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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 2O549
FORM 1O-K/A
(Mark One)
/ x /Annual Report Pursuant to Section 13 or 15 (d) of the Securities and
Exchange Act of 1934 [Fee Required] for the fiscal year ended December 31, 2000.
or / /Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 [No fee required] for the transition period from
____________ to ______________.
Commission File No. 2-90168.
DSI REALTY INCOME FUND VIII, a California Limited Partnership
(Exact name of registrant as specified in governing instruments)
_________California___________________________33-0050204_____
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization identification
number
6700 E. Pacific Coast Hwy., Long Beach, California 9O8O3
(Address of principal executive offices) (Zip Code)
Registrants telephone number, including area code-(562)493-8881
Securities registered pursuant to Section 12(b) of the Act: none.
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interests
(Class of Securities Registered)
Indicate by check mark, whether the registrant (l) 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 9O days. Yes_X____. No______.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. /x/
The Registrant is a limited partnership and there is no voting stock. All units
of limited partnership sold to date are owned by non-affiliates of the
registrant. All such units were sold at $5OO.OO per unit.
DOCUMENTS INCORPORATED BY REFERENCE
Item 8. Registrant's Financial Statements for its fiscal year ended December 31,
2000, incorporated by reference to Form 10-K, Part II.
Item 11. Registrant's Financial Statements for its fiscal year ended December
31, 2000, incorporated by reference to Form 10-K, Part III.
Item 12. Registration Statement on Form S-11, previously filed with the
Securities and Exchange Commission pursuant to Securities Act of 1933, as
amended, incorporated by reference to Form 10-K Part III.
Item 13. Registrant's Financial Statements for its fiscal year ended December
31, 2000, incorporated by reference to Form 10-K, Part III.
PART I
Item l. BUSINESS
Registrant, DSI Realty Income Fund VIII (the "Partnership") is a
publicly-held limited partnership organized under the California Uniform Limited
Partnership Act pursuant to a Certificate and Agreement of Limited Partnership
(hereinafter referred to as "Agreement") dated November 28, 1983, as amended and
restated to November 1, 1985. The General Partners are DSI Properties, Inc., a
California corporation, Diversified Investors Agency, a general partnership,
whose current partners are Robert J. Conway and Joseph W. Conway, brothers. The
General Partners are affiliates of Diversified Securities, Inc., a wholly-owned
subsidiary of DSI Financial, Inc. The General Partners provide similar services
to other partnerships. Through its public offering of Limited Partnership Units,
Registrant sold twenty-four thousand (24,000) units of limited partnership
interests aggregating Twelve Million Dollars ($12,000,000). The General Partners
have retained a one percent (l%) interest in all profits, losses and
distributions (subject to certain conditions) without making any capital
contribution to the Partnership. The General Partners are not required to make
any capital contributions to the Partnership in the future. Registrant is
engaged in the business of investing in and operating mini-storage facilities
with the primary objectives of generating, for its partners, cash flow, capital
appreciation of its properties, and obtaining federal income tax deductions so
that during the early years of operations, all or a portion of such
distributable cash may not represent taxable income to its partners. Funds
obtained by Registrant during the public offering period of its units were used
to acquire five mini-storage facilities and a thirty percent (30%) interest in a
joint venture with DSI Realty Income Fund IX, an affiliated California limited
partnership, owning a sixth mini-storage facility. Registrant does not intend to
sell additional limited partnership units. The term of the Partnership is fifty
years but it is anticipated that Registrant will sell and/or refinance its
properties prior to the termination of the Partnership. The Partnership is
intended to be self-liquidating and it is not intended that proceeds from the
sale or refinancing of its operating properties will be reinvested. Registrant
has no full time employees but shares one or more employees with other
publicly-held limited partnerships sponsored by the General Partners. The
General Partners are vested with authority as to the general management and
supervision of the business and affairs of Registrant. Limited Partners have no
right to participate in the management or conduct of such business and affairs.
An independent management company has been retained to provide day-to-day
management services with respect to all of the Partnership's investment
properties.
Average occupancy levels for each of the Partnership's six properties for
the years ended December 31, 2000 and December 31, 1999 were as follows:
Location of Property Average Occupancy Average Occupancy
Level for the Level for the
Year Ended Year Ended
Dec. 31, 2000 Dec. 31, 1999
El Centro, CA 82% 76%
Lompoc, CA 91% 84%
Pittsburg, CA 89% 80%
Stockton, CA 91% 84%
Huntington Beach, CA 90% 90%
Aurora, CO* 86% 88%
- ----------
*The Partnership owns a 30% fee interest in this facility.
The business in which the Partnership is engaged is highly competitive.
Each of its mini-storage facilities is located in or near a major urban area,
and accordingly, competes with a significant number of individuals and
organizations with respect to both the purchase and sale of its properties and
rental of units. Generally, Registrant's business is not affected by the change
in seasons.
Item 2. PROPERTIES
Registrant owns a fee interest in five mini-storage facilities and a thirty
percent (30%) interest in a joint venture with DSI Realty Income Fund IX, an
affiliated California limited partnership, owning a sixth mini-storage facility,
none of which are subject to long-term indebtedness. Additional information is
set forth in Registrant's letter to its Limited Partners regarding the Annual
Report, attached hereto as Exhibit 2, and incorporated by this reference. The
following table sets forth information as of December 31, 2000 regarding
properties owned by the Partnership.
Location Size of Net Rentable No. of Completion
Parcel Area Rental Units Date
Stockton, CA 2.88 acres 48,017 560 2/11/85
Pittsburg, CA 1.91 acres 30,483 383 6/01/85
El Centro, CA 1.42 acres 24,818 276 4/01/85
Huntington
Beach, CA 3.28 acres 62,192 601 6/14/85
Lompoc, CA 2.24 acres 47,472 438 2/28/85
Aurora, CO* 4.6 acres 86,676 887 9/05/85
- ----------
*The Partnership has a 30% fee interest in this facility. DSI Realty Income Fund
IX, a California Limited Partnership, (an affiliated partnership) owns a 70% fee
interest in this facility.
Item 3. LEGAL PROCEEDINGS
Registrant is not a party to any material pending legal proceedings.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
Registrant, a publicly-held limited partnership, sold 24,000 limited
partnership units during its offering and currently has 872 limited partners of
record. There is no intention to sell additional limited partnership units nor
is there a market for these units.
Average cash distributions of $14.44 per Limited Partnership Unit were
declared and paid each quarter for the year ended December 31, 2000 and $12.56
per Limited Partnership Unit were declared and paid each quarter for the year
ended December 31, 1999 and $12.50 per Unit were declared and paid for the
year ended December 31, 1998. It is Registrant's expectations that
distributions will continue to be paid in the future.
Item 6. SELECTED FINANCIAL DATA
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, 1998, 1997, and 1996
--------------------------------------------------------------------
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
TOTAL REVENUES
AND OTHER
INCOME $2,191,329 $1,964,314 $1,899,608 $1,712,288 $1,624,001
TOTAL
EXPENSES 1,124,448 1,325,636 1,253,740 1,217,044 1,229,425
EQUITY IN
INCOME OF
REAL ESTATE
JOINT
VENTURE 121,220 122,453 109,741 93,305 82,729
---------- ---------- ---------- ---------- ----------
NET
INCOME $1,188,101 $ 761,131 $ 755,609 $ 588,549 $ 477,305
========== ========== ========== ========== ==========
TOTAL
ASSETS $3,039,636 $3,209,853 $3,668,506 $4,132,136 $4,632,052
========== ========== ========== ========== ==========
CASH FLOW FROM:
OPERATING $1,291,175 $1,095,614 $1,058,931 $ 956,900 $ 918,712
INVESTING (26,440) (14,773) 50,712 - (19,797)
(1,233,546) (1,055,558) (1,051,322) (946,609) (955,159)
NET INCOME
PER LIMITED
PARTNERSHIP
UNIT $ 49.01 $ 31.40 $ 31.17 $ 24.28 $ 19.69
========== ========== ========== ========== ==========
CASH
DISTRIBUTIONS
PER LIMITED
PARTNERSHIP
UNIT $ 57.77 $ 50.25 $ 50.00 $ 45.00 $ 45.00
========== ========== ========== ========== ==========
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
2000 COMPARED TO 2001
Total revenues increased from $1,958,184 in 1999 to $2,183,874 in 2000, total
expenses decreased from $1,325,636 to $1,124,448, other income increased from
$6,130 to $7,455 and income from the real estate joint venture decreased from
$122,453 to $121,220. As a result, net income increased from $761,131 in
1999 to $1,188,101 in 2000. The approximate $225,700 (11.5%) increase in
rental revenues can be attributed to higher occupancy and unit rental rates.
Occupancy levels for the Partnership's six mini-storage facilities averaged
89.0% for the ended December 31, 2000 and 82.9% for the year ended December 31,
1999. The Partnership is continuing its advertising campaign to attract and
keep new tenants in its various mini-storage facilities. The approximate
$37,800 (7.3%) increase in operating expneses was due primarily to an increase
in yellow pages and other advertising costs, salaries and wages and workers
compensation insurance expenses, partially offset by a decrease in repair and
maintenance expense. General and administrative expenses increased as a
result of higher legal and professional expenses. General Partners' incentive
management fees increased as a result of the increase in net income. Property
management fees, wich are based on revenue, increased as a result of the in-
crease in rental revenue. Income from real estate joint venture remained
relatively constant. Average occupancy of the joint venture facility was
86.2% in 2000 and 88.0% in 1999.
1999 COMPARED TO 1998
Total revenues increased from $1,841,672 in 1998 to $1,958,184 in 1999, total
expenses increased from $1,253,740 to $1,325,636, other income decreased from
$57,936 to $6,310 and income from the real estate joint venture increased from
$109,741 to $122,453. As a result, net income increased from $755,609 in 1998
to $761,131 in 1999. The approximate $116,500 (6.3%) increase in rental
revenues can be attributed to higher unit rental rates. Occupancy levels for
the Partnership's six mini-storage facilities averaged 82.9% for the year
ended December 31, 1999 and 84.0% for the year ended December 31, 1998. The
Partnership is continuing its advertising campaign to attract and keep new
tenants in its various mini-storage facilities. The approximate $72,900
(16.3%) increase in operating expenses was due primarily to an increase in
yellow pages and other advertising costs, maintenance and repair, workers
compensation and security and alarm services expenses. General and admini-
strative expenses and General Partners' incentive management fees remained
relatively constant. Property management fees, which are based on revenue,
increased as a result of the increase in rental revenue. The increase in
income from real estate joint venture was the result of higher unit rental
rates, partially offset by increases in operating expenses. Average occupancy
of the joint venture was 88.0% in 1999 and 87.6% in 1998.
Operating expenses consits mainly of expenses such as yellow pages and other
advertising, utilities, repairs and maintenance, real estate taxes, salaries
and wages and their related expenses. General and administrative expenses
consist mainly of expenses such as legal and professional, office supplies,
postage, accounting services and computer expenses.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities increased approximately $195,600
(17.9%) in 2000 compared to 1999, primarily due to increase in net income and
other liabilities. Net cash provided by operating activities increased approx-
imately $36,700 (3.5%) in 1999 compared to 1998, primarily due to the absence
of a gain from involuntary conversion of land (see Note 7 to the Financial
Statements).
Cash used in financing activities, as set forth in the statements of cash
flows, has been limited to distributions paid to the partners. A special
distribution of 2.5%, 1% and 1% was declared and paid on December 15, 2000,
1999 and 1998 respectively.
Cash used in investing activities, as set forth in the statements of cash
flows, consisted of acquisitions of equipment for the Partnership's mini-
storage properties. The Partnership has no material commitments for capital
expenditures.
The General Partners plan to continue their policy of funding the
continuing improvement and maintenance of Partnership properties with cash
generated from operations. The Partnership anticipates that cash flows
generated from operations of the Partnership's real estate operations will be
sufficient to cover operating expenses and distributions for the next twelve
months.
The General Partners are not aware of any environmental problems which
could have a material adverse effect upon the financial position of the
Partnership.
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Summarized quarterly financial data for the years ended December 31, 2000 and
1999 was as follows:
2000 Quarter Ended
------------------
March 31, June 30, September 30, December 31,
Total revenues $511,891 $529,876 $565,527 $576,580
Income before interest
in joint venture 165,733 182,641 192,458 526,049
Net income 197,922 208,830 221,945 559,404
Net income per limited $ 8.16 $ 8.61 $ 9.16 $ 23.08
partnership unit
Weighted average limited
partnership units 24,000 24,000 24,000 24,000
1999 Quarter Ended
------------------
March 31, June 30, September 30, December 31,
Total revenues $487,135 $479,153 $503,289 $488,607
Income before interest
in joint venture 137,490 154,130 182,699 164,359
Net income 163,139 183,706 215,076 199,210
Net income per limited
partnership unit $ 6.73 $ 7.58 $ 8.87 $ 8.22
Weighted average limited
partnership units 24,000 24,000 24,000 24,000
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Attached hereto as Exhibit l is the information required to be set forth as
Item 8, Part II hereof.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT'S
GENERAL PARTNER
The General Partners of Registrant are the same as when the Partnership was
formed, i.e., DSI Properties, Inc., a California corporation, and Diversified
Investors Agency. As of December 31, 2000, Messrs. Robert J. Conway and Joseph
W. Conway, each of whom own approximately 48.4% of the issued and outstanding
capital stock of DSI Financial, Inc., a California corporation, together with
Mr. Joseph W. Stok, currently comprise the entire Board of Directors of DSI
Properties, Inc.
Mr. Robert J. Conway is 67 years of age and is a licensed California real
estate broker, and since 1965 has been President and a member of the Board of
Directors of Diversified Securities, Inc., and since 1973 President, Chief
Financial Officer and a member of the Board of Directors of DSI Properties, Inc.
Mr. Conway received a Bachelor of Science Degree from Marquette University with
majors in Corporate Finance and Real Estate.
Mr. Joseph W. Conway is age 71 and has been Executive Vice President,
Treasurer and a member of the Board of Directors of Diversified Securities, Inc.
since 1965 and since 1973 the Vice President, Treasurer and member of the Board
of Directors of DSI Properties, Inc. Mr. Conway received a Bachelor of Arts
Degree from Loras College with a major in Accounting.
Mr. Joseph W. Stok is age 77 and has been a member of the Board of
Directors of DSI Properties, Inc. since 1994, a Vice President of Diversified
Securities, Inc. since 1973, and an Account Executive with Diversified
Securities, Inc. since 1967.
Item 11. EXECUTIVE COMPENSATION (MANAGEMENT REMUNERATION AND
TRANSACTIONS)
The information required to be furnished in Item 11 of Part III is
contained in Registrant's Financial Statements for its fiscal year ended
December 31, 2000, which together with the report of its independent auditors,
Deloitte & Touche LLP, is attached hereto as Exhibit 1 and incorporated herein
by this reference. In addition to such information:
(a) No annuity, pension or retirement benefits are proposed to be paid by
Registrant to any of the General Partners or to any officer or
director of the corporate General Partner;
(b) No standard or other arrangement exists by which directors of the
Registrant are compensated;
(c) The Registrant has not granted any option to purchase any of its
securities; and
(d) The Registrant has no plan, nor does the Registrant presently propose
a plan, which will result in any renumeration being paid to any
officer or director upon termination of employment.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
As of December 31, 2000, no person of record owned more than 5% of the
limited partnership units of Registrant, nor was any person known by Registrant
to own of record and beneficially, or beneficially only, more than 5% thereof.
The balance of the information required to be furnished in Item 12 of Part III
is contained in Registrant's Registration Statement on Form S-11, previously
filed pursuant to the Securities Act of 1933, as amended, and which is
incorporated herein by this reference. The only change to the information
contained in said Registration Statement on Form S-11 is the fact that Messrs.
Benes and Blakley have retired and Messrs. Robert J. Conway and Joseph W. Conway
equity interest in DSI Financial, Inc., parent of DSI Properties, Inc., has
increased. Please see information contained in Item 10 hereinabove.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required to be furnished in Item 13 of Part III is
contained in Registrant's Financial Statements for its fiscal year ended
December 31, 2000, attached hereto as Exhibit l and incorporated herein by this
reference.
PART IV
Item 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a)(l) Attached hereto and incorporated herein by this reference as Exhibit
l are Registrant's Financial Statements and Supplemental Schedule for
its fiscal year ended December 31, 2000, together with the reports of
its independent auditors, Deloitte & Touche LLP. See Index to
Financial Statements and Supplemental Schedule.
(a)(2) Attached hereto and incorporated herein by this reference as Exhibit
2 is Registrant's letter to its Limited Partners regarding its Annual
Report for its fiscal year ended December 31, 2000.
(b) No reports on Form 8K were filed during the fiscal year ended December
31, 2000.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
DSI REALTY INCOME FUND VIII
by: DSI Properties, Inc., a
California corporation, as
General Partner
By_____________________________ Dated: March 30, 2001
ROBERT J. CONWAY, President
(Chief Executive Officer, Chief
Financial Officer, and Director)
By____________________________ Dated: March 30, 2001
JOSEPH W. CONWAY (Executive
Vice President and Director)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant and
in the capacities and on the date indicated.
DSI REALTY INCOME FUND VIII
by: DSI Properties, Inc., a
California corporation, as
General Partner
By:__________________________ Dated: March 30, 2001
ROBERT J. CONWAY, President,
Chief Executive Officer, Chief
Financial Officer, and Director
By___________________________ Dated: March 30, 2001
JOSEPH W. CONWAY
(Executive Vice President
and Director)
DSI REALTY INCOME FUND VIII
CROSS REFERENCE SHEET
FORM 1O-K ITEMS TO ANNUAL REPORT
PART I, Item 3. There are no legal proceedings pending or threatened.
PART I, Item 4. Not applicable.
PART II, Item 5. Not applicable.
PART II, Item 6. The information required is contained in Registrant's Financial
Statements for its fiscal year ended December 31, 2000, attached as Exhibit l to
Form 10-K.
PART II, Item 8. See Exhibit l to Form 10-K filed herewith.
PART II, Item 9. Not applicable.
EXHIBIT l
DSI REALTY INCOME FUND VIII
(A California Real Estate Limited Partnership)
SELECTED FINANCIAL DATA
FIVE YEARS ENDED DECEMBER 31, 2000
- --------------------------------------------------------------------------------
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
TOTAL REVENUES
AND OTHER
INCOME $2,191,329 $1,964,314 $1,899,608 $1,712,288 $1,624,001
TOTAL
EXPENSES 1,124,448 1,325,636 1,253,740 1,217,044 1,229,425
EQUITY IN
INCOME OF
REAL ESTATE
JOINT
VENTURE 121,220 122,453 109,741 93,305 82,729
---------- ---------- ---------- ---------- ----------
NET
INCOME $1,188,101 $ 761,131 $ 755,609 $ 588,549 $ 477,305
========== ========== ========== ========== ==========
TOTAL
ASSETS $3,039,636 $3,209,853 $3,668,506 $4,132,136 $4,632,052
========== ========== ========== ========== ==========
CASH FLOW FROM:
OPERATING $1,291,175 $1,095,614 $1,058,931 $ 956,900 $ 918,712
INVESTING (26,440) (14,773) 50,712 - (19,797)
(1,233,546) (1,055,558) (1,051,322) (946,609) (955,159)
NET INCOME
PER LIMITED
PARTNERSHIP
UNIT $ 49.01 $ 31.40 $ 31.17 $ 24.28 $ 19.69
========== ========== ========== ========== ==========
CASH
DISTRIBUTIONS
PER LIMITED
PARTNERSHIP
UNIT $ 57.77 $ 50.25 $ 50.00 $ 45.00 $ 45.00
========== ========== ========== ========== ==========
The following are reconciliations between the net income and partners' equity
for the financial statements and the Partnership's income tax return for the
year ended December 31, 2000.
Net Partners'
Income Equity
Per financial statements $ 1,188,101 $ 2,393,811
Excess financial statement depreciation (134,736) 1,337,741
Excess tax return income
from real estate joint venture 9,609 215,370
Accrued incentive management fees 266,768
Capitalization of property acquisition costs 80,713
Fixed asset adjustments 2,083
Recognition of deferred rental revenues 41,918
Accrued distributions to partners 272,728
State taxes (6,497)
----------- -----------
Per Partnership income tax return $ 1,056,477 $ 4,611,132
=========== ===========
Net taxable income per limited
partnership unit $ 43.58
===========
DSI REALTY INCOME FUND VIII
(A California Real Estate Limited Partnership)
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
Page
FINANCIAL STATEMENTS:
Independent Auditors' Report F-1
Balance Sheets at December 31, 2000 and 1999 F-2
Statements of Income for the Three
Years Ended December 31, 2000 F-3
Statements of Changes in Partners' Equity for
the Three Years Ended December 31, 2000 F-4
Statements of Cash Flows for the Three Years
Ended December 31, 2000 F-5
Notes to Financial Statements F-6
SUPPLEMENTAL SCHEDULE:
Independent Auditors' Report F-9
Schedule XI - Real Estate and Accumulated Depreciation F-10
SCHEDULES OMITTED:
Financial statements and schedules not listed above are omitted because of the
absence of conditions under which they are required or because the
information is included in the financial statements named above, or in the
notes thereto.
INDEPENDENT AUDITORS' REPORT
To the Partners of
DSI Realty Income Fund VIII:
We have audited the accompanying balance sheets of DSI Realty Income Fund VIII,
a California Real Estate Limited Partnership (the "Partnership") as of
December 31, 2000 and 1999, and the related statements of income, changes in
partners' equity (deficit), and cash flows for each of the three years in the
period ended December 31, 2000. Our audits also included the financial
statement schedule listed in the Index at Item 14. These financial statements
are the responsibility of the Partnership's management. Our responsibility is
to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of DSI Realty Income Fund VIII at December
31, 2000 and 1999 and the results of its operations and its cash flows for
each of the three years in the period ended December 31, 2000 in conformity
with accounting principles generally accepted in the United States of America.
Also in our opinion, such financial statement schedule, when conidered in
relation to the basic financial statements taken as a whole, presents fairly,
in all material respects, the information set forth therein.
February 2, 2001
DELOITTE & TOUCHE
LONG BEACH, CALIFORNIA
DSI REALTY INCOME FUND VIII
(A California Real Estate Limited Partnership)
BALANCE SHEETS
DECEMBER 31, 2000 AND 1999
- --------------------------------------------------------------------------------
ASSETS 2000 1999
CASH AND CASH EQUIVALENTS $ 514,497 $ 483,308
PROPERTY, net (Notes 3 and 7) 2,287,427 2,460,088
INVESTMENT IN REAL ESTATE
JOINT VENTURE
(Notes 2 and 6) 176,774 222,444
OTHER ASSETS 60,938 44,013
----------- -----------
TOTAL $ 3,039,636 $ 3,209,853
=========== ===========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
LIABILITIES:
Distribution due to partners (Note 4) $ 272,727 $ 272,727
Incentive management fee payable to
general partners (Note 4) 274,669 271,016
Property management fees payable 9,916 8,046
Customer deposits and other liabilities 88,513 51,918
----------- -----------
Total liabilities 645,825 603,707
----------- -----------
PARTNERS' EQUITY (DEFICIT) (Notes 4):
General partners (83,844) (81,721)
Limited partners (24,000 limited
partnership units outstanding
at December 31, 2000 and 1999) 2,477,655 2,687,867
------------ -----------
Total partners' equity 2,393,811 2,606,146
------------ -----------
TOTAL $ 3,039,636 $ 3,209,853
============ ===========
See accompanying notes to financial statements.
DSI REALTY INCOME FUND VIII
(A California Real Estate Limited Partnership)
STATEMENTS OF INCOME
THREE YEARS ENDED DECEMBER 31, 2000
- --------------------------------------------------------------------------------
2000 1999 1998
REVENUES:
Rental $2,183,874 $1,958,184 $1,841,672
---------- ---------- ----------
EXPENSES:
Depreciation 199,101 469,134 469,134
Operating 559,057 521,278 448,424
General and administrative 131,867 122,785 126,231
General partners' incentive
management fee (Note 4) 124,878 114,530 117,867
Property management fee 109,545 97,909 92,084
---------- ---------- ----------
Total expenses 1,124,448 1,325,636 1,253,740
---------- ---------- ----------
OPERATING INCOME 1,059,426 632,548 587,932
OTHER INCOME:
Gain from involuntary conversion
(Note 7) 47,117
Interest income 7,455 6,130 10,819
--------- ---------- ----------
INCOME BEFORE EQUITY IN
INCOME OF REAL ESTATE
JOINT VENTURE 1,066,881 638,678 645,868
EQUITY IN INCOME OF
REAL ESTATE JOINT
VENTURE (Notes 2 and 6) 121,220 122,453 109,741
__________ __________ _________
NET INCOME $1,188,101 $ 761,131 $ 755,609
========== ========== ==========
AGGREGATE NET INCOME ALLOCATED
TO (Note 4):
Limited partners $1,176,220 $ 753,520 $ 748,053
General partners 11,881 7,611 7,556
---------- ---------- ----------
TOTAL $1,188,101 $ 761,131 $ 755,609
========== ========== ==========
NET INCOME PER LIMITED PARTNERSHIP
UNIT (Notes 2 and 4) $ 49.01 $ 31.40 $ 31.17
========== ========== ==========
See accompanying notes to financial statements.
DSI REALTY INCOME FUND VIII
(A California Real Estate Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' EQUITY
THREE YEARS ENDED DECEMBER 31, 2000
- --------------------------------------------------------------------------------
General Limited
Partners Partners Total
BALANCE, JANUARY 1, 1998 $(72,584) $3,592,270 $3,519,686
Net income 7,556 748,053 755,609
Distributions (12,122) (1,200,000) (1,212,122)
-------- ----------- ----------
BALANCE, DECEMBER 31, 1998 $(77,150) $3,140,323 $3,063,173
Net income 7,611 753,520 761,131
Distributions (12,182) (1,205,976) (1,218,158)
-------- ----------- -----------
BALANCE, DECEMBER 31, 1999 $(81,721) $2,687,867 $2,606,146
Net income 11,881 1,176,220 1,188,101
Distributions (14,004) (1,386,432) (1,400,436)
-------- ----------- -----------
BALANCE, DECEMBER 31, 2000 $(83,844) $2,477,655 $2,393,811
======== =========== ===========
See accompanying notes to financial statements.
DSI REALTY INCOME FUND VIII
(A California Real Estate Limited Partnership)
STATEMENTS OF CASH FLOWS
THREE YEARS ENDED DECEMBER 31, 2000
- --------------------------------------------------------------------------------
2000 1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,188,101 $ 761,131 $ 755,609
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 199,101 469,134 469,134
Equity in earnings of
real estate joint venture (121,220) (122,453) (109,741)
Gain from involuntary conversion (47,117)
Changes in assets and liabilities:
Receivable from general partners
Other assets (16,925) (10,572) (1,837)
Incentive management fee
payable to general partners 3,653 (2,127) (7,572)
Property management fees payable 1,870 501 455
Customer deposits and
other liabilities 36,595
----------- ----------- -----------
Net cash provided by operating
activities 1,291,175 1,095,614 1,058,931
CASH FLOWS FROM INVESTING ACTIVITIES -
Additions of property (26,440) (14,773) (14,288)
Proceeds from involuntary conversion 65,000
----------- ----------- ------------
Net cash (used in) provided by
investing activities (26,440) (14,773) 50,712
----------- ----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES -
Distributions to partners (1,400,436) (1,218,158) (1,212,122)
Distributions from real
estate joint venture 166,890 162,600 160,800
----------- ----------- ------------
Net cash used in
financing activities (1,233,546) (1,055,558) (1,051,322)
NET INCREASE IN CASH AND
CASH EQUIVALENTS 31,189 25,283 58,321
CASH AND CASH EQUIVALENTS,
AT BEGINNING OF YEAR 483,308 458,025 399,704
----------- ----------- ------------
CASH AND CASH EQUIVALENTS,
AT END OF YEAR $ 514,497 $ 483,308 $ 458,025
=========== =========== ============
See accompanying notes to financial statements.
DSI REALTY INCOME FUND VIII
(A California Real Estate Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
THREE YEARS ENDED DECEMBER 31, 2000
1. GENERAL
DSI Realty Income Fund VIII, a California Real Estate Limited Partnership
(the "Partnership"), has two general partners (DSI Properties, Inc. and
Diversified Investors Agency) and limited partners owning 24,000 limited
partnership units, which were purchased for $500 a unit. The general
partners have made no capital contribution to the Partnership and are not
required to make any capital contribution in the future. The Partnership
has a maximum life of 50 years and was formed on April 23, 1984 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 percent interest in
a mini-storage facility in Aurora, Colorado (see Note 6). 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
five percent 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.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents - The Partnership classifies its short-term
investments purchased with an original maturity of three months or less as
cash equivalents.
Property and Depreciation - Property is recorded at cost and is composed
primarily of mini-storage facilities. Depreciation is provided for using
the straight-line method over an estimated useful life of 15 years.
Building improvements are depreciated over a five year period.
Income Taxes - No provision has been made for income taxes in the
accompanying financial statements. The taxable income or loss of the
Partnership is allocated to each partner in accordance with the terms of
the Agreement of Limited Partnership. Each partner's tax status, in turn,
determines the appropriate income tax for its allocated share of the
Partnership taxable income or loss. The net difference between the basis
of the Partnership's assets and liabilities for federal income tax purposes
and as reported for financial statement purposes is $2,217,321.
Revenues - Rental revenue is recognized using the accrual method based
on contractual amounts provided for in the lease agreements, which
approximates recognition on a straight line basis. The term of the lease
agreements is usually less than one year.
Investment in Real Estate Joint Venture - The Partnership accounts for its
30 percent interest in the Aurora, Colorado, Facility using the equity
method of accounting (see Note 6).
Net Income per Limited Partnership Unit - Net income per limited
partnership unit is computed by dividing the net income allocated to
the limited partners by the weighted average number of limited
partnership units outstanding during each year (24,000 in 2000, 1999, and
1998).
Estimates - The preparation of financial statements in conformity with
generally accepted in the United States of America requires the Partner-
ship's management to make estimates and assumptions that affect the report-
ed amounts of assets and liabilities at the date of the financial state-
ments and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Impairment of Long-Lived Assets - The Partnership regularly reviews long-
lived assets for impairment whenever events or changes in circumstances
indicate that the carrying amount of the asset may not be recoverable.
If the sum of the expected future cash flow is less than the carrying
amount of the asset, the Partnership recognizes an impairment loss. No
impairment losses were required in 2000, 1999, or 1998.
Fair Value of Financial Instruments - The Company's financial instruments
consist primarily of cash, receivables, accounts payable and accrued
liabilities. The carrying values of all financial instruments are
representative of their fair values due to their short-term maturities.
Concentrations of Credit Risk - Financial instruments that potentially
subject the Partnership to concentrations of credit risk consist primarily
of cash equivalents and rent receivables. The Partnership places its
cash equivalents with high credit quality institutions.
Reclassifications - Certain reclassifications have been made to the 1999
and 1997 amounts to conform to the 2000 presentation.
Recent Accounting Pronouncements - In December 1999, the Securities and
Exchange Commission issued Staff Accounting Bulletin No. 101 ("SAB 101"),
"Revenue Recognition in Financial Statements." The adoption of SAB 101
did not impact the financial statments.
3. PROPERTY
As of December 31, 2000 and 1999, the total cost of property and
accumulated depreciation are as follows:
2000 1999
Land $ 2,287,427 $ 2,287,427
Buildings and improvements 7,149,828 7,123,388
----------- -----------
Total 9,437,255 9,410,815
Less accumulated depreciation (7,149,828) (6,950,727)
----------- ----------
Property, net $ 2,287,427 $ 2,460,088
=========== ===========
During 1998, the Partnership received proceeds of $65,000 for an involuntary
conversion of the land. A gain from involuntary conversion was recorded in
the amount of $47,117, and the colst of land was reduced by $17,883 during
the year ended December 31, 1998.
4. ALLOCATION OF PROFITS AND LOSSES AND GENERAL PARTNERS' MANAGEMENT FEES
Under the Agreement of Limited Partnership, the general partners are to be
allocated 1% of the net profits or net 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 a real estate 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 nine percent per annum of the cash
available for distribution, on a cumulative basis, calculated as cash
generated from operation less capital expenditures.
5. BUSINESS SEGMENT INFORMATION
The following disclosure about segment reporting of the Partnership is
made in accordance with the requirements of Statement of Financial
Accounting Standards No. 131, "Disclosures about Segments of an Enter-
prise and Related Information." The Partnership operates in a single
segment; storage facility operations, under which the Partnership rents
its storage facilities to its customers on a need basis and charges rent
on a predetermined rate.
6. INVESTMENT IN REAL ESTATE JOINT VENTURE
The Partnership is involved in a joint venture (the Buckley Road facility)
that owns a mini-storage facility in Aurora, Colorado. Under the terms
of the joint venture agreement, the Partnership is entitled to 30 percent
of the profits or losses of the venture and owns 30 percent of the mini-
storage facility as a tenant in common with DSI Realty Income Fund IX
("Fund IX"), which has the remaining 70 percent interest in the venture.
The agreement specifies that DSI Properties, Inc. (a general partner in
both the Partnership and Fund IX) shall make all decisions relating to
the activities of the joint venture and the management of the property.
Summarized financial information of the Buckley Road financial statements
is as follows:
2000 1999
(Unaudited)
ASSETS:
Cash $ 13,652 $ 16,172
Property:
Land 586,500 586,500
Building 2,586,208 2,586,208
----------- -----------
Total 3,172,708 3,172,708
Less accumulated depreciation (2,586,208) (2,436,739)
----------- -----------
Property - net 586,500 735,969
----------- -----------
Other assets 19,542 19,542
----------- -----------
TOTAL $ 619,694 $ 771,683
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Liabilities 27,215 26,972
Partner's equity 592,479 744,711
----------- -----------
TOTAL $ 619,694 $ 771,683
=========== ===========
2000 1999 1998
INCOME STATEMENT DATA:
Rental revenues $763,992 $774,753 $717,772
Less expenses 359,924 366,576 351,970
-------- -------- --------
Net income $404,068 $408,177 $365,802
======== ======== ========
Property is stated at cost; depreciation is provided for using the
straight-line method over the estimated useful life of 15 years.
7. INVOLUNTARY CONVERSION
In March 1999, the City of Stockton acquired approximately 6,089 square
feet or 4.8 percent the land to create a pedestrian under pass next to
the Partnership's Stockton property. During 1999, the Partnership received
a reimbursement in the amount of $65,000 for what City of Stockton believes
to have been the fair value of the land. A gain from involuntary
conversion was recorded in the amount of $47,117 and the cost of land was
reduced by $17,883 during the year ended December 31, 1998.
INDEPENDENT AUDITORS' REPORT
To the Partners of
DSI Realty Income Fund VIII:
We have audited the statements of income, changes in venturers' capital, and
cash flows for the year ended December 31, 2000 of Mini U Storage, Buckley Road
Joint Venture, a California General Partnership (the "Joint Venture"). These
financial statements are the responsibility of the Joint Venture's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the results of operations and cash flows of Mini U Storage, Buckley
Road Joint Venture for the year ended December 31, 2000 conformity with
generally accepted accounting principles.
February 2, 2001
Deloitte & Touche LLP
Los Angeles, California
DSI REALTY INCOME FUND VIII
(A California Real Estate Limited Partnership)
REAL ESTATE AND ACCUMULATED DEPRECIATION
- --------------------------------------------------------------------------------
Costs Capitalized
Initial Cost to Subsequent to Gross Amount at Which Carried
Partnership Acquisition at Close of Period
------------------- ----------------- -----------------------------
Buildings Buildings Date
and Improve- Carrying and Accum. of Date
Description Encumbrances Land Improvements ments Costs Land Improvements Total Deprec. Const. Acq. Life
MINI-U-STORAGE
Stockton, CA None $371,000 $1,375,823 $ 24,599 $353,117 $1,418,305 $1,771,422 $1,418,304 01/85 07/84 15 Yrs
Pittsburgh, CA None 317,550 1,122,032 18,890 317,550 1,140,922 1,458,472 1,140,922 05/85 11/84 15 Yrs
El Centro, CA None 163,560 708,710 3,202 163,560 711,912 875,472 711,912 04/85 12/84 15 Yrs
Lompoc, CA None 277,200 1,524,419 6,303 277,200 1,530,722 1,807,922 1,530,722 02/85 02/85 15 Yrs
Huntington Bch, CA None 1,176,000 2,306,020 41,947 1,176,000 2,347,967 3,523,967 2,347,968 06/85 02/85 15 Yrs
-------- ---------- ------- -------- ---------- ---------- ----------
$2,305,310 $7,037,004 $ 94,941 $2,287,427 $7,149,828 $ 9,437,255 $7,149,828
========== ========== ======== ========== ========== =========== ==========
Real Estate Accumulated
at Cost Depreciation
Balance at January 1, 1998 $ 9,399,637 $6,012,459
Additions 14,288 469,134
Disposals (17,883)
----------- ----------
Balance at December 31, 1998 $ 9,396,042 $6,481,593
Additions 14,773 469,134
----------- ----------
Balance at December 31, 1999 $ 9,410,815 $6,950,727
Additions 26,440 199,101
----------- ----------
Balance at December 31, 2000 $ 9,437,255 $7,149,828
=========== ==========
EXHIBIT 2
March 27, 2000
ANNUAL REPORT TO LIMITED PARTNERS OF
DSI REALTY INCOME FUND VIII
Dear Limited Partner:
This report contains the Partnership's balance sheets as of December 31,
2000 and 1999, and the related statements of income, changes in partners' equity
and cash flows for each of the three years in the period ended December 31, 2000
accompanied by an independent auditors' report. The Partnership owns five
mini-storage facilities, plus a 30% interest in a sixth mini-storage facility on
a joint venture basis with an affiliated Partnership, DSI Realty Income Fund IX,
a California Limited Partnership. The Partnership's properties were each
purchased for all cash and funded solely from subscriptions for limited
partnership interests without the use of mortgage financing.
Your attention is directed to the section entitled Management's Discussion
and Analysis of Financial Condition and Results of Operations for the General
Partners' discussion and analysis of the financial statements and operations of
the Partnership.
Average occupancy levels for each of the Partnership's six properties for
the years ended December 31, 2000 and December 31, 1999 were as follows:
Location of Property Average Occupancy Average Occupancy
Levels for the Levels for the
Year Ended Year Ended
Dec. 31, 2000 Dec. 31, 1999
El Centro, CA 82% 76%
Lompoc, CA 91% 84%
Pittsburg, CA 89% 85%
Stockton, CA 91% 84%
Huntington Beach, CA 90% 90%
Aurora, CO* 86% 88%
- ---------
*The Partnership owns a 30% fee interest in this facility.
We will keep you informed of the activities of DSI Realty Income Fund VIII
as they develop. If you have any questions, please contact us at your
convenience at (562) 493-3022.
If you would like a copy of the Partnership's Annual Report on Form 10-K
for the year ended December 31, 2000 which was filed with the Securities and
Exchange Commission (which report includes the enclosed Financial Statements),
we will forward a copy of the report to you upon written request.
Very truly yours,
DSI REALTY INCOME FUND VIII
By: DSI Properties, Inc.
By___________________________
ROBERT J. CONWAY, President