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 September 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)
SEPTEMBER 30, 2006 AND DECEMBER 31, 2005
September 30, December 31,
2006 2005
ASSETS
CASH AND CASH EQUIVALENTS $ 845,018 $ 599,338
ASSET HELD FOR SALE, Net (NOTE 6) 343,111
PROPERTY, Net 2,028,544 2,391,773
INVESTMENT IN REAL ESTATE
JOINT VENTURE 183,527 182,220
OTHER ASSETS 70,246 70,246
---------- ----------
TOTAL $3,470,446 $3,243,577
========== ==========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
LIABILITIES
Distribution to Partners $ 272,727 $ 272,727
Capital lease obligation 58,650 75,831
Other liabilities 239,767 215,931
---------- ----------
Total liabilities 571,144 564,489
---------- ----------
PARTNERS' EQUITY (DEFICIT):
General Partners (78,788) (80,991)
Limited Partners 2,978,090 2,760,079
---------- ----------
Total partners' equity 2,899,302 2,679,088
---------- ----------
TOTAL $3,470,446 $3,243,577
========== ==========
See accompanying notes to financial statements(unaudited).
STATEMENTS OF INCOME (UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
September 30, September 30,
2006 2005
REVENUES:
Rental $ 532,876 $ 533,437
---------- ----------
EXPENSES:
Operating 215,547 182,139
General and administrative 49,751 52,856
---------- ----------
Total expenses 265,298 234,995
---------- ----------
OPERATING INCOME 267,578 298,442
OTHER INCOME
Interest 187 188
---------- ----------
INCOME BEFORE EQUITY IN INCOME
OF REAL ESTATE JOINT VENTURE 267,765 298,630
EQUITY IN INCOME OF REAL ESTATE
JOINT VENTURE 29,577 30,634
---------- ----------
INCOME FROM OPERATIONS
BEFORE DISCONTINUED OPERATIONS 297,342 329,264
NET INCOME FROM OPERATIONS
OF DISCONTINUED OPERATIONS 47,219 44,507
---------- ----------
NET INCOME $ 344,561 $ 373,771
========== ==========
AGGREGATE NET INCOME ALLOCATED TO:
Limited Partners $ 341,115 $ 370,033
General Partners 3,446 3,738
---------- ----------
TOTAL $ 344,561 $ 373,771
========== ==========
NET INCOME PER LIMITED
PARTNERSHIP UNIT $ 14.21 $ 15.42
========== ==========
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 NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
September 30, September 30,
2006 2005
REVENUES:
Rental $1,608,921 $1,584,915
---------- ----------
EXPENSES:
Operating 593,357 564,404
General and Administrative 200,399 195,614
---------- ----------
Total Expenses 793,756 760,018
---------- ----------
OPERATING INCOME 815,165 824,897
OTHER INCOME
Interest 560 557
---------- ----------
INCOME BEFORE EQUITY IN INCOME OF
REAL ESTATE JOINT VENTURE 815,725 825,454
EQUITY IN INCOME OF REAL
ESTATE JOINT VENTURE 83,807 82,758
---------- ----------
INCOME FROM OPERATIONS
BEFORE DISCONINUED OPERATIONS 899,532 908,212
NET INCOME FROM OPERATIONS
OF DISCONTINUED OPERATIONS 138,863 125,665
---------- ----------
NET INCOME $1,038,395 $1,033,877
========== ==========
AGGREGATE NET INCOME ALLOCATED TO:
Limited Partners $1,028,011 $1,023,538
General Partners 10,384 10,339
---------- ----------
TOTAL $1,038,395 $1,033,877
========== ==========
NET INCOME PER LIMITED PARTNERSHIP UNIT $42.83 $42.65
====== ======
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 NINE MONTHS ENDED SEPTEMBER 30, 2006
GENERAL LIMITED
PARTNERS PARTNERS TOTAL
BALANCE AT JANUARY 1, 2006 ($80,991) $2,760,079 $2,679,088
NET INCOME 10,384 1,028,011 1,038,395
DISTRIBUTIONS (8,181) (810,000) (818,181)
-------- ---------- ----------
BALANCE AT SEPTEMBER 30, 2006 ($78,788) $2,978,090 $2,899,302
======== ========== ==========
See accompanying notes to consolidated financial statements(unaudited).
STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
September 30, September 30,
2006 2005
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $1,038,395 $1,033,877
Adjustments to reconcile net
income to net cash provided
by operating activities (including
discontinued operations):
Depreciation 20,118 15,760
Equity in earnings of
real estate joint venture (83,807) (82,758)
Distributions from real
estate joint venture 82,500 80,400
Changes in assets and
liabilities:
Increase in
other liabilities 23,836 40,937
--------- ---------
Net cash provided by
operating activities 1,081,042 1,088,216
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners (818,181) (818,181)
Payments on capital
lease obligations (17,181)
--------- ---------
Net cash used in
financing activities (835,362) (818,181)
--------- ---------
NET INCREASE IN CASH AND
CASH EQUIVALENTS 245,680 270,035
CASH AND CASH EQUIVALENTS:
At beginning of period 599,338 620,452
--------- ---------
At end of period $ 845,018 $ 890,487
========= =========
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, Pittsburg, 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:
September 30, 2006 December 31, 2005
Land $ 1,969,877 $ 2,287,427
Buildings and improvements 6,035,669 7,184,426
Rental trucks
under capital lease 70,046 105,069
------------ ------------
Total 8,075,592 9,576,922
Less: Accumulated Depreciation ( 6,047,048) ( 7,185,149)
------------ ------------
Property - Net $ 2,028,544 $ 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 nine months ended September 30, 2006,
and 2005 is as follows:
September 30, 2006 September 30, 2005
Revenue $490,959 $461,730
Operating Expenses 211,602 185,871
-------- --------
Net Income $279,357 $275,859
======== ========
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. DISCONTINUED OPERATIONS
In accordance with Statement of Financial Accounting Standards No. 144,
the net income of a mini-storage facility located in Pittsburg, California
is reflected in the statement of income as discontinued operations for
all periods presented.
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 of approximately $2,942,000 to the Partnership. Escrow closed
on October 20, 2006 and funds were transferred to the Partnership on
that date. Proceeds will be distributed to the limited partners on
November 15, 2006.
The following table summarizes the revenue and expense components that
comprise discontinued operations:
FOR THE THREE MONTHS ENDED
9/30/06 9/30/05
------- -------
REVENUE $95,883 $94,752
EXPENSES
Operating 48,664 50,245
------- -------
NET OPERATING
INCOME FROM
DISCONTINUED OPERATIONS $47,219 $44,507
======= =======
FOR THE NINE MONTHS ENDED
9/30/06 9/30/05
------- -------
REVENUE $287,288 $271,917
EXPENSES
Operating 148,425 146,252
------- -------
NET OPERATING
INCOME FROM
DISCONTINUED OPERATIONS $138,863 $125,665
======== ========
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 September 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 September 30, 2006 and 2005, total revenues
increased 0.1% from $628,189 to $628,759 and total expenses increased 10.1%
from $285,240 to $313,962 and other income decreased from $188 to $187.
Equity in income of the real estate joint venture decreased 3.5% from $30,634
to $29,577. As a result, net income decreased 7.8% from $373,771 to $344,561
for the three-month period ended September 30, 2006, as compared to the same
period in 2005. Rental revenue remained constant as higher unit rental rates
were offset by lower occupancy rates. Occupancy levels for the Partnership's
five mini-storage facilities averaged 81.4% for the three-month period ended
September 30, 2006 as compared to 85.7% for the same period in 2005. The
Partnership is continuing its marketing efforts to attract and keep new ten-
ants in its various mini-storage facilities. Operating expenses increased
approximately $31,800 (13.7%) as a result of increases in repairs and main-
tenance, legal and salaries and wages expenses. General and administrative
expenses decreased approximately $3,100 (5.9%) primarily as a result of de-
creases in incentive management fee and equipment and computer lease expenses,
partially offset by an increase in legal and professional expense. Equity in
income from the real estate joint venture remained constant as higher rental
revenues were offset by an increase in operating expenses at that facility.
For the nine-month periods ended September 30, 2006 and 2005, total revenues
increased 2.1% from $1,856,832 to $1,896,209 and total expenses increased 4.0%
from $906,270 to $942,181 and other income increased from $557 to $560. Equity
in income for the real estate joint venture increased 1.3% from $82,758 to
$83,807. As a result net income increased 0.4% from $1,033,877 to $1,038,395
for the nine-month period ended September 30, 2006, as compared to the same
period in 2005. Rental revenue increased as a result of higher unit rental
rates. Operating expenses increased approximately $31,100 (4.4%) primarily
as a result of increases in repairs and maintenance, real estate tax, salaries
and wages and depreciation expenses, partially offset by decreases in adver-
tising, purchase of locks and packing materials, office supplies, workers'
compensation, insurance and truck maintenance expenses. General and admin-
istrative expenses increased approximately $4,800 (2.5%) primarily as a result
of an increase in legal and professional expense, partially offset by a de-
crease in equipment and computer lease expense. 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. Escrow closed on October 20, 2006. It is anticipated that the
proceeds will be distributed sometime in November 2006.
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 September 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: October 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: October 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: October 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: October 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 September 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
October 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 September 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, certif y,
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
October 31, 2006