-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UyVR0Bflnbp9Ob+TlCgijb77sJyPZkNb7tt7yWKd9YMe5tBsUNPBV/VmkwC0OzIh cLEqwxOrnaTs4f0agvfXlQ== 0000318835-06-000032.txt : 20060811 0000318835-06-000032.hdr.sgml : 20060811 20060811133036 ACCESSION NUMBER: 0000318835-06-000032 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20060630 FILED AS OF DATE: 20060811 DATE AS OF CHANGE: 20060811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DSI REALTY INCOME FUND VIII CENTRAL INDEX KEY: 0000743366 STANDARD INDUSTRIAL CLASSIFICATION: LESSORS OF REAL PROPERTY, NEC [6519] IRS NUMBER: 950050204 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 002-90168 FILM NUMBER: 061024042 BUSINESS ADDRESS: STREET 1: 3701 LONG BEACH BLVD STREET 2: C/O DSI PROPERTIES INC CITY: LONG BEACH STATE: CA ZIP: 90807 BUSINESS PHONE: 3105957711 MAIL ADDRESS: STREET 1: 3701 LONG BEACH BLVD CITY: LONG BEACH STATE: CA ZIP: 90807 10-Q 1 dsiviii-606.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q /_x_/ Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended June 30, 2006 /___/ Transition report pursuant to Section 13 or 15(d) of the Securities Act of 1934 for the transition period from ______________ to ________________. Commission File Number 2-90168 DSI REALTY INCOME FUND VIII, A California Limited Partnership (Exact name of registrant as specified in its charter) California_______________________________________95-0050204 (State or other jurisdiction of (I.R.S. Employer incorporation) Identification No.) 6700 E. Pacific Coast Hwy., Long Beach, California 90803 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code-(562)493-8881 _________________________________________________________________ Former name, former address and former fiscal year, if changed since last report. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes _x_. No__. PART I - FINANCIAL INFORMATION Item 1. Financial Statements. DSI REALTY INCOME FUND VIII (A California Real Estate Limited Partnership) BALANCE SHEETS(UNAUDITED) JUNE 30, 2006 AND DECEMBER 31, 2005 June 30, December 31, 2006 2005 ASSETS CASH AND CASH EQUIVALENTS $ 740,773 $ 599,338 PROPERTY, Net 2,378,357 2,391,773 INVESTMENT IN REAL ESTATE JOINT VENTURE 181,550 182,220 OTHER ASSETS 70,246 70,246 ---------- ---------- TOTAL $3,370,926 $3,243,577 ========== ========== LIABILITIES AND PARTNERS' EQUITY (DEFICIT) LIABILITIES Distribution to Partners $ 272,727 $ 272,727 Capital lease obligation 64,464 75,831 Other liabilities 206,267 215,931 ---------- ---------- Total liabilities 543,458 564,489 ---------- ---------- PARTNERS' EQUITY (DEFICIT): General Partners (79,507) (80,991) Limited Partners 2,906,975 2,760,079 ---------- ---------- Total partners' equity 2,827,468 2,679,088 ---------- ---------- TOTAL $3,370,926 $3,243,577 ========== ========== See accompanying notes to financial statements(unaudited). STATEMENTS OF INCOME (UNAUDITED) FOR THE THREE MONTHS ENDED JUNE 30, 2006 AND 2005 June 30, June 30, 2006 2005 REVENUES: Rental $ 630,508 $ 616,297 ---------- ---------- EXPENSES: Operating 237,255 239,886 General and administrative 65,614 60,890 ---------- ---------- Total expenses 302,869 300,776 ---------- ---------- OPERATING INCOME 327,639 315,521 OTHER INCOME Interest 187 186 ---------- ---------- INCOME BEFORE EQUITY IN INCOME OF REAL ESTATE JOINT VENTURE 327,826 315,707 EQUITY IN INCOME OF REAL ESTATE JOINT VENTURE 23,628 23,973 ---------- ---------- NET INCOME $ 351,454 $ 339,680 ========== ========== AGGREGATE NET INCOME ALLOCATED TO: Limited Partners $ 347,939 $ 336,283 General Partners 3,515 3,397 ---------- ---------- TOTAL $ 351,454 $ 339,680 ========== ========== NET INCOME PER LIMITED PARTNERSHIP UNIT $ 14.50 $ 14.01 ========== ========== LIMITED PARTNERSHIP UNITS USED IN PER UNIT CALCULATION 24,000 24,000 ====== ====== See accompanying notes to financial statements(unaudited). STATEMENTS OF INCOME (UNAUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005 June 30, June 30, 2006 2005 REVENUES: Rental $1,267,450 $1,228,643 ---------- ---------- EXPENSES: Operating 477,571 478,272 General and Administrative 150,648 142,758 ---------- ---------- Total Expenses 628,219 621,030 ---------- ---------- OPERATING INCOME 639,231 607,613 OTHER INCOME 373 369 ---------- ---------- INCOME BEFORE EQUITY IN INCOME OF REAL ESTATE JOINT VENTURE 639,604 607,982 EQUITY IN INCOME OF REAL ESTATE JOINT VENTURE 54,230 52,124 ---------- ---------- NET INCOME $ 693,834 $ 660,106 ========== ========== AGGREGATE NET INCOME ALLOCATED TO: Limited Partners $ 686,896 $ 653,505 General Partners 6,938 6,601 ---------- ---------- TOTAL $ 693,834 $ 660,106 ========== ========== NET INCOME PER LIMITED PARTNERSHIP UNIT $28.62 $27.23 ====== ====== LIMITED PARTNERSHIP UNITS USED IN PER UNIT CALCULATION 24,000 24,000 ====== ====== See accompanying notes to financial statements (unaudited). STATEMENT OF CHANGES IN PARTNERS' EQUITY (UNAUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2006 GENERAL LIMITED PARTNERS PARTNERS TOTAL BALANCE AT JANUARY 1, 2006 ($80,991) $2,760,079 $2,679,088 NET INCOME 6,938 686,896 693,834 DISTRIBUTIONS (5,454) (540,000) (545,454) -------- ---------- ---------- BALANCE AT JUNE 30, 2006 ($79,507) $2,906,975 $2,827,468 ======== ========== ========== See accompanying notes to consolidated financial statements(unaudited). STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005 June 30, June 30, 2006 2005 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 693,834 $ 660,106 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 13,416 10,507 Equity in earnings of real estate joint venture (54,230) (52,124) Distributions from real estate joint venture 54,900 46,800 Changes in assets and liabilities: (Decrease)increase in other liabilities (9,664) 2,022 --------- --------- Net cash provided by operating activities 698,256 667,311 CASH FLOWS FROM FINANCING ACTIVITIES - Distributions to partners (545,454) (545,454) Payment on capital lease obligations (11,367) 0 --------- --------- Net cash used in financing activities (556,821) (545,454) --------- --------- NET INCREASE IN CASH AND CASH EQUIVALENTS 141,435 121,857 CASH AND CASH EQUIVALENTS: At beginning of period 599,338 620,452 --------- --------- At end of period $ 740,773 $ 742,309 ========= ========= See accompanying notes to financial statements(unaudited). DSI REALTY INCOME FUND VIII (A California Real Estate Limited Partnership) NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 1. GENERAL DSI Realty Income Fund VIII (the "Partnership"), a limited partnership, has two general partners (DSI Properties, Inc., and Diversified Investors Agency) and limited partners owning 24,000 limited partnership units. The Partnership was formed 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 Stockton, Pittsburgh, El Centro, Huntington Beach, and Lompoc, California. The Partnership has also entered into a joint venture with DSI Realty Income Fund IX, through which the Partnership has a 30% interest in a mini-storage facility in Aurora, Colorado (see Note 3). All facilities were acquired from Dahn Corporation ("Dahn"). Dahn is not affiliated with the Partnership. Dahn is affiliated with other partnerships in which DSI Properties, Inc. is a general partner. The mini-storage facilities are operated for the Partnership by Dahn under various agreements that are subject to renewal annually. Under the terms of the agreements, the Partnership is required to pay Dahn a property management fee equal to 5% of gross revenue from operations, defined as the entire amount of all receipts from the renting or leasing of storage compartments and sale of locks. The accompanying financial information is unaudited. Such financial information includes all adjustments considered necessary by the Partnership's management for a fair presentation of the results for the periods indicated. 2. PROPERTY Properties owned by the Partnership are all mini-storage facilities. Depreciation is calculated using the straight line method over the estimated useful life of 15 years. The total cost of property and accumulated depreciation is as follows: June 30, 2006 December 31, 2005 Land $ 2,287,427 $ 2,287,427 Buildings and improvements 7,184,426 7,184,426 Rental trucks under capital lease 105,069 105,069 ------------ ------------ Total 9,576,922 9,576,922 Less: Accumulated Depreciation ( 7,198,565) ( 7,185,149) ------------ ------------ Property - Net $ 2,378,357 $ 2,391,773 ============ ============ 3. INVESTMENT IN REAL ESTATE JOINT VENTURE The Partnership is involved in a joint venture with DSI Realty Income Fund IX through which the Partnership has a 30% interest in a mini-storage facility in Aurora, Colorado. Under the terms of the joint venture agreement, the Partnership is entitled to 30% of the profits and losses of the venture and owns 30% of the mini-storage facility with DSI Realty Income Fund IX, which has the remaining 70% interest in the venture. Summarized income statement information for the six months ended June 30, 2006, and 2005 is as follows: June 30, 2006 June 30, 2005 Revenue $327,541 $295,477 Operating Expenses 146,775 121,731 -------- -------- Net Income $180,766 $173,746 ======== ======== The Partnership accounts for its investment in the real estate joint venture under the equity method of accounting. 4. NET INCOME PER LIMITED PARTNERSHIP UNIT Net income per limited partnership unit is calculated by dividing the net income allocated to the limited partners by the number of limited partnership units outstanding during the period. 5. ALLOCATION OF PROFITS AND LOSSES AND GENERAL PARTNERS' INCENTIVE MANAGEMENT FEE Under the Agreement of limited Partnership, the general partners are to be allocated 1% of the net profits or losses from operations, and the limited partners are to be allocated the balance of the net profits or losses from operations in proportion to their limited partnership interests. The General Partners are also entitled to receive a percentage, based on a predetermined formula, of any cash distribution from the sale, other disposition or refinancing of the project. In addition, the General Partners are entitled to receive an incentive management fee for supervising the operations of the Partnership. The fee is to be paid in an amount equal to 9% per annum of the cash available for distribution on a cumulative basis, calculated as cash generated from operations less capital expenditures. 6. SUBSEQUENT EVENT On July 20, 2006, a sales agreement was signed with the Department of Transportation, State of California, whereby it would acquire the Partnerships' mini-storage facility in Pittsburg, California for a gross sales price of $3,285,000. This transaction will result in a gain to the Partnership. Escrow has not yet closed for this transaction. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. DSI REALTY INCOME FUND VIII (A California Real Estate Limited Partnership) We are pleased to enclose the Partnership's unaudited financial statements for the period ended June 30, 2006. The following is Management's discussion and analysis of the Partnership's financial condition and results of its operations. For the three-month periods ended June 30, 2006 and 2005, total revenues increased 2.3% from $616,297 to $630,508 and total expenses increased 0.7% from $300,776 to $302,869 and other income increased from $186 to $187. Equity in income of the real estate joint venture decreased 1.4% from $23,973 to $23,628. As a result, net income increased 3.5% from $339,680 to $351,454 for the three-month period ended June 30, 2006, as compared to the same period in 2005. Rental revenue increased as a result of higher unit rental rates. Occupancy levels for the Partnership's five mini-storage facilities averaged 82.4% for the three-month period ended June 30, 2006 as compared to 85.2% for the period in 2005. The Partnership is continuing its marketing efforts to attract and keep new tenants in its various mini-storage facilities. Operating expenses remained relatively constant as increases in salaries and wages, repairs and maintenance, and depreciation expenses were offset by de- creases in purchase of locks and packing materials, telephone and fire and liability insurance expenses. General and administrative expenses increased approximately $4,700 (7.8%) primarily as a result of an increase in legal and professional expenses. Equity in income from the real estate joint venture remained constant as higher rental revenues was offset by an increase in operating expenses at that facility. For the six-month periods ended June 30, 2006 and 2005, total revenues increased 3.2% from $1,228,643 to $1,267,450 and total expenses increased 1.2% from $621,030 to $628,219 and other income increased from $369 to $373. Equity in income of the real estate joint venture increased 4.0% from $52,124 to $54,230. As a result, net income increased 5.1% from $660,106 to $693,834 for the six-month period ended June 30, 2006, as compared to the same period in 2005. Rental revenue increased as a result of higher unit rental rates. Operating expenses remained constant as increases in real estate tax, salaries and wages and depreciation expenses, were offset by decreases in advertising, purchase of locks and packing materials, office supplies, and workers compen- sation insurance expenses. General and administrative expenses increased approximately $7,900 (5.5%) primarily as a result of increases in incentive management fee and legal and professional expenses, partially offset by a decrease in equipment and computer lease expenses. Equity in income from the real estate joint venture remained relatively constant as discussed above. On July 20, 2006, a sales agreement was signed with the Department of Trans- portation, State of California, whereby it would acquire the Partnerships' mini-storage facility in Pittsburg, California for a gross sales price of $3,285,000. This transaction will result in a gain to the partnership. Escrow has not yet closed for this transaction. The General Partners will continue their policy of funding improvements and maintenance of Partnership properties with cash generated from operations. The Partnership's financial resources appear to be adequate to meet its needs. The General Partners anticipate distributions to the Limited Partners to remain at the current level for the foreseeable future. Item 3. Quantative and Qualitative Disclosures About Market Risk NONE Item 4. CONTROLS AND PROCEDURES Within 90 days prior to the date of this report, 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 President and Chief Executive Officer. These disclosure controls and pro- cedures are designed to ensure that the information required to be disclosed by the Partnership in its periodic reports filed with the Securities and Ex- change Commission (the Commission) is recorded, processed, summarized and reported, within the time periods specified by the Commissions 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 signifi- cantly affect the internal controls subsequent to the date of their evaluation. PART II - OTHER INFORMATION Item 1. Legal Proceedings Registrant is not a party to any material pending legal proceedings. Item 1A. Risk Factors Please refer to the risk factors disclosed by the partnership in response to Item 1A, part I of the Form 10-K filed on March 27, 2006. There has been no material change to the risk factors disclosed therein. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds NONE Item 3. Defaults Upon Senior Securities NONE Item 4. Submission of Matters to a Vote of Security Holders NONE Item 5. Other Information NONE Item 6. Exhibits and Reports on Form 8K. (a) Attached hereto as Exhibit "20" is Registrant's Quarterly Report to Limited Partners for the period ended June 30, 2006. (b) Registrant did not file any reports on Form 8-K for the period reported upon. SIGNATURES Pursuant to the requirements 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. Dated: July 31, 2006 DSI REALTY INCOME FUND VIII A California Limited Partnership (Registrant) By____\s\ Robert J. Conway_____ DSI Properties, Inc., as General Partner by ROBERT J. CONWAY, President and Chief Financial Officer SIGNATURES Pursuant to the requirements 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. Dated: July 31, 2006 DSI REALTY INCOME FUND VIII A California Limited Partnership (Registrant) By__\s\ Robert J. Conway________ DSI Properties, Inc., as General Partner by ROBERT J. CONWAY, President and Chief Financial Officer CERTIFICATIONS I, Robert J. Conway, certify that: 1. I have reviewed this quarterly report on Form 10-Q of DSI Realty Income Fund VIII; 2. Based on my knowledge, this quarterly 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 quarterly report. 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly report; 4. The registrant's other certifying officers 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 officers 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 affect the registrant's ability to record, pro- cess, 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: July 31, 2006 Robert J. Conway Chief Executive Officer CERTIFICATIONS I, Richard P. Conway, certify that: 1. I have reviewed this quarterly report on Form 10-Q of DSI Realty Income Fund VIII; 2. Based on my knowledge, this quarterly 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 quarterly report. 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly report; 4. The registrant's other certifying officers 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 quarterly 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 control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors: a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to affect the registrant's ability to record, pro- cess, 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: July 31, 2006 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 Quarterly Report of DSI Realty Income Fund VIII (the "Partnership") on Form 10-Q for the period ending June 30, 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 July 31, 2006 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 Quarterly Report of DSI Realty Income Fund VIII (the "Partnership") on Form 10-Q for the period ending June 30, 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. Richard P. Conway Vice President July 31, 2006 -----END PRIVACY-ENHANCED MESSAGE-----