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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [Fee Required]
For the fiscal year ended December 31, 1999 or
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[_] 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 ___________________ to _______________
Commission file number 0-14463
WELLS REAL ESTATE FUND I
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(Exact name of registrant as specified in its charter)
Georgia 58-1565512
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(State or other jurisdiction of I.R.S Employer Identification Number)
incorporation or organization)
6200 The Corners Parkway, Norcross, Georgia 30092
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 449-7800
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Securities registered pursuant to Section 12 (b) of the Act:
Title of each class Name of exchange on which registered
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NONE NONE
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Securities registered pursuant to Section 12 (g) of the Act:
CLASS A UNITS
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(Title of Class)
CLASS B UNITS
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(Title of Class)
Indicate by check mark whether the registrant (1) 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 90 days.
Yes X No ___
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Aggregate market value of the voting stock held by nonaffiliates: Not Applicable
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PART I
ITEM 1. BUSINESS
General
Wells Real Estate Fund I (the "Partnership") is a Georgia public limited
partnership having Leo F. Wells, III and Wells Capital, Inc., a Georgia
corporation, as General Partners. The Partnership was formed on April 26, 1984,
for the purpose of acquiring, developing, constructing, owning, operating,
improving, leasing and otherwise managing for investment purposes income-
producing commercial or industrial properties.
On September 6, 1984, the Partnership commenced a public offering of its limited
partnership units pursuant to a Registration Statement filed on Form S-11 under
the Securities Act of 1933. The Partnership terminated its offering on
September 5, 1986, and received gross proceeds of $35,321,000 representing
subscriptions from 4,895 Limited Partners, composed of two classes of limited
partnership interests, Class A and Class B limited partnership units.
The Partnership owns interests in the following joint ventures: (i) Wells-Baker
Associates, a joint venture between the Partnership and Wells & Associates, (ii)
Fund I-Fund II Tucker, and (iii) the Fund I, II, II-OW, VI, VII Joint Venture
As of December 31, 1999, the Partnership owned, directly or through its
ownership in joint ventures, interests in the following properties: (i) Paces
Pavilion, a medical office building located in Atlanta, Georgia, owned by the
Partnership, (ii) The Crowe's Crossing Property, a shopping center located in
DeKalb County, Georgia, owned by the Partnership, (iii) The Black Oak Plaza
Property, a shopping center located in Knoxville, Tennessee, owned by the
Partnership, (iv) The Peachtree Place Property, two commercial office buildings
located in Atlanta, Georgia, owned by Wells-Baker Associates, (v) The Tucker
Property, a retail shopping and commercial office complex located in Tucker,
Georgia, owned by Fund I-Fund II Tucker, and (vi) The Cherokee Property, a
shopping center located in Cherokee County, Georgia, owned by the Fund I, II,
II-OW, VI, VII Joint Venture. All of the foregoing properties were acquired on
an all cash basis.
Employees
The Partnership has no direct employees. The employees of Wells Capital, Inc.,
a General Partner of the Partnership, perform a full range of real estate
services including leasing and property management, accounting, asset management
and investor relations for the Partnership. See Item 11--"Compensation of
General Partners and Affiliates" for a summary of the fees paid to the General
Partners and their affiliates during the fiscal year ended December 31, 1999.
Insurance
Wells Management Company, Inc., an affiliate of the General Partners, carries
comprehensive liability and extended coverage with respect to all the properties
owned directly or indirectly by the Partnership. In the opinion of management,
the properties are adequately insured.
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Competition
The Partnership will experience competition for tenants from owners and managers
of competing projects which may include the General Partners and their
affiliates. As a result, the Partnership may be required to provide free rent,
reduced charges for tenant improvements, and other inducements, all of which may
have an adverse impact on results of operations. At the time the Partnership
elects to dispose of its properties, the Partnership will also be in competition
with sellers of similar properties to locate suitable purchasers for its
properties.
ITEM 2. PROPERTIES
The Partnership owns six properties directly or through its ownership in joint
ventures of which two are office buildings, three are retail buildings, and one
is a combined office and retail project. The Partnership does not have control
over the operations of the joint ventures; however, it does exercise significant
influence. Accordingly, investment in joint ventures is recorded on the equity
method. The Wells-Baker Associate joint venture is consolidated with Fund I
since the ownership is 89.95%. As of December 31, 1999 these properties were
80% occupied, up from 78.8% at December 31, 1998 and 1997.
The following table shows lease expirations during each of the next ten years as
of December 31, 1999, assuming no exercise of renewal options or termination
rights:
Partnership Percentage Percentage
Number Share of of Total of Total
Year of of Square Annualized Annualized Square Annualized
Lease Leases Feet Gross Base Gross Base Feet Gross Base
Expiration Expiring Expiring Rent (1) Rent (1) Expiring Rent
- ------------ ------------- ------------ -------------- -------------- ---------------- ---------------
2000 22 41,831 $ 681,059 $ 451,384 22.02% 27.85%
2001 27 44,387 687,755 450,373 23.36 28.13
2002(2) 25 56,673 656,343 472,809 29.83 26.84
2003 4 9,878 94,687 79,894 5.20 3.67
2004 14 27,633 236,474 166,792 14.55 9.67
2005 0 0 0 0 0.00 0.00
2006 0 0 0 0 0.00 0.00
2007 1 3,600 44,250 10,629 1.89 1.81
2008 1 2,400 27,384 15,086 1.26 1.12
2009 1 3,580 17,229 17,229 1.88 0.70
------------- ------------ -------------- -------------- ---------------- ---------------
95 189,982 $2,445,181 $1,664,196 100.00% 100.00%
------------- ------------ -------------- -------------- ---------------- ---------------
(1) Average monthly gross rent over the life of the lease,
annualized.
(2) Lease expiring is ground lease only with McDonald's.
The following describes the properties in which the Partnership owns an interest
as of December 31, 1999:
Paces Pavilion Property
On December 27, 1985, the Partnership acquired a three-story medical office
building on 1.65 acres of land located on Howell Mill Road in metropolitan
Atlanta, Fulton County, Georgia, directly across from the West Paces Ferry
Hospital (the "Paces Pavilion Property") for a purchase price of
$3,443,203. The Paces Pavilion Property contains approximately 32,339 of
net rentable
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square feet, and the entire building was leased to HCA Realty, Inc. and
Hospital Corporation of America (collectively, "HCA") until December 31,
1996. HCA is a medical support staff group which supplies health care
workers to West Paces Ferry Hospital. Although efforts were made to
negotiate a new lease, HCA vacated the premises as of December 31, 1996.
Management has hired an outside firm to engage a tenant. Rental income is
currently being generated from four (4) leaseholders occupying 5,062 square
feet.
The occupancy rate at the Paces Pavilion Property was 19.15% for the year
ended December 31, 1999, 12.6% for the year ended December 31, 1998, and
27.8% for the year ended December 31, 1997.
The average effective annual rental per square foot at the Paces Pavilion
Property was $3.31 for 1999, $2.44 for 1998, $4.17 for 1997, and $16.86 for
1996 and 1995.
Crowe's Crossing Property/Fund I
On December 31, 1986, the Partnership acquired a retail shopping center
known as "Crowe's Crossing Shopping Center" located in metropolitan
Atlanta, DeKalb County, Georgia (the "Crowe's Crossing Property"). The
Crowe's Crossing Property consists of approximately 93,728 net rentable
square feet. The Crowe's Crossing Property is anchored by a 45,528 square
foot lease with Kroger Food/Drug which expires in 2011. The annual base
rent payable under the Kroger lease is $295,932. The remaining 48,200
square feet of the center is composed of 31 separate retail spaces whose
tenants operate retail businesses typical of multi-tenant shopping centers.
The occupancy rate at the Crowe's Crossing Property was 96% in 1999, 94% in
1998, and 86% in 1997.
The average annual rental per square foot at the Crowe's Crossing Property
was $7.64 for 1999, $7.98 for 1998, $7.40 for 1997, $7.92 for 1996, and
$7.60 for 1995.
As of December 31, 1999, the Partnership had expended a total of $8,357,591
for the acquisition of the Crowe's Crossing Property.
Black Oak Plaza Property/Fund I
On December 31, 1986, the Partnership acquired a retail shopping center
known as "Black Oak Plaza" located in Metropolitan Knoxville, Knox County,
Tennessee. Black Oak Plaza was initially developed in 1981. Although
Black Oak Plaza contained a total of approximately 175,000 square feet of
space including a K-Mart department store and a Kroger Food/Drug, the
Partnership acquired only the space located in the shopping center other
than the space occupied by K-Mart and Kroger. The portion of the shopping
center owned and operated by the Partnership contains approximately 68,414
net rentable square feet. As of December 31, 1999, Black Oak Plaza was
approximately 70% leased to 20 tenants. Cato/Cato Plus, a women's clothing
store, is the only tenant occupying 10% or more of the rentable square
footage of the property. Cato's lease for 8,610 square feet, approximately
12.5% of the total, expired in January, 1999 and is currently on a month to
month basis. The occupancy rate at Black Oak Plaza was 70% in 1999, 73% in
1998, and 78% in 1997. The average annual rental per square foot at Black
Oak Plaza was $5.53 in 1999, $6.41 in 1998, $6.53 in 1997, $6.08 for 1996,
and $6.14 for 1995.
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As of December 31, 1999, the Partnership had expended a total of $4,581,743
for the acquisition of Black Oak Plaza.
Peachtree Place Property/Fund I and Wells & Associates, Inc.
In 1985, the Partnership acquired an interest in two commercial office
buildings located at Holcomb Bridge Road, Norcross, Gwinnett County,
Georgia (the "Peachtree Place Property"). The Peachtree Place Property,
which contains approximately 17,245 net rentable square feet, is owned
through a joint venture between the Partnership and Wells & Associates,
Inc., a Georgia corporation affiliated with the General Partners. The land
upon which the Peachtree Place Property was developed was originally
purchased by Wells & Associates, Inc. for a purchase price of $187,087,
and, upon the formation of the joint venture with the Partnership, Wells &
Associates, Inc. contributed the land to the joint venture as its capital
contribution. As of December 31, 1999, the Partnership had made total
capital contributions of $1,526,798 to the joint venture. The Partnership
holds a 89.95% equity interest in the joint venture, and Wells &
Associates, Inc. holds a 10.05% equity interest in the joint venture. As
of December 31, 1999, the buildings at the Peachtree Place Property were
100% leased to nine tenants.
The occupancy rate at the Peachtree Place Property was 100% in 1999, 74% in
1998, and 95.3% in 1997.
The average annual rental per square foot at the Peachtree Place Property
was $13.86 in 1999, $15.51 for 1998, $15.88 for 1997, $16.08 for 1996, and
$13.62 for 1995.
Three tenants occupy ten percent or more of the rentable square footage,
Dr. Keith Broome, a dentist, Dr. Christian Loetscher, an oral surgeon and
Prime Media International, a marketing promotional company. The other
tenants in the office park provide typical commercial office services.
Dr. Loetscher's original lease represented 2,067 rentable square feet. In
1995, he expanded and increased his rentable space by an additional 2,333
square feet for a total of 4,400 rentable square feet. Dr. Loetscher's
lease calls for an annual base rent of $76,083 in 1999 and base rent of
$77,603 in 2000. The lease expires May 31, 2001.
Dr. Keith Broome's lease represents 2,016 rentable square feet. The annual
base rent under the lease is $34,272 for 1998 and 1999, and $35,280 in
2000. The lease expires December 31, 2002.
Prime Media International's lease represents 2,065 rentable square feet.
The annual base rent under the lease is $35,105 for 2000. The lease
expires June 30, 2004.
Tucker Property/Fund I--Fund II Tucker Joint Venture
The Tucker Property consists of a retail shopping center and a commercial
office building complex located in Tucker, DeKalb County, Georgia (the
"Tucker Property"). The retail shopping center at the Tucker Property
contains approximately 29,858 net rentable square feet. The commercial
office space at the Tucker Property, which is divided into seven separate
buildings, contains approximately 67,465 net rentable square feet.
On September 4, 1986, the Partnership acquired an 11.17 acre tract of land
located at Hugh Howell Road and Tucker Industrial Boulevard, Tucker, DeKalb
County, Georgia. In January 1987, the Partnership transferred and
contributed this tract of land to a joint venture (the "Tucker
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Joint Venture"), which was formed in 1987 between the Partnership and Wells
Real Estate Fund II ("Wells Fund II"). Wells Fund II is a Georgia public
limited partnership affiliated with the Partnership through common general
partners. The investment objectives of Wells Fund II are substantially
identical to those of the Partnership. On March 1, 1988, Wells Fund II
formed a joint venture (the "Fund II-Fund II-OW Joint Venture") with Wells
Real Estate Fund II-OW ("Wells Fund II-OW"). Wells Fund II-OW is a Georgia
public limited partnership affiliated with the Partnership through common
general partners. The investment objectives of Wells Fund II-OW are
substantially identical to those of the Partnership. Upon the formation of
the Fund II-Fund II-OW Joint Venture, Wells Fund II contributed its joint
venture interest in the Tucker Joint Venture to the Fund II-Fund II-OW
Joint Venture as part of its capital contribution. On January 1, 1991, the
Cherokee Joint Venture, which is defined below, was merged into the Tucker
Joint Venture forming a new joint venture ("Tucker-Cherokee Joint
Venture"). As described below, the Cherokee Joint Venture was also a joint
venture between the Partnership and the Fund II-Fund II-OW Joint Venture.
Under the terms of the Amended and Restated Joint Venture Agreement of Fund
I and Fund II Tucker-Cherokee, the Partnership's percentage interest in the
Tucker Property remained unchanged as a result of the merger of the Tucker
Joint Venture into the Tucker-Cherokee Joint Venture.
On August 1, 1995, the Partnership and the Fund II-Fund II-OW Joint Venture
entered into another amendment to effect the contribution of the Cherokee
Project to the Fund I, II, II-OW, VI, VII Joint Venture, as described
below. As a result, the name of the joint venture owning the Tucker
Property was changed back to "Fund I and Fund II Tucker". The
Partnership's percentage interest in the Tucker Property remained unchanged
as a result of the transaction.
Both the Partnership and the Fund II-Fund II-OW Joint Venture have funded
the cost of completing the Tucker Property through capital contributions
which were paid as progressive stages of construction were completed. As
of December 31, 1999, the Partnership had contributed a total of
$6,194,634, and the Fund II-Fund II-OW Joint Venture had contributed a
total of $4,764,585 for the acquisition and development of the Tucker
Property. As of December 31, 1999, the Partnership had approximately a 55%
equity interest in the Tucker Property, and the Fund II--Fund II-OW Joint
Venture held approximately a 45% equity interest in the Tucker Property.
As of December 31, 1999, the Tucker Property was 87% occupied by 35
tenants.
There are no tenants in the project occupying ten percent or more of the
rentable square footage. The principal businesses, occupations, and
professions carried on in the building are typical retail
shopping/commercial office services.
The occupancy rate at the Tucker Property was 87% in 1999, 94% in 1998, and
85% in 1997.
The average effective annual rental per square foot at the Tucker Property
was $14.11 in 1999, $12.76 for 1998, $11.08 for 1997, $13.78 for 1996, and
$12.61 for 1995.
Cherokee Property/Fund I, II, II-OW, VI, and VII Joint Venture
The Cherokee Property consists of a retail shopping center known as
"Cherokee Commons Shopping Center" located in metropolitan Atlanta,
Cherokee County, Georgia (the "Cherokee Property"). The Cherokee Property
consists of approximately 103,755 net rentable square feet.
On June 30, 1987, the Partnership acquired an interest in the Cherokee
Property through a joint venture (the "Cherokee Joint Venture") between the
Partnership and Wells Fund II-Fund II-OW
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Joint Venture. On January 1, 1991, the Cherokee Joint Venture merged with
the Tucker Joint Venture to form the Tucker-Cherokee Joint Venture. As
described above, the Tucker Joint Venture was also a joint venture between
the Partnership and the Fund II-Fund II-OW Joint Venture. Under the terms
of the Amended and Restated Joint Venture Agreement of Fund I and Fund II
Tucker-Cherokee, the Partnership's percentage interest in the Cherokee
Property remained unchanged as a result of the merger of the Cherokee Joint
Venture into the Tucker-Cherokee Joint Venture.
On August 1, 1995, the Partnership, Fund II--Fund II-OW Joint Venture,
Wells Real Estate Fund VI, L.P., a Georgia public limited partnership
having Leo F. Wells, III and Wells Partners, L.P., a Georgia limited
partnership, as General Partners ("Wells Fund VI"); and Wells Real Estate
Fund VII, L.P., a Georgia public limited partnership having Leo F. Wells,
III and Wells Partners, L.P., a Georgia limited partnership, as General
Partners ("Wells Fund VII') entered into a joint venture agreement known as
Fund I, II, II-OW, VI, and VII Associates (the "Fund I, II, II-OW, VI, VII
Joint Venture"), which was formed to own and operate the Cherokee Property.
Wells Partners, L.P. is a private limited partnership having Wells Capital,
Inc., a General Partner of the Partnership, as its sole general partner.
The investment objectives of Fund II-Fund II-OW, Wells Fund VI and Wells
Fund VII are substantially identical to those of the Partnership.
As of December 31, 1999, the Partnership had contributed property with a
book value of $2,139,900, the Fund II-Fund II-OW Joint Venture had
contributed property with a book value of $4,860,100, Wells Fund VI had
contributed cash in the amount of $953,798 and Wells Fund VII had
contributed cash in the amount of $953,798 to the Fund I, II, II-OW, VI,
VII Joint Venture. As of December 31, 1999, the equity interests in the
Fund I, II, II-OW, VI, VII Joint Venture were as follows: the Partnership
24%, Fund II-Fund II-OW Joint Venture 54%, Wells Fund VI 11% and Wells Fund
VII 11%.
The Cherokee Property is anchored by a 67,115 square foot lease with Kroger
Food/Drug ("Kroger") which expires in 2011. Kroger's original lease was
for 45,528 square feet. In 1994, Kroger expanded to the current 67,115
square feet which is approximately 65% of the total rentable square feet in
the Property. As of December 31, 1999, the Cherokee Property was
approximately 97% occupied by 21 tenants, including Kroger.
Kroger is the only tenant occupying ten percent or more of the rentable
square footage. Kroger is a retail grocery chain. The other tenants in
the shopping center provide typical retail shopping services.
The Kroger lease called for an annual rent of $392,915 which increased to
$589,102 on August 16, 1995, due to the expansion from 45,528 square feet
to 67,115 square feet. The lease expires March 31, 2011 with Kroger
entitled to five successive renewals each for a term of five years, upon
the same terms and conditions.
The occupancy rate at the Cherokee Property was 97% in 1999, 91% in 1998,
and 94% in 1997.
The average annual rental per square foot at the Cherokee Property was
$9.11 for 1999, $8.78 for 1998, $8.49 for 1997, $8.59 for 1996, and $7.50
for 1995.
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ITEM 3. LEGAL PROCEEDINGS
There were no material pending legal proceedings or proceedings known to be
contemplated by governmental authorities involving the Partnership during 1999.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Limited Partners during the year of
1999.
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PART II
ITEM 5. MARKET FOR PARTNERSHIP'S UNITS AND RELATED SECURITY HOLDER MATTERS
As of February 28, 2000, the Partnership had 98,716 outstanding Class A Units
held by a total of 3,682 Limited Partners and 42,568 outstanding Class B Units
held by a total of 930 Limited Partners. The capital contribution per unit was
$250. There is no established public trading market for the Partnership's
limited partnership units, and it is not anticipated that a public trading
market for the units will develop. Under the Partnership Agreement, the General
Partners have the right to prohibit transfers of units.
Class A Unit holders are entitled to an annual 9% noncumulative distribution
preference over Class B Unit holders as to distributions from Cash Available for
Distribution but are initially allocated none of the depreciation, amortization,
cost recovery, and interest expense. These items are allocated to Class B Unit
holders until their capital account balances have been reduced to zero.
Cash Available for Distribution to the Limited Partners is distributed on a
quarterly basis. To date, no cash distributions have been made to Limited
Partners holding Class B Units during 1999. The Partnership has reserved all
operating cash flow during 1998 and the first two quarters of 1999 which would
otherwise be available for distribution to fund the proposed reconfiguration of
the interior of the Paces Pavilion Building. Cash distributions made to the
Limited Partners holding Class A Units during the two most recent fiscal years
were as follows:
Per Class A Per Class A Per Class B Per Class B
Distribution Total Unit Unit Unit Unit
for Quarter Cash Investment Return of Return of General
Ended Distributed Income Capital Capital Partner
- ---------------------- ------------------- ---------------- --------------- ------------ --------------
March 31, 1998 $ 0 $0.00 $0.00 $0.00 $0.00
June 30, 1998 0 0.00 0.00 0.00 0.00
September 30, 1998 0 0.00 0.00 0.00 0.00
December 31, 1998 0 0.00 0.00 0.00 0.00
March 31, 1999 0 0.00 0.00 0.00 0.00
June 30, 1999 0 0.00 0.00 0.00 0.00
September 30, 1999 320,363 3.25 0.00 0.00 0.00
December 31, 1999 324,141 3.28 0.00 0.00 0.00
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ITEM 6. SELECTED FINANCIAL DATA
The following sets forth a summary of the selected financial data for the fiscal
years ended December 31, 1999, 1998, 1997, 1996, and 1995:
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
Total assets $22,721,176 $23,098,782 $23,593,566 $24,968,886 $26,086,260
Total revenues 1,710,741 1,636,172 1,643,943 1,967,743 2,169,532
Net (loss) income (101,904) (337,675) (305,296) 101,804 746,262
Net (loss) income allocated to Class A
limited partners (101,904) (337,675) 1,059,405 1,416,538 1,657,310
Net loss allocated to Class B limited
partners 0 0 (1,364,701) (1,314,734) (911,048)
Net (loss) income per Class A limited
partner unit $(1.03) $(3.42) $10.73 $14.35 $16.79
Net loss per Class B limited partner
unit 0.00 0.00 (32.06) (30.89) (21.40)
Cash distributions to Investors:
Investments income Class A units 6.53 0.00 10.85 12.92 17.24
Return of Capital Class A units 0.00 0.00 0.00 0.00 0.00
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL AND CONDITIONS RESULTS
OF OPERATION
The following discussion and analysis should be read in conjunction with the
selected financial data and the accompanying financial statements of the
Partnership and notes thereto. This Report contains forward-looking statements,
within the meaning of Section 27A of the Securities Act of 1933 and 21E of the
Securities Exchange Act of 1934, including discussion and analysis of the
financial condition of the Partnership, anticipated capital expenditures
required to complete certain projects, amounts of cash distributions anticipated
to be distributed to Limited Partners in the future and certain other matters.
Readers of this Report should be aware that there are various factors that could
cause actual results to differ materially from any forward-looking statement
made in this Report, which include construction costs which may exceed
estimates, construction delays, lease-up risks, inability to obtain new tenants
upon the expiration of existing leases, and the potential need to fund tenant
improvements or other capital expenditures out of operating cash flow.
Results of Operations and Changes in Financial Conditions
General
Gross revenues of the Partnership were $1,710,741 for the fiscal year ended
December 31, 1999 as compared to $1,636,172 for the fiscal year ended December
31, 1998, and $1,643,943 for the fiscal year ended December 31, 1997. The
increase for 1999 was due to increased equity in joint ventures and increased
interest income. Increased equity in joint ventures is due to increased rental
renewal rates at the Tucker Property and increased occupancy and lower operating
expenses at the Cherokee Property. Interest income increased due to increased
cash and cash equivalents as distributions to limited partners was reserved for
future tenant improvements at the Pace Pavilion Property. Expenses of the
Partnership were $1,811,046 for the fiscal year ended December 31, 1999, down
from $1,973,731 for 1998 and $1,945,614 for 1997. The decrease in 1999 over
1998 is due primarily to decreased legal fees at Black Oak Plaza and decreased
property operating expenses in the areas of property security and general
repairs
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and maintenance. As a result of increased revenue and decreased expenses net
loss decreased to $101,904 in 1999 as compared to net loss of $337,675 in 1998
and net loss of $305,296 in 1997.
The Partnership's cash distribution to the Limited Partners holding Class A
Units was $6.53 per unit for the fiscal year ended December 31, 1999 and $10.85
per unit for the fiscal year ended December 31, 1997. No cash distributions
were made to the Limited Partners holding Class A Units for the year ending
December 31, 1998. No distributions have been paid to Class B Units or to the
General Partners.
The Partnership has recently made the decision to begin selling its properties.
At this time, four properties have been identified that will be offered for sale
within the next several months. The Partnership's goal is to have all Fund I
properties sold by the end of 2002. As the properties are sold, all proceeds
will be returned to the limited partners in accordance with the Partnership's
prospectus. Management estimates that the net realizable value of each of the
properties exceeds the carrying value of the corresponding real estate assets;
consequently, no impairment loss has been recorded. In the event that the net
sales proceeds are less than the carrying value of the property sold, the
Partnership would recognize a loss on the sale. Management is not contractually
or financially obligated to sell any of its properties, and it is management's
current intent to fully realize the Partnership's investment in real estate.
The success of the Partnership's future operations and the ability to realize
investment in its assets will be dependent on the Partnership's ability to
maintain rental rates, occupancy and an appropriate level of operating expenses
in future years. Management believes that the steps that it is taking will
enable the Partnership to realize its investment in its assets.
Property Operations
As of December 31, 1999, the Partnership's ownership interest in the Paces
Pavilion Property, Black Oak Plaza and Crowe's Crossing Shopping Center is 100%,
the Peachtree Place Property is 89.95%, Fund I--Fund II Tucker Joint Venture is
55.09% and Fund I, II, II-OW, VI, and VII Joint Venture is 24.02%.
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As of December 31, 1999, the Partnership owned interests in the following
properties:
Paces Pavilion Property/Fund I
For the Year Ended December 31
---------------------------------------------
1999 1998 1997
--------- --------- ---------
Revenues:
Rental income $ 106,993 $ 79,054 $ 134,951
--------- --------- ---------
Expenses:
Depreciation 256,640 256,157 251,755
Management and leasing expenses 6,420 4,800 8,652
Other operating expenses 262,295 243,744 241,180
--------- --------- ---------
525,355 504,701 501,587
--------- --------- ---------
Net loss $(418,362) $(425,647) $(366,636)
========= ========= =========
Occupied percentage 19.15% 12.6% 27.8%
========= ========= =========
Partnership ownership percentage 100% 100% 100%
========= ========= =========
Cash generated to the Partnership $ 0 $ 0 $ 0
========= ========= =========
Net loss generated to the Partnership $(418,362) $(425,647) $(366,636)
========= ========= =========
Rental income increased to $106,993 in 1999 from $79,054 in 1998 due to a tenant
that moved in during the second quarter of 1999 and decreased from $134,951 in
1997 to $79,054 in 1998 due to decreased tenant occupancy.
Management and leasing fees increased to $6,420 in 1999 from $4,800 in 1998 and
decreased from $8,652 in 1997 to $4,800 in 1998 due to fluctuation in tenant
occupancy.
Other operating expenses increased to $262,295 in 1999 from $243,744 in 1998 due
primarily to an increase in association dues from $189,209 in 1998 to $219,923
in 1999 but remained stable from 1997 to 1998.
Currently, there are four tenants occupying 19.15% of the premises. Management
is actively seeking replacement tenants for the remaining space at Paces
Pavilion. Because of the low rental income, increased expenses and capital
improvements, no cash was generated to the Partnership for 1999, 1998 and 1997.
Rental income is currently being generated through four (4) leaseholders
occupying 5,062 square feet.
Real estate taxes were paid by HCA directly during the years of occupancy at the
Paces Pavilion Property and are included in the Paces Pavilion Condominium
Association monthly fee for 1999, 1998 and 1997.
The Partnership's ownership percentage has remained constant at 100% for the
years 1999, 1998, and 1997.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on the
property, tenants, etc., see Item 2, Properties, page 3.
-12-
Crowe's Crossing Shopping Center/Fund I
For the Year Ended December 31
-------------------------------------------
1999 1998 1997
======== ======== =========
Revenues:
Rental income $716,427 $696,530 $693,334
-------- -------- --------
Expenses:
Depreciation 417,020 417,588 417,262
Management and leasing expenses 84,719 76,243 66,509
Other operating expenses 97,219 71,925 187,504
-------- -------- --------
598,958 565,756 671,275
-------- -------- --------
Net income $117,469 $130,774 $ 22,059
======== ======== ========
Occupied percentage 96% 94% 86%
======== ======== ========
Partnership ownership percentage 100% 100% 100%
======== ======== ========
Cash generated to the Partnership $529,994 $606,495 $545,071
======== ======== ========
Net income generated to the Partnership $117,469 $130,774 $ 22,059
======== ======== ========
Rental increased for 1999 as compared to 1998 due to increased occupancy and
rental renewal rates. Rental income increased in 1998 compared to 1997 but not
as significantly as the occupancy increase from 86% to 94% due primarily to this
increase in occupancy being attributable to the fourth quarter of 1998. Other
operating expenses increased to $97,219 in 1999 as compared to $71,925 in 1998
due to significant HVAC and plumbing repairs. The lower operating expenses in
1998 as compared to both 1999 and 1997 is due to a recovery of bad debt of
$13,000 and water reimbursements from tenants of approximately $12,000.
Cash generated to the Partnership decreased in 1999 as compared to 1998 due to
decreased net income and capitalized leasing commissions.
Real estate taxes were $83,402 in 1999, $87,045 in 1998, and $84,973 in 1997.
The Partnership's ownership percentage has remained constant at 100% for the
years 1999, 1998, and 1997.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on the
property, tenants, etc., see Item 2, Properties, page 3.
-13-
Black Oak Plaza/Fund I
For the Year Ended December 31
--------------------------------------------
1999 1998 1997
======== ========= ========
Revenues:
Rental income $378,447 $ 441,890 $447,027
-------- --------- --------
Expenses:
Depreciation 266,275 266,866 254,009
Management and leasing expenses 43,043 46,857 39,040
Other operating expenses 61,517 232,521 161,635
-------- --------- --------
370,835 546,244 454,684
-------- --------- --------
Net income (loss) $ 7,612 $(104,354) $ (7,657)
======== ========= ========
Occupied percentage 70% 73% 78%
======== ========= ========
Partnership ownership percentage 100% 100% 100%
======== ========= ========
Cash generated to the Partnership $327,845 $ 208,670 $187,385
======== ========= ========
Net income (loss) generated to the Partnership $ 7,612 $(104,354) $ (7,657)
======== ========= ========
Rental income decreased to $378,447 in 1999 as compared to $441,890 in 1998 and
$447,027 in 1997 due to fluctuations in tenant occupancy at the property.
Depreciation remained relatively stable in 1999 as compared to 1998 but
increased in 1998 as compared to 1997 due to additional building and landscaping
improvements as well as tenant improvements for two new tenants in 1998. Other
operating expenses decreased in 1999 as compared to 1998 and 1997 due to
significantly lower expenses in the areas of parking lot repairs, security,
legal, and bad debt. Security was approximately $18,000 in 1999 as compared to
$28,445 in 1998 and $25,160 in 1997, legal was approximately $13,700 in 1999 as
compared to $111,000 in 1998 and $28,500 in 1997, and bad debt write-off was
zero in 1999 as compared to $22,730 in 1998, and $29,000 in 1997.
Real estate taxes were $47,318 for 1999, $39,479 for 1998, and $40,634 for 1997.
The Partnership's ownership percentage remained constant at 100% for the years
1999, 1998, and 1997.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on the
property, tenants, etc., see Item 2, Properties, page 3.
-14-
Peachtree Place/Fund I and Wells & Associates, Inc. Joint Venture
For the Year Ended December 31
--------------------------------------------
1999 1998 1997
-------- -------- --------
Revenues:
Rental income $238,932 $267,476 $276,345
Interest income 22 24 22
-------- -------- --------
238,954 267,500 273,826
-------- -------- --------
Expenses:
Depreciation 79,596 85,148 87,057
Management and leasing expenses 17,143 22,450 22,931
Other operating expenses 126,302 158,749 127,686
-------- -------- --------
223,041 266,347 237,674
-------- -------- --------
Net income $ 15,913 $ 1,153 $ 36,152
======== ======== ========
Occupied percentage 100.00% 74.02% 95.34%
======== ======== ========
Partnership ownership percentage 89.95% 89.95% 89.95%
======== ======== ========
Cash distribution to the Partnership $ 69,147 $ 82,286 $128,771
======== ======== ========
Net income allocated to the Partnership $ 14,314 $ 1,037 $ 32,518
======== ======== ========
Rental income decreased in 1999 as compared to 1998 and 1997 due to fluctuations
in occupancy. Occupancy decreased from 95.4% in 1997 to 74% in 1998. Although
occupancy at December 31, 1999 is at 100%, the year began at 74%, increased to
85% and did not become 100% occupied until December of 1999. Other operating
expenses remained relatively constant in 1999 as compared to 1997 but were
higher in 1998 due to HVAC and roof repairs. As some of the capitalized tenant
improvements have become fully depreciated, depreciation expense has declined
for 1999 and 1998 as compared to 1997.
Real estate taxes were $14,349 for 1999 and $15,650 each for 1998 and 1997.
The Partnership holds an 89.95% equity interest in the joint venture, and Wells
& Associates, Inc. holds a 10.05% equity interest.
For comments on the general conditions to which the property may be subject, see
Item 1, Business, Page 2. For additional information on the property, tenants,
etc., see Item 2, Properties, page 3.
-15-
Tucker Property/Fund I--Fund II Tucker Joint Venture
For the Year Ended December 31
------------------------------------------------
1999 1998 1997
---------- ---------- ----------
Revenues:
Rental income $1,373,213 $1,242,332 $1,077,916
Interest income 447 0 1,159
---------- ---------- ----------
1,373,660 1,242,332 1,079,075
---------- ---------- ----------
Expenses:
Depreciation 491,385 440,099 419,928
(Gain) loss on real estate assets 0 0 (45,943)
Management and leasing expenses 158,270 164,378 122,452
Other operating expenses 498,849 532,985 532,859
---------- ---------- ----------
1,148,504 1,137,462 1,029,296
---------- ---------- ----------
Net income $ 225,156 $ 104,870 $ 49,779
========== ========== ==========
Occupied percentage 87.10% 93.94% 84.83%
========== ========== ==========
Partnership ownership percentage 55.09% 55.09% 55.09%
========== ========== ==========
Cash distribution to the Partnership $ 300,689 $ 269,139 $ 205,024
========== ========== ==========
Net income allocated to the Partnership $ 124,039 $ 57,773 $ 27,423
========== ========== ==========
Rental income increased in 1999 compared to 1998 even though occupancy decreased
due to increased rental renewal rates and the decrease in occupancy moving
slowly downward throughout the year. The increased rental income for 1998 as
compared to 1997 was due to increased tenant occupancy at the property. The
increase in depreciation expense for 1999 was due to capitalized building
repairs. Other operating expenses decreased for 1999 as compared to both 1998
and 1997 due to significant variable expenses for those years. Expenses were
higher in 1998 due to sewer and main water line repairs and were higher in 1997
due to HVAC repairs and painting expense.
Real estate taxes were $91,970 in 1999, $93,697 in 1998 and $108,836 in 1997.
For comments on the general conditions to which the property may be subject, see
Item 1, Business, Page 2. For additional information on the property, tenants,
etc., see Item 2, Properties, page 3.
-16-
Cherokee Commons Shopping Center/Fund I, II, II-OW, VI, and VII Joint Venture
For the Year Ended December 31
--------------------------------------------
1999 1998 1997
-------- -------- --------
Revenues:
Rental income $945,222 $909,831 $880,652
Interest income 68 84 67
-------- -------- --------
945,290 909,915 880,719
-------- -------- --------
Expenses:
Depreciation 447,969 444,660 440,882
Management and leasing expenses 94,149 82,517 78,046
Other operating expenses 68,090 84,676 138,294
-------- -------- --------
610,208 611,853 657,222
-------- -------- --------
Net income $335,082 $298,062 $223,497
======== ======== ========
Occupied percentage 97% 91% 94%
======== ======== ========
Partnership ownership percentage 24% 24% 24%
======== ======== ========
Cash distributed to the Partnership $203,853 $193,285 $160,881
======== ======== ========
Net income allocated to the Partnership $ 80,496 $ 71,604 $ 53,691
======== ======== ========
Rental income increased from $909,831 in 1998 to $945,22 in 1999, due to an
increase in occupancy from 91% in 1998 to 97% in 1999. Rental income increased
in 1998 over 1997 due primarily to a one time adjustment made to the straight
line rent receivable in 1997. Management and leasing expenses increased from
$82,517 in 1998 to $94,149 in 1999, due to an increase in occupancy and rental
renewal rates. Operating expenses of the property decreased to $68,090 in 1999
from $84,676 in 1998 due to increased CAM billings to tenants that were
underaccrued in 1998, offset by increased expenditures for tenant improvements,
HVAC repairs and a partial demolition of a tenant suite in 1999 and decreased
from $138,294 in 1997 to $84,676 in 1998 due to decreased expenditures for
tenant improvements, common area expenses, and legal fees. Net income of the
property increased to $355,082 in 1999 from $298,062 in 1998 and $223,497 in
1997, due to the reasons discussed above.
Real estate taxes were $87,411 for 1999, $77,311 for 1998, and $67,259 for 1997.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on the
property, tenants, etc. refer to Item 2, Properties, page 3.
Liquidity and Capital Resources
During its offering, which terminated on September 5, 1986, the Partnership
raised a total of $35,321,000 through the sale of 141,284 units. No additional
Units will be sold by the Partnership. From the original funds raised, the
Partnership had invested a total of $28,253,054 in properties, paid $2,225,992
in acquisition and advisory fees, $4,836,633 in selling commissions and
organization and offering expenses, and is maintaining a working capital reserve
of $5,321.
-17-
Since the Partnership is an investment partnership formed for the purpose of
acquiring, owning, and operating income-producing real property and has invested
all of its funds available for investment, it is unlikely that the Partnership
will acquire interests in any additional properties, and the Partnership's
capital resources are anticipated to remain relatively stable over the holding
period of its investments.
The Partnership's net cash provided by operating activities decreased to
$614,844 in 1999 as compared to $632,894 in 1998 due primarily to increased
lease acquisition costs, changes in receivables and payables, and increased
prepaid assets. Net cash provided by investing activities increased from
$239,519 in 1997 and $391,609 in 1998 to $414,506 in 1999 due to decreased
capitalized building and tenant improvements. Net cash used in financing
activities increased in 1999 as compared to 1998 and decreased in 1998 as
compared to 1997. These changes are due to the reserving of distributions to
limited partners for the first and second quarters of 1999 and all of 1998 for
the anticipated tenant improvements at the Paces Pavilion Property. As a
result, primarily of the reserving of distributions, cash and cash equivalents
has increased in both 1999 and 1998.
The Partnership is unaware of any other demands, commitments, events, or capital
expenditures other than that which is required for the normal operations of its
properties or the properties in which it owns a joint venture interest that will
result in the Partnership's liquidity increasing or decreasing in any material
way.
Inflation
Real estate has not been affected significantly by inflation in the past three
years due to the relatively low inflation rate. There are provisions in the
majority of tenant leases executed by the Partnership to protect the Partnership
from the impact of inflation. These leases contain common area maintenance
charges ("CAM charges"), real estate tax and insurance reimbursements on a per
square foot bases, or in some cases, annual reimbursement of operating expenses
above a certain per square foot allowance. These provisions should reduce the
Partnership's exposure to increases in costs and operating expenses resulting
from inflation. In addition, a number of the Partnership's leases are for terms
of less than five years which may permit the Partnership to replace existing
leases with new leases at higher base rental rates if the existing leases are
below market rate. There is no assurance, however, that the Partnership would
be able to replace existing leases with new leases at higher base rentals.
Year 2000
The Partnership made the transition into the year 2000 without any information
systems, business operations or facilities related system problems. Management
believes that there are no other year 2000 related issues that may require
disclosure.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Financial Statements of the Registrant and supplementary data are detailed
under Item 14(a) and filed as part of the report on the pages indicated.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There were no disagreements with the Partnership's accountants or other
reportable events during 1999.
-18-
PART III
ITEM 10. GENERAL PARTNERS OF THE PARTNERSHIP
Wells Capital, Inc.
Wells Capital, Inc. ("Capital") is a Georgia corporation formed in April 1984.
The executive offices of Capital are located at 6200 The Corners Parkway,
Norcross, Georgia 30092. Leo F. Wells, III is the sole Director and the
President of Capital.
Leo F. Wells, III.
Mr. Wells is a resident of Atlanta, Georgia, is 56 years of age and holds a
Bachelor of Business Administration Degree in Economics from the University of
Georgia. Mr. Wells is the President and sole Director of Wells Capital. Mr.
Wells is the President of Wells & Associates, Inc., a real estate brokerage and
investment company formed in 1976 and incorporated in 1978, for which he serves
as principal broker. Mr. Wells is also currently the sole Director and
President of Wells Management Company, Inc., a property management company he
founded in 1983. In addition, Mr. Wells is the President and Chairman of the
Board of Wells Investment Securities, Inc., Wells & Associates, Inc., and Wells
Management Company, Inc. which are affiliates of the General Partners. From
1980 to February 1985, Mr. Wells served as Vice-President of Hill-Johnson, Inc.,
a Georgia corporation engaged in the construction business. From 1973 to 1976,
he was associated with Sax Gaskin Real Estate Company and from 1970 to 1973, he
was a real estate salesman and property manager for Roy D. Warren & Company, an
Atlanta real estate company.
ITEM 11. COMPENSATION OF GENERAL PARTNERS AND AFFILIATES
No cash compensation or fees were paid to the General Partners or their
affiliates during the year ended December 31, 1999 from the Partnership or with
respect to the Partnership's interests in joint ventures owning and operating
properties. Due to the fact that Wells Management Company, Inc. has elected to
defer the receipt of property management and leasing fees from the Partnership
and with respect to the Partnership's interests in properties owned through
joint ventures, as of December 31, 1999, deferred cash compensation of
approximately $2,397,266 of which $1,686,651 was accrued at the Partnership
level and the remainder at the joint venture level, was due to the General
Partners and their affiliates, of which $128,077 was accrued for fiscal year
1999.
-19-
The following table summarizes the compensation and fees paid to the General
Partners and their affiliates during the year ended December 31, 1999:
(A) (B) (C)
Name of Individual Capacities in Which Served Cash
or Number in Group Form of Compensation Compensation
- -------------------------------------- -------------------------------------- ------------
Wells Management Company, Inc. Property Manager-Management
and Leasing Fees $200,249(1)
Wells Capital, Inc. General Partner-Partnership
Cash Flow Distributions 0
Leo F. Wells, III General Partner-Partnership
Cash Flow Distributions 0
(1) Some of these fees are paid directly by the Partnership and some are
paid by the joint venture entities which own properties to which the
property management and leasing services relate and include management
and leasing fees which were accrued for accounting purposes in 1999
but not actually paid until January, 2000.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
No Limited Partner is known by the Partnership to own beneficially more than 5%
of the outstanding units of the Partnership.
Set forth below is the security ownership of management as of December 31, 1999.
(2) (3)
(1) Name and Address of Amount and Nature of (4)
Title of Class Beneficial Owner Beneficial Ownership Percent of Class
- ------------------ --------------------- --------------------------- --------------------
Class A units Leo F. Wells, III 146 Units (IRA, 401 (k) and Less than 1%
Profit Sharing)
Class B units Leo F. Wells, III 202 Units (401 (k) and Less than 1%
Profit Sharing)
No arrangements exist which would, upon implementation, result in a change in
control of the Partnership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following are compensation and fees paid or to be paid by the Partnership to
the General Partners and their affiliates in connection with the operation of
the Partnership.
-20-
Interest in Partnership Cash Flow and Net Sale Proceeds
The General Partners will receive a subordinated participation in net cash flow
from operations equal to 10% of net cash flow after the Limited Partners have
received preferential distributions equal to 9% of their adjusted capital
accounts in each fiscal year. In addition, after the Limited Partners receive
their distributions equal to 9% of their capital contributions and the General
Partners receive their distributions equal to 10% of the total distributions for
such year, the General Partners will receive a participation of 10% of the
additional distributions from cash available for distribution, 9% of which shall
be paid to the General Partners as a Partnership Management Fee. The General
Partners will also receive a participation in net sale proceeds and net
financing proceeds equal to 15% of the residual proceeds available for
distribution after the Limited Partners have received a return of their adjusted
capital contributions plus a 15% cumulative return on their adjusted capital
contributions. The General Partners received no partnership cash flow or net
sale proceeds during 1999.
Property Management and Leasing Fees
Wells Management Company, Inc., an affiliate of the General Partners, will
receive compensation for supervising the management of the Partnership
properties equal to 6% (3% management and 3% leasing) of rental income. In no
event will such fees exceed the sum of (i) 6% of the gross receipts of each
property, plus (ii) a separate one-time fee for initial rent-up or leasing-up of
development properties in an amount not to exceed the fee customarily charged in
arm's-length transactions by others rendering similar services in the same
geographic area for similar properties. With respect to properties leased on a
net basis for a period of ten years or longer, property management fees will not
exceed 1% of gross revenues from such leases, plus a one-time initial leasing
fee of 3% of the gross revenues which are payable over the first five years of
the term of such net leases. The management and leasing of the Crowe's Crossing
Property and the Black Oak Plaza Property is performed by an outside agent,
Merchants Management, since the third quarter of 1998 for which they receive a
3% fee and Wells Management is accrued the balance. Management and leasing fees
as well as initial lease-up fees due from the Partnership and with respect to
the Partnership's interest in joint ventures owning properties are currently
being expensed but not paid to Wells Management Company, Inc. As set forth
above, as of December 31, 1999, deferred property management and leasing fees
totaling $2,397,266 were due to Wells Management Company, Inc., of which
$128,077 was accrued for fiscal year 1999.
Real Estate Commissions
In connection with the sale of Partnership properties, the General Partners or
their affiliates may receive commissions not exceeding the lesser of (A) 50% of
the commissions customarily charged by other brokers in arm's-length
transactions involving comparable properties in the same geographic area or (B)
3% of the gross sales price of the property, and provided that payments of such
commissions will be made only after Limited Partners have received prior
distributions totaling 100% of their capital contributions plus a 6% cumulative
return on their adjusted capital contributions. During 1999, no real estate
commissions were paid to the General Partners or their affiliates.
(THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.)
-21-
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)1. The financial statements are contained on pages F-2 through F-24 of this
Annual Report on Form 10-K, and the list of the financial statements
contained herein is set forth on page F-1, which is hereby incorporated by
reference.
(a)2. Financial statement Schedule III
Information with respect to this item begins on page S-1 of this Annual
Report on Form 10-K.
(a)3. The Exhibits filed in response to Item 601 of Regulation S-K are listed on
the Exhibit Index attached hereto.
(b) No reports on Form 8-K were filed with the commission during the fourth
quarter of 1999.
(c) The exhibits filed in response to Item 601 of Regulation S-K are listed on
the Exhibit Index attached hereto.
(d) See (a) 2 above.
(THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK)
-22-
SIGNATURES
Pursuant to the requirements of Sections 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 this 27th day of March
2000.
Wells Real Estate Fund I
(Registrant)
By: /s/ Leo F. Wells, III
------------------------------------
Leo F. Wells, III
Individual General Partner and as
President and Chief Financial Officer of
Wells Capital, Inc., the Corporate
General Partner
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following person on behalf of the registrant and in
the capacity as and on the date indicated.
Signature Title Date
- ------------------------- ------------------------------ --------------------
/s/ Leo F. Wells, III
- -------------------------
Leo F. Wells, III Individual General Partner, March 27, 2000
President and Sole Director of
Wells Capital, Inc., the
Corporate General Partner
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE ACT BY REGISTRARS WHICH HAVE NOT BEEN REGISTERED PURSUANT TO
SECTION 12 OF THE ACT.
No annual report or proxy material relating to an annual or other meeting of
security holders has been sent to security holders.
-23-
INDEX TO FINANCIAL STATEMENTS
Financial Statements Page
- -------------------------------------------------------------------------------------- ----
Independent Auditors' Report F2
Balance Sheets as of December 31, 1999 and 1998 F3
Statements of Loss for the Years ended December 31, 1999, 1998, and 1997 F4
Statements of Partners' Capital for the Years Ended December 31, 1999, 1998, and 1997 F5
Statements of Cash Flows for the Years Ended December 31, 1999, 1998, and 1997 F6
Notes to Financial Statements for December 31, 1999, 1998, and 1997 F7
F-1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Wells Real Estate Fund I and Subsidiary:
We have audited the accompanying consolidated balance sheets of WELLS REAL
ESTATE FUND I (a Georgia public limited partnership) AND SUBSIDIARY as of
December 31, 1999 and 1998 and the related consolidated statements of loss,
partners' capital, and cash flows for each of the three years in the period
ended December 31, 1999. These financial statements and the schedule referred
to below are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these consolidated financial
statements and schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements and
schedule 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, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Wells Real Estate
Fund I and subsidiary as of December 31, 1999 and 1998 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999 in conformity with accounting principles generally accepted in
the United States.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. Schedule III--Real Estate Investments
and Accumulated Depreciation as of December 31, 1999 is presented for purposes
of complying with the Securities and Exchange Commission's rules and is not part
of the basic financial statements. This schedule has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
January 20, 2000
F-2
WELLS REAL ESTATE FUND I AND SUBSIDIARY
(A Georgia Public Limited Partnership)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
ASSETS
1999 1998
------------ ------------
REAL ESTATE ASSETS, at cost:
Land $ 2,894,193 $ 2,894,193
Building and improvements, less accumulated depreciation of $8,399,494 and $7,379,963 at
December 31, 1999 and 1998, respectively 11,313,057 12,305,562
------------ ------------
Total real estate assets 14,207,250 15,199,755
INVESTMENT IN JOINT VENTURES 6,200,073 6,500,083
CASH AND CASH EQUIVALENTS 1,670,343 969,081
DUE FROM AFFILIATES 145,762 83,222
ACCOUNTS RECEIVABLE 275,220 230,510
DEFERRED LEASE ACQUISITION COSTS 131,071 57,590
PREPAID EXPENSES AND OTHER ASSETS 91,457 58,541
------------ ------------
Total assets $22,721,176 $23,098,782
============ ============
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Accounts payable and accrued expenses $ 23,004 $ 70,049
Due to affiliate 1,686,651 1,624,749
Refundable security deposits 93,112 56,709
Partnership distributions payable 328,511 4,843
Minority interest 102,727 108,853
------------ ------------
Total liabilities 2,234,005 1,865,203
============ ============
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL:
Limited partners:
Class A--98,716 units 20,487,171 21,233,579
Class B--42,568 units 0 0
------------ ------------
Total partners' capital 20,487,171 21,233,579
------------ ------------
Total liabilities and partners' capital $22,721,176 $23,098,782
============ ============
The accompanying notes are an integral part of these consolidated balance
sheets.
F-3
WELLS REAL ESTATE FUND I AND SUBSIDIARY
(A Georgia Public Limited Partnership)
CONSOLIDATED STATEMENTS OF LOSS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
1999 1998 1997
---------- ---------- -----------
REVENUES:
Rental income $1,436,029 $1,484,950 $ 1,549,117
Equity in income of joint ventures 204,535 129,377 81,114
Interest income 70,177 21,845 13,712
---------- ---------- -----------
1,710,741 1,636,172 1,643,943
---------- ---------- -----------
EXPENSES:
Depreciation 1,019,531 1,025,759 1,010,084
Operating costs, net of reimbursements 490,462 531,998 490,438
Partnership administration 63,465 60,938 50,057
Management and leasing fees 130,040 146,350 144,761
Legal and accounting 89,882 173,873 85,683
Bad debt expense 7,280 27,254 95,051
Computer costs 10,386 7,559 9,149
Loss on real estate assets 0 0 60,391
---------- ---------- -----------
1,811,046 1,973,731 1,945,614
---------- ---------- -----------
LOSS BEFORE MINORITY INTEREST (100,305) (337,559) (301,671)
MINORITY INTEREST (1,599) (116) (3,625)
---------- ---------- -----------
NET LOSS $ (101,904) $ (337,675) $ (305,296)
========== ========== ===========
NET (LOSS) INCOME ALLOCATED TO CLASS A LIMITED PARTNERS $ (101,904) $ (337,675) $ 1,059,405
========== ========== ===========
NET LOSS ALLOCATED TO CLASS B LIMITED PARTNERS $ 0 $ 0 $(1,364,701)
========== ========== ===========
NET (LOSS) INCOME PER CLASS A LIMITED PARTNER UNIT $(1.03) $(3.42) $10.73
========== ========== ===========
NET LOSS PER CLASS B LIMITED PARTNER UNIT $0.00 $0.00 $(32.06)
========== ========== ===========
CASH DISTRIBUTION PER CLASS A LIMITED PARTNER UNIT $6.53 $0.00 $10.85
========== ========== ===========
The accompanying notes are an integral part of these consolidated statements.
F-4
WELLS REAL ESTATE FUND I AND SUBSIDIARY
(A Georgia Public Limited Partnership)
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
Limited Partners Total
-----------------------------------------------
Class A Class B Partners'
--------------------- ---------------------
Units Amount Units Amount Capital
------ ----------- ------ ----------- -----------
BALANCE, December 31, 1996 98,716 $21,583,091 42,568 $ 1,364,701 $22,947,792
Net income (loss) 0 1,059,405 0 (1,364,701) (305,296)
Partnership distributions 0 (1,071,242) 0 0 (1,071,242)
------ ----------- ------ ----------- -----------
BALANCE, December 31, 1997 98,716 21,571,254 42,568 0 21,571,254
Net loss 0 (337,675) 0 0 (337,675)
------ ----------- ------ ----------- -----------
BALANCE, December 31, 1998 98,716 21,233,579 42,568 0 21,233,579
Net loss 0 (101,904) 0 0 (101,904)
Partnership distributions 0 (644,504) 0 0 (644,504)
------ ----------- ------ ----------- -----------
BALANCE, December 31, 1999 98,716 $20,487,171 42,568 $ 0 $20,487,171
====== =========== ====== =========== ===========
The accompanying notes are an integral part of these consolidated statements.
F-5
WELLS REAL ESTATE FUND I AND SUBSIDIARY
(A Georgia Public Limited Partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1998
1999 1998 1997
---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (101,904) $ (337,675) $ (305,296)
---------- ---------- -----------
Adjustments to reconcile net loss to net cash provided by
operating activities:
Equity in income of joint ventures (204,535) (129,377) (81,114)
Depreciation 1,019,531 1,025,759 1,010,084
Loss on real estate assets 0 0 60,391
Changes in assets and liabilities:
Accounts receivable (44,710) 63,134 70,018
Deferred lease acquisition costs (73,481) (11,212) (10,570)
Prepaid expenses and other assets (32,916) (4,247) 11,015
Accounts payable, accrued expenses, and refundable
security deposits (10,642) (67,138) (320)
Due to affiliate 61,902 93,534 118,643
Minority interest 1,599 116 3,625
---------- ---------- -----------
Total adjustments 716,748 970,569 1,181,772
---------- ---------- -----------
Net cash provided by operating activities 614,844 632,894 876,476
---------- ---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in real estate (27,499) (52,061) (173,469)
Distributions received from joint ventures 442,005 443,670 412,988
---------- ---------- -----------
Net cash provided by investing activities 414,506 391,609 239,519
---------- ---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners in excess of accumulated earnings (320,363) (174,427) (1,177,659)
Distributions to minority interest (7,725) (9,194) (14,313)
---------- ---------- -----------
Net cash used in financing activities (328,088) (183,621) (1,191,972)
---------- ---------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 701,262 840,882 (75,977)
CASH AND CASH EQUIVALENTS, beginning of year 969,081 128,199 204,176
---------- ---------- -----------
CASH AND CASH EQUIVALENTS, end of year $1,670,343 $ 969,081 $ 128,199
========== ========== ===========
The accompanying notes are an integral part of these consolidated statements.
F-6
WELLS REAL ESTATE FUND I AND SUBSIDIARY
(A Georgia Public Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998, AND 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Business
Wells Real Estate Fund I (the "Partnership") is a public limited
partnership organized on April 26, 1984 under the laws of the state of
Georgia. The general partners are Leo F. Wells, III and Wells Capital, Inc.
(the "Company"). The Partnership has two classes of limited partnership
interests, Class A and Class B units. Limited partners may vote to, among
other things, (a) amend the partnership agreement, subject to certain
limitations, (b) change the business purpose or investment objectives of
the Partnership, and (c) remove a general partner. A majority vote on any
of the above described matters will bind the Partnership, without the
concurrence of the general partners. Each limited partnership unit has
equal voting rights, regardless of class.
The Partnership was formed to acquire and operate commercial real
properties, including properties which are either to be developed,
currently under development or construction, newly constructed, or have
operating histories. As of December 31, 1999, the Partnership owned the
following properties directly: (i) the Paces Pavilion Property ("Paces
Pavilion"), a medical office building located in Atlanta, Georgia; (ii) the
Crowe's Crossing Property, a shopping center located in DeKalb County,
Georgia; (iii) the Black Oak Property, a shopping center located in
Knoxville, Tennessee; and (iv) the Peachtree Place Property ("Wells-
Baker"), two commercial office buildings located in Atlanta, Georgia. In
addition, through its investment in joint ventures, the Partnership owns
interests in the following properties: Heritage Place at Tucker ("Tucker"),
a retail shopping and commercial office complex located in Tucker, Georgia,
and the Cherokee Commons Shopping Center ("Cherokee Commons"), a shopping
center located in Cherokee County, Georgia.
Basis of Presentation
The financial statements include the accounts of the Partnership and Wells-
Baker. The Partnership's interest in Wells-Baker was approximately 90% at
December 31, 1999 and 1998. All significant intercompany balances have been
eliminated in consolidation.
Minority Interest
Minority interest represents the interest of Wells and Associates, Inc., an
affiliate of the general partners, in Wells-Baker. At December 31, 1999 and
1998, Wells and Associates, Inc.'s interest in Wells-Baker was
approximately 10%.
F-7
Use of Estimates and Factors Affecting the Partnership
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent 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.
The Partnership has recently begun considering selling its properties.
Management estimates that the net realizable value of each of the
properties exceeds the carrying value of the corresponding real estate
assets; consequently, no impairment loss has been recorded. In the event
that the net sales proceeds are less than the carrying value of the
property sold, the Partnership would recognize a loss on the sale.
Management is not contractually or financially obligated to sell any of its
properties, and it is management's current intent to fully realize the
Partnership's investment in real estate. The success of the Partnership's
future operations and the ability to realize the investment in its assets
will be dependent on the Partnership's ability to maintain rental rates,
occupancy, and an appropriate level of operating expenses in future years.
Management believes that the steps that it is taking will enable the
Partnership to realize its investment in its assets.
One significant tenant at Paces Pavilion represented 100% of rental income
of the property for the year ended December 31, 1996, of which
approximately 25% was received from sublessees. This tenant vacated the
property effective December 31, 1996 and the property is currently only 19%
occupied. The Partnership is actively seeking replacement tenants for
occupancy of the remainder of the space at Paces Pavilion; however, in the
event that replacement tenants require significant tenant improvements and
renovations to the space to be leased, it is anticipated that such amounts
may be funded from cash of the Partnership which would otherwise have been
distributed to the Limited Partners. In such event, cash distributions to
Limited Partners holding Class A Units may be reduced or suspended pending
funding of amounts required for any such tenant improvements or
renovations. As of January 20, 2000, the Partnership has not been
successful in re-leasing a substantial portion of Paces Pavilion.
Income Taxes
The Partnership is not subject to federal or state income taxes, and
therefore, none have been provided for in the accompanying financial
statements. The partners are required to include their respective shares of
profits and losses in their individual income tax returns.
Distribution of Net Cash From Operations
Cash available for distribution is distributed on a cumulative
noncompounded basis to limited partners quarterly. In accordance with the
partnership agreement, distributions are paid first to limited partners
holding Class A units until they have received a 9% per annum return on
their adjusted capital contributions, as defined. Cash available for
distribution is then distributed to limited partners holding Class B units
until they have received a 9% per annum return on their adjusted capital
contributions, as defined. Any remaining cash available for distribution is
split between the limited partners and the general partners on a basis of
90% and 10%, respectively.
F-8
Distribution of Sales Proceeds
Upon sales of properties, the net sales proceeds are distributed in the
following order:
. To limited partners, on a per unit basis, until all limited
partners have received 100% of their adjusted capital
contributions, as defined
. To limited partners holding Class B units until they receive an
amount equal to the net cash available for distribution received by
the limited partners holding Class A units
. To all limited partners until they receive a cumulative 15% per
annum return on their adjusted capital contributions, as defined
. To all the general partners until they have received 100% of their
capital contributions, as defined
. Thereafter, 85% to the limited partners and 15% to the general
partners
Allocation of Net Income, Net Loss, and Gain on Sale
Net income is defined as net income recognized by the Partnership,
excluding deductions for depreciation and amortization. Net income, as
defined, of the Partnership will be allocated each year in the same
proportions that net cash from operations is distributed to the partners.
To the extent the Partnership's net income in any year exceeds net cash
from operations, it will be allocated 99% to the limited partners and 1% to
the general partners.
Net loss, depreciation and amortization deductions for each fiscal year
will be allocated as follows: (a) 99% to the Class B limited partners and
1% to the general partners until their capital accounts are reduced to
zero, (b) then to any partner having a positive balance in his capital
account in an amount not to exceed such positive balance, and (c)
thereafter to the general partners.
Gain on the sale or exchange of the Partnership's properties will be
allocated generally in the same manner that the net proceeds from such sale
are distributed to partners after the following allocations are made, if
applicable: (a) allocations made pursuant to a qualified income offset
provision in the partnership agreement, (b) allocations to partners having
negative capital accounts until all negative capital accounts have been
restored to zero, and (c) allocations to Class B limited partners in
amounts equal to deductions for depreciation and amortization previously
allocated to them with respect to the specific partnership property sold,
but not in excess of the amount of gain on sale recognized by the
Partnership with respect to the sale of such property.
Real Estate Assets
Real estate assets held by the Partnership directly or through investments
in affiliated joint ventures are stated at cost less accumulated
depreciation. Major improvements and betterments are capitalized when they
extend the useful life of the related asset. All repairs and maintenance
are expensed as incurred.
Management continually monitors events and changes in circumstances that
could indicate carrying amounts of real estate assets may not be
recoverable. When events or changes in circumstances are present that
indicate the carrying amounts of real estate assets may not be recoverable,
management assesses the recoverability of real estate assets by determining
whether the carrying value of such real estate assets will be recovered
through the future cash flows expected from the use of the asset and its
F-9
eventual disposition. Management has determined that there has been no
impairment in the carrying value of real estate assets held by the
Partnership or its affiliated joint ventures as of December 31, 1999.
Depreciation for buildings and improvements is calculated using the
straight-line method over 25 years.
Revenue Recognition
All leases on real estate assets held by the Partnership are classified as
operating leases and the related rental income is recognized on a straight-
line basis over the terms of the respective leases.
Deferred Lease Acquisition Costs
Costs incurred to procure operating leases are capitalized and amortized on
a straight-line basis over the terms of the related leases.
Investment in Joint Ventures
The Partnership does not have control over the operations of the joint
ventures; however, it does exercise significant influence. Accordingly,
investment in joint ventures is recorded using the equity method of
accounting. The joint ventures follow the same significant accounting
policies as the Partnership.
Cash available for distribution and allocations of profit and loss to the
Partnership by the joint ventures are made in accordance with the terms of
the individual joint venture agreements. Generally, these items are
allocated in proportion to the partners' respective ownership interests.
Cash is paid by the joint ventures to the Partnership on a quarterly basis.
Cash and Cash Equivalents
For the purposes of the statements of cash flows, the Partnership considers
all highly liquid investments purchased with an original maturity of three
months or less to be cash equivalents. Cash equivalents include cash and
short-term investments. Short-term investments are stated at cost, which
approximates fair value, and consist of investments in money market
accounts.
Per Unit Data
Net income (loss) per unit with respect to the Partnership for the years
ended December 31, 1999, 1998, and 1997 is computed based on the average
number of units outstanding during the period.
2. RELATED-PARTY TRANSACTIONS
Due from affiliates at December 31, 1999 and 1998 represents the
Partnership's share of cash to be distributed from its joint venture
investments for the fourth quarters of 1999 and 1998, as follows:
1999 1998
-------- --------
Fund I and II Tucker $ 96,725 $ 43,284
Fund I, II, II-OW, VI, and VII Associates--Cherokee 49,037 39,938
-------- --------
$145,762 $ 83,222
======== ========
F-10
The Partnership entered into property management agreements with Merchant's
Management, Inc. (an unrelated third party) and Wells Management Company,
Inc. ("Wells Management"), an affiliate of the general partners. In
consideration for supervising the management of its properties, the
Partnership pays Merchant's Management, Inc. management and leasing fees
equal to 1.5% of the gross revenues for management and 1.5% of the gross
revenues for leasing. With respect to Wells Management, the Partnership
incurs management and leasing fees equal to (a) 1.5% of the gross revenues
for management and 1.5% of the gross revenues for leasing, plus a separate
fee for the one-time initial lease-up of newly constructed properties in an
amount not to exceed the fee customarily charged in arm's-length
transactions by others rendering similar services in the same geographic
area for similar properties or (b) in the case of commercial properties,
which are leased on a long-term net basis (ten or more years), 1% of the
gross revenues except for initial leasing fees equal to 3% of the gross
revenues over the first five years of the lease term. The Partnership's
aggregate management and leasing fees are not to exceed a maximum of 6% of
annual gross revenues.
The Partnership incurred management and leasing fees and lease acquisition
costs, both directly and at the joint venture level, for the years ended
December 31, 1999, 1998, and 1997 of $200,249, $227,230, and $147,282.
Wells Management has elected to defer the receipt of its portion of the
management and leasing fees from the Partnership and with respect to the
Partnership's interest in properties owned through joint ventures. As of
December 31, 1999 and 1998, this deferral totaled $1,686,651 and
$1,624,749, respectively, and is included in due to affiliate in the
accompanying balance sheets.
The Company performs certain administrative services for the Partnership,
such as accounting and other Partnership administration, and incurs the
related expenses. Such expenses are allocated among the various Wells Real
Estate Funds based on time spent on each fund by individual administrative
personnel. In the opinion of management, such allocation is a reasonable
estimation of such expenses.
The general partners are also general partners of other Wells Real Estate
Funds. As such, there may exist conflicts of interest where the general
partners in the capacity as general partners for other Wells Real Estate
Funds may be in competition with the Partnership for tenants in similar
geographic markets.
3. INVESTMENT IN JOINT VENTURES
The Partnership's investment and percentage ownership in joint ventures at
December 31, 1999 and 1998 are summarized as follows:
1999 1998
------------------------- ------------------------
Amount Percent Amount Percent
------------ ----------- ------------ ------------
Fund I and II Tucker $4,581,940 55% $4,758,591 55%
Fund I, II, II-OW, VI, and VII
Associates--Cherokee 1,618,133 24 1,741,492 24
------------ ------------
$6,200,073 $6,500,083
============ ============
F-11
The following is a rollforward of the Partnership's investment in joint ventures
for the years ended December 31, 1999 and 1998:
1999 1998
---------- ----------
Investment in joint ventures, beginning of year $6,500,083 $6,833,129
Equity in income of joint ventures 204,535 129,377
Distributions from joint ventures (504,545) (462,423)
---------- ----------
Investment in joint ventures, end of year $6,200,073 $6,500,083
========== ==========
Fund I and II Tucker
Tucker and Cherokee Commons were previously held in a joint venture between the
Partnership and Fund II and II-OW, a Georgia joint venture having Wells Real
Estate Fund II and Wells Real Estate Fund II-OW as joint partners. The joint
ventures were formed for the purpose of owning, developing, and operating
Cherokee Commons and Tucker. In 1991, the Tucker and Cherokee Commons joint
ventures were merged into a new joint venture, the Fund I and II Tucker-Cherokee
Joint Venture. Under the terms of the joint venture agreement, the ownership
interests of the Partnership and Fund II and II-OW in each individual property
remained unchanged.
On August 1, 1995, the joint venture assigned its ownership in Cherokee Commons
to the Fund I, II, II-OW, VI, and VII Associates joint venture. Upon the
assignment of Cherokee Commons, the joint venture was renamed Fund I and II
Tucker. Tucker is a retail shopping center containing approximately 29,858
square feet and a commercial office building complex containing approximately
67,465 square feet in Tucker, DeKalb County, Georgia.
In 1996, one of the tenants in Tucker experienced a fire. In 1996, Fund I and
II Tucker received an initial insurance settlement of $143,944 for damages to
the building. In 1997, an additional $104,895 was received as a final insurance
settlement for the fire damages discussed above and storm damages that occurred
in 1997. In addition, a loss from the retirement of real estate assets of
$58,952 was incurred. The resulting net gain on real estate assets of $45,943
is included in the following statement of income. Additional insurance proceeds
of $27,319 related to these damages were received in 1998 and are reflected as a
gain on real estate assets in the following statement of income.
F-12
Following are the financial statements for Fund I and II Tucker:
Fund I and II Tucker
(A Georgia Joint Venture)
Balance Sheets
December 31, 1999 and 1998
Assets
1999 1998
---------- ----------
Real estate assets, at cost:
Land $3,260,887 $3,260,887
Building and improvements, less accumulated depreciation of 5,835,882 6,040,015
$3,405,038 in 1999 and $2,913,652 in 1998
Construction in progress 0 26,731
---------- ----------
Total real estate assets 9,096,769 9,327,633
Cash and cash equivalents 123,617 49,380
Accounts receivable 125,772 96,362
Prepaid expenses and other assets 115,865 122,181
---------- ----------
Total assets $9,462,023 $9,595,556
========== ==========
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 67,797 $ 64,964
Partnership distributions payable 165,750 66,558
Due to affiliates 588,344 548,632
---------- ----------
Total liabilities 821,891 680,154
---------- ----------
Partners' capital:
Wells Real Estate Fund I 4,581,940 4,758,591
Fund II and II-OW 4,058,192 4,156,811
---------- ----------
Total partners' capital 8,640,132 8,915,402
---------- ----------
Total liabilities and partners' capital $9,462,023 $9,595,556
========== ==========
F-13
Fund I and II Tucker
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 1999, 1998, and 1997
1999 1998 1997
---------- ---------- ----------
Revenues:
Rental income $1,373,660 $1,242,332 $1,077,916
Interest income 0 0 1,159
---------- ---------- ----------
1,373,660 1,242,332 1,079,075
---------- ---------- ----------
Expenses:
Operating costs, net of reimbursements 464,001 515,791 496,258
Depreciation 491,386 440,099 419,928
Management and leasing fees 158,269 164,378 122,452
Loss on real estate assets 0 (27,319) (45,943)
Partnership administration 29,109 32,420 28,665
Legal and accounting 5,739 12,093 7,936
---------- ---------- ----------
1,148,504 1,137,462 1,029,296
---------- ---------- ----------
Net income $ 225,156 $ 104,870 $ 49,779
========== ========== ==========
Net income allocated to Wells Real Estate Fund I $ 124,039 $ 57,773 $ 27,423
========== ========== ==========
Net income allocated to Fund II and II-OW $ 101,117 $ 47,097 $ 22,356
========== ========== ==========
Fund I and II Tucker
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 1999, 1998, and 1997
Wells Real Fund II Total
Estate and Partners'
Fund I II-OW Capital
---------- ---------- ----------
Balance, December 31, 1996 $5,147,557 $4,381,559 $9,529,116
Net income 27,423 22,356 49,779
Partnership distributions (205,024) (123,264) (328,288)
---------- ---------- ----------
Balance, December 31, 1997 4,969,956 4,280,651 9,250,607
Net income 57,773 47,097 104,870
Partnership distributions (269,138) (170,937) (440,075)
---------- ---------- ----------
Balance, December 31, 1998 4,758,591 4,156,811 8,915,402
Net income 124,039 101,117 225,156
Partnership distributions (300,690) (199,736) (500,426)
---------- ---------- ----------
Balance, December 31, 1999 $4,581,940 $4,058,192 $8,640,132
========== ========== ==========
F-14
Funds I and II Tucker
(A Georgia Joint Venture)
Statements of Cash Flows
for the Years Ended December 31, 1999, 1998, and 1997
1999 1998 1997
------------ ------------ ------------
Cash flows from operating activities:
Net income $ 225,156 $ 104,870 $ 49,779
--------- --------- ---------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 491,386 440,099 419,928
Gain on real estate assets 0 (27,319) (45,943)
Changes in assets and liabilities:
Accounts receivable (29,410) (16,647) (5,244)
Prepaid expenses and other assets 6,316 (17,585) (54,616)
Accounts payable and accrued expenses 2,833 (9,054) 31,831
Due to affiliates 39,712 67,404 58,435
--------- --------- ---------
Total adjustments 510,837 436,898 404,391
--------- --------- ---------
Net cash provided by operating activities 735,993 541,768 454,170
--------- --------- ---------
Cash flows from investing activities:
Investment in real estate (260,522) (142,814) (346,550)
Insurance proceeds 0 27,319 104,895
--------- --------- ---------
Net cash used in investing activities (260,522) (115,495) (241,655)
--------- --------- ---------
Cash flows from financing activities:
Distributions to joint venture partners (401,234) (389,577) (423,108)
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents 74,237 36,696 (210,593)
Cash and cash equivalents, beginning of year 49,380 12,684 223,277
--------- --------- ---------
Cash and cash equivalents, end of year $ 123,617 $ 49,380 $ 12,684
========= ========= =========
Fund I, II, II-OW, VI, and VII Associates--Cherokee
On August 1, 1995, Cherokee Commons was transferred to a new joint venture
between the Partnership, Fund II and II-OW, Wells Real Estate Fund VI, L.P.
("Fund VI"), and Wells Real Estate Fund VII, L.P. ("Fund VII"). The joint
venture, I, II, II-OW, VI, and VII Associates--Cherokee was formed for the
purpose of owning and operating Cherokee Commons, a retail shopping center
containing approximately 103,755 square feet, located in Cherokee County,
Georgia. Percentage ownership interests in the joint venture were determined at
the time of formation based on contributions. Under the terms of the joint
venture agreement, Fund VI and Fund VII each contributed approximately $1
million to the new joint venture in return for a 10.7% ownership interest. The
Partnership's ownership interest in Cherokee Commons changed from 30.6% to 24%,
and Fund II and II-OW joint venture's ownership interest changed from 69.4% to
55.6%. The $2 million in cash contributed to Cherokee Commons was used to fund
an expansion of the property for an existing tenant.
F-15
Following are the financial statements for Fund I, II, II-OW, VI, and VII
Associates--Cherokee:
Fund I, II, II-OW, VI, and VII Associates--Cherokee
(A Georgia Joint Venture)
Balance Sheets
December 31, 1999 and 1998
Assets
1999 1998
---------- -----------
Real estate assets, at cost:
Land $1,219,704 $1,219,704
Building and improvements, less accumulated depreciation of $3,165,778
in 1999 and $2,717,809 in 1998 6,067,174 6,500,995
---------- -----------
Total real estate assets 7,286,878 7,720,699
Cash and cash equivalents 206,540 222,814
Accounts receivable 27,703 35,517
Prepaid expenses and other assets 89,846 90,979
---------- -----------
Total assets $7,610,967 $8,070,009
========== ===========
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 34,857 $ 107,129
Partnership distributions payable 192,184 130,838
Due to affiliates 122,272 109,267
---------- -----------
Total liabilities 349,313 347,234
---------- -----------
Partners' capital:
Wells Real Estate Fund I 1,618,133 1,741,492
Fund II and II-OW 4,053,105 4,295,663
Wells Real Estate Fund VI 796,558 844,160
Wells Real Estate Fund VII 793,858 841,460
---------- -----------
Total partners' capital 7,261,654 7,722,775
---------- -----------
Total liabilities and partners' capital $7,610,967 $8,070,009
========== ===========
F-16
Fund I, II, II-OW, VI and VII Associates--Cherokee
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 1999, 1998, and 1997
1999 1998 1997
-------- -------- --------
Revenues:
Rental income $945,222 $909,831 $880,652
Interest income 68 84 67
-------- -------- --------
945,290 909,915 880,719
-------- -------- --------
Expenses:
Depreciation 447,969 444,660 440,882
Operating costs, net of reimbursements 37,583 35,715 70,017
Partnership administration 24,882 22,934 26,260
Management and leasing fees 94,149 82,517 78,046
Legal and accounting 5,624 7,363 9,385
Bad debt expense 0 18,664 0
Loss on real estate assets 0 0 32,632
-------- -------- --------
610,207 611,853 657,222
-------- -------- --------
Net income $335,083 $298,062 $223,497
======== ======== ========
Net income allocated to Wells Real Estate Fund I $ 80,496 $ 71,604 $ 53,691
======== ======== ========
Net income allocated to Fund II and II-OW $182,825 $162,626 $121,942
======== ======== ========
Net income allocated to Wells Real Estate Fund VI $ 35,881 $ 31,916 $ 23,932
======== ======== ========
Net income allocated to Wells Real Estate Fund VII $ 35,881 $ 31,916 $ 23,932
======== ======== ========
Fund I, II, II-OW, VI and VII Associates--Cherokee
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 1999, 1998, and 1997
Wells Real Fund II Wells Real Wells Real Total
Estate and Estate Estate Partners'
Fund I II-OW Fund VI Fund VII Capital
------------- -------- ----------- ----------- ----------
Balance, December 31, 1996 $1,970,363 $4,746,274 $932,597 $929,897 $8,579,131
Net income 53,691 121,942 23,932 23,932 223,497
Partnership distributions (160,881) (331,435) (65,047) (65,047) (622,410)
---------- ---------- -------- -------- ----------
Balance, December 31, 1997 1,863,173 4,536,781 891,482 888,782 8,180,218
Net income 71,604 162,626 31,916 31,916 298,062
Partnership distributions (193,285) (403,744) (79,238) (79,238) (755,505)
---------- ---------- -------- -------- ----------
Balance, December 31, 1998 1,741,492 4,295,663 844,160 841,460 7,722,775
Net income 80,496 182,825 35,881 35,881 335,083
Partnership distributions (203,855) (425,383) (83,483) (83,483) (796,204)
---------- ---------- -------- -------- ----------
Balance, December 31, 1999 $1,618,133 $4,053,105 $796,558 $793,858 $7,261,654
========== ========== ======== ======== ==========
F-17
Fund I, II, II-OW, VI, and VII Associates--Cherokee
(A Georgia Joint Venture)
Statements of Cash Flows
for the Years Ended December 31, 1999, 1998, and 1997
1999 1998 1997
--------- --------- ---------
Cash flows from operating activities:
Net income $ 335,083 $ 298,062 $ 223,497
--------- --------- ---------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 447,969 444,660 440,882
Loss on real estate assets 0 0 32,632
Changes in assets and liabilities:
Accounts receivable 7,814 56,999 1,386
Prepaid expenses and other assets 1,133 8,890 (21,342)
Accounts payable and accrued expenses (72,272) 70,278 13,721
Due to affiliates 13,005 15,327 15,565
--------- --------- ---------
Total adjustments 397,649 596,154 482,844
--------- --------- ---------
Net cash provided by operating activities 732,732 894,216 706,341
--------- --------- ---------
Cash flows from investing activities:
Investment in real estate (14,148) (5,771) (83,424)
--------- --------- ---------
Cash flows from financing activities:
Distributions to joint venture partners (734,858) (818,790) (541,104)
--------- --------- ---------
Net (decrease) increase in cash and cash equivalents (16,274) 69,655 81,813
Cash and cash equivalents, beginning of year 222,814 153,159 71,346
--------- --------- ---------
Cash and cash equivalents, end of year $ 206,540 $ 222,814 $ 153,159
========= ========= =========
F-18
4. INCOME TAX BASIS NET INCOME AND PARTNERS' CAPITAL
The Partnership's income tax basis net income for the years ended December
31, 1999, 1998, and 1997 is calculated as follows:
1999 1998 1997
---------- ---------- ----------
Financial statement net loss $(101,904) $(337,675) $(305,296)
Decrease in net loss resulting from:
Depreciation expense for financial reporting purposes in excess of 720,603 705,472 669,447
amounts for income tax purposes
Expenses deductible when paid for income tax purposes, accrued for 87,478 146,242 164,719
financial reporting purposes
Rental income recognized for income tax purposes in excess of 59,574 33,416 13,613
amounts for financial reporting purposes
Amortization of lease acquisition costs 0 0 0
Meals and entertainment 590 1,577 1,491
Reversal of prior year property taxes 0 0 (10,559)
Other 0 21,031 0
--------- --------- ---------
Income tax basis net income $ 766,341 $ 570,063 $ 533,415
========= ========= =========
The Partnership's income tax basis partners' capital at December 31, 1999,
1998, and 1997 is computed as follows:
1999 1998 1997
----------- ----------- -----------
Financial statement partners' capital $20,487,171 $21,233,579 $21,571,254
Increase (decrease) in partners' capital resulting from:
Depreciation expense for financial reporting purposes 2,879,454 2,158,851 1,453,379
in excess of amounts for income tax purposes
Joint venture change in ownership 14,293 14,293 14,293
Accumulated rental income accrued for financial (94,249) (153,823) (187,239)
reporting purposes in excess of amounts for income tax
purposes
Accumulated expenses deductible when paid for income 2,333,501 2,246,023 2,099,781
tax purposes, accrued for financial reporting purposes
Accumulated expenses capitalized for income tax (2,086) (2,086) (2,086)
purposes and expensed for financial reporting
purposes, net of accumulated amortization
Partnership distributions payable 299,399 15,402 135,242
Other, net 9,507 8,917 (13,690)
----------- ----------- -----------
Income tax basis partners' capital $25,926,990 $25,521,156 $25,070,934
=========== =========== ===========
5. RENTAL INCOME
The future minimum rental income due from the Partnership's direct
investments in real estate assets or its respective ownership interest in
the joint ventures under noncancelable operating leases at December 31,
1999 is as follows:
F-19
Year ending December 31:
2000 $ 2,143,299
2001 1,797,156
2002 1,346,709
2003 943,400
2004 689,537
Thereafter 3,335,746
-----------
$10,255,847
===========
One tenant contributed approximately 18% of rental income for the year ended
December 31, 1999. In addition, three tenants will contribute approximately
33%, 15%, and 14% of future minimum rental income.
The future minimum rental income due Fund I and II Tucker under noncancelable
operating leases at December 31, 1999 is as follows:
Year ending December 31:
2000 $ 1,119,619
2001 810,590
2002 531,737
2003 293,464
2004 95,633
Thereafter 101,200
-----------
$ 2,952,243
===========
One tenant contributed 10% of rental income for the year ended December 31, 1999
and will contribute approximately 15% of future minimum rental income.
The future minimum rental income due Fund I, II, II-OW, VI, and VII Associates--
Cherokee under noncancelable operating leases at December 31, 1999 is as
follows:
Year ending December 31:
2000 $ 914,317
2001 828,960
2002 762,564
2003 692,708
2004 771,053
Thereafter 3,847,339
-----------
$ 7,816,941
===========
One tenant contributed approximately 62% of rental income for the year ended
December 31, 1999. In addition, one tenant will contribute approximately 85% of
future minimum rental income.
F-20
6. QUARTERLY RESULTS (UNAUDITED)
Presented below is a summary of the unaudited quarterly financial
information for the years ended December 31, 1999 and 1998:
1999 Quarters Ended
-----------------------------------------------------------------
March 31 June 30 September 30 December 31
----------- ----------- ------------- -------------
Revenues $445,258 $442,104 $403,109 $ 420,270
Net income (loss) (68,435) 115,140 (46,499) (102,110)
Net income allocated to Class A limited (68,435) 115,140 (46,499) (102,110)
partners
Net income per weighted average Class A $ (0.69) $ 1.17 $ (0.47) $ (1.04)
limited partner unit outstanding
Cash distribution per weighted average Class A 0.00 0.00 3.25 3.28
limited partner unit outstanding
1998 Quarters Ended
-----------------------------------------------------------------
March 31 June 30 September 30 December 31
----------- ----------- ------------- -------------
Revenues $434,268 $428,677 $ 418,293 $ 354,934
Net income (loss) (82,754) 33,356 (142,884) (145,393)
Net income allocated to Class A limited (82,754) 33,356 (142,884) (145,393)
partners
Net income per weighted average Class A $ (0.84) $ 0.34 $ (1.45) $ (1.47)
limited partner unit
7. COMMITMENTS AND CONTINGENCIES
Management, after consultation with legal counsel, is not aware of any
significant litigation or claims against the Partnership or the Company. In
the normal course of business, the Partnership or the Company may become
subject to such litigation or claims.
F-21
WELLS REAL ESTATE FUND I AND SUBSIDIARY
(A Georgia Public Limited Partnership)
SCHEDULE III--REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
Gross Amounts of Which Carried
Initial Cost Costs of at December 31, 1999
------------------------- ---------------------------------------
Buildings and Capitalized Buildings and Construction
Description Ownership Encumbrances Land Improvements Improvements Land Improvements in Progress
- ------------------------ --------- ------------ ---------- ------------- ------------ ---------- -------------- -------------
PACES PAVILION (a) 100% None $ 515,078 $ 3,158,662 $ 1,819,842 $ 501,049 $ 4,992,533 $ 0
BLACK OAK PLAZA (b) 100 None 727,500 4,151,849 1,037,573 737,770 5,173,152 6,000
CROWE'S CROSSING (c) 100 None 1,317,220 7,617,905 302,805 1,335,936 7,899,849 0
PEACHTREE PROPERTY (d) 90 None 187,087 0 1,770,874 319,438 1,638,523 0
CHEROKEE COMMONS (e) 24 None 1,142,663 6,462,837 2,847,156 1,219,704 9,232,952 0
HERITAGE PLACE AT TUCKER (f) 55 None 2,756,378 0 9,745,429 3,260,887 9,240,920 0
---------- ------------- ------------ ---------- -------------- -------------
Total $6,645,926 $ 21,391,253 $ 17,523,679 $7,374,784 $ 38,177,929 $ 6,000
========== ============= ============ ========== ============== =============
Life on Which
-----------
Accumulated Date of Date Depreciation
Description Total Depreciation Construction Acquired Is Computed (g)
- ------------------------ ----------- ------------ --------------- ------------ -----------------
PACES PAVILION (a) $ 5,493,582 $ 2,195,818 1986 12/27/85 20 to 25 years
BLACK OAK PLAZA (b) 5,916,922 2,019,541 1986 12/31/86 20 to 25 years
CROWE'S CROSSING (c) 9,235,785 3,439,358 1986 12/31/86 20 to 25 years
PEACHTREE PROPERTY (d) 1,957,961 744,778 1986 04/09/85 20 to 25 years
CHEROKEE COMMONS (e) 10,452,656 3,165,778 1986 06/09/87 20 to 25 years
HERITAGE PLACE AT TUCKER (f) 12,501,807 3,405,038 1987 09/04/86 20 to 25 years
----------- ------------
Total $45,558,713 $ 14,970,311
=========== ============
(a) Paces Pavilion Property is a medical office building
located in Atlanta, Georgia, owned entirely by the
Partnership.
(b) Black Oak Plaza is a retail shopping center located in
Knoxville, Tennessee, owned entirely by the Partnership.
(c) Crowe's Crossing is a retail shopping center located in
DeKalb County, Georgia, owned entirely by the
Partnership.
(d) Peachtree Property is a commercial office park located
in Atlanta, Georgia. It is owned by Wells-Baker.
(e) Cherokee Commons is a retail shopping center located in
Cherokee County, Georgia. It is owned by Fund I, II, II-
OW, VI, and VII Associates--Cherokee.
(f) Heritage Place at Tucker is a center offering retail,
shopping, and commercial office space located in Tucker,
Georgia. It is owned by Fund I and II--Tucker.
(g) Depreciation lives used for buildings were 40 years
through September 1995, changed to 25 years thereafter.
Depreciation lives used for land improvements are 20
years.
S-1
WELLS REAL ESTATE FUND I AND SUBSIDIARY
(A Georgia Public Limited Partnership)
SCHEDULE III--REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
Accumulated
Cost Depreciation
----------- --------------
BALANCE AT DECEMBER 31, 1996 $44,661,340 $ 9,283,955
1997 additions 599,975 1,867,429
1997 deductions (202,450) (50,478)
----------- -------------
BALANCE AT DECEMBER 31, 1997 45,058,865 11,100,906
1998 additions 200,645 1,910,512
----------- -------------
BALANCE AT DECEMBER 31, 1998 45,259,510 13,011,418
1999 additions 299,203 1,958,893
----------- -------------
BALANCE AT DECEMBER 31, 1999 $45,558,713 $14,970,311
=========== =============
S-2
EXHIBIT INDEX
-------------
(Wells Real Estate Fund I)
The following documents are filed as exhibits to this report. Those
exhibits previously filed and incorporated herein by reference are identified
below by an asterisk. For each such asterisked exhibit, there is shown below the
description of the previous filing. Exhibits which are not required for this
report are omitted.
Sequential
Exhibit No. Description of Document Page Number
- ----------- ----------------------- -----------
*4 Restated and Amended Certificate N/A
and Agreement of Limited
Partnership of Wells Real Estate
Fund I (Registration Statement
of Wells Real Estate Fund I,
Exhibit B to the Prospectus, File
No. 2-91165)
*10(a) Management Agreement between N/A
Registrant and Wells Management
Company, Inc. (Exhibit to Form
10-K of Wells Real Estate Fund I
for the fiscal year ended December
31, 1990, File No. 0-14463)
*10(b) Leasing and Tenant Coordination N/A
Agreement Between Registrant
and Wells Management
Company, Inc. (Exhibit to Form
10-K of Wells Real Estate Fund I
for the fiscal year ended December
31, 1990, File No. 0-14463)
*10(c) Purchase Agreement for the N/A
acquisition of the Howell Mill
Road Property dated December 27,
1985 (Exhibit to Form 10-K
of Wells Real Estate Fund I for
the fiscal year ended December 31,
1990, File No. 0-14463)
Sequential
Exhibit No. Description of Document Page Number
- ----------- ----------------------- -----------
*10(d) Leases between Registrant and N/A
Hospital Corporation of America
(Exhibit to Form 10-K of Wells
Real Estate Fund I for the fiscal
year ended December 31, 1990,
File No. 0-14463)
*10(e) Joint Venture Agreement of N/A
Wells-Baker Associates dated
April 1, 1985 (Exhibit to Form
10-K of Wells Real Estate Fund I
for the fiscal year ended December
31, 1990, File No. 0-14463)
*10(f) Purchase Agreement for the N/A
acquisition of Heritage Place at
Tucker dated April 25, 1986
(Exhibit to Form 10-K of Wells Real
Estate Fund I for the fiscal year
ended December 31, 1990, File No.
0-14463)
*10(g) Joint Venture Agreement of Fund I N/A
and Fund II Tucker dated January 9,
1987 (Exhibit to Form 10-K of Wells
Real Estate Fund I for the fiscal
year ended December 31, 1990, File
No. 0-14463)
*10(h) Purchase Agreement for the N/A
acquisition of the Cherokee Commons
Shopping Center dated December 31,
1986 (Exhibit to Form 10-K of Wells
Real Estate Fund I for the fiscal
year ended December 31, 1990, File
No. 0-14463)
*10(i) Joint Venture Agreement of Fund I and N/A
Fund II Cherokee dated June 27, 1987
(Exhibit to Form 10-K of Wells Real
Estate Fund I for the fiscal year
ended December 31, 1990, File No.
0-14463)
Sequential
Exhibit No. Description of Document Page Number
- ----------- ----------------------- -----------
*10(j) Amended and Restated Joint Venture N/A
Agreement of Fund I and Fund II
Tucker-Cherokee dated January 1,
1991 (Exhibit to Form 10-K of Wells
Real Estate Fund I for the fiscal year
ended December 31, 1991, File No.
0-14463)
*10(k) Lease Modification Agreement No. 3 N/A
with The Kroger Co. dated December 21,
1993 (Exhibit to Form 10-K of Wells
Real Estate Fund I for the fiscal year
ended December 31, 1993, File No.
0-14463)
*10(l) Joint Venture Agreement of Fund I, II, N/A
II-OW, VI and VII Associates dated
August 1, 1995 (Exhibit to Form 10-K of
Wells Real Estate Fund VI, L.P. for the
fiscal year ended December 31, 1995,
File No. 0-23656)
*10(m) First Amendment to Amended and Restated N/A
Joint Venture Agreement of Fund I and
Fund II Tucker (formerly Fund I and
Fund II Tucker-Cherokee) dated August 1,
1995 (Exhibit to Form 10-K of Wells Real
Estate Fund I for the fiscal year ended
December 31, 1995, File No. 0-14463)
*10(n) Custodial Agency Agreement between Wells N/A
Real Estate Fund I and NationsBank of
Georgia, N.A. dated August 1, 1995
(Exhibit to Form 10-K of Wells Real
Estate Fund I for the fiscal year ended
December 31, 1995, File No. 0-14463)