[LETTERHEAD OF DSI PROPERTIES, INC.]
Via Edgar
January 25, 2008
Securities and Exchange Commission
Division of Corporation Finance
100 F. Street, N.E.
Washington DC, 20549
ATTN: Kevin Woody, Branch Chief
Jennifer Monick, Staff Accountant
Re: DSI Realty Income Fund VIII
Form 10-K for Fiscal Year Ended December 31, 2006
Form 10-Q for Quarterly Period Ended September 30, 2007
File No. 002-90168
Ladies and Gentlemen:
I am writing on behalf of DSI Realty Income Fund VIII, a California
Limited Partnership, in response to a letter of comment from the staff of the
Securities and Exchange Commission (the "Staff") which was dated December 12,
2007 (the "Staff Letter").
The paragraphs below numbered 1 to 10 restate the numbered paragraphs
in the Staff Letter and the discussions set below these paragraphs represent
our responses to each of them. In addition, we have included full versions
(Exhibit A) of our proposed amended 10-Ks to which these responses refer.
I. Form 10-K for Fiscal Year Ended December 31, 2006
General
1. Please update the Form 10-K cover page and include the appropriate inform-
ation.
In response to the Staff, we have updated our cover page to reflect the latest
required information.
2. Please provide the required signatures on your certifications and on the
form 10-K itself.
In response to the Staff, the requested changes have been made to our filings.
In future filings the Company will ensure that the typed signatures will be
provided as applicable.
Item 2. Properties
3. Please include 2006 and 2005 disclosure regarding average rent per square
foot.
We have revised our Form 10-K to include these figures in the table under Item
2. In future filings the Company will ensure that this information will be
provided.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
4. We note you have omitted the contractual obligations table. Please tell us
how you have complied with Item 303(A)(5) of Regulation S-K, or tell us why you
believe it was not necessary to include this table.
We have revised our Form 10-K to include the Contractual Obligations Table under
Item 7.
Item 11. Executive Compensation (Management Remuneration and Transactions)
5. Please revise to include the disclosure required by Item 402(c) of Regulation
S-K, using the tabular presentation prescribed by the rule. Alternatively,
please advise us as to why you do not believe it is appropriate to include this
information.
We believe a tabular presentation is unnecessary since the Registrant is a
limited partnership and has no executive officers. The General Partners are
DSI Properties, Inc., a California corporation, and Diversified Investors
Agency, a partnership. The General Partnership entities received incentive
management fees totaling $178,902 for the year ended December 31, 2006. Each
of these entities also had revenues from other sources. Robert J. Conway and
Joseph W. Conway, (the sole partners of Diversified Investors Agency and collec-
tively the owners of 96.8% of the outstanding common stock of DSI Financial,
Inc. which is the parent of DSI Properties, Inc.) receive compensation from
those entities in amounts that do not bear a direct relationship to the amount
of incentive management fees paid to those entities by the Fund. It is imposs-
ible to determine the exact amount paid to Robert J. Conway and Joseph W. Conway
since no monies were paid directly to them from the Funds. Please see the foot-
note to item 11.
Item 12. Security Ownership of Certain Beneficial Owners and Management
6. Please revise to include the updated disclosure required by Item 403(b) of
Regulation S-K, using the tabular presentation prescribed by the rule.
In response to the Staff, the requested changes have been made to our filings
under Item 12.
Financial Statements
Report of Independent Registered Public Accounting Firm
7. We note you include an opinion from your external auditor, which does not
appear to be signed by your external auditor. Please amend your filing to in-
clude evidence that their opinion is signed.
Prior to the Form Filing, the Company obtained manually signed copies of the
reports of its independent registered public accounting firm. The Company will
retain these signed copies for at least five years. In response to the Staff,
in future filings the Company will ensure that the typed signatures will be
provided on all applicable reports and consents.
Statements of Cash Flows
8. We note you include distributions from real estate joint ventures with your
financing activities. Please tell us how you have complied with SFAS 95, or
tell us why you believe it was not necessary to include these distributions
with your investing activities.
Distributions from real estate joint venture for the years ended December 31,
2006, 2005, and 2004 of $111,300, $105,900, and $117,000, respectively, were
incorrectly included as financing activities. This cash inflow was not con-
sidered a return of capital which would have been an investing activity, in-
stead should have been recorded as a return on investment and therefore reported
as an operating activity transaction for financial statement presentation
purposes.
STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31,
2006 2005 2004
As previously reported
Cash flows provided by
operating activities: 1,216,024 1,124,587 1,276,067
Cash flows used in
financing activities: (3,923,613) (1,132,043) (1,349,315)
Distributions from real
estate joint venture 111,300 105,900 117,000
% of financing activities 3% 9% 9%
As revised
Cash flows provided by
operating activities: 1,327,324 1,230,487 1,393,067
Cash flows used in
financing activities: (4,034,913) (1,237,943) (1,466,315)
% change in operating activities 9% 9% 9%
Per SFAS 154, Accounting Changes and Error Corrections, paragraph 2 an error in
previously issued financial statements is defined as an error in recognition,
measurement, presentation, or disclosure in financial statements resulting from
mathematical mistakes, mistakes in the application of GAAP, or oversight or
misuse of facts that existed at the time the financial statements were prepared.
In our evaluation of the error, we considered both the quantitative and qualita-
tive factors of the item.
Quantitative Considerations: Distributions from a real estate joint venture was
approximately 3%, 9%, and 9% of cash flows used in financing activities, for the
fiscal years ended December 31, 2006, 2005, and 2004, respectively. If the
amount had been properly classified the percent increase in operating activities
would have been 9% higher for all three years. Therefore, the statement of cash
flows misclassification does not materially affect the overall presentation of
the cash flows from a quantitative analysis.
Qualitative Analysis: The misstatement was not intentional and does not appear
to relate to fraud or an illegal act. In addition the misclassification does
not have an affect on income, does not affect management compensation, and has
no affects on the registrant's compliance with loan covenants or other contrac-
tual requirements. We do not believe that the judgment of a reasonable person
relying on the financial statements would have changed if the amount had been
properly recorded in the 2006, 2005, and 2004 financial statements.
Based upon the above, misclassification of the 2006, 2005, and 2004 distribu-
tions from real estate joint venture does not have a material affect on the
financial statement and therefore the users of the financial statements. There-
fore, we determined that it is not necessary to restate the statement of cash
flows as filed in the 2006 Form 10-K. We intend to correct the misclassifica-
tion in the statement of cash flows in the Form 10-K filing for the year ended
December 31, 2007 including appropriate disclosures of the change.
Certifications
9. We note your certifications do not comply with the content of the certifi-
cations required under Exchange Act Rules 13a-14(a) and 15d-14(a). Specifically,
we note you have replaced the word "report" with "annual report" in paragraphs
2, 3 and 4; you have replaced the word "an" with "our" in paragraph 4c; you have
replaced the phrase "the audit committee of the registrant's board of directors"
with "general partners" in paragraph 5; you have changed the term "control" to
"controls" in paragraph 5b; and you have included the certifications at the
end of the Form 10-K, instead of as exhibits. Please amend your filing to in-
clude certifications that comply with the Exchange Act Rules.
In response to the Staff, the requested changes have been made to our Certifi-
cations to comply with Exchange Act Rules. Furthermore, they will be included
as exhibits to our Form 10-K.
Form 10-Q for Quarterly Period Ended September 30, 2007
Certifications
10. We note your certifications do not comply with the content of the certifi-
cations required under Exchange Act Rules 13a-14(a) and 15d-14(a). Specifically,
we note you have removed the word "adversely" from paragraph 5a. Please revise
your certifications in future filings to comply with the Exchange Act Rules.
In response to the Staff, the requested changes have been made.
******
We appreciate the Staff's guidance and await final comments before filing our
10-K/As. Please direct these comments and/or any questions you may have to me
or Richard P. Conway, SVP at (562) 493-3022.
Sincerely,
/s/ ROBERT J. CONWAY
__________________________________
Robert J. Conway
Chief Executive Officer
January 25, 2008