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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 2O549
FORM 1O-K
(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, 1995.
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-(213)595-7711
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,
1995, incorporated by reference to Form 10-K, Part II.
Item 11. Registrant's Financial Statements for its fiscal year ended December
31, 1995, 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, 1995, 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, 1995 and December 31, 1994 were as follows:
Location of Property Average Occupancy Average Occupancy
Level for the Level for the
Year Ended Year Ended
Dec. 31, 1995 Dec. 31, 1994
El Centro, CA 82% 73%
Lompoc, CA 91% 91%
Pittsburg, CA 85% 87%
Stockton, CA 84% 85%
Huntington Beach, CA 86% 85%
Aurora, CO* 89% 83%
- ----------
*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, 1995 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 957 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, 1995 and $10.62
per quarter for the year ended December 31, 1994. 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, 1995, 1994, 1993, 1992, AND 1991.
--------------------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
REVENUES $1,636,156 $1,604,279 $1,590,386 $1,527,667 $1,455,524
COSTS AND
EXPENSES 1,196,068 1,169,399 1,157,938 1,123,453 1,113,426
EQUITY IN
EARNINGS OF
REAL ESTATE
JOINT
VENTURE 116,421 93,634 89,210 62,063 49,287
---------- ---------- ---------- ---------- ----------
NET
INCOME $ 556,509 $ 528,514 $ 521,658 $ 466,277 $ 391,385
========== ========== ========== ========== ==========
TOTAL
ASSETS $5,245,858 $5,785,750 $6,270,148 $6,664,785 $7,056,887
========== ========== ========== ========== ==========
NET CASH
PROVIDED
BY OPERATING
ACTIVITIES $1,136,519 $ 937,601 $1,060,688 $ 976,982 $ 814,471
========== ========== ========== ========== ==========
CASH
DISTRIBUTIONS
PER $500
LIMITED
PARTNERSHIP
UNIT $ 45.00 $ 42.50 $ 40.00 $ 35.00 $ 35.00
========== ========== ========== ========== ==========
NET INCOME
PER LIMITED
PARTNERSHIP
UNIT $ 22.96 $ 21.80 $ 21.52 $ 19.23 $ 16.14
========== ========== ========== ========== ==========
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
1995 COMPARED TO 1994
Total revenues increased from $1,604,279 in 1994 to $1,636,156 in 1995,
while total expenses increased from $1,169,399 to $1,196,068 and income from the
real estate joint venture increased from $93,634 to $116,421. As a result, net
income increased from $528,514 in 1994 to $556,509 in 1995. The slight increase
in rental revenues is due to higher occupancy levels partially offset by lower
unit rental rates. Average occupancy levels for the Partnership's five
mini-storage facilities increased from 84.2% for the year ended December 31,
1994, to 85.6% for the year ended December 31, 1995. The Partnership is
continuing its marketing efforts to attract and keep new tenants in its various
mini-storage facilities. The approximate $11,000 (2.5%) increase in operating
expenses was primarily due to an increase in maintenance and repair and office
expenses partially offset by a decrease in yellow page advertising costs.
General and administrative expenses remained relatively constant. The General
Partners' incentive management fee increased approximately $6,000 (5.8%) as a
result of an increase in cash available for distribution on which this fee is
based. The increase in income from the real estate joint venture was the result
of higher occupancy and unit rental rates. Average occupancy of the joint
venture was 89% in 1995 compared to 83% in 1994.
1994 COMPARED TO 1993
Total revenues increased from $1,590,386 in 1993 to $1,604,279 in 1994,
while total expenses increased from $1,157,938 to $1,169,399 and income from the
real estate joint venture increased from $89,210 to $93,634. As a result, net
income increased from $521,658 in 1993 to $528,514 in 1994. The slight increase
in rental revenues is due to higher unit rental rates which are offset to some
extent by a slightly lower average occupancy level. Average occupancy levels for
the Partnership's five mini-storage facilities decreased from 85.6% for the year
ended December 31, 1993, to 84.2% for the year ended December 31, 1994. The
Partnership continued to increase rental rates where market conditions made such
increases feasible. The Partnership is continuing its marketing efforts to
attract and keep new tenants in its various mini-storage facilities. Operating
expenses remained stable. The approximate $7,000 (4.6%) increase in general and
administrative expenses can be attributed primarily to higher professional fees.
The General Partners' incentive management fee increased approximately $4,000
(4.0%) as a result of an increase in cash available for distribution on which
this fee is based. The increase in income from the real estate joint venture was
the result of higher unit rental rates partially offset by a lower average
occupancy percentage experienced by the joint venture's mini-storage facility.
Average occupancy of the joint venture was 83% in 1994 compared to 91% in 1993.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities increased approximately $199,000
(21.2%) in 1995 compared to 1994, primarily due to an increase in net income and
a reduction in receivables. Net cash provided by operating activities decreased
approximately $123,000 (11.6%) in 1994 compared to 1993.
Cash used in financing activities, as set forth in the statements of cash
flows, has been limited to distributions paid to the partners. The General
Partners determined that effective with the third quarter 1994 distribution
which was paid on October 15, 1994, distributions to the limited partners would
be increased to an amount which yields 9% annual return on the capital
contributed by the limited partners from an annual return of 8% paid in the
prior year.
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, 1995, Messrs. Robert J. Conway and Joseph
W. Conway, each of whom own approximately 41.63% 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 62 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 66 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 72 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, 1995, 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, 1995, 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, 1995, 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, 1995, 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, 1995.
(b) No reports on Form 8K were filed during the fiscal year ended December
31, 1995.
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 28, 1996
ROBERT J. CONWAY, President
(Chief Executive Officer, Chief
Financial Officer, and Director)
By____________________________ Dated: March 28, 1996
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 28, 1996
ROBERT J. CONWAY, President,
Chief Executive Officer, Chief
Financial Officer, and Director
By___________________________ Dated: March 28, 1996
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, 1995, 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, 1995
- --------------------------------------------------------------------------------
1995 1994 1993 1992 1991
REVENUES $1,636,156 $1,604,279 $1,590,386 $1,527,667 $1,455,524
COSTS AND EXPENSES $1,196,068 1,169,399 1,157,938 1,123,453 1,113,426
EQUITY IN EARNINGS
OF REAL ESTATE
JOINT VENTURE 116,421 93,634 89,210 62,063 49,287
---------- ---------- ---------- ---------- ----------
NET INCOME $ 556,509 $ 528,514 $ 521,658 $ 466,277 $ 391,385
========== ========== ========== ========== ==========
TOTAL ASSETS $5,245,858 $5,785,750 $6,270,148 $6,664,785 $7,056,887
========== ========== ========== ========== ==========
NET CASH PROVIDED BY
OPERATING ACTIVITIES $1,136,519 $ 937,601 $1,060,688 $ 976,982 $ 814,471
========== ========== ========== ========== ==========
CASH DISTRIBUTIONS
PER $500 LIMITED
PARTNERSHIP UNIT $ 45.00 $ 42.50 $ 40.00 $ 35.00 $ 35.00
========== ========== ========== ========== ==========
NET INCOME PER
LIMITED
PARTNERSHIP UNIT $ 22.96 $ 21.80 $ 21.52 $ 19.23 $ 16.14
========== ========== ========== ========== ==========
The following are reconciliations between the operating results and partners'
equity per the financial statements and the Partnership's income tax return for
the year ended December 31, 1995.
Operating Partners'
Results Equity
Per financial statements $ 556,509 $ 4,635,650
Excess tax depreciation 144,635 924,452
Accrued property taxes 13,459 143,545
Deferred rental revenues 266,768
Accrued incentive management fees 80,713
Acquisition costs capitalized for tax purposes 2,080
Accrued distributions to partners (6,000) 41,918
Other 272,728
----------- -----------
Per Partnership income tax return $ 708,603 $ 6,367,854
=========== ===========
Net taxable income per $500 limited
partnership unit $ 29.53
===========
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, 1995 and 1994 F-2
Statements of Income for the Three
Years Ended December 31, 1995 F-3
Statements of Changes in Partners' Equity for
the Three Years Ended December 31, 1995 F-4
Statements of Cash Flows for the Three Years
Ended December 31, 1995 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, 1995 and 1994, 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, 1995. 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, 1995 and 1994, and the results of its operations and its cash flows for
each of the three years in the period ended December 31, 1995 in
conformity with generally accepted accounting principles.
January 31, 1996
DELOITTE & TOUCHE
LONG BEACH, CALIFORNIA
DSI REALTY INCOME FUND VIII
(A California Real Estate Limited Partnership)
BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
- --------------------------------------------------------------------------------
ASSETS 1995 1994
CASH AND CASH EQUIVALENTS $ 445,657 $ 424,960
PROPERTY, At cost (net of accumulated
depreciation of $5,061,631
in 1995 and $4,582,064 in 1994)
(Notes 1, 2 and 3) 4,318,209 4,772,863
INVESTMENT IN REAL ESTATE
JOINT VENTURE
(Notes 1,2, and 6) 417,666 466,245
RECEIVABLE FROM GENERAL
PARTNERS (Note 4) 100,000
OTHER ASSETS (Note 5) 64,326 21,682
----------- -----------
TOTAL $ 5,245,858 $ 5,785,750
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES:
Distribution due to partners $ 272,727 $ 272,727
Incentive management fee payable to
general partners (Note 4) 279,255 272,715
Property management fees payable (Note 1) 6,308 7,380
Customer deposits and other liabilities 51,918 62,878
----------- -----------
Total liabilities 610,208 615,700
----------- -----------
PARTNERS' EQUITY (Notes 1 and 4):
General partners (61,424) (56,080)
Limited partners (24,000 limited
partnership units outstanding
at December 31, 1995 and 1994) 4,697,074 5,226,130
------------ -----------
Total partners' equity 4,635,650 5,170,050
------------ -----------
TOTAL $ 5,245,858 $ 5,785,750
============ ===========
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, 1995
- --------------------------------------------------------------------------------
1995 1994 1993
REVENUES:
Rental revenues $1,619,839 $1,592,249 $1,583,788
Interest income 16,317 12,030 6,598
---------- ---------- ----------
Total revenues 1,636,156 1,604,279 1,590,386
---------- ---------- ----------
EXPENSES:
Depreciation (Note 2) 479,566 469,134 469,134
Operating expenses (Note 1) 450,010 438,840 438,704
General and administrative 157,203 158,088 150,766
General partners' incentive
management fee (Note 4) 109,289 103,337 99,334
---------- ---------- ----------
Total expenses 1,196,068 1,169,399 1,157,938
---------- ---------- ----------
INCOME BEFORE EQUITY IN
INCOME OF REAL ESTATE
JOINT VENTURE 440,088 434,880 432,448
EQUITY IN INCOME OF
REAL ESTATE JOINT
VENTURE (Notes 1,2 and 6) 116,421 93,634 89,210
__________ __________ _________
NET INCOME $ 556,509 $ 528,514 $ 521,658
========== ========== ==========
AGGREGATE NET INCOME ALLOCATED
TO (Note 4):
Limited partners $ 550,944 $ 523,229 $ 516,441
General partners 5,565 5,285 5,217
---------- ---------- ----------
TOTAL $ 556,509 $ 528,514 $ 521,658
========== ========== ==========
NET INCOME PER LIMITED PARTNERSHIP
UNIT (Notes 2 and 4) $ 22.96 $ 21.80 $ 21.52
========== ========== ==========
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, 1995
- --------------------------------------------------------------------------------
General Limited
Partners Partners Total
BALANCE AT JANUARY 1, 1993 ($46,582) $ 6,166,460 $ 6,119,878
Net income 5,217 516,441 521,658
Distributions (Note 4) (9,697) (960,000) (969,697)
------- ---------- ----------
BALANCE AT DECEMBER 31, 1993 (51,062) 5,722,901 5,671,839
Net income 5,285 523,229 528,514
Distributions (Note 4) (10,303) (1,020,000) (1,030,303)
------- ---------- -----------
BALANCE AT DECEMBER 31, 1994 (56,080) 5,226,130 5,170,050
Net income 5,565 550,944 556,509
Distributions (Note 4) (10,909) (1,080,000) (1,090,909)
------- ----------- -----------
BALANCE AT DECEMBER 31, 1995 ($61,424) $ 4,697,074 $ 4,635,650
======= =========== ===========
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, 1995
- --------------------------------------------------------------------------------
1995 1994 1993
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $ 1,619,839 $ 1,592,249 $ 1,583,789
Cash paid to suppliers and employees (664,637) (811,644) (665,706)
Cash received from real
estate joint venture 165,000 144,966 136,007
Interest received 16,317 12,030 6,598
----------- ----------- ------------
Net cash provided by operating
activities 1,136,519 937,601 1,060,688
CASH FLOWS FROM FINANCING ACTIVITIES -
Distributions to partners (1,090,909) (1,000,000) (939,394)
CASH FLOWS FROM INVESTING ACTIVITIES -
Purchase of property (24,913) (5,510) (4,347)
----------- ----------- ------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 20,697 (67,909) 116,947
CASH AND CASH EQUIVALENTS,
AT BEGINNING OF YEAR 424,960 492,869 375,922
----------- ----------- ------------
CASH AND CASH EQUIVALENTS,
AT END OF YEAR $ 445,657 $ 424,960 $ 492,869
=========== =========== ============
RECONCILIATION OF NET INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
Net income $ 556,509 $ 528,514 $ 521,658
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 479,566 469,134 469,134
Equity in earnings of real
estate joint venture (116,421) (93,634) (89,210)
Distributions from real
estate joint venture 165,000 144,964 136,007
Changes in assets and liabilities:
Receivable from general partners 100,000 (100,000)
Other assets (42,643) 1,535
Incentive management fee payable to
general partners 6,540 (19,727) 17,624
Property management fees payable (1,072) (146) 1,501
Customer deposits and other
liabilities (10,960) 6,961 3,974
----------- ----------- ------------
NET CASH PROVIDED BY OPERATING
ACTIVITIES $ 1,136,519 $ 937,601 $ 1,060,688
=========== =========== ============
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, 1995
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 owns 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 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 which are subject to renewal annually. Under the
terms of the agreements, the Partnership is required to pay Dahn a
property management fee equal to 6% 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 comprised
primarily of mini-storage facilities. Depreciation is provided for using
the straight-line method over an estimated useful life of 15 years.
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.
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 6).
Net Income per Limited Partnership Unit - Net income per limited
partnership unit is computed by dividing net income allocated to the
limited partners by the weighted average number of limited partnership
units outstanding during each year (24,000 in 1995, 1994 and 1993).
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.
3. PROPERTY
As of December 31, 1995 and 1994, the total cost of property and
accumulated depreciation are as follows:
1995 1994
Land $ 2,305,310 $ 2,305,310
Buildings and improvements 7,074,530 7,049,617
----------- -----------
Total 9,379,840 9,354,927
Less accumulated depreciation (5,061,631) (4,582,064)
----------- ----------
Property, net $ 4,318,209 $ 4,772,863
=========== ===========
4. ALLOCATION OF PROFITS AND LOSSES
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. Payment of incentive management fees earned by
the general partners during the years 1986 through 1988 is subordinated to
the limited partners' receipt of an annual cumulative, noncompounded return
equal to 9.1% of their capital contributions. Incentive management fee
payable to general partners at December 31, 1995 and 1994 is $279,255 and
$272,715, respectively.
In December 1994, subordinated incentive management fees in the amount of
$100,000 were distributed to the general partners in error. The amount,
which reflected as receivable from general partners in the 1994 financial
statements, was repaid in full on February 27, 1995, with interest at a
rate of approximately 5%.
5. OTHER ASSETS
In September 1995, the Huntington Beach mini-storage facility was damaged
by fire. Only 30 of the 601 units were effected. A claim for $43,600 has
been filed with the facility's insurance company and is included in other
assets at December 31, 1995. It is anticipated that 100% of the
reconstruction costs, less the deductible, will be reimbursed.
6. 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 as a
tenant in common with DSI Realty Income Fund IX ("Fund IX"), which has the
remaining 70% interest in the venture. The agreemnet 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:
1995 1994
ASSETS:
Cash $ 15,199 $ 9,673
Property:
Land 586,500 586,500
Building 2,565,446 2,561,859
----------- -----------
Total 3,151,946 3,148,359
Less accumulated depreciation (1,752,566) (1,582,962)
----------- -----------
Property - net 1,399,380 1,565,397
----------- -----------
Other assets 8,995 8,995
----------- -----------
TOTAL $ 1,423,574 $ 1,584,065
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Liabilities 28,124 26,685
Partner's equity 1,395,450 1,557,380
----------- -----------
TOTAL $ 1,423,574 $ 1,584,065
=========== ===========
1995 1994 1993
INCOME STATEMENT DATA:
Rental revenues $707,333 $640,098 $633,691
Less operating expenses 319,264 327,985 336,771
-------- -------- --------
Net income $388,069 $312,113 $296,920
======== ======== ========
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, 1995 and 1994, and for each of the three years
in the period ended December 31, 1995, and have issued our report thereon dated
January 31, 1996; 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.
January 31, 1996
DELOITTE & TOUCHE
LONG BEACH, 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 $14,676 $371,000 $1,390,499 $1,761,499 $1,012,584 01/85 07/84 15 Yrs
Pittsburgh, CA None 317,550 1,122,032 5,482 317,550 1,127,514 1,445,064 799,571 05/85 11/84 15 Yrs
El Centro, CA None 163,560 708,710 3,202 163,560 711,912 875,472 508,975 04/85 12/84 15 Yrs
Lompoc, CA None 277,200 1,524,419 6,303 277,200 1,530,722 1,807,922 1,111,539 02/85 02/85 15 Yrs
Huntington Bch, CA None 1,176,000 2,306,020 7,863 1,176,000 2,313,883 3,489,883 1,628,962 06/85 02/85 15 Yrs
-------- ---------- ------- -------- ---------- ---------- ----------
$2,305,310 $7,037,004 $ 37,526 $2,305,310 $7,074,530 $ 9,379,840 $5,061,631
========== ========== ======== ========== ========== =========== ==========
Real Estate Accumulated
at Cost Depreciation
Balance at January 1, 1993 $ 9,345,070 $3,643,797
Additions 4,347 469,134
----------- ----------
Balance at December 31, 1993 9,349,417 4,112,931
Additions 5,510 469,134
----------- ----------
Balance at December 31, 1994 9,354,927 4,582,065
Additions 24,913 479,566
----------- ----------
Balance at December 31, 1995 $ 9,379,840 $5,061,631
=========== ==========
The total cost at the end of the period for Federal income tax purposes was
approximately $9,437,000.
EXHIBIT 2
March 28, 1996
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,
1995 and 1994, 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, 1995
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, 1995 and December 31, 1994 were as follows:
Location of Property Average Occupancy Average Occupancy
Levels for the Levels for the
Year Ended Year Ended
Dec. 31, 1995 Dec. 31, 1994
El Centro, CA 82% 73%
Lompoc, CA 91% 91%
Pittsburg, CA 85% 87%
Stockton, CA 84% 85%
Huntington Beach, CA 86% 85%
Aurora, CO* 89% 83%
- ---------
*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 (310) 424-2655.
If you would like a copy of the Partnership's Annual Report on Form 10-K
for the year ended December 31, 1995 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