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