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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, 1997.
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
37O1 Long Beach Boulevard, Long Beach, California 9O8O7
(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,
1997, incorporated by reference to Form 10-K, Part II.
Item 11. Registrant's Financial Statements for its fiscal year ended December
31, 1997, 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, 1997, 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, 1997 and December 31, 1996 were as follows:
Location of Property Average Occupancy Average Occupancy
Level for the Level for the
Year Ended Year Ended
Dec. 31, 1997 Dec. 31, 1996
El Centro, CA 75% 82%
Lompoc, CA 89% 84%
Pittsburg, CA 85% 86%
Stockton, CA 85% 83%
Huntington Beach, CA 89% 87%
Aurora, CO* 88% 82%
- ----------
*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, 1997 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 898 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 $11.25 per Limited Partnership Unit were
declared and paid each quarter for the year ended December 31, 1997 and 1996.
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, 1997, 1996, 1995, 1994, AND 1993
--------------------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
REVENUES $1,712,288 $1,624,001 $1,636,156 $1,604,279 $1,590,386
COSTS AND
EXPENSES 1,217,044 1,229,425 1,196,068 1,169,399 1,157,938
EQUITY IN
EARNINGS OF
REAL ESTATE
JOINT
VENTURE 93,305 82,729 116,421 93,634 89,210
---------- ---------- ---------- ---------- ----------
NET
INCOME $ 588,549 $ 477,305 $ 556,509 $ 528,514 $ 521,658
========== ========== ========== ========== ==========
TOTAL
ASSETS $4,132,136 $4,632,052 $5,245,858 $5,785,750 $6,270,148
========== ========== ========== ========== ==========
NET CASH
PROVIDED
BY OPERATING
ACTIVITIES $1,103,067 $1,054,462 $1,136,519 $ 937,601 $1,060,688
========== ========== ========== ========== ==========
CASH
DISTRIBUTIONS
PER $500
LIMITED
PARTNERSHIP
UNIT $ 45.00 $ 45.00 $ 45.00 $ 42.50 $ 40.00
========== ========== ========== ========== ==========
NET INCOME
PER LIMITED
PARTNERSHIP
UNIT $ 24.28 $ 19.69 $ 22.96 $ 21.80 $ 21.52
========== ========== ========== ========== ==========
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
1997 COMPARED TO 1996
Total revenues increased from $1,624,001 in 1996 to $1,712,288 in 1997,
while total expenses decreased from $1,229,425 to $1,217,044 and income from
the real estate joint venture increased from $82,729 to $93,305. As a result,
net income increased from $477,305 in 1996 to $588,549 in 1997. The increase
in rental revenues is due primarily to higher unit rental rates. Average
occupancy levels for the Partnership's five mini-storage facilities was 84.4%
for the year ended December 31, 1996 and 84.9% for the year ended December 31,
1997. The approximately $35,300 (8.2%) decrease in operating expenses was
primarily due to a decrease in yellow pages advertising costs, maintenance and
repair and real estate tax expenses partially offset by an increase in salaries
and wages. General and administrative expenses increased approximately $21,900
(16.1%) primarily as a result increases in legal and professional and postage
expenses. The General Partners' incentive management fee increased
approximately $9,500 (9.5%) as a result of an increase in cash available for
distribution on which this fee is based. Property management fees, which are
based on revenue, increased as a result of the increase in rental revenue.
The increase in income from the real estate joint venture was the result of
higher occupancy and unit rental rates as well as an increase in salaries and
wage expense partially offset by a decrease in yellow page advertising costs
and maintenance and repair expense. Average occupancy of the joint venture was
88.3% in 1997 compared to 81.7% in 1996.
1996 COMPARED TO 1995
Total revenues decreased from $1,636,156 in 1995 to $1,624,001 in 1996,
while total expenses increased from $1,196,068 to $1,229,425 and income from
the real estate joint venture decreased from $116,421 to $82,729. As a result,
net income decreased from $556,509 in 1995 to $477,305 in 1996. The slight
decrease in rental revenues is due to lower occupancy levels partially offset
by higher unit rental rates. Average occupancy levels for the Partnership's five
mini-storage facilities decreased from 85.6% for the year ended December 31,
1995, to 84.4% for the year ended December 31, 1996. The approximately $40,000
(10.2%) increase in operating expenses was primarily due to an increase in
yellow pages advertising costs, maintenance and repair and salaries and wages
partially offset by a decrease in real estate tax expenses. General and
administrative and property management fee expenses remained relatively
constant. The General Partners' incentive management fee decreased
approximately $8,800 (8.1%) as a result of a decrease in cash available for
distribution on which this fee is based. The decrease in income from the real
estate joint venture was the result of lower occupancy and unit rental rates as
well as an increase in yellow pages advertising costs partially offset by a
decrease in maintenance and repair expense. Average occupancy of the joint
venture was 82% in 1996 compared to 89% in 1995.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities increased approximately $46,700
(4.4%) in 1997 compared to 1996, primarily due to the decrease in net income.
Net cash provided by operating activities decreased approximately $82,100
(7.2%) in 1996 compared to 1995, primarily due to an decrease in net income.
Cash used in financing activities, as set forth in the statements of cash
flows, has been limited to distributions paid to the partners.
Cash used in investing activities, as set forth in the statements of cash
flows, has consisted solely 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's financial resources appear to be
adequate to meet its needs 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.
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, 1997, Messrs. Robert J. Conway and Joseph
W. Conway, each of whom own approximately 45.43% 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 64 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 68 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 74 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, 1997, 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 remuneration 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, 1997, 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, 1997, 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, 1997, 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, 1997.
(b) No reports on Form 8K were filed during the fiscal year ended December
31, 1997.
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 27, 1998
ROBERT J. CONWAY, President
(Chief Executive Officer, Chief
Financial Officer, and Director)
By____________________________ Dated: March 27, 1998
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 27, 1998
ROBERT J. CONWAY, President,
Chief Executive Officer, Chief
Financial Officer, and Director
By___________________________ Dated: March 27, 1998
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, 1997, 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, 1997
- --------------------------------------------------------------------------------
1997 1996 1995 1994 1993
REVENUES $1,712,288 $1,624,001 $1,636,156 $1,604,279 $1,590,386
EXPENSES 1,217,044 1,229,425 1,196,068 1,169,399 1,157,938
EQUITY IN EARNINGS
OF REAL ESTATE
JOINT VENTURE 93,305 82,729 116,421 93,634 89,210
---------- ---------- ---------- ---------- ----------
NET INCOME $ 588,549 $ 477,305 $ 556,509 $ 528,514 $ 521,658
========== ========== ========== ========== ==========
TOTAL ASSETS $4,132,136 $4,632,052 $5,245,858 $5,785,750 $6,270,148
========== ========== ========== ========== ==========
NET CASH PROVIDED BY
OPERATING ACTIVITIES $1,103,067 $1,054,462 $1,136,519 $ 937,601 $1,060,688
========== ========== ========== ========== ==========
CASH DISTRIBUTIONS
PER $500 LIMITED
PARTNERSHIP UNIT $ 45.00 $ 45.00 $ 45.00 $ 42.50 $ 40.00
========== ========== ========== ========== ==========
NET INCOME PER
LIMITED
PARTNERSHIP UNIT $ 24.28 $ 19.69 $ 22.96 $ 21.80 $ 21.52
========== ========== ========== ========== ==========
Operating Partners'
Results Equity
Per financial statements $ 588,549 $ 3,519,686
Excess financial statement depreciation 133,621 1,202,350
Excess tax return income
from real estate joint venture 15,160 174,361
Accrued incentive management fees 266,768
Capitalization of property acquisition costs 80,713
Fixed asset adjustments 2,080
Recognition of deferred rental revenues 41,918
Accrued revenue (14,209)
Accrued distributions to partners 272,728
----------- -----------
Per Partnership income tax return $ 723,121 $ 5,560,604
=========== ===========
Net taxable income per $500 limited
partnership unit $ 30.13
===========
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, 1997 and 1996 F-2
Statements of Income for the Three
Years Ended December 31, 1997 F-3
Statements of Changes in Partners' Equity for
the Three Years Ended December 31, 1997 F-4
Statements of Cash Flows for the Three Years
Ended December 31, 1997 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, 1997 and 1996, 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, 1997. 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 generally accepted auditing
standards. 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, 1996 and 1995, and the results of its operations and its cash flows for
each of the three years in the period ended December 31, 1997 in
conformity with generally accepted accounting principles.
February 3, 1998
DELOITTE & TOUCHE
LONG BEACH, CALIFORNIA
DSI REALTY INCOME FUND VIII
(A California Real Estate Limited Partnership)
BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
- --------------------------------------------------------------------------------
ASSETS 1997 1996
CASH AND CASH EQUIVALENTS $ 399,704 $ 389,413
PROPERTY, net (Notes 1, 2 and 3) 3,387,178 3,856,310
INVESTMENT IN REAL ESTATE
JOINT VENTURE
(Notes 1,2, and 5) 313,650 364,645
OTHER ASSETS 31,604 21,684
----------- -----------
TOTAL $ 4,132,136 $ 4,632,052
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES:
Distribution due to partners (Note 4) $ 272,727 $ 272,727
Incentive management fee payable to
general partners (Note 4) 280,715 266,769
Property management fees payable (Note 1) 7,090 6,257
Customer deposits and other liabilities 51,918 64,253
----------- -----------
Total liabilities 612,450 610,006
----------- -----------
PARTNERS' EQUITY (Notes 1 and 4):
General partners (72,584) (67,560)
Limited partners (24,000 limited
partnership units outstanding
at December 31, 1997 and 1996) 3,592,270 4,089,606
------------ -----------
Total partners' equity 3,519,686 4,022,046
------------ -----------
TOTAL $ 4,132,136 $ 4,632,052
============ ===========
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, 1997
- --------------------------------------------------------------------------------
1997 1996 1995
REVENUES:
Rental revenues $1,704,301 $1,612,680 $1,619,839
Interest income 7,987 11,321 16,317
---------- ---------- ----------
Total revenues 1,712,288 1,624,001 1,636,156
---------- ---------- ----------
EXPENSES:
Depreciation (Note 2) 469,132 481,696 479,566
Operating expenses (Note 1) 395,194 430,463 390,487
General and administrative 158,008 136,110 135,734
General partners' incentive
management fee (Note 4) 109,991 100,514 109,289
Property management fee (Note 1) 84,719 80,642 80,992
---------- ---------- ----------
Total expenses 1,217,044 1,229,425 1,196,068
---------- ---------- ----------
INCOME BEFORE EQUITY IN
INCOME OF REAL ESTATE
JOINT VENTURE 495,244 394,576 440,088
EQUITY IN INCOME OF
REAL ESTATE JOINT
VENTURE (Notes 1,2 and 5) 93,305 82,729 116,421
__________ __________ _________
NET INCOME $ 588,549 $ 477,305 $ 556,509
========== ========== ==========
AGGREGATE NET INCOME ALLOCATED
TO (Note 4):
Limited partners $ 582,664 $ 472,532 $ 550,944
General partners 5,885 4,773 5,565
---------- ---------- ----------
TOTAL $ 588,549 $ 477,305 $ 556,509
========== ========== ==========
NET INCOME PER LIMITED PARTNERSHIP
UNIT (Notes 2 and 4) $ 24.28 $ 19.69 $ 22.96
========== ========== ==========
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, 1997
- --------------------------------------------------------------------------------
General Limited
Partners Partners Total
BALANCE AT JANUARY 1, 1995 (56,080) 5,226,130 5,170,050
Net income 5,565 550,944 556,509
Distributions (10,909) (1,080,000) (1,090,909)
------- ----------- -----------
BALANCE AT DECEMBER 31, 1995 ($61,424) $ 4,697,074 $ 4,635,650
Net income 4,773 472,532 477,305
Distributions (10,909) (1,080,000) (1,090,909)
-------- ----------- ----------
BALANCE AT DECEMBER 31, 1996 $(67,560) $4,089,606 $4,022,046
Net income 5,885 582,664 588,549
Distributions (10,909) (1,080,000) (1,090,909)
-------- ----------- -----------
BALANCE AT DECEMBER 31, 1997 $(72,584) $3,592,270 $3,519,686
======== =========== ==========
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, 1997
- --------------------------------------------------------------------------------
1997 1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 588,549 $ 477,305 $ 556,509
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 469,132 481,696 479,566
Equity in earnings of
real estate joint venture (93,305) (82,729) (116,421)
Distributions from real
estate joint venture 144,300 135,750 165,000
Changes in assets and liabilities:
Receivable from general partners 100,000
Other assets (9,920) 42,642 (42,643)
Incentive management fee
payable to general partners 13,946 (12,486) 6,540
Property management fees payable 833 (51) (1,072)
Customer deposits and
other liabilities (12,335) 12,335 (10,960)
----------- ----------- -----------
Net cash provided by operating
activities 1,101,200 1,054,462 1,136,519
CASH FLOWS FROM FINANCING ACTIVITIES -
Distributions to partners (1,090,909) (1,090,909) (1,090,909)
CASH FLOWS FROM INVESTING ACTIVITIES -
Additions of property (19,797) (24,913)
----------- ----------- ------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 10,291 (56,244) 20,697
CASH AND CASH EQUIVALENTS,
AT BEGINNING OF YEAR 389,413 445,657 424,960
----------- ----------- ------------
CASH AND CASH EQUIVALENTS,
AT END OF YEAR $ 399,704 $ 389,413 $ 445,657
=========== =========== ============
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, 1997
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% interest in a mini-
storage facility in Aurora, Colorado (see Note 5). 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, as defined.
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 bases
of the Partnership's assets and liabilities for federal income tax purposes
and as reported for financial statement purposes is $2,040,918.
Revenues - Rental revenue is recognized using the accrual method based
on contractual amounts provided for in the lease agreements, which
approximates recogniation 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% interest in the Aurora, Colorado facility using the equity method of
accounting (see Note 5).
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 1997, 1996 and
1995).
Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires the Partnership's
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements
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 recognized.
3. PROPERTY
As of December 31, 1997 and 1996, the total cost of property and
accumulated depreciation are as follows:
1997 1996
Land $ 2,305,310 $ 2,305,310
Buildings and improvements 7,094,327 7,094,327
----------- -----------
Total 9,399,637 9,399,637
Less accumulated depreciation (6,012,459) (5,543,327)
----------- ----------
Property, net $ 3,387,178 $ 3,856,310
=========== ===========
The City of Stockton acquired a small portion of the Stockton property in
1997. Pending the outcome of a lawsuit with the City of Stockton, management
plans to write down land and record other income. Based on operations since
the acquisition, neither cash flow from or the value of the property appears
materially impaired.
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 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 9% per annum of the cash available for
distribution, as defined.
5. INVESTMENT IN REAL ESTATE JOINT VENTURE
The Partnership is involved in a joint venture (the Buckley Road facility)
which owns 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 ("Fund IX"),
which has the remaining 70% 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 facility is as
follows:
1997 1996
ASSETS:
Cash $ 12,002 $ 14,894
Property:
Land 586,500 586,500
Building 2,565,446 2,565,446
----------- -----------
Total 3,151,946 3,151,946
Less accumulated depreciation (2,097,533) (1,927,930)
----------- -----------
Property - net 1,054,413 1,224,016
----------- -----------
Other assets 8,995 8,995
----------- -----------
TOTAL $ 1,075,410 $ 1,247,905
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Liabilities 26,678 29,191
Partner's equity 1,048,732 1,218,714
----------- -----------
TOTAL $ 1,075,410 $ 1,247,905
=========== ===========
1997 1996 1995
INCOME STATEMENT DATA:
Rental revenues $659,073 $620,720 $707,333
Less operating expenses 348,055 344,957 319,264
-------- -------- --------
Net income $311,018 $275,763 $388,069
======== ======== ========
Property is stated at cost; depreciation is provided for using the
straight-line method over the estimated useful life of 15 years.
INDEPENDENT AUDITORS' REPORT
To the Partners of
DSI Realty Income Fund VIII:
We have audited the financial statements of DSI Realty Income Fund VIII (the
"Partnership") as of December 31, 1996 and 1995, and for each of the three years
in the period ended December 31, 1996, and have issued our report thereon dated
February 3, 1998; such report is included elsewhere in this Form 10-K. Our
audits also included the financial statement schedule of DSI Realty Income Fund
VIII, listed in Item 14. This financial statement schedule is the responsibility
of the Partnership's management. Our responsibility is to express an opinion
based on our audits. In our opinion, such financial statements schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects, the information set forth therein.
February 3, 1998
DELOITTE & TOUCHE
LONG BEACH, CALIFORNIA
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, 1995 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, 1995 conformity with
generally accepted accounting principles.
Deloitte & Touche LLP
Long Beach, California
January 7, 1997
MINI U STORAGE, BUCKLEY ROAD JOINT VENTURE
(A California General Partnership)
BALANCE SHEET
DECEMBER 31, 1997 AND 1996
- -------------------------------------------------------------------------------
ASSETS 1997 1996
(Unaudited) (Unaudited)
CASH AND CASH EQUIVALENTS (Notes 2) $ 12,002 $ 14,894
PROPERTY, net (Notes 1,2 and 3) 1,054,413 1,224,016
OTHER ASSETS 8,995 8,995
----------- -----------
TOTAL $ 1,075,410 $ 1,247,905
=========== ===========
LIABILITIES AND VENTURERS' CAPITAL
ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 26,678 $ 29,191
VENTURERS' CAPITAL (Note 1) 1,048,732 1,218,714
----------- -----------
TOTAL $ 1,075,410 $ 1,247,905
=========== ===========
See accompanying notes to financial statements.
MINI U STORAGE, BUCKLEY ROAD JOINT VENTURE
(A California General Partnership)
STATEMENTS OF INCOME
THREE YEARS ENDED DECEMBER 31, 1997
- -------------------------------------------------------------------------------
1997 1996 1995
(Unaudited) (Unaudited)
RENTAL REVENUES (Note 2) $ 659,073 $ 620,720 $ 707,333
--------- --------- ---------
EXPENSES:
Depreciation (Note 2) 169,603 175,364 169,603
Operating 132,962 125,041 96,476
General and administrative 45,490 44,552 53,185
--------- --------- ---------
Total expenses 348,055 344,957 319,264
--------- --------- ---------
NET INCOME $ 311,018 $ 275,763 $ 388,069
========= ========= =========
See accompanying notes to financial statements.
MINI U STORAGE, BUCKLEY ROAD JOINT VENTURE
(A California General Partnership)
STATEMENTS OF CHANGES IN VENTURERS' CAPITAL
THREE YEARS ENDED DECEMBER 31, 1997
- -------------------------------------------------------------------------------
Fund VIII Fund IX Total
BALANCE, JANUARY 1, 1995 466,245 1,091,135 1,557,380
Net income 116,421 271,648 388,069
Distributions (165,000) (384,999) (549,999)
--------- ---------- ----------
BALANCE, DECEMBER 31, 1995 417,666 977,784 1,395,450
Net income (Unaudited) 82,729 193,034 275,763
Distributions (Unaudited) (135,750) (316,749) (452,499)
--------- --------- ----------
BALANCE, DECEMBER 31, 1996 (Unaudited) $ 364,645 $ 854,069 $1,218,714
Net income (Unaudited) 93,305 217,713 311,018
Distributions (Unaudited) (144,300) (336,700) (481,000)
--------- --------- ----------
BALANCE, DECEMBER 31, 1997 Unaudited) $ 313,650 $ 735,082 $1,048,732
========= ========= ==========
See accompanying notes to financial statements.
MINI U STORAGE, BUCKLEY ROAD JOINT VENTURE
(A California General Partnership)
STATEMENTS OF CASH FLOWS
THREE YEARS ENDED DECEMBER 31, 1997
- -------------------------------------------------------------------------------
1997 1996 1995
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 311,018 $ 275,763 $ 388,069
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation 169,603 175,364 169,603
Changes in operating assets
and liabilities-
Accounts payable and accrued expenses (2,513) 1,067 1,439
--------- --------- ---------
Net cash provided by operating activities $ 478,108 $ 452,194 $ 559,111
========= ========= =========
CASH FLOWS FROM FINANCING ACTIVITIES-
Distributions (481,000) (452,499) (549,999)
CASH FLOWS FROM INVESTING ACTIVITIES-
Additions of property (3,586)
--------- --------- ---------
NET (DECREASE)INCREASE IN CASH AND
CASH EQUIVALENTS (2,892) (305) 5,526
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 14,894 15,199 9,673
--------- --------- ---------
CASH AND CASH EQUIVALENTS,
END OF YEAR $ 12,002 $ 14,894 $ 15,199
========= ========= =========
See accompanying notes to financial statements.
MINI U STORAGE, BUCKLEY ROAD JOINT VENTURE
(A California General Partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
- -------------------------------------------------------------------------------
1. GENERAL
Mini U Storage, Buckley Road Joint Venture, a California General
Partnership (the "Joint Venture"), was formed by DSI Realty Income Fund
VIII ("Fund VIII"), a California Real Estate Limited Partnership, and DSI
Realty Income Fund IX ("Fund IX"), a California Real Estate Limited
Partnership, pursuant to an agreement dated August 30, 1985 to operate
a mini-storage facility known as Buckley Road located in Aurora, Colorado.
The term of the Joint Venture is to continue until the earliest of the
following events:
* Acquisition of all of one venturer's interest by the other;
* Sale or other disposition of substantially all of the property; or
* Dissolution of the Joint Venture pursuant to the provisions of the
agreement.
Under the terms of the joint venture agreement, Fund VIII is entitled to
30% of the profits and losses of the Joint Venture and owns 30% of the
mini-storage facility as a tenant in common with Fund IX, which has the
remaining 70% interest in the Joint Venture. The agreement specifies
that DSI Properties, Inc. (a general partner of both Fund VIII and Fund IX)
shall make all decisions relating to the activities of the Joint Venture
and the management of the property.
The mini-storage facility was acquired from Dahn Corporation ("Dahn").
Dahn is not affiliated with the Joint Venture. Dahn is affiliated with
other partnerships in which DSI Properties, Inc. is a general partner.
The mini-storage facility is operated for the Joint Venture by Dahn
under various agreements that are subject to renewal annually. Under
the terms of the agreements, the Joint Venture is required to pay Dahn
a property management fee equal to 5% of gross revenue from operations,
as defined.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents - The Joint Venture 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 comprises
primarily a mini-storage facility. Depreciation is provided for using
the straight-line method over an estimated useful life of 15 years.
Income Taxes - The Joint Venture is not a taxpaying entity for federal
and state income tax purposes, and thus no income tax expense has been
recorded in the accompanying statements. Net income from the Joint
Venture is allocated to the venturers.
Rental Revenue - Rental revenue is recognized using the accrual method
based on contractual amounts provided for in the lease agreements, which
approximates recognition on the straight-line basis. The term of the
lease agreements is usually less than one year.
Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires the Joint Venturer's
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements
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 1997, 1996 or 1995.
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.
3. PROPERTY
As of December 31, 1997 and 1996, the total cost of property and
accumulated depreciation are as follows:
1997 1996
(Unaudited)
Land $ 586,500 $ 586,500
Buildings and improvements 2,565,446 2,565,446
----------- -----------
Total 3,151,946 3,151,946
Accumulated depreciation (2,097,533) (1,927,930)
----------- -----------
Property, net $ 1,054,413 $ 1,224,016
=========== ===========
*****
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 $14,676 $371,000 $1,390,499 $1,761,499 $1,197,579 01/85 07/84 15 Yrs
Pittsburgh, CA None 317,550 1,122,032 5,482 317,550 1,127,514 1,445,064 950,727 05/85 11/84 15 Yrs
El Centro, CA None 163,560 708,710 3,202 163,560 711,912 875,472 605,022 04/85 12/84 15 Yrs
Lompoc, CA None 277,200 1,524,419 6,303 277,200 1,530,722 1,807,922 1,316,347 02/85 02/85 15 Yrs
Huntington Bch, CA None 1,176,000 2,306,020 27,660 1,176,000 2,333,680 3,509,680 1,942,784 06/85 02/85 15 Yrs
-------- ---------- ------- -------- ---------- ---------- ----------
$2,305,310 $7,037,004 $ 57,323 $2,305,310 $7,094,327 $ 9,399,637 $6,012,459
========== ========== ======== ========== ========== =========== ==========
Real Estate Accumulated
at Cost Depreciation
Balance at Janaury 1, 1995 9,354,927 4,582,065
Additions 24,913 479,566
----------- ----------
Balance at December 31, 1995 $ 9,379,840 $5,061,631
Additions 19,797 481,696
----------- ----------
Balance at December 31, 1996 $ 9,399,637 $5,543,327
Additions 469,132
----------- ----------
Balance at December 31, 1997 $ 9,399,637 $6,012,459
=========== ==========
EXHIBIT 2
March 27, 1998
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,
1997 and 1996, 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, 1997
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, 1997 and December 31, 1996 were as follows:
Location of Property Average Occupancy Average Occupancy
Levels for the Levels for the
Year Ended Year Ended
Dec. 31, 1997 Dec. 31, 1996
El Centro, CA 75% 82%
Lompoc, CA 89% 84%
Pittsburg, CA 85% 85%
Stockton, CA 85% 83%
Huntington Beach, CA 89% 87%
Aurora, CO* 88% 82%
- ---------
*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, 1997 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