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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, 1999.
or / /Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 [No fee required] for the transition period from
____________ to ______________.
Commission File No. 2-90168.
DSI REALTY INCOME FUND VIII, a California Limited Partnership
(Exact name of registrant as specified in governing instruments)
_________California___________________________33-0050204_____
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization identification
number
6700 E. Pacific Coast Hwy., Long Beach, California 9O8O3
(Address of principal executive offices) (Zip Code)
Registrants telephone number, including area code-(562)493-8881
Securities registered pursuant to Section 12(b) of the Act: none.
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interests
(Class of Securities Registered)
Indicate by check mark, whether the registrant (l) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 9O days. Yes_X____. No______.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. /x/
The Registrant is a limited partnership and there is no voting stock. All units
of limited partnership sold to date are owned by non-affiliates of the
registrant. All such units were sold at $5OO.OO per unit.
DOCUMENTS INCORPORATED BY REFERENCE
Item 8. Registrant's Financial Statements for its fiscal year ended December 31,
1999, incorporated by reference to Form 10-K, Part II.
Item 11. Registrant's Financial Statements for its fiscal year ended December
31, 1999, 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, 1999, 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, 1999 and December 31, 1998 were as follows:
Location of Property Average Occupancy Average Occupancy
Level for the Level for the
Year Ended Year Ended
Dec. 31, 1999 Dec. 31, 1998
El Centro, CA 76% 75%
Lompoc, CA 84% 82%
Pittsburg, CA 80% 85%
Stockton, CA 84% 85%
Huntington Beach, CA 90% 90%
Aurora, CO* 88% 88%
- ----------
*The Partnership owns a 30% fee interest in this facility.
The business in which the Partnership is engaged is highly competitive.
Each of its mini-storage facilities is located in or near a major urban area,
and accordingly, competes with a significant number of individuals and
organizations with respect to both the purchase and sale of its properties and
rental of units. Generally, Registrant's business is not affected by the change
in seasons.
Item 2. PROPERTIES
Registrant owns a fee interest in five mini-storage facilities and a thirty
percent (30%) interest in a joint venture with DSI Realty Income Fund IX, an
affiliated California limited partnership, owning a sixth mini-storage facility,
none of which are subject to long-term indebtedness. Additional information is
set forth in Registrant's letter to its Limited Partners regarding the Annual
Report, attached hereto as Exhibit 2, and incorporated by this reference. The
following table sets forth information as of December 31, 1999 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 879 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 $12.56 per Limited Partnership Unit were
declared and paid each quarter for the year ended December 31, 1999 and of
$12.50 per Limited Partnership Unit were declared and paid each quarter for
the year ended December 31, 1998 and $11.25 per Limited Partnership Unit were
declared each quarter for the year ended 1997. 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, 1999, 1998, 1997, 1996, and 1995
--------------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
TOTAL
REVENUES $1,964,314 $1,899,608 $1,712,288 $1,624,001 $1,636,156
TOTAL
EXPENSES 1,325,636 1,253,740 1,217,044 1,229,425 1,196,068
EQUITY IN
EARNINGS OF
REAL ESTATE
JOINT
VENTURE 122,453 109,741 93,305 82,729 116,421
---------- ---------- ---------- ---------- ----------
NET
INCOME $ 761,131 $ 755,609 $ 588,549 $ 477,305 $ 556,509
========== ========== ========== ========== ==========
TOTAL
ASSETS $3,209,853 $3,668,506 $4,132,136 $4,632,052 $5,245,858
========== ========== ========== ========== ==========
NET CASH
PROVIDED
BY OPERATING
ACTIVITIES $1,258,214 $1,219,731 $1,101,200 $1,054,462 $1,136,519
========== ========== ========== ========== ==========
NET INCOME
PER LIMITED
PARTNERSHIP
UNIT $ 31.40 $ 31.17 $ 24.28 $ 19.69 $ 22.96
========== ========== ========== ========== ==========
CASH
DISTRIBUTIONS
PER $500
LIMITED
PARTNERSHIP
UNIT $ 50.25 $ 50.00 $ 45.00 $ 45.00 $ 45.00
========== ========== ========== ========== ==========
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
1999 COMPARED TO 1998
Total revenues increased from $1,899,608 in 1998 to $1,964,314 in 1999,
while total expenses increased from $1,253,740 to $1,325,636 and income from
the real estate joint venture increased from $109,741 to $122,453. As a result
net income increased from $755,609 in 1998 to $761,131 in 1999. The approximate
$116,500 (6.3%) increase in rental revenues can be attributed to higher unit
rental rates. Occupancy levels for the Partnership's six mini-storage averaged
82.9% for the year ended December 31, 1999 and 84% for the year ended December
31, 1998. The Partnership is continuing its advertising campaign to attract
and keep new tenants in its various mini-storage facilities. The approximate
$72,900 (16.3%) increase in operating expenses was due primarily to an increase
in yellow pages and other advertising costs, maintenance and repair, workers
compensation and security and alarm services expenses. General and
administrative expenses and General Partners' incentive management fees remained
relatively constant. Property management fees, which are based on revenue
increased as a result of the increase in rental revenue. The increase in
income from real estate joint venture was the result of higher unit rental
rates, partially offset by increase in operating expenses. Average occupancy
of the joint venture was 88.0% in 1999 and 87.6% in 1998.
1998 COMPARED TO 1997
Total revenues increased from $1,712,288 in 1997 to $1,899,608 in 1998,
while total expenses increased from $1,217,044 to $1,253,740 and income from
the real estate joint venture increased from $93,305 to $109,741. As a result,
net income increased from $588,549 in 1997 to $755,609 in 1998. The increase
in revenues includes a one-time gain from involuntary conversion of land (see
Note 7 to Financial Statements). The increase in rental revenues is due
primarily to higher unit rental rates. Occupancy levels for the
Partnership's five mini-storage facilities was 84.9% for the year ended
December 31, 1997 and 84.0% for the year ended December 31, 1998. The
approximate $33,900 (8.2%) increase in operating expenses was primarily due
to increases in yellow pages advertising costs, maintenance and repair,
salaries and wages and real estate tax expenses. General and administrative
expenses decreased approximately $12,400 (8.9%) primarily as a result of a
decrease in legal and professional expenses. The General Partners' incentive
management fee increased approximately $7,900 (7.2%) 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 unit rental rates, as operating and general
and administrative expenses remained relatively constant. Average occupancy of
the joint venture was 87.6% in 1998 compared to 88.3% in 1997.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities increased approximately $38,500
(3.2%) in 1999 compared to 1998, primarily due to the absence of a gain from
involuntary conversion of land (see Note 7 to Financial Statements). Net cash
provided by operating activities increased approximately $118,500 (10.8%)
in 1998 compared to 1997, primarily due to the increase 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. A special
distribution of 1% was declared and paid on December 15, 1999 and 1998.
Cash used in investing activities, as set forth in the statements of cash
flows, consisted of acquisitions of equipment for the Partnership's mini-
storage properties. The Partnership has no material commitments for capital
expenditures.
The General Partners plan to continue their policy of funding the
continuing improvement and maintenance of Partnership properties with cash
generated from operations. The Partnership'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, 1999, Messrs. Robert J. Conway and Joseph
W. Conway, each of whom own approximately 48.4% of the issued and outstanding
capital stock of DSI Financial, Inc., a California corporation, together with
Mr. Joseph W. Stok, currently comprise the entire Board of Directors of DSI
Properties, Inc.
Mr. Robert J. Conway is 66 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 70 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 76 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, 1999, which together with the report of its independent auditors,
Deloitte & Touche LLP, is attached hereto as Exhibit 1 and incorporated herein
by this reference. In addition to such information:
(a) No annuity, pension or retirement benefits are proposed to be paid by
Registrant to any of the General Partners or to any officer or
director of the corporate General Partner;
(b) No standard or other arrangement exists by which directors of the
Registrant are compensated;
(c) The Registrant has not granted any option to purchase any of its
securities; and
(d) The Registrant has no plan, nor does the Registrant presently propose
a plan, which will result in any renumeration being paid to any
officer or director upon termination of employment.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
As of December 31, 1999, 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, 1999, 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, 1999, 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, 1999.
(b) No reports on Form 8K were filed during the fiscal year ended December
31, 1999.
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 31, 2000
ROBERT J. CONWAY, President
(Chief Executive Officer, Chief
Financial Officer, and Director)
By____________________________ Dated: March 31, 2000
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 31, 2000
ROBERT J. CONWAY, President,
Chief Executive Officer, Chief
Financial Officer, and Director
By___________________________ Dated: March 31, 2000
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, 1999, 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, 1999
- --------------------------------------------------------------------------------
1999 1998 1997 1996 1995
TOTAL REVENUES $1,964,314 $1,899,608 $1,712,288 $1,624,001 $1,636,156
TOTAL EXPENSES 1,325,636 1,253,740 1,217,044 1,229,425 1,196,068
EQUITY IN INCOME
OF REAL ESTATE
JOINT VENTURE 122,453 109,741 93,305 82,729 116,421
---------- ---------- ---------- ---------- ----------
NET INCOME $ 761,131 $ 755,609 $ 588,549 $ 477,305 $ 556,509
========== ========== ========== ========== ==========
TOTAL ASSETS $3,209,853 $3,668,506 $4,132,136 $4,632,052 $5,245,858
========== ========== ========== ========== ==========
NET CASH PROVIDED
BY OPERATING
ACTIVITIES $1,258,214 $1,219,731 $1,101,200 $1,054,462 $1,136,519
========== ========== ========== ========== ==========
NET INCOME PER
LIMITED
PARTNERSHIP UNIT $ 31.40 $ 31.17 $ 24.28 $ 19.69 $ 22.96
========== ========== ========== ========== ==========
CASH DISTRIBUTIONS
PER $500 LIMITED
PARTNERSHIP UNIT $ 50.25 $ 50.00 $ 45.00 $ 45.00 $ 45.00
========== ========== ========== ========== ==========
Operating Partners'
Results Equity
Per financial statements $ 761,131 $ 2,606,146
Excess financial statement depreciation 135,177 1,472,480
Excess tax return income
from real estate joint venture 15,640 205,761
Accrued incentive management fees 266,768
Capitalization of property acquisition costs 80,715
Fixed asset adjustments 2,080
Recognition of deferred rental revenues 41,918
Accrued distributions to partners 272,728
State taxes (6,040)
----------- -----------
Per Partnership income tax return $ 905,908 $ 4,948,596
=========== ===========
Net taxable income per $500 limited
partnership unit $ 37.75
===========
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, 1999 and 1998 F-2
Statements of Income for the Three
Years Ended December 31, 1999 F-3
Statements of Changes in Partners' Equity for
the Three Years Ended December 31, 1999 F-4
Statements of Cash Flows for the Three Years
Ended December 31, 1999 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, 1999 and 1998, and the related statements of income, changes in
partners' equity (deficit), and cash flows for each of the three years in the
period ended December 31, 1999. 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, 1999 and 1998 and the results of its operations and its cash flows for
each of the three years in the period ended December 31, 1999 in conformity
with generally accepted accounting principles.
January 28, 2000
DELOITTE & TOUCHE
LONG BEACH, CALIFORNIA
DSI REALTY INCOME FUND VIII
(A California Real Estate Limited Partnership)
BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
ASSETS 1999 1998
CASH AND CASH EQUIVALENTS $ 483,308 $ 458,025
PROPERTY, net (Notes 1, 3 and 7) 2,460,088 2,914,449
INVESTMENT IN REAL ESTATE
JOINT VENTURE
(Notes 1,2, and 6) 222,444 262,591
OTHER ASSETS 44,013 33,441
----------- -----------
TOTAL $ 3,209,853 $ 3,668,506
=========== ===========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
LIABILITIES:
Distribution due to partners (Note 4) $ 272,727 $ 272,727
Incentive management fee payable to
general partners (Note 4) 271,016 273,143
Property management fees payable (Note 1) 8,046 7,545
Customer deposits and other liabilities 51,918 51,918
----------- -----------
Total liabilities 603,707 605,333
----------- -----------
PARTNERS' EQUITY (DEFICIT) (Notes 1 and 4):
General partners (81,721) (77,150)
Limited partners (24,000 limited
partnership units outstanding
at December 31, 1997 and 1998) 2,687,867 3,140,323
------------ -----------
Total partners' equity 2,606,146 3,063,173
------------ -----------
TOTAL $ 3,209,853 $ 3,668,506
============ ===========
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, 1999
- --------------------------------------------------------------------------------
1999 1998 1997
REVENUES:
Rental $1,958,184 $1,841,672 $1,704,301
Gain from involuntary conversion
(Note 7) 47,117
Interest income 6,130 10,819 7,987
---------- ---------- ----------
Total revenues 1,964,314 1,899,608 1,712,288
---------- ---------- ----------
EXPENSES:
Depreciation 469,134 469,134 469,132
Operating 521,278 448,424 414,555
General and administrative 122,785 126,231 138,647
General partners' incentive
management fee (Note 4) 114,530 117,867 109,991
Property management fee (Note 1) 97,909 92,084 84,719
---------- ---------- ----------
Total expenses 1,325,636 1,253,740 1,217,044
---------- ---------- ----------
INCOME BEFORE EQUITY IN
INCOME OF REAL ESTATE
JOINT VENTURE 638,678 645,868 495,244
EQUITY IN INCOME OF
REAL ESTATE JOINT
VENTURE (Notes 1,2 and 6) 122,453 109,741 93,305
__________ __________ _________
NET INCOME $ 761,131 $ 755,609 $ 588,549
========== ========== ==========
AGGREGATE NET INCOME ALLOCATED
TO (Note 4):
Limited partners $ 753,520 $ 748,053 $ 582,664
General partners 7,611 7,556 5,885
---------- ---------- ----------
TOTAL $ 761,161 $ 755,609 $ 477,305
========== ========== ==========
NET INCOME PER LIMITED PARTNERSHIP
UNIT (Notes 2 and 4) $ 31.40 $ 31.17 $ 24.28
========== ========== ==========
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, 1999
- --------------------------------------------------------------------------------
General Limited
Partners Partners Total
BALANCE, JANUARY 1, 1997 $(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, DECEMBER 31, 1997 $(72,584) $3,592,270 $3,519,686
Net income 7,556 748,053 755,609
Distributions (12,122) (1,200,000) (1,212,122)
-------- ----------- ----------
BALANCE, DECEMBER 31, 1998 $(77,150) $3,140,323 $3,063,173
Net income 7,611 753,520 761,131
Distributions (12,182) (1,205,976) (1,218,158)
-------- ----------- -----------
BALANCE, DECEMBER 31, 1999 $(81,721) $2,687,867 $2,606,146
======== =========== ==========
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, 1999
- --------------------------------------------------------------------------------
1999 1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 761,131 $ 755,609 $ 588,549
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 469,134 469,134 469,132
Equity in earnings of
real estate joint venture (122,453) (109,741) (93,305)
Distributions from real
estate joint venture 162,600 160,800 144,300
Gain from involuntary conversion (47,117)
Changes in assets and liabilities:
Receivable from general partners
Other assets (10,572) (1,837) (9,920)
Incentive management fee
payable to general partners (2,127) (7,572) 13,946
Property management fees payable 501 455 833
Customer deposits and
other liabilities (12,335)
----------- ----------- -----------
Net cash provided by operating
activities 1,258,214 1,219,731 1,101,200
CASH FLOWS FROM INVESTING ACTIVITIES -
Additions of property (14,773) (14,288)
Proceeds from involuntary conversion 65,000
----------- ----------- ------------
Net cash (used in) provided by
investing activities (14,773) 50,712
----------- ----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES -
Distributions to partners (1,218,158) (1,212,122) (1,090,909)
----------- ----------- ------------
NET INCREASE IN CASH AND
CASH EQUIVALENTS 25,283 58,321 10,291
CASH AND CASH EQUIVALENTS,
AT BEGINNING OF YEAR 458,025 399,704 389,413
----------- ----------- ------------
CASH AND CASH EQUIVALENTS,
AT END OF YEAR $ 483,308 $ 458,025 $ 399,704
=========== =========== ============
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, 1999
1. GENERAL
DSI Realty Income Fund VIII, a California Real Estate Limited Partnership
(the "Partnership"), has two general partners (DSI Properties, Inc. and
Diversified Investors Agency) and limited partners owning 24,000 limited
partnership units, which were purchased for $500 a unit. The general
partners have made no capital contribution to the Partnership and are not
required to make any capital contribution in the future. The Partnership
has a maximum life of 50 years and was formed on April 23, 1984 under the
California Uniform Limited Partnership Act for the primary purpose of
acquiring and operating real estate.
The Partnership has acquired five mini-storage facilities located in
Stockton, Pittsburgh, El Centro, Huntington Beach, and Lompoc, California.
The Partnership has also entered into a joint venture with DSI Realty
Income Fund IX, through which the Partnership has a 30 percent interest in
a mini-storage facility in Aurora, Colorado (see Note 6). All facilities
were acquired from Dahn Corporation ("Dahn"). Dahn is not affiliated with
the Partnership. Dahn is affiliated with other partnerships in which DSI
Properties, Inc. is a general partner. The mini-storage facilities are
operated for the Partnership by Dahn under various agreements that are
subject to renewal annually. Under the terms of the agreements, the
Partnership is required to pay Dahn a property management fee equal to
five percent of gross revenue from operations, 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 $2,542,450.
Revenues - Rental revenue is recognized using the accrual method based
on contractual amounts provided for in the lease agreements, which
approximates recognition on a straight line basis. The term of the lease
agreements is usually less than one year.
Investment in Real Estate Joint Venture - The Partnership accounts for its
30 percent interest in the Aurora, Colorado facility using the equity
method of accounting (see Note 6).
Reclassifications - Certain reclassifications have been made to the 1998
and 1997 amounts to conform to the 1999 presentation.
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 1999, 1998 and
1997).
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 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 1999, 1998 or 1997.
Fair Value of Financial Instruments - The Company's financial instruments
consist primarily of cash, receivables, accounts payable and accrued
liabilities. The carrying values of all financial instruments are
representative of their fair values due to their short-term maturities.
Concentrations of Credit Risk - Financial instruments that potentially
subject the Partnership to concentrations of credit risk consist primarily
of cash equivalents and rent receivables. The Partnership places its
cash equivalents with high credit quality institutions.
3. PROPERTY
As of December 31, 1999 and 1998, the total cost of property and
accumulated depreciation are as follows:
1999 1998
Land $ 2,287,427 $ 2,287,427
Buildings and improvements 7,123,388 7,108,615
----------- -----------
Total 9,410,815 9,396,042
Less accumulated depreciation (6,950,727) (6,481,593)
----------- ----------
Property, net $ 2,460,088 $ 2,914,449
=========== ===========
During 1998, the Partnership received proceeds of $65,000 for an involuntary
conversion of the land. A gain from involuntary conversion was recorded in
the amount of $47,117, and the colst of land was reduced by $17,883 during
the year ended December 31, 1998.
4. ALLOCATION OF PROFITS AND LOSSES AND GENERAL PARTNERS' MANAGEMENT FEES
Under the Agreement of Limited Partnership, the general partners are to be
allocated 1% of the net profits or net losses from operations and the
limited partners are to be allocated the balance of the net profits or
losses from operations in proportion to their limited partnership
interests. The general partners are also entitled to receive a
percentage, based on a predetermined formula, of any cash distribution
from the sale, other disposition, or refinancing of a real estate project.
In addition, the general partners are entitled to receive an incentive
management fee for supervising the operations of the Partnership. The fee
is to be paid in an amount equal to nine percent per annum of the cash
available for distribution, as defined.
5. BUSINESS SEGMENT INFORMATION
The following disclosure about segment reporting of the Partnership is
made in accordance with the requirements of SFAS No. 131, "Disclosures
about Segments of an Enterprise and Related Information." The Partner-
ship operates under a single segment; storage facility operations, under
which the Partnership rents its storage facilities to its customers on
a need basis and charges rent on a predetermined rate.
6. INVESTMENT IN REAL ESTATE JOINT VENTURE
The Partnership is involved in a joint venture (the Buckley Road facility)
that owns a mini-storage facility in Aurora, Colorado. Under the terms
of the joint venture agreement, the Partnership is entitled to 30 percent
of the profits or losses of the venture and owns 30 percent of the mini-
storage facility as a tenant in common with DSI Realty Income Fund IX
("Fund IX"), which has the remaining 70 percent interest in the venture.
The agreement specifies that DSI Properties, Inc. (a general partner in
both the Partnership and Fund IX) shall make all decisions relating to
the activities of the joint venture and the management of the property.
Summarized financial information of the unaudited Buckley Road financial
statements is as follows:
1999 1998
ASSETS:
Cash $ 16,172 $ 11,642
Property:
Land 586,500 586,500
Building 2,586,208 2,565,446
----------- -----------
Total 3,172,708 3,151,946
Less accumulated depreciation (2,436,739) (2,267,136)
----------- -----------
Property - net 735,969 884,810
----------- -----------
Other assets 19,542 8,995
----------- -----------
TOTAL $ 771,683 $ 905,447
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Liabilities 26,972 26,913
Partner's equity 744,711 878,534
----------- -----------
TOTAL $ 771,683 $ 905,447
=========== ===========
1999 1998 1997
INCOME STATEMENT DATA:
Rental revenues $774,753 $717,772 $659,073
Less operating expenses 366,576 351,970 348,055
-------- -------- --------
Net income $408,177 $365,802 $311,018
======== ======== ========
Property is stated at cost; depreciation is provided for using the
straight-line method over the estimated useful life of 15 years.
7. INVOLUNTARY CONVERSION
In March 1998, the City of Stockton acquired approximately 6,089 square
feet or 4.8 percent the land to create a pedestrian under pass next to
the Partnership's Stockton property. During 1998, the Partnership received
a reimbursement in the amount of $65,000 for what City of Stockton believes
to have been the fair value of the land. A gain from involuntary
conversion was recorded in the amount of $47,117 and the cost of land was
reduced by $17,883 during the year ended December 31, 1998.
INDEPENDENT AUDITORS' REPORT
To the Partners of
DSI Realty Income Fund VIII:
We have audited the statements of income, changes in venturers' capital, and
cash flows for the year ended December 31, 1999 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, 1999 conformity with
generally accepted accounting principles.
January 28, 2000
Deloitte & Touche LLP
Los Angeles, California
DSI REALTY INCOME FUND VIII
(A California Real Estate Limited Partnership)
REAL ESTATE AND ACCUMULATED DEPRECIATION
- --------------------------------------------------------------------------------
Costs Capitalized
Initial Cost to Subsequent to Gross Amount at Which Carried
Partnership Acquisition at Close of Period
------------------- ----------------- -----------------------------
Buildings Buildings Date
and Improve- Carrying and Accum. of Date
Description Encumbrances Land Improvements ments Costs Land Improvements Total Deprec. Const. Acq. Life
MINI-U-STORAGE
Stockton, CA None $371,000 $1,375,823 $ 11,567 $353,117 $1,405,273 $1,758,390 $1,381,022 01/85 07/84 15 Yrs
Pittsburgh, CA None 317,550 1,122,032 5,482 317,550 1,127,514 1,445,064 1,100,331 05/85 11/84 15 Yrs
El Centro, CA None 163,560 708,710 3,202 163,560 711,912 875,472 699,517 04/85 12/84 15 Yrs
Lompoc, CA None 277,200 1,524,419 6,303 277,200 1,530,722 1,807,922 1,519,603 02/85 02/85 15 Yrs
Huntington Bch, CA None 1,176,000 2,306,020 41,947 1,176,000 2,347,967 3,523,967 2,250,254 06/85 02/85 15 Yrs
-------- ---------- ------- -------- ---------- ---------- ----------
$2,305,310 $7,037,004 $ 68,501 $2,287,427 $7,123,388 $ 9,410,815 $6,950,727
========== ========== ======== ========== ========== =========== ==========
Real Estate Accumulated
at Cost Depreciation
Balance at January 1, 1997 $ 9,399,637 $5,543,327
Additions 469,132
----------- ----------
Balance at December 31, 1997 $ 9,399,637 $6,012,459
Additions 14,288 469,134
Disposals (17,883)
----------- ----------
Balance at December 31, 1998 $ 9,396,042 $6,481,593
Additions 14,773 469,134
----------- ----------
Balance at December 31, 1999 $ 9,410,815 $6,950,727
=========== ==========
EXHIBIT 2
March 27, 2000
ANNUAL REPORT TO LIMITED PARTNERS OF
DSI REALTY INCOME FUND VIII
Dear Limited Partner:
This report contains the Partnership's balance sheets as of December 31,
1999 and 1998, 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, 1999
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, 1999 and December 31, 1998 were as follows:
Location of Property Average Occupancy Average Occupancy
Levels for the Levels for the
Year Ended Year Ended
Dec. 31, 1999 Dec. 31, 1998
El Centro, CA 76% 75%
Lompoc, CA 84% 82%
Pittsburg, CA 85% 80%
Stockton, CA 84% 85%
Huntington Beach, CA 90% 90%
Aurora, CO* 88% 88%
- ---------
*The Partnership owns a 30% fee interest in this facility.
We will keep you informed of the activities of DSI Realty Income Fund VIII
as they develop. If you have any questions, please contact us at your
convenience at (562) 493-3022.
If you would like a copy of the Partnership's Annual Report on Form 10-K
for the year ended December 31, 1999 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