LLP
Long Beach, California
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 $ 5,131 $845,000 $1,974,214 $2,819,214 $568,307 04/90 03/90 20 Yrs
Edgewater, NJ None 191,250 2,358,780 7,807 191,250 2,366,587 2,557,837 629,931 06/89 09/90 20 Yrs
Bloomingdale, IL None 442,000 1,579,879 6,680 442,000 1,586,559 2,028,559 388,813 07/88 01/91 20 Yrs
Sterling Heights, MI None 416,000 467,979 19,176 416,000 487,155 903,155 105,598 06/77 07/91 20 Yrs
-------- ---------- ------- -------- ---------- ---------- ----------
$1,894,250 $6,375,721 $ 38,794 $1,894,250 $6,414,515 $ 8,308,765*$1,692,649
========== ========== ======== ========== ========== =========== ==========
Real Estate Accumulated
at Cost Depreciation
Balance at January 1, 1993 $ 8,269,971 $ 731,775
Additions 318,792
----------- ----------
Balance at December 31, 1993 8,269,971 1,050,567
Additions 16,683 318,792
----------- ----------
Balance at December 31, 1994 8,286,654 1,369,359
Additions 22,111 323,290
----------- ----------
Balance at December 31, 1995 $ 8,308,765 $1,692,649
=========== ==========
The total cost at the end of the period for Federal income tax purposes was
approximately $10,250,000
EXHIBIT 2
March 28, 1996
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,
1995 and 1994, 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, 1995
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, 1995 and December 31, 1994 were as follows:
Location of Property Average Occupancy Average Occupancy
Levels for the Levels for the
Year Ended Year Ended
Dec. 31, 1995 Dec. 31, 1994
Whittier, CA(1) 87% 89%
Bloomingdale, IL(2) 88% 88%
Edgewater, NJ(3) 89% 91%
Sterling Heights, MI(4) 83% 85%
(1) The Partnersip owns a 90% interest in this property.
(2) The Partnersip owns a 90% interest in this property
(3) The Partnersip owns an 85% interest in this property
(4) The Partnersip 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 (310) 424-2655. If you would like a copy of the Partnership's Annual Report
on Form 10-K for the year ended December 31, 1995, 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