Item 1a. RISK FACTORS
Some Potential Losses Are Not Covered By Insurance. We carry comprehensive liability, fire, extended coverage and rental loss insurance on all of our Properties. We believe the policy specifications and insured limits of these policies are adequate and appropriate. There are, however, types of losses, such as lease and other contract claims and acts of war that generally are not insured. We cannot be assured that we will be able to renew insurance coverage upon expiration of our policies in an adequate amount or at reasonable prices. In addition, insurance companies may no longer offer coverage against certain types of losses, such as losses due to terrorist acts and mold or, if offered, these types of insurance may be prohibitively expensive. Should uninsured loss or a loss in excess from insured limits occur, we could lose all or a portion of the capital we have invested in a Property, as well as the anticipated future revenue from the Property. In such an event, we might nevertheless remain obligated for any mortgage debt or other financial obligations related to the Property. We cannot be assured that material losses in excess of insurance proceeds will not occur in the future. If any of our Properties were to experience catastrophic loss, it could seriously disrupt our operations, delay revenue and result in large expenses to repair or rebuild the Property. Such events could adversely affect our cash flow and ability to make distributions to shareholders.
Because real estate is illiquid, we may not be able to sell Properties when appropriate. Real estate investments generally, mini-storage facilities like those that we own, in particular, often cannot be sold quickly. Consequently, we may not be able to sell Properties when appropriate. This could adversely affect our cash flow and ability to make distributions.
Our operating costs might rise, which might reduce our profitability and have an adverse affect on our cash flow and our ability to make distributions to shareholders. We might face higher operating expenses as a result of rising costs generally, and in particular as a result of increased costs following a terrorist attack or other catastrophic event. For example, it might cost more in the future for security, property/casualty and liability insurance, and property mainten- ance. As noted above, when our insurance policies expire, the cost of premiums for comparable coverage might be significantly higher after such an event when it is time to renew our coverage, which could then increase our operating expenses and reduce or profitability and our cash flow. Because of rising costs in general, we might experience increases in our property maintenance costs, such as for cleaning and electricity. If operating expenses increase dramatically, the availability of other comparable mini-storage facilities in our specific geographic markets might limit our ability to increase rents, which could reduce our profitability (if operating expenses increase without a corresponding increase in revenues) and limit our ability to make distributions.
We face significant competition. We compete with numerous other owners of mini-storage facilities for tenants. Some of these competitors have significantly greater financial resources than we do. Such competition may reduce our ability to attract and keep and retain tenants, and may increase vacancies, which increases may lower rental rates. In addition, some of our competitors may be willing, because their properties may have vacancy rates higher than those for our properties, to make space available at lower prices than the space in our properties. We cannot be assured that this competition will not adversely affect our cash flow and ability to make distributions.
Our ability to make distributions is subject to various risks. We have been paying quarterly distributions since inception. Our ability to make distributions in the future will depend upon:
- Financial performance of our Property; - The absence of significant expenditures relating to environmental and regulator matters; and - Our ability to attract and maintain tenants.
Certain of these matters are beyond our control and any significant difference between our expectations and actual results could have a material adverse affect on our cash flow and our ability to make distributions.
Changes in the law may adversely affect our cash flow. The Properties are subject to various regulatory requirements, such as those relating to the environment, fire and safety. Our failure to comply with these requirements could result in the imposition of fines and damage awards. Additionally, the cost to comply with any new or different regulation could adversely affect our cash flow and our ability to make distributions. While we believe that the Properties are currently in material compliance with all such requirements, we cannot be assured that these requirements will not change our that newly imposed requirements will not require significant unanticipated expenditures.
Should we incur long-term indebtedness, it will subject us to additional risks. Like other real estate companies, should we incur indebtedness on our proper- ties, we will be subject to risks normally associated with debt financing, such as the insufficiency of cash flow to meet required debt service payment obligations and the inability to refinance existing indebtedness. If such debt cannot be paid, refinanced or extended at maturity, in addition to our failure to repay our debt, we may not be able to make distributions at expected levels or at all. Furthermore, an increase in interest expense could adversely affect our cash flow and ability to make distributions to Limited Partners. If we should not meet our debt service obligations, any Properties securing such indebtedness could be foreclosed on, which would have a material adverse affect on our cash flow and ability to make distributions and, depending on the number of Properties foreclosed on, could threaten our continued viability. Our organizational documents do not contain any limitation on our ability to incur debt secured by our Properties. Accordingly, we could place financing on our Properties almost without restriction. If we were to take such action, the debt service could adversely affect our cash flow and ability to make dis- tributions and would include the risk of default on such indebtedness. There are no plans to incur any long-term indebtedness on any of the Partnership's Properties.
Environmental problems at the Properties are possible and may be costly. Federal, state and local laws, ordinances and regulations may require a current or previous owner or operator of real estate to investigate and clean up hazard- ous or toxic substances or releases at such property. The owner or operator may be forced to pay for property damage and for investigation and clean up costs incurred by others in connection with environmental contamination. Such laws typically impose clean-up responsibility and liability without regard to whether the owner or operator knew of or caused the presence of contaminates. Even if more than one person may have been responsible for the contamination, each person covered by the environmental laws may be held responsible for all the clean-up costs incurred. In addition, third parties may sue the owner or operator of a site for damages and costs resulting from environmental contamin- ation emanating from that site. These costs may be substantial and the presence of such substances may adversely affect the owner's ability to sell or rent such property or to borrow using such property as collateral.
Environmental laws that govern the presence, maintenance and removal of asbestos require that owners or operators of buildings containing asbestos properly manage and maintain the asbestos, notifying and train those who may come into contact with asbestos and undertake special precautions, including removal or other abatement, if asbestos would be disturbed during renovation or demolition of a building. Such laws may impose fines and penalties on building owners or operators who fail to comply with these requirements and may allow third parties to seek recovery from owners or operators for personal injury associated with exposure to asbestos fibers.
To the best of our knowledge, asbestos was not used in the construction of any of the Properties. Tenants of the Partnership's mini-storage facilities are prohibited from storing hazardous or toxic substances or from even bringing hazardous or toxic substances onto the property. To the best knowledge of the General Partners, there are no instances of storage or release of hazardous or toxic substances at any of the Partnership's Properties. However, there can be no guaranty that one or more tenants did not actually store such materials or cause releases at any of the Partnership's Properties. If these conditions should occur, we may need to undertake a target remediation program which could become costly and could necessitate the temporary location of some or all of the Properties' tenants or require rehabilitation of the affected property.
Americans With Disabilities Act compliance can be costly. Under the Americans With Disabilities Act of 1990 ("ADA"), all public accom- modations and commercial facilities, must meet certain Federal requirements related to access and use by disabled persons. Compliance with the ADA re- quirements could involve removal of structural barriers from certain disabled persons' entrances, which could adversely affect our financial condition, and results of operations. Other Federal, state or local laws may require modifi- cations to or restrict further renovations of our Properties with respect to such accesses. Although we believe that our Properties are currently in material compliance with present requirements, non-compliance with the ADA or similar or related laws or regulations could result in the United States govern- ment imposing fines or private litigants being awarded damages against us. In addition, we do not know whether existing requirements will change or whether compliance with future requirements will require significant unanticipated expenditures. Such costs may adversely affect our cash flow and ability to make distributions.
Partnership's status as a limited partnership is dependent on compliance with Federal income tax requirements. Failure of the Partnership to be treated as a limited partnership would have serious adverse consequences to holders of our Units. If the IRS were to successfully challenge the tax status of the Partnership for Federal income tax purposes, the Partnership would be treatable as a corporation. In such event, the imposition of a corporate tax on the Partnership would reduce the amount of cash available for distribution from such Partnership to the Limited Partners. We do not anticipate such a challenge.
We are dependent upon our key personnel whose continued service is not guar- anteed. We are dependent upon our independent property manager for experience in managing mini-storage facilities. While we believe we could find replace- ments for these key personnel, loss of their services could adversely affect our operations.
Item 1b.
Item 1b. UNRESOLVED STAFF COMMENTS
None.
Item 2.
Item 2. PROPERTIES
Registrant owns a fee interest in five mini-storage facilities, as well as a 70% interest in a joint venture with an affiliated partnership (DSI Realty Income Fund VIII, a California Limited Partnership) which joint venture owns a mini-storage facility, none of which are subject to long-term indebtedness. The following table sets forth information as of December 31, 2006 regarding properties owned by the Partnership.
Location Size of Net Rentable No. of Completion Parcel Area Rental Units Date
Azusa, CA 2.94 acres 71,059 664 6/11/86
Elgin, IL 4.99 acres 48,363 441 9/29/86
Everett, WA 2.71 acres 50,572 488 12/01/85
Monterey Park, CA .95 acres 31,654 392 8/23/86
Romeoville, IL 3.956 acres 65,941 690 11/24/86
Aurora, CO(1) 4.6 acres 86,676 887 9/05/85
(1) The Partnership has a 70% fee interest in this facility. DSI Realty Income Fund VIII, a California Limited Partnership (an affiliated partnership) owns a 30% fee interest in this facility.
Item 3.
Item 3. LEGAL PROCEEDINGS
Registrant is not a party to any material pending legal proceedings.
Item 4.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
Item 5.
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Registrant, a publicly-held limited partnership, sold 30,693 limited partnership units during its offering and currently has 1,152 limited partners of record. There is no intention to sell additional limited partnership units nor is there a market for these units.
Average cash distributions of $7.59 per Limited Partnership Unit were declared and paid each quarter for the year ended December 31, 2006 and $8.20 per Limited Partnership Unit were declared and paid each quarter for the year ended December 31, 2005 and $10.39 per Limited Partnership Unit were declared and paid each quarter for the year ended December 31, 2004. It is the Registrant's expectations that distributions will continue to be paid in the future.
Item 6.
Item 6. SELECTED FINANCIAL DATA FIVE YEARS ENDED DECEMBER 31, 2006 -------------------------------------------------------------------- 2006 2005 2004 2003 2002 ---- ---- ---- ---- ---- TOTAL REVENUES AND OTHER INCOME $3,030,962 $2,791,288 $2,648,811 $ 2,848,497 $ 3,107,226
TOTAL EXPENSES 1,807,977 2,064,603 1,843,046 1,807,338 1,892,925
MINORITY INTEREST IN INCOME OF REAL ESTATE JOINT VENTURE (120,580) (108,420) (115,732) (128,775) (143,534) ----------- ----------- ----------- ------------ -----------
NET INCOME $ 1,102,405 $ 618,265 $ 690,033 $ 912,384 $ 1,070,767 =========== =========== =========== ============ ===========
TOTAL ASSETS $ 3,729,105 $ 3,803,223 $ 4,238,864 $ 4,713,603 $ 5,049,395 =========== =========== =========== ============ ===========
CASH FLOW FROM (USED IN): OPERATING $ 1,232,721 $ 1,212,645 $ 1,203,300 $ 1,486,963 $ 1,640,392 INVESTING (18,675) (12,850) (28,262) (6,499) (10,438) FINANCING (1,098,450) (1,166,460) (1,420,657) (1,379,818) (1,631,748)
NET INCOME PER LIMITED PARTNERSHIP UNIT $ 35.56 $ 19.94 $ 22.26 $ 29.43 $ 34.54 =========== =========== =========== ============ ===========
CASH DISTRIBUTIONS PER LIMITED PARTNERSHIP UNIT $ 30.35 $ 32.81 $ 41.57 $ 40.37 $ 47.96 =========== =========== =========== ============ ===========
Item 7.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Critical Accounting Policies
Revenue recognition - 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.
RESULTS OF OPERATIONS
2006 COMPARED TO 2005
Total revenues increased from $2,790,998 in 2005 to $3,030,769 in 2006, total expenses decreased from $2,064,603 to $1,807,977, other income decreased from $290 to $193 and minority interest in income of the real estate joint venture increased from $108,420 to $120,580. As a result of these fluctuations, net income increased from $618,265 to $1,102,405. The increase in rental revenues can be attributed to higher occupancy and unit rental rates. Occupancy levels for the Partnership's six mini-storage facilities averaged 78.4% for the year ended December 31, 2006 and 75.3% for the year ended December 31, 2005. The Partnership continued its advertising campaign to attract and keep new tenants in its various mini-storage facilities. The approximate $54,300 (5.1%) de- crease in operating expenses was due primarily to decreases in advertising, purchase of locks and packing materials, partially offset by decreases in real estate tax and salaries and wages. The approximate $7,600 (2.7%) decrease in general and administrativ expenses was due primarily to decreases in office supplies and printing expenses travel expenses, partially offset by increases in legal and professional, bank and credit card fees and postage expenses. General Partners' incentive management fees, which are based on cash distri- butions to Limited Partnes, remained constant. Property management fees, which are based on rental revenue, increased as a result of the increase in rental revenue.
2005 COMPARED TO 2004
Total revenues increased from $2,648,288 in 2004 to $2,790,998 in 2005, total expenses increased from $1,843,046 to $2,064,603, other income decreased from $523 to $290 and minority interest in income of the real estate joint venture decreased from $115,732 to $108,420. As a result of these fluctuations, net income decreased from $690,033 to $618,265. The approximate $142,700 (5.4%) increase in rental revenues can be attributed to higher occupancy and unit rental rates. Occupancy levels for the Partnership's six mini-storage facilities averaged 75.3% for the year ended December 31, 2005 and 73.6% for the year ended December 31, 2004. The Partnership continued its advertising campaign to attract and keep new tenants in its various mini-storage facilities. The approximate $118,200 (12.6%) increase in operating expenses was due primar- ily to increases in maintenance and repair, purchase of locks and packing materials, real estate tax, salaries and wages and truck insurance and main- tenance expenses, partially offset by a decrease in advertising and security expenses. The approximate $68,300 (31.7%) increase in general and administra- tive expenses was due primarily to increases in legal and professional, equip- ment and computer lease and office supplies and printing expenses. General Partners' incentive management fees, which are based on cash distributions to Limited Partners, decreased as a result of a decrease in these distributions. Property management fees, which are based on rental revenue, increased as a result of the increase in rental revenue.
Operating expenses consists mainly of expenses such as yellow pages and other advertising, utilities, repairs 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 approximately $20,000 (1.7%) in 2006 as compared to 2005 primarily as a result of the in- crease in net income, partially offset by an increase in other assets payment of deferred incentive management fee payable to general partners and a de- crease in customer deposits and other liabilities. Net cash provided by operating activities increased approximately $9,300 (0.8%) in 2005 as compared to 2004 primarily as a result of the decrease in payment of deferred incentive management fee payable to general partners, partially offset by a decrease in net income, a decrease in customer deposits and other liabilities and an in- crease in other assets.
Cash used in investing activities, as set forth in the statements of cash flows, consists of acquisitions of equipment for the Partnership's mini-storage facilities in 2006, 2005 and 2004. The Partnership has no material commitments for capital expenditures.
Cash used in financing activities, as set forth in the statements of cash flows, has been used for distributions to partners, the minority investor in the Partnership's real estate joint venture in 2006, 2005 and 2004 and payments on capital lease obligations starting in 2004.
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 oper- ations 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, 2006 and 2005 was as follows:
2006 Quarter Ended ------------------
March 31 June 30 September 30 December 31 -------- ------- ------------ -----------
Total revenues $737,612 $932,405 $773,618 $587,134
Income before minority interest in joint venture 212,762 383,121 264,200 362,902
Net income 182,160 359,493 234,623 326,129
Net income per limited partnership unit $ 5.88 $ 11.60 $ 7.57 $ 10.51
Weighted average number of limited partnership units outstanding 30,693 30,693 30,693 30,693
2005 Quarter Ended ------------------
March 31 June 30 September 30 December 31 -------- ------- ------------ -----------
Total revenues $663,961 $658,264 $736,887 $731,886
Income before minority interest in joint venture 173,381 96,679 245,481 211,144
Net income 145,230 72,706 214,847 185,482
Net income per limited partnership unit $ 4.68 $ 2.35 $ 6.93 $ 5.98
Weighted average number of limited partnership units outstanding 30,693 30,693 30,693 30,693
Item 7a.
Item 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
None.
Item 8.
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.
See the financial statements.
Item 9.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
Item 9a.
Item 9a. CONTROLS AND PROCEDURES
The Partnership evaluated the effectiveness of its disclosure controls and procedures. This evaluation was performed by the Partnership's Controller with the assistance of the Partnership's President and the Chief Executive Officer. These disclosure controls and procedures are designed to ensure that the information required to be disclosed by the Parnership in its periodic reports filed with the Securities and Exchange Commission (the "Commission") is recorded, processed summarized and reported, within the time periods specified by the Commission's rules and forms, and that the information is communicated to the certifying officers on a timely basis. Based on this evaluation, the Partnership concluded that its disclosure controls and procedures were effective. There have been no significant changes in the Partnership's internal controls or in other factors that could significantly affect the internal controls subsequent to the date of their evaluation.
Item 9b.
Item 9b. OTHER INFORMATION
None.
PART III
Item 10.
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, 2006, 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 73 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 78 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 84 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.
Item 11. EXECUTIVE COMPENSATION (MANAGEMENT REMUNERATION AND TRANSACTIONS)
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, 2006, 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 Registrant to any of the General Partners or to any officer or director of the corporate General Partner;
(b) No standard or other arrangement exists by which directors of the Registrant are compensated;
(c) The Registrant has not granted any option to purchase any of its securities; and
(d) 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.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of December 31, 2006 no person of record owned more than 5% of the limited partnership units of Registrant, nor was any person known by 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 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. The only change to the information contained in said Registration Statement on Form S-11 is the fact that Messrs. Benes and Blakley have retired and Messrs. Robert J. Conway and Joseph W. Conway equity interest in DSI Financial, Inc., parent of DSI Properties, Inc., has increased. Please see information contained in Item 10 hereinabove.
Item 13.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required to be furnished in Item 13 of Part III is contained in Registrant's Financial Statements for its fiscal year ended December 31, 2006, attached hereto as Exhibit l and incorporated herein by this reference.
Item 14.
Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees
The aggregate fees for professional services rendered by Deloitte & Touche LLP for the audit of the Partnership's annual financial statements and for re- view of the financial statements included in the Partnership's Quarterly Reports on Form 10-Q for 2006 were $31,240 and for 2005 were $29,640.
Tax Fees
The aggregate fees for professional services rendered by Deloitte Tax LLP for tax compliance, tax advice and tax planning for 2006 were $26,755 and 2005 were $24,050. Most of the fees related to preparation of the Partner- ship's tax returns.
PART IV
Item 15.
Item 15. 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 and Supplemental Schedule for its fiscal year ended December 31, 2006, together with the reports of its independent auditors, Deloitte & Touche. See Index to Financial Statements and Supplemental Schedule.
(a)(2) Attached hereto and incorporated herein by this reference as Exhibit 2 is Registrant's letter to its Limited Partners regarding its Annual Report for its fiscal year ended December 31, 2006.
(b) No reports on Form 8K were filed during the fiscal year ended December 31, 2006.
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 IX by: DSI Properties, Inc., a California corporation, as General Partner
By_____________________________ Dated: March 30, 2007 ROBERT J. CONWAY, President (Chief Executive Officer, Chief Financial Officer, and Director)
By____________________________ Dated: March 30, 2007 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 IX by: DSI Properties, Inc., a California corporation, as General Partner
By:__________________________ Dated: March 30, 2007 ROBERT J. CONWAY, President, Chief Executive Officer, Chief Financial Officer, and Director
By___________________________ Dated: March 30, 2007 JOSEPH W. CONWAY (Executive Vice President and Director)
DSI REALTY INCOME FUND IX
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, 2006, 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 IX (A California Real Estate Limited Partnership)
SELECTED FINANCIAL DATA FIVE YEARS ENDED DECEMBER 31, --------------------------------------------------------------------
2006 2005 2004 2003 2002 ---- ---- ---- ---- ---- TOTAL REVENUES AND OTHER INCOME $3,030,962 $2,791,288 $2,648,811 $ 2,848,497 $ 3,107,226
TOTAL EXPENSES 1,807,977 2,064,603 1,843,046 1,807,338 1,892,925
MINORITY INTEREST IN INCOME OF REAL ESTATE JOINT VENTURE (120,580) (108,420) (115,732) (128,775) (143,534) ----------- ----------- ----------- ------------ -----------
NET INCOME $ 1,102,405 $ 618,265 $ 690,033 $ 912,384 $ 1,070,767 =========== =========== =========== ============ ===========
TOTAL ASSETS $ 3,729,105 $ 3,803,223 $ 4,238,864 $ 4,713,603 $ 5,049,395 =========== =========== =========== ============ ===========
CASH FLOW FROM (USED IN): OPERATING $ 1,232,721 $ 1,212,645 $ 1,203,300 $ 1,486,963 $ 1,640,392 INVESTING (18,675) (12,850) (28,262) (6,499) (10,438) FINANCING (1,098,450) (1,166,460) (1,420,657) (1,379,818) (1,631,748)
NET INCOME PER LIMITED PARTNERSHIP UNIT $ 35.56 $ 19.94 $ 22.26 $ 29.43 $ 34.54 =========== =========== =========== ============ ===========
CASH DISTRIBUTIONS PER LIMITED PARTNERSHIP UNIT $ 30.35 $ 32.81 $ 41.57 $ 40.37 $ 47.96 =========== =========== =========== ============ ===========
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, 2006:
Net Partners' Income Equity
Per financial statements $ 1,102,405 $ 3,053,077 Excess book depreciation 217,416 715,815 Joint venture income adjustment (7,434) 218,935 Interest income 8,770 Property acquisition costs 466,135 Deferred rental revenues (904) 47,445 Accrued expenses (83,406) 18,579 Accrued property taxes (75,000) Fixed asset adjustments (38,460) (95,960) Excess book distributions 232,468 Bad debt allowance 36,599 36,599 Tax expense adjustment (10,902) ----------- ----------- Per Partnership income tax return $ 1,215,314 $ 4,626,863 =========== =========== Net taxable income per limited partnership unit $ 39.20 ===========
DSI REALTY INCOME FUND IX (A California Real Estate Limited Partnership)
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
Page
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
FINANCIAL STATEMENTS:
Consolidated Balance Sheets as of December 31, 2006 and 2005
Consolidated Statements of Income for Each of the Three Years Ended December 31, 2006
Consolidated Statements of Changes in Partners' Equity (Deficit) for Each of the Three Years Ended December 31, 2006
Consolidated Statements of Cash Flows for Each of the Three Years Ended December 31, 2006
Notes to Consolidated Financial Statements as of December 31, 2006 and 2005, and for Each of the Three Years Ended December 31, 2006
SUPPLEMENTAL SCHEDULE:
Schedule III - Real Estate and Accumulated Depreciation as of December 31, 2006
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.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACOUNTING FIRM
To the Partners of DSI Realty Income Fund IX:
We have audited the accompanying consolidated balance sheets of DSI Realty Income Fund IX, a California Limited Partnership (the "Partnership") as of December 31, 2006 and 2005, and the related consolidated statements of income, changes in partners' equity (deficit), and cash flows for each of the three years in the period ended December 31, 2006. Our audits also included the supplemental schedule listed in the Index at Item 15. These financial statements and the supplemental schedule are the responsibility of the Partner- ship's management. Our responsibility is to express an opinion on the 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 and financial statement schedule 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 audit 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 espressing 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, such consolidated financial statements present fairly, in all material respects, the financial position of DSI Realty Income Fund IX at December 31, 2006 and 2005, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2006, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such supplemental 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.
Deloitte & Touche LLP Los Angeles, California
March 30, 2007
DSI REALTY INCOME FUND IX (A California Real Estate Limited Partnership)
CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2006 AND 2005 - --------------------------------------------------------------------------------
ASSETS 2006 2005
CASH AND CASH EQUIVALENTS $ 635,667 $ 520,071
PROPERTY, net (Note 3) 2,918,479 3,190,797
OTHER ASSETS 174,959 92,355 ----------- ----------- TOTAL $ 3,729,105 $ 3,803,223 =========== ===========
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES: Distribution due to partners (Note 4) $ 232,468 $ 232,468 Incentive management fee payable to general partners (Note 4) 158,150 Property management fees payable (Note 6) 12,424 9,372 Customer deposits and other liabilities 134,123 177,678 Capital lease obligations (Notes 3 and 6) 105,510 151,662 ----------- ----------- Total liabilities 484,525 729,330 ----------- ----------- MINORITY INTEREST IN REAL ESTATE JOINT VENTURE 191,503 182,223
PARTNERS' EQUITY (DEFICIT)(Note 4): General partners (106,910) (108,524) Limited partners (30,693 limited partnership units outstanding at December 31, 2006 and 2005) 3,159,987 3,000,194 ------------ ----------- Total partners' equity 3,053,077 2,891,670 ------------ ----------- TOTAL $ 3,729,105 $ 3,803,223 ============ ===========
See notes to financial statements.
DSI REALTY INCOME FUND IX (A California Real Estate Limited Partnership)
CONSOLIDATED STATEMENTS OF INCOME THREE YEARS ENDED DECEMBER 31, 2006 - --------------------------------------------------------------------------------
2006 2005 2004
REVENUES: Rental $3,030,769 $2,790,998 $2,648,288 ---------- ---------- ---------- EXPENSES: Depreciation 290,993 492,778 443,745 Operating 1,000,370 1,054,717 936,470 Interest Expense 7,848 10,525 General and administrative 276,101 283,651 215,317 General partners' incentive management fee (Note 4) 83,708 84,557 115,100 Property management fee (Note 6) 148,957 138,375 132,414 ---------- ---------- ---------- Total expenses 1,807,977 2,064,603 1,843,046 ---------- ---------- ----------
OPERATING INCOME 1,222,792 726,395 805,242
OTHER INCOME- Interest income 193 290 523 ---------- ---------- ----------
INCOME BEFORE MINORITY INTEREST IN INCOME OF REAL ESTATE JOINT VENTURE 1,222,985 726,685 805,765
MINORITY INTEREST IN INCOME OF REAL ESTATE JOINT VENTURE (120,580) (108,420) (115,732) ---------- ---------- ---------- NET INCOME $1,102,405 $ 618,265 $ 690,033 ========== ========== ========== AGGREGATE NET INCOME ALLOCATED TO (Note 4): General partners $ 11,024 $ 6,183 $ 6,900 Limited partners 1,091,381 612,082 683,133 ---------- ---------- ---------- TOTAL $1,102,405 $ 618,265 $ 690,033 ========== ========== ========== NET INCOME PER LIMITED PARTNERSHIP UNIT (Notes 2 and 4) $ 35.56 $ 19.94 $ 22.26 ========== ========== ==========
See notes to financial statements.
DSI REALTY INCOME FUND IX (A California Real Estate Limited Partnership)
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIT) THREE YEARS ENDED DECEMBER 31, 2006 - --------------------------------------------------------------------------------
General Limited Partners Partners Total ------- ----------- -----------
BALANCE, JANUARY 1, 2004 $(99,325) $ 3,910,876 $ 3,811,551
Net income 6,900 683,133 690,033
Distributions (12,887) (1,275,770) (1,288,657) ------- ----------- ----------- BALANCE, DECEMBER 31, 2004 (105,312) 3,318,239 3,212,927
Net income 6,183 612,082 618,265
Distributions (9,395) (930,127) (939,522) ------- ----------- ----------- BALANCE, DECEMBER 31, 2005 (108,524) 3,000,194 2,891,670
Net income 11,024 1,091,381 1,102,405
Distributions (9,410) (931,588) (940,998) ------- ----------- ----------- BALANCE, DECEMBER 31, 2006 $(106,910) $ 3,159,987 $ 3,053,077 ======= =========== ===========
See notes to financial statements.
DSI REALTY INCOME FUND IX (A California Real Estate Limited Partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS THREE YEARS ENDED DECEMBER 31, 2006 - --------------------------------------------------------------------------------
2006 2005 2004
CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,102,405 $ 618,265 $ 690,033 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 290,993 492,778 443,745 Minority interest in income of real estate joint venture 120,580 108,420 115,732 Changes in assets and liabilities: Other assets (82,604) (10,952) 23,775 Incentive management fee payable (158,150) 849 (157,301) Property management fees payable 3,052 1,136 (453) Customer deposits and other liabilities (43,555) 2,149 87,769 ----------- ----------- ------------ Net cash provided by operating activities 1,232,721 1,212,645 1,203,300 ----------- ----------- ------------ CASH FLOWS FROM INVESTING ACTIVITIES - Additions to property (18,675) (12,850) (28,262) ----------- ----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES: Distributions paid to minority interest in real estate joint venture (111,300) (105,900) (117,000) Distributions to partners (940,998) (1,017,084) (1,288,657) Payments on capital lease obligations (46,152) (43,476) (15,000) ____________ ___________ __________ Net cash used in financing activities (1,098,450) (1,166,460) (1,420,657) ------------ ----------- ---------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 115,596 33,335 (245,619)
CASH AND CASH EQUIVALENTS, AT BEGINNING OF YEAR 520,071 486,736 732,355 ----------- ----------- ----------- CASH AND CASH EQUIVALENTS, AT END OF YEAR $ 635,667 $ 520,071 $ 486,736 =========== =========== ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION - Cash paid for interest $ 7,848 $ 10,525 $ - =========== =========== ============
NON CASH INVESTING AND FINANCING ACTIVITIES:
Acquisition of trucks utilizing capital leases $ - - $ 210,138 =========== =========== ============
Distributions due partners included in partners' equity $ 232,468 $ 232,468 $ 310,030 =========== =========== ============
See notes to consolidated financial statements.
DSI REALTY INCOME FUND IX (A California Real Estate Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2006 AND 2005 AND FOR EACH OF THE THREE YEARS ENDED DECEMBER 31, 2006
1. GENERAL
DSI Realty Income Fund IX, 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 30,693 limited partnership units which were purchased for $500 a unit. The general partners have made no contributions 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 April 12, 1985 under the California Uniform Limited Partnership Act for the primary purpose of acquiring and operating real estate.
The Partnership has acquired five mini-storage facilities located in Monterey Park and Azusa, California; Everett, Washington;and Romeoville and Elgin, Illinois. The Partnership has also entered into a joint venture with DSI Realty Income Fund VIII through which the Partnership has a 70% interest in a mini-storage facility in Aurora, Colorado. The Partnership is a general partner in the joint venture. The facilities were acquired from Dahn Corporation ("Dahn"). Dahn is not affiliated with the Partner- ship. Dahn is affiliated with other partnerships in which DSI Properties, Inc., Robert J. Conway, and Joseph W. Conway are the general partners.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation - The accompanying consolidated financial statements include the accounts of the Partnership and its 70% owned real estate joint venture. All significant intercompany accounts and trans- actions have been eliminated in consolidation.
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 for using the straight-line method over an estimated useful life ranging from 15 to 20 years for the facilities. Improvements are depreciated over a five- year period. Property under capital leases is amortized over the lives of the respecitve leases or the estimated useful lives of the assets.
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'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, 2006, is $112,909.
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 the 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'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 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 to the extent the carrying value exceeded the fair value of the property. No impairment losses were required in 2006, 2005 or 2004.
Fair Value of Financial Instruments - For all financial instruments, including cash and cash equivalents, other assets, distrivutions due part- ners, incentive management fee payable to general partners, property management fee payable, 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 approx- imates fair value because the terms of the instrument are similar to terms available to the Partnership for similar types of leasing agreements.
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 equivalents with high credit quality institutions.
Recent Accounting Pronouncement - In September 2006, the Financial Account- ing Standards Board of Financial Accounting Standards ("SFAS") No. 157, "Fair Value Measurements." SFAS No. 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. The Partnership is required to adopt SFAS No. 157 for fiscal year 2008 and does not expect its adoption to have a material effect on the Partnership's results of operations or financial condition.
3. PROPERTY
The total cost of property and the accumulated depreciation as of December 31, 2006 and 2005, is as follows:
2006 2005
Land $ 2,729,790 $ 2,729,790 Buildings and improvements 11,129,105 11,110,430 Rental trucks under capital leases 210,138 210,138 ----------- -----------
Total 14,069,033 14,050,358 Accumulated depreciation (11,150,554) (10,859,561) ----------- ---------- Property, net $ 2,918,479 $ 3,190,797 =========== ==========
Depreciation expense of $52,537 and $53,652 was recorded on the rental trucks under capital leases in 2006 and 2005, respectively.
The Partnership leases certain vehicles under agreements that meet the criteria for classification as capital leases which expire in 2008. Future minimum lease payments under these capital leases at December 31, 2006 are summarized as follows:
2007 $ 58,500 2008 54,000 ---------- Total future minimum payment obligations 112,500 Less interest portion 6,990 ---------- Present value of net minimum lease payments $ 105,510 ==========
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 net 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 percent- age, based on a predetermined formula, of any cash distribution from the sale, other disposition, or refinancing of the real estate project.
In addition, the general partners are entitled to 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 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 SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information." The Partner- ship 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 TRANSACTION
The Partnership has entered into management agreement with Dahn to operate their mini-storage facilities. The management agreement provides for management fee equal to 5% of gross revenue from operations, which is defined as the entire amount of all receipts from the renting or leasing of storage compartments and sale of locks. The management agreement is renewable annually. Dahn earned management fees equal to $148,957, $138,375 and $132,414 for the years ended December 31, 2006, 2005 and 2004, respectively. Amounts payable to Dahn at December 31, 2006 and 2005, were $12,424 and $9,372, respectively.
In 2004, the Partnership entered into truck lease agreements with KMD Trucks, LLC ("KMD"). The president of Dahn, Brian Dahn, is also a member of KMD. The truck lease is a 48-month lease with monthly payments in the amount of $750 (see Note 3).
DSI REALTY INCOME FUND IX (A California Real Estate Limited Partnership)
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION - --------------------------------------------------------------------------------
Real Estate Accumulated at Cost Depreciation
Balance, January 1, 2004 $13,799,108 $ 9,923,038 Additions 28,262 443,745 ----------- ---------- Balance, December 31, 2004 13,827,370 10,366,783 Additions 12,850 439,126 ----------- ---------- Balance, December 31, 2005 13,840,220 10,805,909 Additions 18,675 238,456 ----------- ---------- Balance, December 31, 2006 $13,858,895 $11,044,365 =========== ==========
SCHEDULE 2
March 30, 2007
ANNUAL REPORT TO LIMITED PARTNERS OF
DSI REALTY INCOME FUND IX
Dear Limited Partners:
This report contains the Partnership's balance sheets as of December 31, 2006 and 2005, and the related statements of income, changes in partner' equity (deficit) and cash flows for each of the three years ended December 31, 2006 accompanied by a report of independent registered public accounting firm. The Partnership owns five mini-storage facilities and a 70% interest in a sixth mini-storage facility on a joint venture basis with an affiliated Partnership, DSI Realty Income Fund VIII. The Partnership's properties were each purchased for all cash and funded solely from subscriptions for limited partnership in- terests 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 six properties for the years ended December 31, 2006 and 2005 were as follows:
Location of Property Average Occupancy Average Occupancy Level for the Level for the Year Ended Year Ended Dec. 31, 2006 Dec. 31, 2005
Azusa, CA 82% 81%
Elgin, IL 66% 63%
Everett, WA 87% 80%
Monterey Park, CA 87% 84%
Romeoville, IL 65% 66%
Aurora, CO* 79% 78%
*The Partnership owns a 70% interest in this facility.
We will keep you informed of the activities of DSI Realty Income Fund IX as they develop. If you have any questions, please contact us at your con- venience 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, 2006 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 IX By: DSI Properties, Inc.
Robert J. Conway, President
CERTIFICATIONS
I, Robert J. Conway, certify that:
1. I have reviewed this annual report on Form 10-K of DSI Realty Income Fund IX;
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period cover- ed by this annual report.
3. Based on my knowledge, the financial statements, and other financial information included in this annual 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 annual 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) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our super- vision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of our annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and general partners (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to re- cord, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's in- ternal controls over financial reporting.
Date: March 30, 2007
Robert J. Conway Chief Executive Officer
CERTIFICATIONS
I, Richard P. Conway, certify that:
1. I have reviewed this annual report on Form 10-K of DSI Realty Income Fund IX;
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period cover- ed by this annual report.
3. Based on my knowledge, the financial statements, and other financial information included in this annual 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 annual 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) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our super- vision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of our annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed based on our most recent evaluation of internal control over financial reporting to the registrant's auditors and general partners (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to re- cord, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's in- ternal controls over financial reporting.
Date: March 30, 2007
Richard P. Conway Vice President
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 IX (the "Partnership") on Form 10-K for the period ending December 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Robert J. Conway, 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:
(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.
Robert J. Conway Chief Executive Officer March 30, 2007
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 IX (the "Partnership") on Form 10-K for the period ending December 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Richard P. Conway, Vice President of the Corporate General Partner, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Partnership.
Richard P. Conway Vice President March 30, 2007