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 March 31, 2007.
/___/ 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 Limited Partnership)
BALANCE SHEETS(UNAUDITED)
MARCH 31, 2007 AND DECEMBER 31, 2006
March 31, December 31,
2007 2006
ASSETS
CASH AND CASH EQUIVALENTS $ 794,344 $ 678,999
PROPERTY, NET 2,029,304 2,033,534
INVESTMENT IN REAL ESTATE
JOINT VENTURE 193,913 191,500
OTHER ASSETS 103,827 96,700
---------- ----------
TOTAL $3,121,388 $3,000,733
========== ==========
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES
Distribution to Partners $ 242,424 $ 242,424
Incentive management fee
payable to general partners 79,621 50,214
Property management
fee payable - 11,072
Customer deposits and
other liabilities 164,003 108,374
Capital lease obligation 31,177 35,170
---------- ----------
Total liabilities 517,225 447,254
---------- ----------
PARTNERS' EQUITY (DEFICIT):
General Partners (78,525) (79,032)
Limited Partners (24,000
limited partnership units
outstanding at March 31, 2007
and December 31, 2006 2,682,688 2,632,511
---------- ----------
Total partners' equity 2,604,163 2,553,479
---------- ----------
TOTAL $3,121,388 $3,000,733
========== ==========
See accompanying notes to financial statements (unaudited).
STATEMENTS OF INCOME (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006
March 31, March 31,
2007 2006
REVENUES:
Rental $ 524,646 $ 539,816
---------- ----------
EXPENSES:
Operating 175,919 186,572
General and administrative 87,919 85,034
---------- ----------
Total expenses 263,838 271,606
---------- ----------
OPERATING INCOME 260,808 268,210
OTHER INCOME
Interest 187 186
---------- ----------
INCOME FROM CONTINUING OPERATIONS
BEFORE EQUITY IN INCOME OF
REAL ESTATE JOINT VENTURE
AND DISCONTINUED OPERATIONS 260,995 268,396
EQUITY IN INCOME OF REAL
ESTATE JOINT VENTURE 32,113 30,602
---------- ----------
NET INCOME FROM CONTINUING
OPERATIONS BEFORE
DISCONTINUED OPERATIONS $ 293,108 $ 298,998
---------- ----------
NET INCOME FROM
DISCONTINUED OPERATIONS 0 43,382
---------- ----------
NET INCOME $ 293,108 $ 342,380
========== ==========
AGGREGATE NET INCOME ALLOCATED TO:
Limited partners $ 290,177 $ 338,956
General partners 2,931 3,424
---------- ----------
TOTAL $ 293,108 $ 342,380
========== ==========
NET INCOME PER LIMITED
PARTNERSHIP UNIT $ 12.09 $ 14.12
========== ==========
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 (DEFICIT)(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2007
GENERAL LIMITED
PARTNERS PARTNERS TOTAL
BALANCE AT JANUARY 1, 2007 ($79,032) $2,632,511 $2,553,479
NET INCOME 2,931 290,177 293,108
DISTRIBUTIONS (2,424) (240,000) (242,424)
-------- ---------- ----------
BALANCE AT MARCH 31, 2007 ($78,525) $2,682,688 $2,604,163
======== ========== ==========
See accompanying notes to consolidated financial statements (unaudited).
STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006
March 31, March 31,
2007 2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 293,108 $ 342,380
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 4,230 6,523
Equity in earnings of real
estate joint venture (32,113) (30,602)
Changes in assets and liabilities:
Increase in other assets (7,127) -
Increase in incentive
management fee payble
to general partners 29,407 34,551
Decrease in property
management fee payable (11,072) 0
Increase in customer deposits
and other liabilities 55,629 (782)
Distributions from real
estate joint venture 29,700 27,600
-------- --------
Net cash provided by
operating activities 361,762 379,670
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES -
Distributions to partners (242,424) (272,727)
Payments on capital
lease obligations (3,993) (6,319)
--------- --------
Net cash used in
financing activities (246,417) (279,046)
--------- --------
NET INCREASE IN CASH AND
CASH EQUIVALENTS 115,345 100,624
CASH AND CASH EQUIVALENTS:
At beginning of period 678,999 599,338
--------- ---------
At end of period $ 794,344 $ 699,962
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION -
Cash paid for interest $ 508 $ 1,107
========= =========
NON CASH FINANCING ACTIVITIES
Distributions due partners
included in partners' equity $ 242,424 $ 272,727
========= =========
See accompanying notes to financial statements(unaudited).
DSI REALTY INCOME FUND VIII
(A 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 four mini-storage facilities located in
Stockton, 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 (see Note 7).
The accompanying interim financial statements have been prepared by the
Company's management in accordance with accounting principles generally
accepted in the United States of America ("GAAP") and in conjunction with
the rules and regulations of the Securities and Exchange Commission ("SEC").
Certain information and footnote disclosures required for annual financial
statements have been condensed or excluded pursuant to SEC rules and regu-
lations. Accordingly, the interim financial statements do not include all
of the information and footnotes required by GAAP for complete financial
statements. In the opinion of management, the accompanying interim financial
statements reflect all adjustments of a normal and recurring nature which are
considered necessary for a fair presentation of the results for the interim
periods presented. However, the results of operations for the interim periods
are not necessarily indicative of the results that may be expected for the
year ending December 31, 2007. These financial statements should be read in
conjunction with the audited consolidated financial statements and notes
thereto included in the Company's annual report on Form 10-K for the year
ended December 31, 2006.
2. PROPERTY
The Partnership owns four mini-storage facilities located in Stockton,
El Centro, Lompoc and Huntington Beach, California. The total cost of
property and accumulated depreciation is as follows:
March 31, December 31,
2007 2006
Land $ 1,969,877 $ 1,969,877
Buildings and improvements 6,047,200 6,047,200
Rental trucks
under capital lease 70,047 70,047
------------ ------------
Total 8,087,124 8,087,124
Less: Accumulated Depreciation ( 6,057,820) ( 6,053,590)
------------ ------------
Property - Net $ 2,029,304 $ 2,033,534
============ ============
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 as a tenant in common
with DSI Realty Income Fund IX, which has the remaining 70% interest in
the venture. Summarized income statement information for the joint venture
for the three months ended March 31, 2007 and 2006 is as follows:
2007 2006
Revenue $176,454 $159,808
Operating Expenses 69,412 57,801
-------- --------
Net Income $107,042 $102,007
======== ========
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 SFAS No. 144, "Business Combinations," the net income
and the net gain on disposition of a mini-storage facility located in
Pittsburg, California, which was sold on October 20, 2006, is reflected
in the statement of income as discontinued operations for the quarter
ended March 31, 2006. The mini-storage facility was sold for the sale
price of $3,285,000. In November 2006, the proceeds in the amount of
$2,796,788 were distributed to the limited partners. The net gain on
the sale of the facility is $2,475,318, which is net of fees paid to the
general partners in accordance with the partnership agreement amounting
to $488,140.
The following table summarized the revenue and expense components that
comprise discontinued operations.
March 31,
2006
Revenue-Rental $ 97,126
Expenses:
Operating 53,744
General and administrative 0
--------
Total expenses $ 53,744
--------
Income from
discontinued operations $ 43,382
========
7. RELATED-PARTY TRANSACTIONS
The Partnership has entered into a management agreement with Dahn to
operate its mini-storage facilities. The management agreement provides
for a management fee equal to 5% of gross revenue from operations, which
is defined as the entire amount of all receipts from the renting or
leasing of storage compartments and sale of locks. The management
agreement is renewable annually. Dahn earned management fees equal to
$26,242 and $26,991, for the three month periods ended March 31, 2007
and 2006, respectively. Amounts payable to Dahn at March 31, 2007 and
December 31, 2006, were $ -0- and $ -0-, respectively.
In 2004, the Partnership entered into truck lease agreements with KMD
Trucks, LLC ("KMD"). The president of Dahn, Brian Dahn, is also a
member of KMD. Trucks are leased under 48-month leases with total
monthly payments in the amount of $1,500.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
We are pleased to enclose the Partnership's unaudited financial
statements for the period ended March 31, 2007. 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 March 31, 2007 and 2006, total revenues
from continuing operations decreased 2.9% from $539,816 to $524,646, total
expenses decreased 2.9% from $271,606 to $263,838, other income increased
from $186 to $187 due to the absence of income from discontinued operations
of the Pittsburg property, and equity in income of the real estate joint
venture increased 4.9% from $30,602 to $32,113. Income from discontinued
operations for the three months ended March 31, 2006 was $43,382 due to
the sale of Pittsburg property in fiscal year 2006. As a result net income
decreased 14.4% from $342,380 to $293,108 for the three-month period ended
March 31, 2006, as compared to the same period in 2007. Rental revenue
decreased as a result of lower occupancy rates. Occupancy levels for the
Partnership's four mini-storage facilities averaged 79.8% for the three month
period ended March 31, 2007, and 81.5% for the same period in 2006. The
Partnership is continuing its marketing efforts to attract and keep new
tenants in its various mini-storage facilities. Operating expenses decreased
approximately $10,700 (5.7%) primarily as a result of decreases in advertising,
repairs and maintenance and salaries and wages expenses, partially of set by
an increase in legal expense. General and administrative expenses increased
approximately $2,900 (3.4%) as a result of higher administrative fee and legal
and professional expenses, partially offset by a decrease in incentive manage-
ment fee expense. Equity in income of real estate joint venture increased as
a result of the higher net income at that facility.
The General Partners will continue their policy of funding continuing
improvement and maintenance of Partnership properties with cash generated
from operations. The Partnership's 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. Quantitative and Qualitative Disclosures About Market Risk
NONE
Item 4. CONTROLS AND PROCEDURES
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 Partnership's President and the Chief Executive
Officer. These disclosure controls and procedures are designed to ensure
that the information required to be disclosed by the Partnership in its
periodic reports filed with the Securities and Exchange Commission (the
Commission) is recorded, processed, summarized and reported, within the time
periods specified by the Commission's rules and forms, and that the inform-
ation 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 significantly
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 30,
2007. 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 March 31, 2007.
(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: May 15, 2007 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: May 15, 2007 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 report on Form 10-Q for the quarter ended
March 31, 2007 of DSI Realty Income Fund VIII;
2. Based on my knowledge, this 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 report.
3. Based on my knowledge, the financial statements and other financial
information included in this 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 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: May 15, 2007
Robert J. Conway
Chief Executive Officer
CERTIFICATIONS
I, Richard P. Conway, certify that:
1. I have reviewed this report on Form 10-Q for the quarter ended
March 31, 2007 of DSI Realty Income Fund VIII;
2. Based on my knowledge, this 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 report.
3. Based on my knowledge, the financial statements and other financial
information included in this 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 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: May 15, 2007
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 March 31, 2007 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
May 15, 2007
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 March 31, 2007 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
May 15, 2007