10-Q 1 dsiviii-605.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, 2005 /___/ 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, 2005 AND DECEMBER 31, 2004 June 30, December 31, 2005 2004 ASSETS CASH AND CASH EQUIVALENTS $ 742,309 $ 620,452 PROPERTY, Net 2,399,745 2,410,252 INVESTMENT IN REAL ESTATE JOINT VENTURE 185,024 179,700 OTHER ASSETS 71,550 71,550 ---------- ---------- TOTAL $3,398,628 $3,281,954 ========== ========== LIABILITIES AND PARTNERS' EQUITY (DEFICIT) LIABILITIES Distribution to Partners $ 272,727 $ 272,727 Capital lease obligation 84,069 97,569 Other liabilities 396,081 380,559 ---------- ---------- Total liabilities $ 752,877 $ 750,855 ---------- ---------- PARTNERS' EQUITY (DEFICIT): General Partners (81,324) (82,471) Limited Partners 2,727,075 2,613,570 ---------- ---------- Total partners' equity 2,645,751 2,531,099 TOTAL $3,398,628 $3,281,954 ========== ========== See accompanying notes to financial statements(unaudited). STATEMENTS OF INCOME (UNAUDITED) FOR THE THREE MONTHS ENDED JUNE 30, 2005 AND 2004 June 30, June 30, 2005 2004 REVENUES: Rental $ 616,297 $ 589,499 ---------- ---------- EXPENSES: Operating 239,886 221,689 General and administrative 60,890 65,977 ---------- ---------- Total expenses 300,776 287,666 ---------- ---------- OPERATING INCOME 315,521 301,833 OTHER INCOME Interest 186 184 ---------- ---------- INCOME BEFORE EQUITY IN INCOME OF REAL ESTATE JOINT VENTURE 315,707 302,017 EQUITY IN INCOME OF REAL ESTATE JOINT VENTURE 23,973 27,284 ---------- ---------- NET INCOME $ 339,680 $ 329,301 ========== ========== AGGREGATE NET INCOME ALLOCATED TO: Limited Partners $ 336,283 $ 326,008 General Partners 3,397 3,293 ---------- ---------- TOTAL $ 339,680 $ 329,301 ========== ========== NET INCOME PER LIMITED PARTNERSHIP UNIT $ 14.01 $ 13.58 ========== ========== 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, 2005 AND 2004 June 30, June 30, 2005 2004 REVENUES: Rental $1,228,643 $1,182,159 ---------- ---------- EXPENSES: Operating 478,272 434,556 General and Administrative 142,758 134,493 ---------- ---------- Total Expenses 621,030 569,049 ---------- ---------- OPERATING INCOME 607,613 613,110 OTHER INCOME 369 368 ---------- ---------- INCOME BEFORE EQUITY IN INCOME OF REAL ESTATE JOINT VENTURE 607,982 613,478 EQUITY IN INCOME OF REAL ESTATE JOINT VENTURE 52,124 59,225 ---------- ---------- NET INCOME $ 660,106 $ 672,703 ========== ========== AGGREGATE NET INCOME ALLOCATED TO: Limited Partners $ 653,505 $ 665,976 General Partners 6,601 6,727 ---------- ---------- TOTAL $ 660,106 $ 672,703 ========== ========== NET INCOME PER LIMITED PARTNERSHIP UNIT $27.23 $27.75 ====== ====== 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, 2005 GENERAL LIMITED PARTNERS PARTNERS TOTAL BALANCE AT JANUARY 1, 2005 ($82,471) $2,613,570 $2,531,099 NET INCOME 6,601 653,505 660,106 DISTRIBUTIONS (5,454) (540,000) (545,454) -------- ---------- ---------- BALANCE AT JUNE 30, 2005 ($81,324) $2,727,075 $2,645,751 ======== ========== ========== See accompanying notes to consolidated financial statements(unaudited). STATEMENT OF CASH FLOWS (UNAUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004 June 30, June 30, 2005 2004 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 660,106 $ 672,703 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 10,507 Equity in earnings of real estate joint venture (52,124) (59,225) Distributions from real estate joint venture 46,800 59,100 Changes in assets and liabilities: Increase in other assets 0 (29) Increase in liabilities 2,022 17,004 --------- --------- Net cash provided by operating activities 667,311 689,553 CASH FLOWS FROM FINANCING ACTIVITIES - Distributions to partners (545,454) (545,454) --------- --------- NET INCREASE IN CASH AND CASH EQUIVALENTS 121,857 144,099 CASH AND CASH EQUIVALENTS: At beginning of period 620,452 713,429 --------- --------- At end of period $ 742,309 $ 857,528 ========= ========= 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 as of June 30, 2005, and for the periods ended June 30, 2005, and 2004 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 The Partnership owns five mini-storage facilities located in Stockton, Pittsburg, El Centro, Lompoc and Huntington Beach, California. The total cost of property and accumulated depreciation as follows: June 30, 2005 December 31, 2004 Land $ 2,287,427 $ 2,287,427 Buildings and improvements 7,127,000 7,127,000 Equipment 148,837 148,837 ------------ ------------ Total 9,563,264 9,563,264 Less: Accumulated Depreciation ( 7,163,519) ( 7,153,012) ------------ ------------ Property - Net $ 2,399,745 $ 2,410,252 ============ ============ 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, 2005, and 2004 is as follows: 2005 2004 Revenue $295,477 $308,594 Operating Expenses 121,731 111,177 Net Income $173,746 $197,417 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. 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, 2005. 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, 2005 and 2004, total revenues increased 4.6% from $589,499 to $616,297 and total expenses increased 4.6% from $287,666 to $300,776 and other income increased from $184 to $186. Equity in income of the real estate joint venture decreased 12.1% from $27,284 to $23,973. As a result, net income increased 3.2% from $329,301 to $339,680 for the three-month period ended June 30, 2005, as compared to the same period in 2004. Rental revenue increased as a result of higher unit rental rates. Occupancy levels for the Partnership's five mini-storage facilities averaged 85.2% for the three-month period ended June 30, 2005 as compared to 85.7% for the same period in 2004. The Partnership is continuing its marketing efforts to attract and keep new tenants in its various mini-storage facilities. Operating expenses increased approximately $18,200 (8.2%) primarily as a result of increases in telephone, purchase of locks, salaries and wages and depreciation expenses, partially offset by a decrease in office supplies expense. General and administrative expenses decreased approximately $5,100 (7.7%) primarily as a result of a decrease in legal and professional expense. Equity in income from the real estate joint venture decreased as a result of lower rental revenue at that facility. For the six-month periods ended June 30, 2005, and 2004, total revenues increased 3.9% from $1,182,159 to $1,228,643 and total expenses increased 9.1% from $569,049 to $621,030 and other income increased from $368 to $369. Equity in income of the real estate joint venture decreased 12.0% from $59,225 to $52,124. As a result, net income decreased 1.9% from $672,703 to $660,106 for the six-month period ended June 30, 2005, as compared to the same period in 2004. Rental revenue increased as a result of higher unit rental rates. Operating expenses increased approximately $43,700 (10.1%) primarily as a result of increases in advertising, purchase of locks, real estate tax, workers compensation insurance, truck insurance and depreciation expenses, partially offset by a decrease in repairs and maintenance expense. General and administrative expenses increased approximately $8,300 (6.2%) primarily as a result of an increase in legal and professional expense and equipment and computer lease expense. Equity in income from the real estate joint venture decreased as a result of lower rental revenue at that facility. 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 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, 2005. (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 29, 2005 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 29, 2005 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 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 29, 2005 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 29, 2005 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, 2005 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 29, 2005 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, 2005 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 July 29, 2005