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, 2002
/___/ Transition report pursuant to Section 13 or 15(d) of the
Securities Act of 1934
for the transition period from ______________ to ________________.
Commission File Number 2-83291
DSI REALTY INCOME FUND VII, A California Limited Partnership
(Exact name of registrant as specified in its charter)
California_______________________________________95-3871044
(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.
The information required by Rule 10-01 of Regulation S-X is
included in the Quarterly Report to the Limited Partners of Registrant for
the period ended June 30, 2002 which is attached hereto as Exhibit "20"
and incorporated herein by this reference.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Registrant incorporates by this reference its Quarterly Report to
Limited Partners for the period ended June 30, 2002.
PART II - OTHER INFORMATION
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, 2002.
(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, 2002 DSI REALTY INCOME FUND VII
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, 2002 DSI REALTY INCOME FUND VII
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
July 31, 2002
QUARTERLY REPORT TO THE LIMITED PARTNERS
OF DSI REALTY INCOME FUND VII
DEAR LIMITED PARTNERS:
We are pleased to enclose the Partnership's unaudited financial statements
for the period ended June 30, 2002. The following is Management's
discussion and analysis of the Partnership's financial condition and
results of its operations.
For the three month period ended June 30, 2002, and 2001, total revenues
decreased 0.9% from $642,992 to $637,269 and total expenses increased 12.8%
from $293,122 to $330,618 and other income decreased from $1,194 to $259.
As a result, net income decreased 12.6% from $351,064 for the three-month
period ended June 30, 2001, to $306,910 for the same period in 2002. Rental
revenue decreased primarily as a result of lower occupancy rates, partially
offset by higher unit rental rates. Occupancy levels for the Partnership's
six mini-storage facilities averaged 88.8% for the three-month period ended
June 30, 2002 and 92.4% for the same period in 2001. The Partnership is
continuing its marketing efforts to attract and keep new tenants in its
various mini-storage facilities. Operating expenses increased approximately
$18,300 (7.7%) primarily as a result of increases in office supplies, workers
compensation insurance and bank and credit card fees expenses, partially
offset by decreases in advertising and salaries and wages expenses. General
and administrative expenses increased approximately $19,200 (35.5%) primarily
as a result of increases in legal and professional and equipment and computer
lease.
For the six month periods ended June 30, 2002, and 2001, total revenues
increased 4.0% from $1,258,676 to $1,309,012 and total expenses increased
10.3% from $587,466 to $648,101 and other income decreased from $2,644 to
$503. As a result, net income decreased 1.8% from $673,854 for the six months
ended June 30, 2001, to $661,414 for the same period in 2002. Rental revenue
increased primarily as a result of higher occupancy and unit rental rates.
Operating expenses increased approximately $35,800 (7.7%) primarily due to
increases in telephone, property management fees, office supplies, workers
compensation insurance, bank and credit card fees and postage expenses,
partially offset by decreases in maintenance and repair and security alarm
services expenses. Property management fees, which are based on rental in-
come, increased as a result of the increase in rental revenue. General and
administrative expenses increased approximately $24,800 (20.8%) primarily
for the reasons discussed above.
On April 5, 2002, the General Partners received a copy of a hostile tender
offer from MacKenzie Patterson, Inc. and associated corporations and limited
partnerships to purchase all of the Units in the Partnership. This offer was
also filed with the Securities and Exchange Commission on the same date. The
General Partners have determined that the hostile tender offer was not in
the best interests of the Limited Partners, that the tender offer was grossly
inadequate given the performance history of the Limited Partnership and the
inherent value of the Units, and recommended that the Limited Partners reject
the hostile tender offer and not tender their Units pursuant thereto. The
offer was subsequently increased and extended to June 30, 2002 and again to
July 22, 2002. The General Partners initial determination regarding the
offer has not changed. Prior to the expiration date of the offer, Limited
Partners tendered 74 Units representing 0.308% of the outstanding Units of
the Partnership.
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.
We are not enclosing a copy of the Partnership Form 10-Q as filed with the
Securities and Exchange Commission since all the information set forth
therein is contained either in this letter or in the attached financial
statements. However, if you wish to receive a copy of said report, please
send a written request to DSI Realty Income Fund VII, P.O. Box 357,
Long Beach, California 90801.
Very truly yours,
DSI REALTY INCOME FUND VII
By: DSI Properties, Inc., as
General Partner
By /s/ Robert J. Conway
____________________________
ROBERT J. CONWAY, President
DSI REALTY INCOME FUND VII
(A California Real Estate Limited Partnership)
BALANCE SHEETS(UNAUDITED)
JUNE 30, 2002 AND DECEMBER 31, 2001
June 30, December 31,
2002 2001
ASSETS
CASH AND CASH EQUIVALENTS $ 686,179 $ 530,721
PROPERTY, Net 2,089,800 2,089,800
OTHER ASSETS 73,743 76,413
TOTAL $2,849,722 $2,696,934
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
LIABILITIES $ 586,595 $ 610,373
PARTNERS' EQUITY (DEFICIT):
General Partners (85,137) (86,903)
Limited Partners 2,348,264 2,173,464
Total partners' equity 2,263,127 2,086,561
TOTAL $2,849,722 $2,696,934
See accompanying notes to financial statements(unaudited).
STATEMENTS OF INCOME (UNAUDITED)
FOR THE THREE MONTHS ENDED JUNE 30, 2002 AND 2001
June 30, June 30,
2002 2001
REVENUES:
Rental $ 637,269 $ 642,992
EXPENSES:
Operating 257,178 238,910
General and administrative 73,440 54,212
Total expenses 330,618 293,122
OPERATING INCOME $ 306,651 $ 349,870
OTHER INCOME
Interest 259 1,194
NET INCOME $ 306,910 $ 351,064
AGGREGATE NET INCOME ALLOCATED TO:
Limited Partners $ 303,841 $ 347,553
General Partners 3,069 3,511
TOTAL $ 306,910 $ 351,064
NET INCOME PER LIMITED
PARTNERSHIP UNIT $ 12.66 $ 14.48
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, 2002 AND 2001
June 30, June 30,
2002 2001
REVENUES:
Rental $1,309,012 $1,258,676
EXPENSES:
Operating 504,231 468,410
General and administrative 143,870 119,056
Total expenses 648,101 587,466
OPERATING INCOME $ 660,911 $ 671,210
OTHER INCOME
Interest 503 2,644
NET INCOME $ 661,414 $ 673,854
AGGREGATE NET INCOME ALLOCATED TO:
Limited Partners $ 654,800 $ 667,115
General Partners 6,614 6,739
TOTAL $ 661,414 $ 673,854
NET INCOME PER LIMITED
PARTNERSHIP UNIT $27.28 $27.80
LIMITED PARTNERSHIP UNITS USED
IN PER UNIT CALCULATION 24,000 24,000
See accompanying notes to financial statements (unaudited)
STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIT)(UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2002
GENERAL LIMITED
PARTNERS PARTNERS TOTAL
BALANCE AT JANUARY 1, 2002 ($86,903) $2,173,464 $2,086,561
NET INCOME 6,614 654,800 661,414
DISTRIBUTIONS (4,848) (480,000) (484,848)
BALANCE AT JUNE 30, 2002 ($85,137) $2,348,263 $2,263,127
See accompanying notes to financial statements(unaudited).
STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
June 30, June 30,
2002 2001
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 661,414 $ 673,854
Adjustments to reconcile net
income to net cash provided
by operating activities:
Changes in assets and
liabilities:
Decrease(increase)in other assets 2,670 (8,000)
Decrease in liabilities (23,778) (38,831)
Net cash provided by
operating activities 640,306 627,023
CASH FLOWS FROM FINANCING ACTIVITIES -
Distributions to partners (484,848) (484,848)
NET INCREASE IN CASH AND
CASH EQUIVALENTS 155,458 142,175
CASH AND CASH EQUIVALENTS:
At beginning of period 530,721 468,842
At end of period $ 686,179 $ 611,017
See accompanying notes to financial statements(unaudited).
DSI REALTY INCOME FUND VII
(A California Real Estate Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. GENERAL
DSI Realty Income Fund VII (the "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 accompanying financial information as of June 30, 2002, and for
the periods ended June 30, 2002, and 2001, is unaudited. Such financial
information includes all adjustments which are 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 at June 30, 2002, is as follows:
Land $ 2,089,800
Buildings and equipment 7,685,522
Equipment 60,760
Total 9,836,082
Less: Accumulated Depreciation ( 7,746,282)
Property - Net $ 2,089,800
3. 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.
DSI REALTY INCOME FUND VII
Form 10-Q
CERTIFICATION
Each of the undersigned hereby certifies in his capacity as an officer of
DSI Properties Inc. (corporate General Partner) of DSI REALTY INCOME FUND VII
(the "Partnership") that the Quarterly Report of the Partnership on Form 10-Q
for the periods ended June 30, 2002 fully complies with the requirements of
Section 13(a) of the Securities and Exchange Act of 1934 and that information
contained in such report fairly presents, in all material respects, the
financial condition of the Partnership at the end of such periods and the
results of operations of the Partnership for such periods.
ROBERT J. CONWAY, CEO RICHARD P. CONWAY, VP