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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 ______________
Commission file number 0-23656
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Wells Real Estate Fund VI, L. P
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(Exact name of registrant as specified in its charter)
Georgia 58-2022628
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(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
6200 The Corners Parkway, Suite 250
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 Unit
_______________________________________________________________________________
(Title of Class)
Class B Unit
_______________________________________________________________________________
(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 non-affiliates: Not
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Applicable
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PART I
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ITEM 1. BUSINESS.
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General
Wells Real Estate Fund VI, L.P. (the "Partnership") is a Georgia public limited
partnership having Leo F. Wells, III and Wells Partners, L.P., a Georgia non-
public limited partnership, as General Partners. The Partnership was formed on
December 1, 1992, for the purpose of acquiring, developing, constructing,
owning, operating, improving, leasing and otherwise managing for investment
purposes income-producing commercial or industrial properties.
On April 5, 1993, 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 April 4,
1994, and received gross proceeds of $25,000,000 representing subscriptions from
2,500,000 Limited Partners units, composed of two classes of limited partnership
interests, Class A and Class B limited partnership units.
The Partnership owns interests in properties through its equity ownership in the
following joint ventures: Fund V and Fund VI Associates, a joint venture between
the Partnership and Wells Real Estate Fund V, L.P. ( the "Fund V - Fund VI Joint
Venture"); (ii) Fund V, Fund VI, and Fund VII Associates, a joint venture
between the Partnership, Wells Real Estate Fund V, L.P. and Wells Real Estate
Fund VII, L.P. (the "Fund V-VI-VII Joint Venture"); (iii) Fund VI and Fund VII
Associates, a joint venture between the Partnership and Wells Real Estate Fund
VII, L.P. (the "Fund VI-VII Joint Venture"); (iv) Fund II, Fund III, Fund VI and
Fund VII Associates, a joint venture between the Partnership, Fund II and Fund
III Associates, and Wells Real Estate Fund VII, L.P., (the "Fund II,III,VI,VII
Joint Venture"); (v) Fund VI, Fund VII and Fund VIII Associates, a joint venture
between the Partnership, Wells Real Estate Fund VII, L.P. and Wells Real Estate
Fund VIII, L.P. (the "Fund VI,VII,VIII Joint Venture"); and (vi) Fund I, II, II-
OW, VI, VII Associates, a joint venture between the Partnership, Wells Real
Estate Fund I, Wells Real Estate Fund II, Wells Real Estate Fund II-OW, and
Wells Real Estate Fund VII, L.P. (the "Fund I,II,II-OW,VI,VII Joint Venture").
As of December 31, 1999, the Partnership owned interests in the following
properties through its ownership of the foregoing joint ventures: (i) a four
story office building located in Hartford, Connecticut (the "Hartford Building")
and (ii) two retail buildings located in Clayton County, Georgia (the
"Stockbridge Village II") which are owned by the Fund V - Fund VI Joint Venture;
(iii) a three-story office building located in Appleton Wisconsin (the "Marathon
Building") which is owned by the Fund V-VI-VII Joint Venture; (iv) two retail
buildings located in Clayton County, Georgia (the "Stockbridge Village III")
which are owned by the Fund VI - Fund VII Joint Venture; (v) a shopping center
expansion located in Clayton County, Georgia (the "Stockbridge Village I
Expansion") which is owned by the Fund VI - Fund VII Joint Venture; (vi) an
office/retail center located in Roswell, Georgia (the "Holcomb Bridge Road
Project") which is owned by the Fund II-III-VI-VII Joint Venture; (vii) a four
story office building located in Jacksonville, Florida (the "BellSouth
Property") which is owned by the Fund VI, VII, VIII Joint Venture; (viii) a
shopping center located in Clemmons, North
2
Carolina (the "Tanglewood Commons") which is owned by the Fund VI, VII, VIII
Joint Venture; and (ix) a retail shopping center located in Cherokee County,
Georgia (the "Cherokee Commons") which is 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.,
the sole General Partner of Wells Partners, L.P., 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 compensation and 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 of
the registrant, the properties are adequately insured.
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.
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The Partnership owns interests in nine properties through its investment in
joint ventures of which three are office buildings and six are retail buildings.
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. As of December 31, 1999, these
properties were 98% occupied, as compared to 95% as of December 31, 1998 and 94%
as of December 31, 1997.
The following table shows lease expirations during each of the next ten years
for all leases as of December 31, 1999, assuming no exercise of renewal options
or termination rights:
3
Partnerships
Year of Number of Annualized Share of Percentage of Percentage of
Lease Leases Square Base Annualized Total Square Total Annualized
Expiration Expiring Feet Expiring Rent(1) Gross Base Rent Feet Expiring Base Rent
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2000 8 13,969 $ 181,719 $ 54,413 3.6% 3.2%
2001 16 52,791 832,245 248,947 13.4% 14.9%
2002 24 46,013 740,248 220,528 11.7% 13.2%
2003(2) 9 85,774 942,439 481,946 21.8% 16.8%
2004 5 21,625 324,338 122,604 5.5% 5.8%
2005 2 9,532 151,152 61,820 2.4% 2.7%
2006(3) 5 160,328 2,385,182 656,731 40.7% 42.6%
2007 1 3,600 44,250 4,735 0.9% 0.8%
2008 0 0 0 0 0.0% 0.0%
2009 0 0 0 0 0.0% 0.0%
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70 393,632 $5,601,573 $1,851,724 100.0% 100.0%
(1) Average monthly gross rent over the life of the lease, annualized.
(2) Expiration of Hartford Fire Insurance Company lease.
(3) Expiration of Marathon lease of 76,000 square feet and BellSouth
lease of 69,424 square feet.
The following describes the properties in which the Partnership owns an interest
as of December 31, 1999:
Fund V - Fund VI Joint Venture
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On December 27, 1993, the Partnership and Wells Real Estate Fund V, L.P. ("Wells
Fund V"), a Georgia public limited partnership affiliated with the Partnership
through common general partners, entered into a joint venture agreement known as
Fund V and Fund VI Associates (the "Fund V - Fund VI Joint Venture"). The
investment objectives of Wells Fund V are substantially identical to those of
the Partnership. As of December 31, 1999, the Partnership had contributed
approximately $5,329,541, and Wells Fund V had contributed approximately
$4,544,601 to the Fund V - Fund VI Joint Venture. The Partnership holds an
approximately 54% equity interest, and Wells Fund V currently holds an
approximately 46% equity interest in the Fund V - Fund VI Joint Venture. The
Partnership owns interests in the following two properties through the Fund V -
Fund VI Joint Venture:
4
The Hartford Building
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On December 29, 1993, the Fund V - Fund VI Joint Venture purchased the Hartford
Building, a four-story office building containing approximately 71,000 rentable
square feet from Hartford Accident and Indemnity Company for a purchase price of
$6,900,000. The Hartford Building is located on 5.56 acres of land in
Southington, Hartford County, Connecticut. The funds used by the Fund V - Fund
VI Joint Venture to acquire the Hartford Building were derived from capital
contributions made by the Partnership and Wells Fund V totaling $3,432,707 and
$3,508,797, respectively, for total capital contributions to the Fund V - Fund
VI Joint Venture of $6,941,504.
The entire building is leased to Hartford Fire Insurance Company for a period of
nine years and eleven months commencing on December 29, 1993. The annual base
rent during the initial term is $458,400 payable in equal monthly installments
of $38,200 for the first three months, and $724,200 payable in equal monthly
installments of $60,350 commencing April 1, 1994 and continuing through the
expiration of the initial term of the lease under the terms of its lease.
Hartford also has the option to extend the initial term of the lease for two
consecutive five year periods. Under the terms of its lease, Hartford is
responsible for property taxes, operating expenses, general repair and
maintenance work and a pro rata share of capital expenditures based upon the
number of years remaining in the lease.
The occupancy rate at the Hartford Building was 100% as of years ended December
31 1999, 1998 and 1997. The average effective annual rental per square foot at
the Hartford Building is $10.11 for 1999, 1998, 1997, 1996 and 1995.
Stockbridge Village II
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On November 12, 1993, Wells Fund V purchased 2.46 acres of real property located
in Clayton County, Georgia for $1,022,634. On July 1, 1994, Wells Fund V
contributed the property as capital contribution to the Fund V - Fund VI Joint
Venture.
Construction of a 5,400 square foot retail building was completed in November,
1994. A second retail building containing approximately 10,423 square feet was
completed in June, 1995. The entire first building was leased by Apple
Restaurants, Inc. for nine years and eleven months beginning in December 9,
1994. The annual base rent under the lease is $125,982 until December 15, 1999,
at which time the annual base rent increases to $137,700.
The total construction cost of the second building in Stockbridge Village II was
approximately $2,933,000. As of December 31, 1999, the Partnership contributed
$1,896,834, and Wells Fund V contributed $1,035,804 to the Fund V - Fund VI
Joint Venture for the acquisition and development of Stockbridge Village II.
The occupancy rate at the Stockbridge Village II Property at year end was 100%
for 1999 and 72% for 1998 and 1997. The average effective annual rental per
square foot at the Stockbridge Village II Property was $19.66 for 1999, $14.90
for 1998, $14.88 for 1997, $12.43 for 1996 and $10.41 for 1995.
5
Fund V-VI-VII Joint Venture
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On September 8, 1994, the Partnership, Wells Fund V and Wells Real Estate Fund
VII, L.P. ("Wells Fund VII"), Georgia public limited partnerships affiliated
with the Partnership through common general partners, entered into a joint
venture agreement known as Fund V, Fund VI and Fund VII Associates (the "Fund V-
VI-VII Joint Venture"). The investment objectives of Wells Fund VII are
substantially identical to those of the Partnership. The Partnership owns a 42%
interest in the following property through the Fund V-VI-VII Joint Venture:
The Marathon Building
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On September 16, 1994, the Fund V-VI-VII Joint Venture purchased a three-story
office building containing approximately 76,000 rentable square feet, located on
approximately 6.2 acres of land in Appleton, Wisconsin (the "Marathon Building")
for a purchase price of $8,250,000 excluding acquisition costs.
The funds used by the Fund V-VI-VII Joint Venture to acquire the Marathon
Building were derived from capital contributions made by the Partnership, Wells
Fund V and Wells Fund VII totaling $3,470,958, $1,337,505, and $3,470,958,
respectively, for total contributions to the Fund V-VI-VII Joint Venture of
$8,279,421 including acquisition costs.
The entire Marathon Building is leased to Jaakko Poyry Fluor Daniel for a period
of twelve years, three and one-half months, with options to extend the lease for
two additional five-year periods. The annual base rent is $910,000. The current
lease expires December 31, 2006. The lease agreement is a net lease in that the
tenant is responsible for the operating expenses including real estate taxes.
The occupancy rate at the Marathon Building was 100% for the years ended 1999,
1998 and 1997. The average effective annual rental per square foot in the
Marathon Building is $12.78 for 1999 and 1998, $12.74 for 1997 and $12.78 for
1996 and 1995.
Fund VI - Fund VII Joint Venture
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On December 9, 1994, the Partnership and Wells Fund VII entered into a Joint
Venture Agreement known as Fund VI and Fund VII Associates (the "Fund VI-Fund
VII Joint Venture"). As of December 31, 1999, the Partnership contributed
$2,604,916, including its cost to acquire land, and Wells Fund VII contributed
$3,358,633 to the Fund VI - Fund VII Joint Venture for the acquisition and
development of the Stockbridge Village III Project and the Stockbridge Village I
Expansion. As of December 31, 1999, the Partnership's equity interest in the
Fund VI - VII Joint Venture was approximately 44%, and Wells Fund VII's equity
interest in the Fund VI - VII Joint Venture was approximately 56%. The
Partnership owns interests in the following two properties through the Fund VI-
Fund VII Joint Venture:
6
Stockbridge Village III
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In April 1994, the Partnership purchased 3.27 acres of real property located on
the north side of Georgia State Route 138 at Mt. Zion Road, Clayton County,
Georgia for a cost of $1,015,673. This tract of land is located directly across
Route 138 from the Stockbridge Village Shopping Center which was developed and
is owned by an affiliate of the Partnership. On December 9, 1994, the
Partnership contributed the property as a capital contribution to the Fund VI-
Fund VII Joint Venture.
The first building is a 3,200 square foot restaurant which was completed in
March 1995, at a cost of approximately $400,000 excluding land. The space is now
being leased by RMS / Fazoli's, which signed a 13 year lease that commenced on
December 10, 1998.
Construction began in January, 1995, on a second outparcel building containing
approximately 15,000 square feet for approximately $1,500,000 excluding land. In
October 1995, Damon's Clubhouse occupied 6,732 square feet restaurant. The term
of the lease is for nine years and eleven months commencing October, 1995. The
initial annual base rent is $102,375 through March, 2001 and $115,375
thereafter.
As of December 31, 1998, the Partnership had contributed $1,033,285, and Wells
Fund VII contributed $1,917,483 to the Fund VI-Fund VII Joint Venture for the
acquisition and development of the Stockbridge Village III Property.
The occupancy rate at the Stockbridge Village III Property at year end was 100%
for the year ended 1999, 1998 and 1997. The average effective annual rental per
square foot at the Stockbridge Village III Property was $17.08 for 1999, $13.08
for 1998, $15.67 for 1997, $14.15 for 1996 and $4.85 for the partial year of
1995.
Stockbridge Village I Expansion
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On June 7, 1995, the Fund VI - Fund VII Joint Venture purchased 3.38 acres of
real property located in Clayton County, Georgia for a total price of
approximately $718,000. The Stockbridge Village I Expansion consists of a multi-
tenant shopping center containing approximately 29,200 square feet. Construction
was substantially complete in April, 1996 with Cici's Pizza occupying a 4,000
square foot restaurant. The term of the CiCi's lease is for nine years and
eleven months commencing in April, 1996. The initial base rent is $48,000. In
the third year, the annual base rent increases to $50,000, in the sixth year to
$52,000, and in the ninth year to $56,000. Eleven additional tenants have
occupied 17,600 square feet at the property in 1997, 1998 and 1999. Negotiations
are being conducted to lease the remaining space.
As of December 31, 1999, the Partnership contributed a total of $1,571,631, and
Wells Fund VII contributed a total of $1,441,150 for a total cost of
approximately $3,026,922 toward the development and construction of the
Stockbridge Village I Expansion.
7
The occupancy rate at the Stockbridge Village I Expansion was 86% at year end
1999, 81% at year end 1998 and 74% at year end 1997. The average effective
annual rental per square foot was $10.74 for 1999, $10.08 for 1998, $6.82 for
1997 and $2.69 for 1996, the first year of occupancy.
Fund II - III - VI - VII Joint Venture/Holcomb Bridge Road Project
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On January 10, 1995, the Partnership, Fund II-Fund III Joint Venture, and Wells
Fund VII entered into a Joint Venture Agreement known as Fund II, III, VI and
VII Associates ("Fund II-III-VI-VII Joint Venture"). The Fund II-Fund III Joint
Venture is a joint venture between Wells Real Estate Fund III, L.P., a Georgia
public limited partnership having Leo F. Wells, III and Wells Capital, Inc. as
general partners, and an existing joint venture (the "Fund II-Fund II-OW Joint
Venture") formed by Wells Real Estate Fund II ("Wells Fund II"), a Georgia
public limited partnership having Leo F. Wells, III and Wells Capital, Inc. as
general partners, and Wells Real Estate Fund II-OW ("Wells Fund II-OW"), a
Georgia public limited partnership having Leo F. Wells, III and Wells Capital,
Inc. as general partners. The investment objectives of Wells Fund II, Wells Fund
II-OW and Wells Fund III are substantially identical to those of the
Partnership.
In January 1995, the Fund II-Fund III Joint Venture contributed to the Fund II-
III-VI-VII Joint Venture approximately 4.3 acres of land at the intersection of
Warsaw Road and Holcomb Bridge Road in Roswell, Fulton County, Georgia (the
"Holcomb Bridge Road Property") including land improvements for the development
and construction of two buildings with a total of 49,534 square feet. As of
December 31, 1999, Fifteen tenants occupied the Holcomb Bridge property for an
occupancy rate of 100% for 1999, 94% for 1998 and 1997. The average effective
annual rental was $19.26 for 1999, $17.62 for 1998, $13.71 for 1997 and $9.87
for 1996, the first year of occupancy.
As of December 31, 1999, Fund II-Fund III Joint Venture contributed $1,729,116
in land and improvements for an equity interest of approximately 24.1%, the
Partnership contributed $1,929,541 for an equity interest of approximately
26.9%, and Wells Fund VII contributed $3,525,041 for an equity interest of
approximately 49.0%. The total cost to develop the Holcomb Bridge Road Property
was approximately $5,454,582, excluding land.
Fund VI-VII-VIII Joint Venture
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On April 17, 1995, the Partnership, Wells Fund VII and Wells Real Estate Fund
VIII, L.P. ("Wells Fund VIII"), a Georgia public limited partnership affiliated
with the Partnership through common general partners, formed a joint venture
known as the Fund VI, Fund VII, and Fund VIII Associates (the "Fund VI-VII-VIII
Joint Venture"). The investment objectives of Wells Fund VIII are substantially
identical to those of the Partnership. As of December 31, 1999, the Partnership
contributed approximately $6,067,688 for an approximately 34.3% equity interest
in the Fund VI-VII-VIII Joint Venture, which owns an office building in
Jacksonville, Florida and a multi-tenant retail center under development in
Forsyth County, North Carolina. As of December 31, 1999, Wells Fund VIII
contributed $5,700,000 for an equity interest in the Fund VI-VII-VIII Joint
Venture of approximately 32.3%, and Wells Fund
8
VII contributed approximately $5,932,312 for an equity interest in the Fund VI-
VII-VIII Joint Venture of approximately 33.4%. The total cost to complete both
properties is approximately $17,700,000.
BellSouth Property
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On April 25, 1995, the Fund VI-VII-VIII Joint Venture purchased a 5.55 acre
parcel of land in Jacksonville, Florida for a total of $1,245,059 including
closing costs. In May 1996, the 92,964 square foot office building was completed
with BellSouth Advertising and Publishing Corporation, a subsidiary of BellSouth
Company, occupying approximately 66,333 square feet and American Express Travel
Related Services Company, Inc. occupying approximately 22,607 square feet.
BellSouth occupied an additional 3,901 square feet in December 1996. The land
purchase and construction costs, totaling approximately $9,000,000, were funded
by capital contributions of $3,500,000 by the Partnership, $3,500,000 by Wells
Fund VII and $2,000,000 by the Wells Fund VIII.
The BellSouth lease is for a term of nine years and eleven months with an option
to extend for an additional five years at the then market rate. The annual base
rent during the initial term is $1,094,426 during the first five years and
$1,202,034 for the balance of the initial lease term. The American Express lease
is for a term of five years at an annual base rent of $369,851. BellSouth and
American Express are required to pay additional rent equal to their shares of
operating expenses during their respective lease terms.
The average effective annual rental per square foot at the BellSouth Property at
year end was $16.36 for 1999 and 1998, $16.40 for 1997 and $14.15 for 1996, the
first year of occupancy. The occupancy rate at year end was 100% for 1999, 1998
and 1997.
Tanglewood Commons Shopping Center
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On May 31, 1995, the Fund VI-VII-VIII Joint Venture purchased a 14.683 acre
tract of real property located in Clemmons, Forsyth County, North Carolina. The
Fund VI-VII-VIII Joint Venture constructed one large strip shopping center
building containing approximately 67,320 gross square feet on a 12.48 acre
tract. The remaining 2.2 acre portion of the property consists of four
outparcels which have been graded and will be held for future development or
resale. As of December 31, 1999, the Partnership contributed $2,567,688, Wells
Fund VII contributed $2,432,312 and Wells Fund VIII had contributed $3,700,000
for the development of this project.
Total cost and expenses to be incurred by the Fund VI-VII-VIII Joint Venture for
the acquisition, development, construction and completion of the shopping center
is approximately $8,700,000. Construction of the project began in March, 1996,
and was substantially completed in the first quarter of 1997. At December 31,
1999, the Joint Venture had $236,000 reserved to complete the remaining tenant
improvements costs.
Harris Teeter, Inc., a regional supermarket chain, executed a lease for a
minimum of 45,000 square feet with an initial term of 20 years. The annual base
rent during the initial term is
9
$488,250. In addition, Harris Teeter has agreed to pay percentage rents equal to
one percent of the amount by which Harris Teeter's gross sales exceed
$35,000,000 for any lease year.
The occupancy rate at Tanglewood Commons was 91% for 1999 and 1998 and 86% for
1997. The average effective annual rental per square foot at Tanglewood Commons
was $11.48 for 1999, $10.96 for 1998 and $9.12 for 1997, the first year of
occupancy.
Fund I - II - II-OW - VI - VII Joint Venture
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On August 1, 1995, the Partnership, Wells Real Estate Fund I ("Wells Fund I"), a
Georgia public limited partnership , the Fund II-Fund II-OW Joint Venture and
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 described below. Wells Fund
I is a Georgia limited partnership having Leo F. Wells, III and Wells Capital,
Inc., as general partners. The investment objectives of Wells Fund I, the Fund
II-Fund II-OW Joint Venture and Wells Fund VII are substantially identical to
those of the Partnership.
The Cherokee Property
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The Cherokee Property consists of a retail shopping center known as the
"Cherokee Commons Shopping Center" located in metropolitan Atlanta, Cherokee
County, Georgia (the "Cherokee Property "). The Cherokee Property has been
expanded to consist of approximately 103,755 net leasable square feet. The
Cherokee Property was initially developed through a joint venture between Wells
Fund I and the Fund II-Fund II-OW Joint Venture, which contributed the Cherokee
Property to the Fund I-II-II-OW-VI-VII Joint Venture on August 1, 1995 to
complete the required funding for the expansion.
As of December 31, 1999, Wells Fund I contributed property with a book value of
$2,139,900, the Fund II-Fund II-OW Joint Venture contributed property with a
book value of $4,860,100, the Partnership contributed cash in the amount of
$953,798, and Wells Fund VII contributed cash in the amount of $953,798 to the
Fund I-II-IIOW-VI-VII Joint Venture. As of December 31, 1999, the equity
interest in the Fund I - II - II-OW - VI - VII Joint Venture were as follows:
Wells Fund I 24%, Fund II-Fund II-OW Joint Venture 54%, Wells Fund VII 11% and
the Partnership 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, a retail grocery chain, is the only tenant
occupying 10% or more of the rentable square footage. The other tenants in the
shopping center provide typical retail shopping services.
The Kroger lease calls 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
10
expires March 31, 2011 with Kroger entitled to five successive renewals each for
a term of five years at the same rental as the original lease.
The occupancy rate at year end for the Cherokee Property was 97% in 1999, 91%
for 1998 and 94% in 1997. The average effective 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.
ITEM 3. LEGAL PROCEEDINGS.
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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 for the year of
1999.
PART II
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ITEM 5. MARKET FOR PARTNERSHIP'S UNITS AND RELATED SECURITY HOLDER MATTERS.
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As of February 29, 2000, the Partnership had 2,199,570 outstanding Class A Units
held by a total of 1,647 Limited Partners and 300,430 outstanding Class B Units
held by a total of 184 Limited Partners. The capital contribution per unit is
$10.00. 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.
The General Partners have estimated the investment value of properties held by
the Partnership, as of December 31, 1999, to be $10.75 per Class A Unit and
$14.46 per Class B Units based on market conditions existing in early December
1999. The value was confirmed as reasonable by an independent MAI appraiser,
David L. Beal Company, although no actual MAI appraisal was performed due to the
inordinate expense involved with such an undertaking. The valuation does not
include any fractional interest valuation.
Cash available for distribution to the Limited Partners is distributed on a
quarterly basis unless Limited Partners elect to have their cash distributions
paid monthly. Under the Partnership Agreement, distributions from net cash from
operations are allocated first to the Limited Partners holding Class A Units
(and limited partners holding Class B units that have elected a conversion right
that allows them to share in the distribution rights of limited partners holding
Class A units) until they have received 10% of their adjusted capital
contributions. Net Cash From Operations, as defined in the Partnership Agreement
to mean Cash Flow, less adequate cash reserves for other obligations of the
Partnership for which there is no provision, but are
11
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 is then distributed to the General Partners until they have
received an amount equal to 10% of cash distributions previously distributed to
the limited partners. Any remaining cash available for distribution is split
between the Limited Partners holding Class A units and the General Partners on a
basis of 90% and 10% respectively. No distributions will be made to the Limited
Partners holding Class B Units. No distribution has been made to the General
Partner as of December 31, 1999.
Cash distributions made to Limited Partners holding Class A Units (and limited
partners holding Class B Units that have elected a conversion right) during the
two most recent fiscal years were as follows:
Per Class A Unit
----------------
Distributions For Total Cash Investment Return of
Quarter Ended Distribution Income Capital
------------- ------------ ------ -------
March 31, 1998 $435,455 $0.20 $0.00
June 30, 1998 $440,837 $0.20 $0.00
Sept. 30, 1998 $438,327 $0.20 $0.00
Dec. 31, 1998 $426,161 $0.20 $0.00
March 31, 1999 $427,108 $0.20 $0.00
June 30, 1999 $449,797 $0.21 $0.00
Sept. 30, 1999 $460,616 $0.11 $0.10
Dec. 31, 1999 $475,835 $0.12 $0.10
Fourth quarter distributions were accrued for accounting purposes in 1999, and
was not actually paid to the limited partners holding Class A Units until
February 2000.
ITEM 6. SELECTED FINANCIAL DATA.
- -------------------------------
The Partnership commenced the offering on April 5, 1993, but did not commence
active operations until it received and accepted subscriptions for a minimum of
125,000 units in May, 1993.
The following sets forth a summary of the selected financial data for the fiscal
years ended December 31, 1999, 1998, 1997, 1996 and 1995.
12
1999 1998 1997 1996 1995
------------ ------------ ------------ ------------ ------------
Total assets $18,532,975 $19,328,676 $20,218,514 $20,880,163 $21,476,126
Total revenues 1,056,568 939,519 884,802 675,782 1,002,567
Net income 969,613 855,788 795,654 589,053 901,828
Net income/(loss) allocated
to General Partners 0 0 0 0 (1,828)
Net income allocated to
Class A Limited Partners 1,274,859 1,770,058 1,677,826 1,234,717 1,172,944
Net loss allocated to
Class B Limited Partners (305,246) (914,270) (882,172) (645,664) (269,288)
Net income per weighted
average (1) Class A
Limited Partner Unit .58 .81 .78 .59 .57
Net loss per weighted
average (1) Class B
Limited Partner Unit (.99) (2.80) (2.47) (1.60) (.60)
Cash Distributions per
weighted average (1)
Class A Limited Partner
Unit:
Investment Income .64 .80 .73 .57 .62
Return of Capital .20 .00 .00 .00 .00
(1) The weighted average unit is calculated by averaging units over the period
they are outstanding during the time units are still being purchased or
converted by Limited Partners in the Partnership.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
- -------------------------------------------------------------------------
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 statements
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.
13
Results of Operations and Changes in Financial Conditions
- ---------------------------------------------------------
General
Gross revenues of the Partnership were $1,056,568 for the fiscal year ended
December 31, 1999, as compared to $939,519 for the fiscal year ended December
31, 1998 and $884,802 for the fiscal year ended December 31, 1997. The increase
for 1999 over 1998 and 1997 was due primarily to increased income due to
increased occupancy at some of the properties, partially offset by a decrease in
interest income.
Expenses of the Partnership were $86,955 for 1999, as compared to $83,731 for
1998 and $89,148 for 1997. The slight change in expenses for 1999, as compared
to 1998 and 1997 was primarily due to a fluctuations in legal and accounting
expenses.
Net income of the Partnership was $969,613 for the fiscal year ended December
31, 1999, as compared to $855,788 for the fiscal year ended December 31, 1998
and $795,654 for the year ended December 31, 1997. The increase in net income
for 1999 over 1998 and 1997 is due primarily to increased earnings from joint
ventures.
The Partnership made cash distributions to the limited partners holding Class A
Units of $.84 for fiscal year 1999 as compared to $.80 per Class A Unit for
fiscal year 1998 and $.73 for fiscal year 1997. Distributions accrued for the
fourth quarter of 1999 to the limited partners holding Class A Units were paid
in February, 2000. No cash distributions were made to limited partners holding
Class B Units.
Property Operations
- -------------------
As of December 31, 1999, the Partnership's ownership interest in Fund I, II, II-
OW, VI and VII Joint Venture was 10.7%, in Fund II, III, VI and VII Joint
Venture was 26.9%, in Fund V and VI Joint Venture was 53.6%, in Fund V,VI, and
VII Joint Venture was 41.8%, in Fund VI and VII Joint Venture was 43.7% and in
Fund VI,VII and VIII Joint Venture was 34.3%.
As of December 31, 1999, the Partnership owned interests through interests in
the following properties through its investment in joint ventures:
14
The Hartford Building - Fund V - Fund VI Joint Venture
- ------------------------------------------------------
For the Year Ended December 31
------------------------------
1999 1998 1997
---- ---- ----
Revenues:
Rental income $717,499 $717,499 $717,499
-------- -------- --------
Expenses
Depreciation 292,031 292,032 292,031
Management & leasing expenses 28,968 27,719 30,189
Other operating expenses 11,282 10,530 (9,983)
-------- -------- --------
332,281 330,281 312,237
-------- -------- --------
Net income $385,218 $387,218 $405,262
======== ======== ========
Occupied % 100% 100% 100%
Partnership's Ownership % 53.6% 53.5% 53.5%
Cash Distribution to the Partnership $366,351 $365,986 $374,219
Net Income Allocated to the
Partnership $206,339 $207,076 $215,449
Net income decreased and expenses increased in 1999 and 1998, as compared to
1997, due primarily to an insurance reimbursement received in 1997 from the
tenant for prior year's expenses.
The Partnership's ownership in the Fund V-Fund VI Joint Venture increased from
53.5% in 1997 and 1998, to 53.6% in 1999 due to additional fundings by the
Partnership, which increased the Partnership's ownership interest.
Cash distributions and net income allocated to the Partnership decreased in 1999
and 1998 as compared to 1997 due to the insurance reimbursement discussed above.
Real estate taxes and all operational expenses for the building are the
responsibility of the tenant.
For comments on the general competitive conditions to which the property may be
subject, See Item 1, Business, Page 2. For additional information on tenants,
etc. refer to Item 2, Properties, Page 3. For more detailed financial
information regarding the historical operations of The Hartford Building, refer
to the Financial Statements, as of December 31, 1999, 1998 and 1997 regarding
The Hartford Building commencing at page F-36 of this Annual Report on
Form 10-K.
15
Stockbridge Village II - Fund V - Fund VI Joint Venture
- -------------------------------------------------------
For the Year Ended December 31
------------------------------
1999 1998 1997
---- ---- ----
Revenues:
Rental income $311,112 $235,776 $235,508
-------- -------- --------
Expenses
Depreciation 104,962 101,971 96,357
Management & leasing expenses 36,199 29,648 35,423
Other operating expenses 43,637 32,156 62,725
-------- -------- --------
184,798 163,775 194,505
-------- -------- --------
Net income $126,314 $ 72,001 $ 41,003
======== ======== ========
Occupied % 100% 72% 72%
Partnership's Ownership % 53.6% 53.5% 53.5%
Cash Distribution to the Partnership $114,220 $ 89,458 $ 69,719
Net Income Allocated to the Partnership $ 67,666 $ 38,513 $ 22,033
Net income and cash distributions allocated to the Partnership are greater in
1999, as compared to 1998 and 1997, due primarily to increase occupancy.
Expenses increased in 1999, as compared to 1998, due to the increased occupancy.
The Partnership's ownership percentage in the Fund V - Fund VI Joint Venture
increased to 53.6% in 1999 as compared to 53.5% in 1998 and 1997 due to
additional investments by the Partnership which increased the Partnership's
ownership interest in the Fund V-Fund VI Joint Venture.
The Stockbridge Village II Project incurred property taxes of $24,121 for 1999,
$23,508 for 1998 and $25,491 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 tenants,
etc., refer to Item 2, Properties, Page 3.
16
The Marathon Building/Fund V-VI-VII Joint Venture
- -------------------------------------------------
For the Year Ended December 31
------------------------------
1999 1998 1997
---- ---- ----
Revenues:
Rental income $971,051 $971,447 $968,219
-------- -------- --------
Expenses:
Depreciation 350,585 350,585 350,585
Management & leasing expenses 39,659 34,632 39,671
Other operating expenses 19,441 12,261 11,905
-------- -------- --------
409,685 397,478 402,161
-------- -------- --------
Net income $561,366 $573,969 $566,058
======== ======== ========
Occupied % 100% 100% 100%
Partnership's Ownership % 41.8% 41.8% 41.8%
Cash Distribution to the Partnership $385,063 $388,557 $388,557
Net Income Allocated to the
Partnership $234,819 $236,782 $236,782
Real estate taxes and all operational expenses for the building are the
responsibility of the tenant.
Rental income remained relatively stable in 1999, 1998 and 1997. Management and
leasing fees increased, as compared to 1998, due to an underaccrual of fees in
1998. Operating expenses increased slightly due primarily to increases in
accounting and administrative fees.
Cash distribution to the Partnership and net income allocated to Partnership
remained relatively stable for 1999.
For comments on the general competitive conditions to which the property may be
subject, See Item 1, Business, page 2. For additional information on tenants,
etc., refer to Item 2, Properties, Page 3.
17
Stockbridge Village III/Fund VI - Fund VII Joint Venture
- --------------------------------------------------------
For the Year Ended December 31,
--------------------------------
1999 1998 1997
---- ---- ----
Revenues:
Rental income $310,887 $238,093 $285,256
-------- -------- --------
Expenses:
Depreciation 86,459 91,053 86,626
Management and leasing expenses 36,146 32,844 30,722
Other operating expenses 26,158 145,402 22,501
-------- -------- --------
148,763 269,299 139,849
-------- -------- --------
Net income(loss) $162,124 $(31,206) $145,407
======== ======== ========
Occupied % 100% 100% 100%
Partnership's Ownership % 43.7% 43.7% 42.5%
Cash Distribution to the Partnership $108,126 $ 27,885 $ 99,789
Net Income (Loss) Allocation to the
Partnership $ 70,851 $(13,520) $ 62,151
Rental income increased in 1999, as compared to 1998 and 1997, due primarily to
100% occupancy for the whole year of 1999 at the property. A tenant vacated its
space in early 1998 and the space was released late in 1998. Management and
leasing expenses increased as the rental income increased. Other operating
expenses were higher in 1998 due to bad debt expense recorded in 1998.
The Stockbridge Village III Project incurred property taxes of $26,211 for 1999,
$25,248 for 1998 and $25,009 for 1997.
The Partnership's ownership in the Fund VI - Fund VIII Joint Venture increased
to 43.7% for 1999 and 1998, as compared to 42.5% in 1997, due to additional
funding by the Partnership, which increased the Partnership's ownership in the
Fund VI-Fund VII Joint Venture.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc. refer to Item 2, Properties, page 3.
18
Stockbridge Village I Expansion/Fund VI - Fund VII Joint Venture
- ----------------------------------------------------------------
For the Year Ended December 31
------------------------------
1999 1998 1997
---- ---- ----
Revenues:
Rental income $313,566 $294,318 $199,090
-------- -------- --------
Expenses:
Depreciation 149,132 141,843 111,990
Management & leasing expenses 43,918 44,398 25,268
Other operating expenses 12,461 18,181 38,757
-------- -------- --------
205,511 204,422 176,015
-------- -------- --------
Net income $108,055 $ 89,896 $ 23,075
======== ======== ========
Occupied % 86% 81% 74%
Partnership's Ownership % 43.7% 43.7% 42.5%
Cash Distribution to Partnership $122,586 $ 96,809 $ 48,829
Net Income Allocated to the
Partnership $ 47,222 $ 38,827 $ 9,832
Rental income, net income and cash distributions have increased due primarily to
increased occupancy. Other operating expenses were higher in 1997 due primarily
to common area maintenance billings to tenants that were underestimated in 1997.
Tenants are billed an estimated amount for the current year common area
maintenance which is then reconciled the following year and the difference
billed to the tenant.
The Stockbridge Village I Expansion incurred property taxes of $23,085 for 1999,
$22,565 for 1998 and $25,608 for 1997.
The Partnership's ownership in the Fund VI - Fund VII Joint Venture increased to
43.7% for 1999 and 1998, as compared to 42.5% in 1997, due to additional funding
by the Partnership, which increased the Partnership's ownership in the Fund VI-
Fund VII Joint Venture.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
refer to Item 2, Properties, page 3.
19
Holcomb Bridge Road Property / Fund II - III - VI - VII Joint Venture
- ---------------------------------------------------------------------
For the Year Ended December 31,
-------------------------------
1999 1998 1997
---- ---- ----
Revenues:
Rental Income $953,952 $872,978 $679,268
Other Income 23,843 36,000 0
-------- -------- --------
977,795 908,978 679,268
-------- -------- --------
Expenses:
Depreciation 415,165 376,290 325,974
Management & leasing expenses 129,797 97,701 48,962
Other operating expenses 93,535 107,418 195,567
-------- -------- --------
638,497 581,409 570,503
-------- -------- --------
Net income $339,298 $327,569 $108,765
======== ======== ========
Occupied % 100% 94% 94%
Partnership's Ownership % 26.9% 26.9% 26.9%
Cash Distribution to Partnership $204,085 $199,946 $115,220
Net Income Allocated to the
Partnership $ 91,135 $ 87,914 $ 28,409
Rental income increased in 1999, as compared to 1998, due primarily to increased
tenant occupancy. The lower rental income in 1997 is due to the 94% occupancy
starting in late 1997. Depreciation expense increased as the occupancy rate
increased due to tenant improvement taking place when tenants moved in.
Management and leasing expenses increased due primarily to increased management
fees that are charged based on rental income. Other operating expenses decreased
in 1999, as compared to 1998, due primarily to an over accrual of 1998 property
tax. Other operating expenses were higher in 1997, due primarily to water/sewer
reimbursement paid by Fulton County Water which did not begin until 1998.
Real estate taxes were $53,896 for 1999, $52,162 for 1998 and $85,230 for 1997.
For comments on the general competitive conditions to which the property may be
subject, see Item, Business page 2. For additional information on tenants, etc.
refer to Item 2, Properties, page 3.
20
BellSouth Property / Fund VI - VII - VIII Joint Venture
- -------------------------------------------------------
For the Year Ended December 31
------------------------------
1999 1998 1997
---------------------- ---------------------- ------------------------
Revenues:
Rental income $1,521,109 $1,521,109 $1,524,708
Interest income 4,763 7,806 8,188
Other income 360 9,373 360
---------- ---------- ----------
1,526,232 1,538,288 1,533,256
---------- ---------- ----------
Expenses:
Depreciation 446,429 444,448 443,544
Management & leasing expenses 192,716 190,025 191,176
Other operating expenses 415,562 436,403 415,114
---------- ---------- ----------
1,054,707 1,070,876 1,049,834
---------- ---------- ----------
Net income $ 471,525 $ 467,412 $ 483,422
========== ========== ==========
Occupied % 100% 100% 100%
========== ========== ==========
Partnership's Ownership % 34.3% 34.3% 34.3%
========== ========== ==========
Cash Distribution to Partnership $ 325,961 $ 323,745 $ 335,846
========== ========== ==========
Net Income Allocated to Partnership $ 161,499 $ 160,090 $ 170,391
========== ========== ==========
Rental income, depreciation and management and leasing expenses have remained
relatively stable. While other operating expenses have fluctuated from $415,114
for 1997, to $436,403 for 1998 and $415,562 for 1999. HVAC and various other
operating expenses were higher in 1998. This created a greater common area
maintenance billing to the tenants in 1999. Tenants are billed an estimated
amount for the current year common area maintenance which is then reconciled the
following year and the difference billed to the tenant.
The BellSouth Property incurred property taxes of $166,706 for 1999, $171,629
for 1998 and $164,400 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 tenants,
etc. refer to Item 2, Properties, page 3.
21
Tanglewood Commons / Fund VI - VII - VIII Joint Venture
- -------------------------------------------------------
Eleven Months Ended
For the Year Ended December 31 December 31
------------------------------ -----------
1999 1998 1997
---- ---- ----
Revenues:
Rental income $772,907 $737,862 $562,880
Interest income 10,174 17,610 11,276
-------- -------- --------
783,081 755,472 574,156
-------- -------- --------
Expenses:
Depreciation 255,456 244,311 191,155
Management & leasing expenses 66,637 61,562 41,589
Other operating expenses 67,726 49,338 88,873
-------- -------- --------
389,819 355,211 321,617
-------- -------- --------
Net income $393,262 $400,261 $252,539
======== ======== ========
Occupied % 91% 91% 86%
======== ======== ========
Partnership's Ownership % 34.3% 34.3% 34.3%
======== ======== ========
Cash Distribution to Partnership $223,973 $218,408 $132,652
======== ======== ========
Net Income Allocated to Partnership $134,694 $137,091 $ 87,731
======== ======== ========
Rental income has increased in 1999, as compared to 1998, due to an increase in
occupancy in late 1998. Depreciation, management and leasing expense and other
operating expenses have also increased due to the increased occupancy creating a
slight decrease in net income. Common area maintenance billings to tenants were
lower in 1999, as compared to 1998, by approximately $9,000. Tenants are billed
an estimated amount for the current year common area maintenance which is then
reconciled the following year and the difference billed to the tenant. Since
this property commenced operations in February, 1997, comparable income and
expense figures for 1997 are not available.
Tanglewood Commons incurred property taxes of $53,259 in 1999, $52,229 for 1998
and $58,466 for 1997, the first year of occupancy.
For comments on the general competitive conditions to which the property may be
subject, see Item, Business, page 2. For additional information on the tenants,
etc. refer to Item 2, Properties page 3.
22
Cherokee Commons Shopping Center / Fund I - II - II-OW - VI - 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 & leasing expenses 94,149 82,517 78,046
Other operating expenses 68,089 84,676 138,294
-------- -------- --------
610,207 611,853 657,222
-------- -------- --------
Net income $335,083 $298,062 $223,497
======== ======== ========
Occupied % 97% 91% 94%
Partnership's Ownership % 10.7% 10.7% 10.7%
Cash Distribution to Partnership $ 83,485 $ 79,238 $ 65,047
Net Income Allocated to the
Partnership $ 35,881 $ 31,916 $ 23,931
Rental income increased from $909,831 in 1998 to $945,222 in 1999, due to an
increase in occupancy from 91% in 1998 to 97%$ in 1999. Rental income increased
in 1998 over 1997 due primarily to a one time adjustment made to the straight
line rent schedule in 1997. Management and leasing expenses increased from
$82,517 in 1998, to $94,149 in 1999, due in an increase in occupancy and rental
renewal rates. Operating expenses of the property decreased to $68,090 in 1999
from $84,676 in 1998 and 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
tenants improvements, common area expenses and legal fees. Tenants are billed an
estimate amount for the current year common area maintenance which is then
reconciled and the difference billed to the tenant. Net income of the property
increased to $335,083 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 tenants,
etc. refer to Item 2, Properties, page 3.
23
Liquidity and Capital Resources
- -------------------------------
During its offering, which terminated on April 4, 1994, the Partnership raised a
total of $25,000,000 in capital through the sale of 2,500,000 units. No
additional units will be sold by the Partnership. From the original funds
raised, the Partnership incurred $4,619,157 in commissions, acquisition fees,
organization and offering costs; invested $20,249,359 in properties; and
reserved $131,484 as working capital reserves.
Pursuant to the terms of the Partnership Agreement, the Partnership is required
to maintain working capital reserves in an amount equal to the cash operating
expenses required to operate the Partnership for a six-month period not to be
reduced below 1% of Limited Partners' capital contributions. As set forth
above, in order to fund tenant improvements at the Stockbridge Village II,
Stockbridge Expansion and at the Holcomb Bridge Road Property, the General
Partners have used $119,000 of the Partnership's working capital reserves to
reduce the balance below this minimum amount, rather than funding the tenant
improvements out of operating cash flow, which would have the effect of reducing
cash flow distributions to Limited Partners. The General Partners anticipate
that the remaining $131,000 in working capital reserves will be sufficient to
meet its future needs.
The Partnership net cash used in operating activities increased from $57,206
for the year ended December 31, 1997 to $70,649 for the year ended December 31,
1998 and to $80,493 for the year ended December 31, 1999 primarily due to
decreased interest income in 1998 and 1999. Net cash provided by investing
activities increased from $1,189,264 in 1997 to $1,693,826 in 1998 and to
$1,855,362 in 1999 due primarily to decreased investments in joint ventures and
increases in distributions received from joint ventures. Cash flow from
financing activities varied from ($1,765,314) in 1999 to ($1,745,626) in 1998
and ($1,452,803) in 1997 due to increases in distributions to partners.
The Partnership's distributions paid and payable through the fourth quarter of
1999 have been paid from net cash from operations and from a return of capital.
The Partnership anticipates that distributions will continue to be paid on a
quarterly basis from such sources. No cash distributions were paid to Class B
Unit holders for 1999.
The Partnership is unaware of any known demands, commitments, events or capital
expenditures other than that which is required for the normal operations of 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. The
Partnership expects to meet liquidity requirements and budget demands through
cash flow from operations.
Inflation
- ---------
The real estate market 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 to protect the partnership from the impact of
inflation. Most leases contain common area maintenance charges, real estate tax
and insurance reimbursements on a per square foot basis, 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
24
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 Y2K 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.
25
PART III
--------
Item 10. General Partners of the Partnership.
- ---------------------------------------------
Wells Partners, L.P. Wells Partners, L.P. is a private Georgia limited
- --------------------
partnership formed on October 25, 1990. The sole General Partner of Wells
Partners, L.P. is Wells Capital, Inc., a Georgia corporation. The executive
offices of Wells Capital, Inc. are located at 6200 The Corners Parkway, Suite
250, Norcross, Georgia 30092.
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 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.
- ---------------------------------------------------------
The following table summarizes the compensation and fees paid to the General
Partners and their affiliates during the year ended December 31, 1999.
CASH COMPENSATION TABLE
(A) (B) (C)
Name of individual or Capacities in which served
number in group Form of Compensation Cash Compensation
- --------------- -------------------- -----------------
Wells Management Property Manager - $161,779
Company, Inc. Management and Leasing
Fees
(1) The majority of these fees are not paid directly by the Partnership but are
paid by the joint venture entities which own properties for 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.
26
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 February 28, 2000.
(1) (2) (3) (4)
Amount and Nature
Name and Address of of Beneficial
Title of Class Beneficial Owner Ownership Percent of Class
- -------------- ----------------- ----------------- ----------------
Class A Units Leo F. Wells, III 1327.37 units IRA less than 1%
(401(k))
No arrangements exist which would, upon operation, result in a change in control
of the Partnership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
- --------------------------------------------------------
The 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 are as follows:
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 holding
Class A Units have received preferential distributions equal to 10% of
their adjusted capital contribution. The General Partners will also
receive a subordinated participation in net sale proceeds and net financing
proceeds equal to 20% of residual proceeds available for distribution after
Limited Partners holding Class A Units have received a return of their
adjusted capital contributions plus a 10% cumulative return on their
adjusted capital contributions and Limited Partners holding Class B Units
have received a return of their adjusted capital contribution plus a 15%
cumulative return on their adjusted capital contribution; however, that in
no event shall the General Partners receive in the aggregate in excess of
15% of net sale proceeds and net financing proceeds remaining after
payments to Limited Partners from such proceeds of amounts equal to the sum
of their adjusted capital contributions plus a 6% cumulative return on
their adjusted capital contributions. The General Partners received no
distribution from cash flow or from net sales proceeds in 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 the
lesser of: (A)(i) 3% of the gross revenues for leasing (aggregate maximum
of 6%) plus a separate one-time fee for
27
initial rent-up or leasing-up of newly constructed properties in an amount
not to exceed the fee customarily charged in arm's-length transactions by
other rendering similar services in the same geographic area for similar
properties; and (ii) in the cash of industrial and commercial properties
which are leased on a long-term 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; or (B) the amounts charged by
unaffiliated persons rendering comparable services in the same geographic
area. Wells Management Company, Inc. accrued $161,779 in property
management and leasing fees relating to the Partnership in 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. The General Partners or their
affiliates received no real estate commissions in 1999.
28
PART IV
-------
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
- --------------------------------------------------------------------------
(a) 1. Financial Statements
The Financial Statements are contained on pages F-2 through F-35 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 for the year 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.
29
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 VI, L.P.
(Registrant)
By: /s/ Leo F. Wells, III
-------------------------------------------
Individual General Partner and as President
and Chief Financial Officer of Wells
Capital, Inc., the General Partner of Wells
Partners, L.P.
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
- --------- -----
/s/ Leo F. Wells, III Individual General Partner, March 27, 2000
- ----------------------------- President and Sole Director
Leo F. Wells, III of Wells Capital, Inc., the
General Partner of Wells
Partners, L.P.
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
30
ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ----------------------------------------------------
INDEX TO THE FINANCIAL STATEMENTS
Financial Statements Page
- -------------------- ----
Independent Auditors' Reports F2
Balance Sheets as of December 31, 1999 and 1998 F3
Statements of Income 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
Audited Financial Statements - The Hartford Building F36
F-1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Wells Real Estate Fund VI, L.P.:
We have audited the accompanying balance sheets of WELLS REAL ESTATE FUND VI,
L.P. (a Georgia public limited partnership) as of December 31, 1999 and 1998 and
the related statements of income, 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
financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing standards
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 financial statements referred to above present fairly, in
all material respects, the financial position of Wells Real Estate Fund VI, L.P.
as of December 31, 1999 and 1998 and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1999 in
conformity with 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 VI, L.P.
(A Georgia Public Limited Partnership)
BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
ASSETS
1999 1998
------------ -----------
INVESTMENT IN JOINT VENTURES $17,884,649 $18,753,866
CASH AND CASH EQUIVALENTS 155,443 145,888
DUE FROM AFFILIATES 492,276 427,734
DEFERRED PROJECT COSTS 307 888
PREPAID EXPENSES AND OTHER ASSETS 300 300
----------- -----------
Total assets $18,532,975 $19,328,676
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Partnership distributions payable $ 476,036 $ 427,995
----------- -----------
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL:
Limited partners:
Class A--2,195,969 units and 2,187,757 units as of December 31,
1999 and 1998, respectively 18,056,939 18,608,322
Class B--304,031 units and 312,243 units as of December 31, 1999
and 1998, respectively 0 292,359
----------- -----------
Total partners' capital 18,056,939 18,900,681
----------- -----------
Total liabilities and partners' capital $18,532,975 $19,328,676
=========== ===========
The accompanying notes are an integral part of these balance sheets.
F-3
WELLS REAL ESTATE FUND VI, L.P.
(A Georgia Public Limited Partnership)
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
1999 1998 1997
---------- ---------- ----------
REVENUES:
Equity in income of joint ventures $1,050,106 $ 928,000 $ 856,710
Interest income 6,462 11,519 28,092
---------- ---------- ----------
1,056,568 939,519 884,802
---------- ---------- ----------
EXPENSES:
Partnership administration 53,350 58,706 52,386
Legal and accounting 23,619 15,481 21,541
Amortization of organization costs 0 1,563 6,250
Computer costs 9,986 7,981 8,971
---------- ---------- ----------
86,955 83,731 89,148
---------- ---------- ----------
NET INCOME $ 969,613 $ 855,788 $ 795,654
========== ========== ==========
NET INCOME ALLOCATED TO CLASS A LIMITED PARTNERS $1,274,859 $1,770,058 $1,677,826
========== ========== ==========
NET LOSS ALLOCATED TO CLASS B LIMITED PARTNERS $ (305,246) $ (914,270) $ (882,172)
========== ========== ==========
NET INCOME PER WEIGHTED AVERAGE CLASS A LIMITED
PARTNER $ 0.58 $ 0.81 $ 0.78
========== ========== ==========
NET LOSS PER WEIGHTED AVERAGE CLASS B LIMITED PARTNER
UNIT $ (0.99) $ (2.80) $ (2.47)
========== ========== ==========
CASH DISTRIBUTION PER WEIGHTED AVERAGE CLASS A
LIMITED PARTNER UNIT $ 0.83 $ 0.80 $ 0.73
========== ========== ==========
The accompanying notes are an integral part of these statements.
F-4
WELLS REAL ESTATE FUND VI, L.P.
(A Georgia Public Limited Partnership)
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 2,113,257 $18,162,497 386,743 $2,382,594 $20,545,091
Net income (loss) 0 1,677,826 0 (882,172) 795,654
Partnership distributions 0 (1,555,072) 0 0 (1,555,072)
Class B conversion elections 45,638 239,939 (45,638) (239,939) 0
--------- ---------- ------- --------- ----------
BALANCE, December 31, 1997 2,158,895 18,525,190 341,105 1,260,483 19,785,673
Net income (loss) 0 1,770,058 0 (914,270) 855,788
Partnership distributions 0 (1,740,780) 0 0 (1,740,780)
Class B conversion elections 28,862 53,854 (28,862) (53,854) 0
--------- ---------- ------- --------- ----------
BALANCE, December 31, 1998 2,187,757 18,608,322 312,243 292,359 18,900,681
Net income (loss) 0 1,274,859 0 (305,246) 969,613
Partnership distributions 0 (1,813,355) 0 0 (1,813,355)
Class A conversion elections (1,751) (14,903) 1,751 14,903 0
Class B conversion elections 9,963 2,016 (9,963) (2,016) 0
--------- ---------- ------- --------- ----------
BALANCE, December 31, 1999 2,195,969 $18,056,939 304,031 $ 0 $18,056,939
========= ========== ======= ========= ==========
The accompanying notes are an integral part of these statements.
F-5
WELLS REAL ESTATE FUND VI, L.P.
(A Georgia Public Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
1999 1998 1997
------------- ------------ -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 969,613 $ 855,788 $ 795,654
------------- ------------ -----------
Adjustments to reconcile net income to net cash used in
operating activities:
Equity in income of joint ventures (1,050,106) (928,000) (856,710)
Amortization of organization costs 0 1,563 6,250
Changes in assets and liabilities:
Prepaid expenses and other assets 0 0 2,100
Accounts payable and accrued expenses 0 0 (4,500)
------------- ------------ -----------
Total adjustments (1,050,106) (926,437) (852,860)
------------- ------------ -----------
Net cash used in operating activities (80,493) (70,649) (57,206)
------------- ------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in joint ventures (13,943) (135,602) (310,759)
Distributions received from joint ventures 1,869,305 1,829,428 1,500,023
------------- ------------ -----------
Net cash provided by investing activities 1,855,362 1,693,826 1,189,264
------------- ------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners in excess of accumulated earnings (41,177) 0 0
Distributions to partners from accumulated earnings (1,724,137) (1,745,626) (1,452,803)
------------- ------------ -----------
Net cash used in financing activities (1,765,314) (1,745,626) (1,452,803)
------------- ------------ -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 9,555 (122,449) (320,745)
CASH AND CASH EQUIVALENTS, beginning of year 145,888 268,337 589,082
------------- ------------ -----------
CASH AND CASH EQUIVALENTS, end of year $ 155,443 $ 145,888 $ 268,337
============= ============ ===========
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES:
Deferred project costs contributed to joint ventures $ 581 $ 1,778 $ 11,491
============= ============ ===========
The accompanying notes are an integral part of these statements.
F-6
WELLS REAL ESTATE FUND VI, L.P.
(A Georgia Public Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998, AND 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Business
Wells Real Estate Fund VI, L.P. (the "Partnership") is a public limited
partnership organized on December 1, 1992 under the laws of the state of
Georgia. The general partners are Leo F. Wells, III and Wells Partners,
L.P. ("Wells Partners"), a Georgia nonpublic limited partnership. The
Partnership has two classes of limited partnership interests, Class A and
Class B units. Limited partners shall have the right to change their prior
elections to have some or all of their units treated as Class A units or
Class B units once every five years. 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 to be developed, are currently
under development or construction, are newly constructed, or have operating
histories. The Partnership owns an interest in the following properties
through joint ventures between the Partnership and other Wells Real Estate
Funds: (i) a shopping center located in Cherokee County, Georgia ("Cherokee
Commons"), (ii) an office/retail center in Roswell, Georgia, (iii) the
Hartford Building, a four-story office building located in Southington,
Connecticut, (iv) the Stockbridge Village II property, two retail buildings
located in Clayton County, Georgia, (v) the Marathon Building, a three-
story office building located in Appleton, Wisconsin, (vi) the Stockbridge
Village III Retail Center, two retail buildings located in Stockbridge,
Georgia, (vii) a retail center expansion in Stockbridge, Georgia, (viii)
the BellSouth property, a four-story office building in Jacksonville,
Florida, and (ix) a retail shopping center in Clemmons, Forsyth County,
North Carolina.
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 carrying values of real estate are based on management's current intent
to hold the real estate assets as long-term investments. 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,
F-7
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.
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, as defined by the partnership agreement,
is distributed 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 10% per annum return on
their adjusted capital contributions, as defined. Cash available for
distribution is then paid to the general partners until they have received
an amount equal to 10% of distributions. Any remaining cash available for
distribution is split between the limited partners holding Class A units
and the general partners on a basis of 90% and 10%, respectively. No
distributions will be made to the limited partners holding Class B units.
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 each limited
partner has received 100% of its adjusted capital contribution,
as defined
. To limited partners holding Class B units, on a per unit basis,
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, on a per unit basis, until they receive
a cumulative 10% per annum return on their adjusted capital
contributions, as defined
. To all limited partners, on a per unit basis, until they receive
an amount equal to their respective cumulative distributions, as
defined
. To the general partners until they have received 100% of their
capital contributions, as defined
. Thereafter, 80% to the limited partners and 20% 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 holding
Class A units 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 limited partners holding Class
B units and 1% to the general partners until their capital
F-8
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, (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, and (d) allocations to Class A
limited partners and general 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.
Investment in Joint Ventures
Basis of Presentation. The Partnership does not have control over the
operations of the joint ventures; however, it does exercise significant
influence. Accordingly, investments in joint ventures are recorded using
the equity method of accounting.
Real Estate Assets. Real estate assets held through investments in
affiliated joint ventures are stated at cost less accumulated depreciation.
Major improvements and betterments are capitalized when they extend the
useful lives of the related assets. All repairs and maintenance are
expensed as incurred.
Management continually monitors events and changes in circumstances which
could indicate that carrying amounts of real estate assets may not be
recoverable. When events or changes in circumstances are present which
indicate that 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 eventual disposition. Management has determined that there
has been no impairment in the carrying value of real estate assets held by
the 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 held by the joint ventures
are classified as operating leases, and the related rental income is
recognized on a straight-line basis over the terms of the respective
leases.
Partners' Distributions and Allocations of Profit and Loss. 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 quarterly.
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.
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
F-9
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 weighted
average number of units outstanding during the period.
2. DEFERRED PROJECT COSTS
The Partnership paid a percentage of limited partner contributions to Wells
Capital, Inc. (the "Company"), the general partner of Wells Partners, for
acquisition and advisory services. These payments, as stipulated by the
partnership agreement, can be up to 6% of the limited partner
contributions, subject to certain overall limitations contained in the
partnership agreement. Aggregate fees paid through December 31, 1999 were
$932,216 and amounted to 3.7% of the limited partner contributions
received. These fees are allocated to specific properties as they are
purchased or developed and are included in real estate assets at the joint
ventures. Deferred project costs at December 31, 1999 and 1998 represent
fees not yet applied to properties.
3. 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 V and VI Associates $108,412 $ 98,669
Fund V, VI, and VII Associates 99,430 98,715
Fund VI and VII Associates 56,972 29,672
Fund VI, VII, and VIII Associates 140,117 128,335
Fund I, II, II-OW, VI, and VII Associates--Cherokee 20,175 16,013
Fund II, III, VI, and VII Associates 67,170 56,330
------------ ----------
$492,276 $427,734
============ ===========
The Partnership entered into a property management agreement with Wells
Management Company, Inc. ("Wells Management"), an affiliate of the general
partners. In consideration for supervising the management of the
Partnership's properties, the Partnership will generally pay Wells
Management management and leasing fees equal to (a) 3% of the gross
revenues for management and 3% of the gross revenues for leasing (aggregate
maximum of 6%) plus a separate fee for the one-time 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 incurred management and leasing fees and lease acquisition
costs, at the joint venture level, of $161,779, $124,660, and $170,646 for
the years ended December 31, 1999, 1998, and 1997, respectively, which were
paid to Wells Management.
F-10
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 of other Wells Real Estate
Funds may be in competition with the Partnership for tenants in similar
geographic markets.
4. INVESTMENT IN JOINT VENTURES
The Partnership's investment and percentage ownership in joint ventures at
December 31, 1999 and 1998 are summarized as follows:
1998 1998
-------------------------- ---------------------------
Amount Percent Amount Percent
------------ ----------- ------------ -----------
Fund I, II, II-OW, VI, and VII
Associates--Cherokee $ 796,558 11% $ 844,160 11%
Fund II, III, VI, and VII Associates 1,569,430 26 1,682,380 26
Fund V and VI Associates 4,597,841 54 4,789,883 53
Fund V, VI, and VII Associates 2,963,015 42 3,113,259 42
Fund VI and VII Associates 2,398,436 44 2,511,074 44
Fund VI, VII, and VIII Associates 5,559,369 34 5,813,110 34
----------- -----------
$17,884,649 $18,753,866
=========== ===========
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 $18,753,866 $19,479,915
Equity in income of joint ventures 1,050,106 928,000
Contributions to joint ventures 14,524 137,380
Distributions from joint ventures (1,933,847) (1,791,429)
----------- -----------
Investment in joint ventures, end of year $17,884,649 $18,753,866
=========== ===========
Fund I, II, II-OW, VI, and VII Associates--Cherokee
In August 1995, the Partnership entered into a joint venture agreement with
Wells Real Estate Fund I, Fund II and II-OW (a joint venture between Wells
Real Estate Fund II and Wells Real Estate Fund II-OW), and Wells Real
Estate Fund VII, L.P. ("Fund VII"). The joint venture, Fund 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.
Until the formation of this joint venture, Cherokee Commons was part of the
Fund I and II Tucker--Cherokee joint venture. Concurrent with the formation
of the Fund I, II, II-OW, VI, and VII Associates--Cherokee joint venture,
Cherokee Commons was transferred from the Fund I and II Tucker--Cherokee
joint venture. Percentage ownership interests in Fund I, II, II-OW, VI, and
VII Associates--Cherokee were determined at the time of formation based on
contributions. Under the terms
F-11
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. Fund I's ownership interest in the Cherokee joint venture
changed from 30.6% to 24%, and Fund II and II-OW joint venture's ownership
interest changed from 69.4% to 54.6%. The $2 million in cash contributed to
Cherokee was used to fund an expansion of the property for an existing tenant.
F-12
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-13
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-14
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-15
Fund II, III, VI, and VII Associates
On January 1, 1995, the Partnership entered into a joint venture agreement with
Fund II and III Associates, and Fund VII. The joint venture, Fund II, III, VI,
and VII Associates, was formed for the purpose of acquiring, developing,
operating, and selling real properties. During 1995, Fund II and III Associates
contributed a 4.3-acre tract of land from its 880 Property--Brookwood Grill to
the Fund II, III, VI, and VII Associates joint venture. During 1996, 1997, and
1998, the Partnership and Fund VII made contributions to the joint venture.
Ownership percentage interests were recomputed accordingly. Development was
substantially completed in 1996 on two buildings containing a total of
approximately 49,500 square feet.
The following are the financial statements for Fund II, III, VI, and VII
Associates:
Fund II, III, VI, and VII Associates
(A Georgia Joint Venture)
Balance Sheets
December 31, 1999 and 1998
Assets
1999 1998
----------- -----------
Real estate assets, at cost:
Land $1,325,242 $1,325,242
Building and improvements, less accumulated depreciation of
$1,299,227 in 1999 and $884,062 in 1998 4,418,932 4,773,062
Construction in progress 0 41,263
----------- -----------
Total real estate assets 5,744,174 6,139,567
Cash and cash equivalents 189,404 308,788
Accounts receivable 162,464 111,460
Prepaid expenses and other assets 213,443 233,965
----------- -----------
Total assets $6,309,485 $6,793,780
=========== ===========
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 87,926 $ 192,072
Partnership distributions payable 250,075 209,716
----------- -----------
338,001 401,788
----------- -----------
Partners' capital:
Fund II and III Associates 1,406,591 1,507,807
Wells Real Estate Fund VI 1,569,430 1,682,380
Wells Real Estate Fund VII 2,995,463 3,201,805
---------- -----------
Total partners' capital 5,971,484 6,391,992
---------- -----------
Total liabilities and partners' capital $6,309,485 $6,793,780
========== ===========
F-16
Fund II, III, VI, and VII Associates
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 1999, 1998, and 1997
1999 1998 1997
--------- --------- ---------
Revenues:
Rental income $953,952 $872,978 $679,268
Other income 23,843 36,000 0
--------- --------- ---------
977,795 908,978 679,268
--------- --------- ---------
Expenses:
Depreciation 415,165 376,290 325,974
Operating costs, net of reimbursements 68,691 85,983 122,261
Management and leasing fees 129,798 97,701 99,834
Legal and accounting 4,952 6,509 4,885
Partnership administration 19,891 14,926 17,321
Computer costs 0 0 228
--------- --------- ---------
638,497 581,409 570,503
--------- --------- ---------
Net income $339,298 $327,569 $108,765
========= ========= =========
Net income allocated to Fund II and III Associates $ 81,669 $ 78,791 $ 27,213
========= ========= =========
Net income allocated to Wells Real Estate Fund VI $ 91,135 $ 87,914 $ 28,409
========= ========= =========
Net income allocated to Wells Real Estate Fund VII $166,494 $160,864 $ 53,143
========= ========= =========
Fund II, III, VI, and VII Associates
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 1999, 1998, and 1997
Fund II Wells Wells Real Total
and III Real Estate Estate Partners'
Associates Fund VI Fund VII Capital
----------- ------------ ----------- -----------
Balance, December 31, 1996 $1,690,244 $1,759,947 $3,292,551 $6,742,742
Partnership contributions 0 116,675 121,576 238,251
Partnership distributions (109,242) (115,220) (214,414) (438,876)
Net income 27,213 28,409 53,143 108,765
----------- ----------- ----------- -----------
Balance, December 31, 1997 1,608,215 1,789,811 3,252,856 6,650,882
Partnership contributions 0 4,600 154,049 158,649
Partnership distributions (179,199) (199,945) (365,964) (745,108)
Net income 78,791 87,914 160,864 327,569
----------- ----------- ----------- -----------
Balance, December 31, 1998 1,507,807 1,682,380 3,201,805 6,391,992
Partnership distributions (182,885) (204,085) (372,836) (759,806)
Net income 81,669 91,135 166,494 339,298
----------- ----------- ----------- -----------
Balance, December 31, 1999 $1,406,591 $1,569,430 $2,995,463 $5,971,484
=========== =========== =========== ===========
F-17
Fund II, III, VI, and VII Associates
(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 $ 339,298 $ 327,569 $ 108,765
---------- ---------- ----------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 415,165 376,290 325,974
Changes in assets and liabilities:
Accounts receivable (51,004) (56,936) 12,810
Prepaid expenses and other assets 20,522 35,603 (123,748)
Accounts payable and accrued expenses (104,146) 21,296 (34,194)
---------- ---------- ----------
Total adjustments 280,537 376,253 180,842
---------- ---------- ----------
Net cash provided by operating activities 619,835 703,822 289,607
---------- ---------- ----------
Cash flows from investing activities:
Investment in real estate (19,772) (102,122) (620,059)
---------- ---------- ----------
Cash flows from financing activities:
Contributions from joint venture partners 0 154,996 230,699
Distributions to joint venture partners (719,447) (667,299) (356,559)
---------- ---------- ----------
Net cash used in financing activities (719,447) (512,303) (125,860)
---------- ---------- ----------
Net (decrease) increase in cash and cash equivalents (119,384) 89,397 (456,312)
Cash and cash equivalents, beginning of year 308,788 219,391 675,703
---------- ---------- ----------
Cash and cash equivalents, end of year $ 189,404 $ 308,788 $ 219,391
========== ========== ==========
Supplemental disclosure of noncash activities:
Deferred project costs contributed to joint venture $ 0 $ 3,653 $ 7,552
========== ========== ==========
Fund V and VI Associates
On December 27, 1993, the Partnership entered into a joint venture agreement
with Wells Real Estate Fund V, L.P. ("Fund V"). The joint venture, Fund V and VI
Associates, was formed for the purpose of investing in commercial real
properties. In December 1993, the joint venture purchased a 71,000-square-foot,
four-story office building known as the Hartford Building in Southington,
Connecticut. On June 26, 1994, Fund V contributed its interest in a parcel of
land, the Stockbridge Village II property, to the joint venture. The Stockbridge
Village II property consists of two separate restaurants and began operations
during 1995. Following are the financial statements for Fund V and VI
Associates:
F-18
Fund V and VI Associates
(A Georgia Joint Venture)
Balance Sheets
December 31, 1999 and 1998
Assets
1999 1998
----------- -----------
Real estate assets, at cost:
Land $1,622,733 $1,622,733
Building and improvements, less accumulated depreciation of
$1,975,721 in 1999 and $1,578,728 in 1998 6,807,975 7,186,970
Construction in progress 0 9,763
----------- -----------
Total real estate assets 8,430,708 8,819,466
Cash and cash equivalents 177,657 213,183
Accounts receivable 135,229 96,830
Prepaid expenses and other assets 55,274 49,599
----------- -----------
Total assets $8,798,868 $9,179,078
=========== ===========
Liabilities and Partners' Capital
Liabilities:
Accounts payable $ 18,294 $ 16,477
Partnership distributions payable 200,259 206,141
Due to affiliates 1,775 6,809
----------- -----------
Total liabilities 220,328 229,427
----------- -----------
Partners' capital:
Wells Real Estate Fund V 3,980,699 4,159,768
Wells Real Estate Fund VI 4,597,841 4,789,883
----------- -----------
Total partners' capital 8,578,540 8,949,651
----------- -----------
Total liabilities and partners' capital $8,798,868 $9,179,078
=========== ===========
F-19
Fund V and VI Associates
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 1999, 1998, and 1997
1999 1998 1997
---------- -------- ---------
Revenues:
Rental income $1,028,611 $ 953,275 $ 953,007
Expenses:
Depreciation 396,993 394,003 388,387
Operating costs, net of reimbursements 30,325 19,566 39,492
Management and leasing fees 65,167 57,368 65,612
Legal and accounting 7,400 9,107 24,941
Partnership administration 17,194 14,012 10,425
Bad debt recovery 0 0 (22,115)
----------- ---------- ----------
517,079 494,056 506,742
----------- ---------- ----------
Net income $ 511,532 $ 459,219 $ 446,265
=========== ========== ==========
Net income allocated to Wells Real Estate Fund V $ 237,527 $ 213,630 $ 208,783
=========== ========== ==========
Net income allocated to Wells Real Estate Fund VI $ 274,005 $ 245,589 $ 237,482
=========== ========== ==========
Fund V and VI Associates
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 1999, 1998, and 1997
Wells Real Wells Real Total
Estate Estate Partners'
Fund V Fund VI Capital
------------- ------------- -------------
Balance, December 31, 1996 $4,523,919 $5,006,236 $9,530,155
Net income 208,783 237,482 446,265
Partnership contributions 0 190,197 190,197
Partnership distributions (390,378) (443,939) (834,317)
----------- ----------- -----------
Balance, December 31, 1997 4,342,324 4,989,976 9,332,300
Net income 213,630 245,589 459,219
Partnership contributions 0 9,762 9,762
Partnership distributions (396,186) (455,444) (851,630)
----------- ----------- -----------
Balance, December 31, 1998 4,159,768 4,789,883 8,949,651
Net income 237,527 274,005 511,532
Partnership contributions 0 14,524 14,524
Partnership distributions (416,596) (480,571) (897,167)
----------- ----------- -----------
Balance, December 31, 1999 $3,980,699 $4,597,841 $8,578,540
=========== =========== ===========
F-20
Fund V and VI Associates
(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 $ 511,532 $ 459,219 $ 446,265
---------- ----------- -----------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 396,993 394,003 388,387
Changes in assets and liabilities:
Accounts receivable (38,399) 13,052 10,140
Prepaid expenses and other assets (5,675) 6,403 (1,033)
Accounts payable 1,817 9,084 (7,867)
Due to affiliates (5,034) (2,848) 4,120
---------- ----------- -----------
Total adjustments 349,702 419,694 393,747
---------- ----------- -----------
Net cash provided by operating activities 861,234 878,913 840,012
---------- ----------- -----------
Cash flows from investing activities:
Investment in real estate (8,235) 0 (185,123)
---------- ----------- -----------
Cash flows from financing activities:
Contributions from joint venture partners 14,524 0 190,197
Distributions to joint venture partners (903,049) (911,028) (757,231)
---------- ----------- -----------
Net cash used in financing activities (888,525) (911,028) (567,034)
---------- ----------- -----------
Net (decrease) increase in cash and cash equivalents (35,526) (32,115) 87,855
Cash and cash equivalents, beginning of year 213,183 245,298 157,443
---------- ----------- -----------
Cash and cash equivalents, end of year $ 177,657 $ 213,183 $ 245,298
========== =========== ===========
Fund V, VI, and VII Associates
On September 8, 1994, the Partnership entered into a joint venture agreement
with Fund V and Fund VII. The joint venture, Fund V, VI, and VII Associates, was
formed for the purpose of investing in commercial real properties. In September
1994, Fund V, VI, and VII Associates purchased a 75,000-square-foot, three-story
office building known as the Marathon Building in Appleton, Wisconsin.
F-21
Following are the financial statements for Fund V, VI, and VII Associates:
Fund V, VI, and VII Associates
(A Georgia Joint Venture)
Balance Sheets
December 31, 1999 and 1998
Assets
1999 1998
------- -------
Real estate assets, at cost:
Land $ 314,591 $ 314,591
Building and improvements, less accumulated depreciation of
$1,706,784 in 1999 and $1,356,199 in 1998 6,661,120 7,011,705
------------ ------------
Total real estate assets 6,975,711 7,326,296
Cash and cash equivalents 235,250 235,991
Due from affiliates 2,450 0
Accounts receivable 112,645 121,594
------------ ------------
Total assets $7,326,056 $7,683,881
============ ============
Liabilities and Partners' Capital
Liabilities:
Partnership distributions payable $ 237,700 $ 235,990
Due to affiliates 4,506 4,864
------------ ------------
Total liabilities 242,206 240,854
------------ ------------
Partners' capital:
Wells Real Estate Fund V 1,165,776 1,224,896
Wells Real Estate Fund VI 2,963,015 3,113,259
Wells Real Estate Fund VII 2,955,059 3,104,872
------------ ------------
Total partners' capital 7,083,850 7,443,027
------------ ------------
Total liabilities and partners' capital $7,326,056 $7,683,881
============ ============
F-22
Fund V, VI, and VII Associates
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 1999, 1998, and 1997
1999 1998 1997
-------- --------- ----------
Revenues:
Rental income $971,051 $971,447 $968,219
---------- --------- --------
Expenses:
Depreciation 350,585 350,585 350,585
Management and leasing fees 39,659 34,632 39,671
Legal and accounting 5,750 3,450 5,690
Partnership administration 12,302 7,439 3,878
Computer costs 0 0 107
Operating costs 1,389 1,372 2,230
---------- --------- --------
409,685 397,478 402,161
---------- --------- --------
Net income $561,366 $573,969 $566,058
========== ========= ========
Net income allocated to Wells Real Estate Fund V $ 92,401 $ 94,475 $ 93,173
========== ========= ========
Net income allocated to Wells Real Estate Fund VI $234,819 $240,091 $236,782
========== ========= ========
Net income allocated to Wells Real Estate Fund VII $234,146 $239,403 $236,103
========== ========= ========
Fund V, VI, and VII Associates
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 1999, 1998, and 1997
Wells Real Wells Real Wells Real Total
Estate Estate Estate Partners'
Fund V Fund VI Fund VII Capital
---------------- ---------------- ---------------- -----------------
Balance, December 31, 1996 $1,343,590 $3,414,896 $3,405,643 $8,164,129
Net income 93,173 236,782 236,103 566,058
Partnership distributions (152,896) (388,557) (387,442) (928,895)
---------------- ---------------- ---------------- -----------------
Balance, December 31, 1997 1,283,867 3,263,121 3,254,304 7,801,292
Net income 94,475 240,091 239,403 573,969
Partnership distributions (153,446) (389,953) (388,835) (932,234)
---------------- ---------------- ---------------- -----------------
Balance, December 31, 1998 1,224,896 3,113,259 3,104,872 7,443,027
Net income 92,401 234,819 234,146 561,366
Partnership distributions (151,521) (385,063) (383,959) (920,543)
---------------- ---------------- ---------------- -----------------
Balance, December 31, 1999 $1,165,776 $2,963,015 $2,955,059 $7,083,850
================ ================ ================ =================
F-23
Fund V, VI, and VII Associates
(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 $ 561,366 $ 573,969 $ 566,058
--------------- -------------- --------------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 350,585 350,585 350,585
Changes in assets and liabilities:
Accounts receivable 8,949 8,983 11,781
Due from affiliates (2,450) 0 0
Due to affiliates (358) (1,302) 471
--------------- -------------- --------------
Total adjustments 356,726 358,266 362,837
--------------- -------------- --------------
Net cash provided by operating activities 918,092 932,235 928,895
Cash flows from financing activities:
Distributions to joint venture partners (918,833) (927,476) (911,808)
--------------- -------------- --------------
Net (decrease) increase in cash and cash equivalents (741) 4,759 17,087
Cash and cash equivalents, beginning of year 235,991 231,232 214,145
--------------- -------------- --------------
Cash and cash equivalents, end of year $ 235,250 $ 235,991 $ 231,232
=============== ============== ==============
Fund VI and VII Associates
On December 9, 1994, the Partnership entered into a joint venture agreement with
Fund VII. The joint venture, Fund VI and VII Associates, was formed for the
purpose of investing in commercial properties. In December 1994, the
Partnership contributed its interest in a parcel of land, the Stockbridge
Village III Retail Center property, located in Stockbridge, Georgia, to the
joint venture. The Stockbridge Village III Retail Center property is comprised
of two separate outparcel buildings totaling approximately 18,500 square feet.
One of the outparcel buildings began operations during 1995. The other
outparcel began operations during 1996. On June 7, 1995, Fund VI and VII
Associates purchased 3.38 acres of real property located in Stockbridge,
Georgia. The retail center expansion consists of a multi-tenant shopping center
containing approximately 29,000 square feet.
During 1997 and 1998, both the Partnership and Fund VII made contributions to
Fund VI and VII Associates, and during 1996, Fund VII made contributions to the
joint venture. Ownership percentage interests were recomputed accordingly.
F-24
Following are the financial statements for Fund VI and VII Associates:
Fund VI and VII Associates
(A Georgia Joint Venture)
Balance Sheets
December 31, 1999 and 1998
Assets
1999 1998
----------- -----------
Real estate assets, at cost:
Land $1,812,447 $1,812,447
Building and improvements, less accumulated depreciation of
$832,798 in 1999 and $597,207 in 1998 3,485,011 3,720,105
----------- -----------
Total real estate assets 5,297,458 5,532,552
Cash and cash equivalents 113,621 60,259
Accounts receivable 126,982 133,134
Prepaid expenses and other assets 115,743 130,683
----------- -----------
Total assets $5,653,804 $5,856,628
=========== ===========
Liabilities and Partners' Capital
Liabilities:
Accounts payable $ 35,235 $ 37,400
Partnership distributions payable 130,366 67,943
Due to affiliates 0 5,338
----------- -----------
Total liabilities 165,601 110,681
----------- -----------
Partners' capital:
Wells Real Estate Fund VI 2,398,436 2,511,074
Wells Real Estate Fund VII 3,089,767 3,234,873
----------- -----------
Total partners' capital 5,488,203 5,745,947
----------- -----------
Total liabilities and partners' capital $5,653,804 $5,856,628
=========== ===========
F-25
Fund VI and VII Associates
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 1999, 1998, and 1997
1999 1998 1997
--------- ---------- ---------
Revenues:
Rental income $624,453 $532,410 $485,346
--------- ---------- ---------
Expenses:
Depreciation 235,591 232,896 198,616
Operating costs, net of reimbursements (9,718) 36,099 19,833
Management and leasing fees 80,064 77,242 55,990
Partnership administration 33,090 22,119 20,803
Legal and accounting 15,247 26,676 21,622
Bad debt expense 0 78,689 0
--------- ---------- ---------
354,274 473,721 316,864
--------- ---------- ---------
Net income $270,179 $ 58,689 $168,482
========= ========== =========
Net income allocated to Wells Real Estate Fund VI $118,073 $ 25,308 $ 71,983
========= ========== =========
Net income allocated to Wells Real Estate Fund VII $152,106 $ 33,381 $ 96,499
========= ========== =========
Fund VI and VII Associates
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 1999, 1998, and 1997
Wells Real Wells Real Total
Estate Estate Partners'
Fund VI Fund VII Capital
-------------- -------------- --------------
Balance, December 31, 1996 $2,548,699 $3,410,542 $5,959,241
Net income 71,983 96,499 168,482
Partnership contributions 15,378 52,528 67,906
Partnership distributions (148,617) (199,304) (347,921)
-------------- -------------- --------------
Balance, December 31, 1997 2,487,443 3,360,265 5,847,708
Net income 25,308 33,381 58,689
Partnership contributions 123,018 5,291 128,309
Partnership distributions (124,695) (164,064) (288,759)
-------------- -------------- --------------
Balance, December 31, 1998 2,511,074 3,234,873 5,745,947
Net income 118,073 152,106 270,179
Partnership distributions (230,711) (297,212) (527,923)
-------------- -------------- --------------
Balance, December 31, 1999 $2,398,436 $3,089,767 $5,488,203
============== ============== ==============
F-26
Funds VI and VII Associates
(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 $ 270,179 $ 58,689 $ 168,482
-------------- -------------- --------------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 235,591 232,896 198,616
Changes in assets and liabilities:
Accounts receivable 6,152 58,720 (98,688)
Prepaid expenses and other assets 14,940 844 (48,821)
Accounts payable (2,165) (27,644) 26,509
Due to affiliates (5,338) 732 2,194
-------------- -------------- --------------
Total adjustments 249,180 265,548 79,810
-------------- -------------- --------------
Net cash provided by operating activities 519,359 324,237 248,292
-------------- -------------- --------------
Cash flows from investing activities:
Decrease in construction payables 0 (30,000) (35,000)
Investment in real estate (497) (83,957) (455,042)
-------------- -------------- --------------
Net cash used in investing activities (497) (113,957) (490,042)
-------------- -------------- --------------
Cash flows from financing activities:
Contributions from joint venture partners 0 128,309 67,906
Distributions to joint venture partners (465,500) (312,251) (297,959)
-------------- -------------- --------------
Net cash used in financing activities (465,500) (183,942) (230,053)
-------------- -------------- --------------
Net increase (decrease) in cash and cash equivalents 53,362 26,338 (471,803)
Cash and cash equivalents, beginning of year 60,259 33,921 505,724
-------------- -------------- --------------
Cash and cash equivalents, end of year $ 113,621 $ 60,259 $ 33,921
============== ============== ==============
Fund VI, VII, and VIII Associates
On April 17, 1995, the Partnership entered into a joint venture with Fund VII
and Wells Real Estate Fund VIII, L.P. ("Fund VIII"). The joint venture, Fund
VI, VII, and VIII Associates, was formed to acquire, develop, operate, and sell
real properties. On April 25, 1995, the joint venture purchased a 5.55-acre
parcel of land in Jacksonville, Florida. A 92,964-square foot office building,
known as the BellSouth property, was completed and commenced operations in 1996.
On May 31, 1995, the joint venture purchased a 14.683-acre parcel of land
located in Clemmons, Forsyth County, North Carolina. A retail shopping center
was developed and was substantially complete at December 31, 1997.
During 1996, the Partnership and Fund VII each withdrew $500,000 from the joint
venture in order to contribute needed funds to Fund II, III, VI, and VII
Associates. In addition, deferred project costs related to the Partnership and
Fund VII of $23,160 and $21,739, respectively, were unapplied when the
contributions were withdrawn. During 1996, Fund VIII made an additional
contribution of $2,815,965, which included $115,965 of deferred project costs
that were applied. Ownership percentage interests were recomputed accordingly.
F-27
Following are the financial statements for Fund VI, VII, and VIII Associates:
Fund VI, VII, and VIII Associates
(A Georgia Joint Venture)
Balance Sheets
December 31, 1999 and 1998
Assets
1999 1998
--------------- ---------------
Real estate assets, at cost:
Land $ 4,461,819 $ 4,461,819
Building and improvements, less accumulated depreciation of
$2,315,750 in 1999 and $1,613,865 in 1998 10,657,052 11,276,322
Construction in progress 0 17,866
--------------- ---------------
Total real estate assets 15,118,871 15,756,007
Cash and cash equivalents 736,202 800,321
Accounts receivable 255,221 183,952
Prepaid expenses and other assets 545,816 633,589
--------------- ---------------
Total assets $16,656,110 $17,373,869
=============== ===============
Liabilities and Partners' Capital
Liabilities:
Accounts payable $ 84,159 $ 52,026
Partnership distributions payable 324,100 339,696
Due to affiliates 16,281 9,735
--------------- ---------------
Total liabilities 424,540 401,457
--------------- ---------------
Partners' capital:
Wells Real Estate Fund VI 5,559,369 5,813,110
Wells Real Estate Fund VII 5,420,549 5,667,955
Wells Real Estate Fund VIII 5,251,652 5,491,347
--------------- ---------------
Total partners' capital 16,231,570 16,972,412
--------------- ---------------
Total liabilities and partners' capital $16,656,110 $17,373,869
=============== ===============
F-28
Fund VI, VII, and VIII Associates
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 1999, 1998, and 1997
1999 1998 1997
---------- ----------- ------------
Revenues:
Rental income $2,294,016 $2,258,971 $2,087,588
Interest income 14,937 25,416 19,464
Other income 360 9,373 360
---------- ----------- ------------
2,309,313 2,293,760 2,107,412
---------- ----------- ------------
Expenses:
Depreciation 701,885 688,759 634,699
Operating costs, net of reimbursements 444,156 451,299 460,873
Management and leasing fees 259,352 251,587 232,765
Legal and accounting 10,286 9,205 15,934
Partnership administration 27,804 25,109 27,180
Computer costs 1,043 128 0
---------- ----------- ------------
1,444,526 1,426,087 1,371,451
---------- ----------- ------------
Net income $ 864,787 $ 867,673 $ 735,961
========== =========== ============
Net income allocated to Wells Real Estate Fund VI $ 296,193 $ 297,181 $ 258,122
========== =========== ============
Net income allocated to Wells Real Estate Fund VII $ 288,796 $ 289,760 $ 251,676
========== =========== ============
Net income allocated to Wells Real Estate Fund VIII $ 279,798 $ 280,732 $ 226,163
========== =========== ============
F-29
Fund VI, VII, and VIII Associates
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 1999, 1998, and 1997
Wells Real Wells Real Wells Real Total
Estate Estate Estate Partners'
Fund VI Fund VII Fund VIII Capital
--------------- --------------- -------------- ----------------
Balance, December 31, 1996 $6,268,458 $6,111,934 $4,849,380 $17,229,772
Net income 258,122 251,676 226,163 735,961
Partnership contributions 0 0 1,055,900 1,055,900
Partnership distributions (468,498) (456,800) (408,682) (1,333,980)
--------------- --------------- -------------- ---------------
Balance, December 31, 1997 6,058,082 5,906,810 5,722,761 17,687,653
Net income 297,181 289,760 280,732 867,673
Partnership distributions (542,153) (528,615) (512,146) (1,582,914)
--------------- --------------- -------------- ---------------
Balance, December 31, 1998 5,813,110 5,667,955 5,491,347 16,972,412
Net income 296,193 288,796 279,798 864,787
Partnership distributions (549,934) (536,202) (519,493) (1,605,629)
--------------- --------------- -------------- ---------------
Balance, December 31, 1999 $5,559,369 $5,420,549 $5,251,652 $16,231,570
=============== =============== ============== ===============
Fund VI, VII, and VIII Associates
(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 $ 864,787 $ 867,673 $ 735,961
----------- ------------ -----------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 701,885 688,759 634,699
Changes in assets and liabilities:
Accounts receivable (71,269) (79,931) (76,170)
Prepaid expenses and other assets 87,773 79,225 (21,073)
Accounts payable 32,133 6,234 8,312
Due to affiliates 6,546 4,558 3,622
----------- ------------ -----------
Total adjustments 757,068 698,845 549,390
----------- ------------ -----------
Net cash provided by operating activities 1,621,855 1,566,518 1,285,351
----------- ------------ -----------
Cash flows from investing activities:
Decrease in construction payables 0 (55,000) (110,795)
Investment in real estate (64,749) (140,590) (828,992)
----------- ------------ -----------
Net cash used in investing activities (64,749) (195,590) (939,787)
----------- ------------ -----------
Cash flows from financing activities:
Contributions received from joint venture partners 0 0 1,000,000
Distributions to joint venture partners (1,621,225) (1,629,608) (1,216,246)
----------- ------------ -----------
Net cash used in financing activities (1,621,225) (1,629,608) (216,246)
----------- ------------ -----------
Net (decrease) increase in cash and cash equivalents (64,119) (258,680) 129,318
Cash and cash equivalents, beginning of year 800,321 1,059,001 929,683
----------- ------------ -----------
Cash and cash equivalents, end of year $ 736,202 $ 800,321 $ 1,059,001
=========== ============ ===========
Supplemental disclosure of noncash items:
Deferred project costs contributed to joint venture $ 0 $ 0 $ 55,900
=========== ============ ===========
F-30
5. 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 income $ 969,613 $ 855,788 $ 795,654
Increase (decrease) in net income resulting from:
Depreciation expense for financial reporting 392,268 383,393 352,316
purposes in excess of amounts for income tax
purposes
Expenses deductible when paid for income tax 4,985 2,915 4,088
purposes, accrued for financial reporting purposes
Rental income accrued for financial reporting
purposes in excess of amounts for income tax
purposes (44,181) (35,128) (60,288)
-------------- -------------- --------------
Income tax basis net income $1,322,685 $1,206,968 $1,091,770
============== ============== ==============
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 $18,056,939 $18,900,681 $19,785,673
Increase (decrease) in partners' capital resulting from:
Depreciation expense for financial reporting purposes 1,428,863 1,036,595 653,202
in excess of amounts for income tax purposes
Joint venture change in ownership 8,730 8,730 8,730
Capitalization of syndication costs for income tax 3,655,694 3,655,694 3,655,694
purposes, which are accounted for as cost of capital
for financial reporting purposes
Accumulated rental income accrued for financial (269,447) (225,266) (190,138)
reporting purposes in excess of amounts for income tax
purposes
Accumulated expenses deductible when paid for income 34,047 29,062 26,147
tax purposes, accrued for financial reporting purposes
Partnership's distributions payable 476,036 427,995 432,841
---------------- ---------------- ----------------
Income tax basis partners' capital $23,390,862 $23,833,491 $24,372,149
================ ================ ================
F-31
6. RENTAL INCOME
The future minimum rental income due from the Partnership's respective
ownership interests in joint ventures under noncancelable operating leases
at December 31, 1999 is as follows:
Year ending December 31:
2000 $ 2,268,350
2001 1,803,612
2002 1,609,291
2003 1,472,576
2004 1,370,185
Thereafter 4,588,375
-----------
$13,112,389
===========
Three tenants contributed approximately 23%, 20%, and 13% of rental income.
In addition, four tenants will contribute approximately 24%, 22%, 19%, and
12% 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 and will contribute approximately 85% of future
minimum rental income.
The future minimum rental income due Fund II, III, VI, and VII Associates
under noncancelable operating leases at December 31, 1999 is as follows:
Year ending December 31:
2000 $ 901,595
2001 847,296
2002 469,628
2003 197,540
2004 175,331
Thereafter 149,157
-----------
$ 2,740,547
===========
Three tenants contributed approximately 13%, 13%, and 11% of rental income
for the year ended December 31, 1999. In addition, four tenants will
contribute approximately 29%, 14%, 14%, and 11% of future minimum rental
income.
F-32
The future minimum rental income due Fund V and VI Associates under
noncancelable operating leases at December 31, 1999 is as follows:
Year ending December 31:
2000 $1,030,399
2001 310,837
2002 308,241
2003 302,166
2004 214,692
Thereafter 195,862
----------
$2,362,197
==========
Two tenants contributed approximately 77% and 13% of rental income for the
year ended December 31, 1999. In addition, four tenants will contribute
approximately 31%, 28%, 27%, and 12% of future minimum rental income.
The future minimum rental income due Fund V, VI, and VII Associates under
noncancelable operating leases at December 31, 1999 is as follows:
Year ending December 31:
2000 $ 980,000
2001 980,000
2002 990,000
2003 990,000
2004 990,000
Thereafter 1,980,000
----------
$6,910,000
==========
One tenant contributed 100% of rental income for the year ended December
31, 1999 and will contribute 100% of future minimum rental income.
The future minimum rental income due Fund VI and VII Associates under
noncancelable operating leases at December 31, 1999 is as follows:
Year ending December 31:
2000 $ 462,265
2001 423,279
2002 337,097
2003 259,812
2004 243,388
Thereafter 936,787
----------
$2,662,628
==========
Two tenants contributed approximately 16% and 11% of rental income for the
year ended December 31, 1999. In addition, three tenants will contribute
approximately 40%, 25%, and 13% of future minimum rental income.
F-33
The future minimum rental income due Fund VI, VII, and VIII Associates
under noncancelable operating leases at December 31, 1999 is as follows:
Year ending December 31:
2000 $ 2,239,045
2001 2,126,978
2002 1,972,479
2003 1,912,574
2004 1,763,419
Thereafter 8,130,020
-----------
$18,144,515
===========
Three tenants contributed approximately 46%, 23%, and 16% of rental income
for the year ended December 31, 1999. In addition, two tenants will
contribute approximately 51% and 39% of future minimum rental income.
7. 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 $ 252,748 $282,555 $ 246,631 $ 274,634
Net income 221,316 258,378 232,429 257,490
Net income allocated to Class A limited
partners 452,565 332,375 232,429 257,490
Net loss allocated to Class B limited
partners (231,249) (73,997) 0 0
Net income per weighted average Class A
limited partner unit (a) $ 0.21 $ 0.15 $ 0.11 $ 0.12
Net loss per weighted average Class B
limited partner unit (a) (0.74) (0.24) 0.00 0.00
Cash distribution per weighted average Class
A limited partner unit 0.20 0.21 0.21 0.22
(a) The totals of the four quarterly amounts for the year ended
December 31, 1999 do not equal the totals for the year. This
difference results from the use of a weighted average to
compute the number of units outstanding for each quarter and
the year.
F-34
1999 Quarters Ended
--------------------------------------------------------------------
March 31 June 30 September 30 December 31
--------- --------- ------------ -----------
Revenues $ 234,159 $ 239,416 $ 228,124 $ 237,820
Net income 215,590 215,061 210,217 214,920
Net income allocated to Class A limited
partners 445,504 444,414 438,480 441,660
Net loss allocated to Class B limited
partners (229,914) (229,353) (228,263) (226,740)
Net income per weighted average Class A
limited partner unit (a) $ 0.21 $ 0.21 $ 0.20 $ 0.20
Net loss per weighted average Class B
limited partner unit (a) (0.68) (0.68) (0.74) (0.73)
Cash distribution per weighted average Class
A limited partner unit 0.20 0.20 0.20 0.20
(a) The totals of the four quarterly amounts for the year ended
December 31, 1998 do not equal the total for the year. This
difference results from the use of a weighted average to
compute the number of units outstanding for each quarter and
the year.
8. 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-35
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Wells Real Estate Fund V, L.P. and
Wells Real Estate Fund VI, L.P.:
We have audited the accompanying balance sheets of THE HARTFORD BUILDING as of
December 31, 1999 and 1998 and the related statements of income, partners'
capital, and cash flows for each of the three years in the period ended December
31, 1999. These financial statements are the responsibility of the building's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Hartford Building as of
December 31, 1999 and 1998 and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1999 in conformity
with accounting principles generally accepted in the United States.
Atlanta, Georgia
January 20, 2000
F-36
THE HARTFORD BUILDING
BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
ASSETS
1999 1998
---------- ----------
REAL ESTATE ASSETS:
Land $ 528,042 $ 528,042
Building and improvements, less accumulated depreciation of
$1,544,791 in 1999 and $1,252,760 in 1998 5,257,650 5,549,681
---------- ----------
Total real estate assets 5,785,692 6,077,723
CASH AND CASH EQUIVALENTS 177,657 213,181
ACCOUNTS RECEIVABLE 26,245 32,948
---------- ----------
Total assets $5,989,594 $6,323,852
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Distributions payable partners $ 200,259 $ 176,828
Due to affiliate 190,615 36,354
---------- ----------
Total liabilities 390,874 213,182
---------- ----------
COMMITMENTS AND CONTINGENCIES (Note 4)
PARTNERS' CAPITAL:
Wells Real Estate Fund V, L.P. 2,950,666 3,188,522
Wells Real Estate Fund VI, L.P. 2,648,054 2,922,148
---------- ----------
Total partners' capital 5,598,720 6,110,670
---------- ----------
Total liabilities and partners' capital $5,989,594 $6,323,852
========== ==========
The accompanying notes are an integral part of these balance sheets.
F-37
THE HARTFORD BUILDING
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
1999 1998 1997
-------- -------- --------
REVENUES:
Rental income $717,499 $717,499 $717,499
-------- -------- --------
EXPENSES:
Depreciation 292,031 292,031 292,031
Operating costs, net of reimbursements 7,582 6,030 (19,184)
Management and leasing fees 28,968 27,719 30,189
Legal and accounting 3,700 4,500 9,201
-------- -------- --------
332,281 330,280 312,237
-------- -------- --------
NET INCOME $385,218 $387,219 $405,262
======== ======== ========
NET INCOME ALLOCATED TO WELLS REAL ESTATE FUND V, L.P. $178,741 $180,142 $189,812
======== ======== ========
NET INCOME ALLOCATED TO WELLS REAL ESTATE FUND VI, L.P. $206,477 $207,077 $215,450
======== ======== ========
The accompanying notes are an integral part of these statements.
F-38
THE HARTFORD BUILDING
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
Wells Real Wells Real Total
Estate Estate Partners'
Fund V, L.P. Fund VI, L.P. Capital
------------ ------------- ----------
BALANCE, December 31, 1996 $ 3,466,241 $ 3,240,038 $6,706,279
Net income 189,812 215,450 405,262
Distributions (329,294) (374,431) (703,725)
------------ ------------- ----------
BALANCE, December 31, 1997 3,326,759 3,081,057 6,407,816
Net income 180,142 207,077 387,219
Distributions (318,379) (365,986) (684,365)
------------ ------------- ----------
BALANCE, December 31, 1998 3,188,522 2,922,148 6,110,670
Net income 178,741 206,477 385,218
Distributions (416,597) (480,571) (897,168)
------------ ------------- ----------
BALANCE, December 31, 1999 $ 2,950,666 $ 2,648,054 $5,598,720
============ ============= ==========
The accompanying notes are an integral part of these statements.
F-39
THE HARTFORD BUILDING
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
1999 1998 1997
--------- --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 385,218 $ 387,219 $ 405,262
--------- --------- ---------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 292,031 292,031 292,031
Changes in assets and liabilities:
Accounts receivable 6,703 6,700 6,700
Due to affiliate 154,261 (42,560) 90,681
--------- --------- ---------
Total adjustments 452,995 256,171 389,412
--------- --------- ---------
Net cash provided by operating activities 838,213 643,390 794,674
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions paid to partners (873,737) (675,507) (706,819)
--------- --------- ---------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (35,524) (32,117) 87,855
CASH AND CASH EQUIVALENTS, beginning of year 213,181 245,298 157,443
--------- --------- ---------
CASH AND CASH EQUIVALENTS, end of year $ 177,657 $ 213,181 $ 245,298
========= ========= =========
The accompanying notes are an integral part of these statements.
F-40
THE HARTFORD BUILDING
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998, AND 1997
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Business
The Hartford Building ("Hartford") is a four-story office building located
in Southington, Connecticut. The building is owned by Fund V and Fund VI
Associates, a joint venture between Wells Real Estate Fund V, L.P. ("Fund
V") and Wells Real Estate Fund VI, L.P. ("Fund VI"). Fund V own 46% of
Hartford and Fund VI owns 54% of Hartford at December 31, 1999 and 1998.
Allocation of net income and distributions are made in accordance with
ownership percentages.
Use of Estimates
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.
Income Taxes
Hartford is not deemed to be a taxable entity for federal income tax
purposes.
Real Estate Assets
Real estate assets 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 which
could indicate that carrying amounts of real estate assets may not be
recoverable. When events or changes in circumstances are present which
indicate that 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 eventual disposition. Management has determined that there
has been no impairment in the carrying value of Hartford as of December 31,
1999.
Depreciation is calculated using the straight-line method over 25 years.
Revenue Recognition
The lease on Hartford is classified as an operating lease, and the related
rental income is recognized on a straight-line basis over the term of the
lease.
F-41
Cash and Cash Equivalents
For the purposes of the statements of cash flows, Hartford 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.
2. RENTAL INCOME
The future minimum rental income due to Hartford under noncancelable
operating leases at December 31, 1999 is as follows:
Year ending December 31:
2000 $ 724,200
2001 724,200
2002 724,200
2003 663,850
----------
$2,836,450
==========
One tenant contributed 100% of rental income for the year ended December
31, 1999 and represents 100% of the future minimum rental income above.
3. RELATED-PARTY TRANSACTIONS
Fund V and Fund VI Associates entered into a property management agreement
with Wells Management Company, Inc. ("Wells Management"), an affiliate of
Fund V and Fund VI Associates. In consideration for supervising the
management of Hartford, Fund V and Fund VI Associates will generally pay
Wells Management management and leasing fees equal to (a) 3% of the gross
revenues for management and 3% of the gross revenues for leasing (aggregate
maximum of 6%) 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.
Hartford incurred management and leasing fees of $28,968, $27,719, and
$30,189 for the years ended December 31, 1999, 1998, and 1997,
respectively, which were paid to Wells Management.
4. COMMITMENTS AND CONTINGENCIES
Management, after consultation with legal counsel, is not aware of any
significant litigation or claims against Hartford and its partners. In the
normal course of business, Hartford and its partners may become subject to
such litigation or claims.
F-42
WELLS REAL ESTATE FUND VI, L.P.
(A Georgia Public Limited Partnership)
SCHEDULE III--REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
Initial Cost Costs of
------------------------------
Buildings and Capitalized
Description Ownership Encumbrances Land Improvements Improvements
- ---------------------------- ----------- -------------- ----------- ----------------- --------------
HARTFORD BUILDING (a) 54% None $ 528,042 $ 6,775,574 $ 26,867
STOCKBRIDGE VILLAGE II (b) 54 None 1,095,219 0 1,980,727
MARATHON BUILDING (c) 42 None 314,591 8,367,904 0
STOCKBRIDGE VILLAGE III (d) 44 None 1,015,674 0 1,994,829
STOCKBRIDGE VILLAGE I
EXPANSION (e) 44 None 712,234 0 2,407,022
880 PROPERTY (f) 27 None 1,325,242 0 5,718,159
BELLSOUTH PROPERTY (g) 34 None 1,244,256 0 7,425,154
TANGLEWOOD COMMONS (h) 34 None 3,020,040 0 5,745,172
CHEROKEE COMMONS (i) 10 None 1,142,663 6,462,837 2,847,156
----------- ----------- ------------
Total $10,397,961 $21,606,315 $ 28,145,086
=========== =========== ============
Gross Amount at Which Carried at December 31, 1999
------------------------------------------------------------------
Buildings and Construction
Description Land Improvements in Progress Total
- ---------------------------- ------------ ----------------- ----------------- --------------
HARTFORD BUILDING (a) $ 528,042 $ 6,802,441 $0 $ 7,330,483
STOCKBRIDGE VILLAGE II (b) 1,094,691 1,981,255 0 3,075,946
MARATHON BUILDING (c) 314,591 8,367,904 0 8,682,495
STOCKBRIDGE VILLAGE III (d) 1,062,720 1,947,783 0 3,010,503
STOCKBRIDGE VILLAGE I
EXPANSION (e) 749,727 2,369,529 0 3,119,256
880 PROPERTY (f) 1,325,242 5,718,159 0 7,043,401
BELLSOUTH PROPERTY (g) 1,301,890 7,367,520 0 8,669,410
TANGLEWOOD COMMONS (h) 3,159,928 5,605,284 0 8,765,212
CHEROKEE COMMONS (i) 1,219,704 9,232,952 0 10,452,656
------------ ----------------- ----------------- --------------
Total $10,756,535 $49,392,827 $0 $60,149,362
============ ================= ================= ==============
Life on Which
Accumulated Date of Date Depreciation
Description Depreciation Construction Acquired Is Computed(j)
- ---------------------------- ----------------- --------------- ----------- ----------------
HARTFORD BUILDING (a) $ 1,544,791 1981 12/29/93 20 to 25 years
STOCKBRIDGE VILLAGE II (b) 430,929 1994 11/12/94 20 to 25 years
MARATHON BUILDING (c) 1,706,784 1991 09/16/94 20 to 25 years
STOCKBRIDGE VILLAGE III (d) 376,556 1995 04/07/94 20 to 25 years
STOCKBRIDGE VILLAGE I
EXPANSION (e) 455,745 1996 06/07/95 20 to 25 years
880 PROPERTY (f) 1,299,227 1996 01/31/90 20 to 25 years
BELLSOUTH PROPERTY (g) 1,624,828 1996 04/25/95 20 to 25 years
TANGLEWOOD COMMONS (h) 690,922 1997 05/31/95 20 to 25 years
CHEROKEE COMMONS (i) 3,165,778 1986 06/09/87 20 to 25 years
-----------------
Total $11,295,560
=================
(a) The Hartford Building is a four-story, 71,000-square-foot
building located in Southington, Connecticut. It is owned by Fund
V and VI Associates.
(b) Stockbridge Village II consists of two retail buildings located
in Clayton County, Georgia. It is owned by Fund V and VI
Associates.
(c) The Marathon Building is a three-story, 75,000-square-foot
building located in Appleton, Wisconsin. It is owned by Fund V,
VI, and VII Associates.
(d) Stockbridge Village III consists of two retail buildings located
in Stockbridge, Georgia. It is owned by Fund VI and VII
Associates.
(e) Stockbridge Village I Expansion is a retail shopping center
located in Stockbridge, Georgia. It is owned by Fund VI and VII
Associates.
(f) The 880 Property is an office-retail shopping center located in
Roswell, Georgia. It is owned by Fund II, III, VI, and VII
Associates.
(g) The BellSouth Property is a four-story, 93,000 square-foot
building located in Jacksonville, Florida. It is owned by the
Fund VI, VII, and VIII Associates.
(h) Tanglewood Commons is a retail shopping center located in
Clemmons, Forsyth County, North Carolina. It is owned by the Fund
VI, VII, and VIII Associates.
(i) 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.
(j) 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 VI, L.P.
(A Georgia Public Limited Partnership)
SCHEDULE III--REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
Accumulated
Cost Depreciation
----------- ----------------
BALANCE AT DECEMBER 31, 1996 $57,518,842 $ 3,936,743
1997 additions 2,236,092 2,339,142
1997 deductions (47,840) (15,208)
----------- ----------------
BALANCE AT DECEMBER 31, 1997 59,707,094 6,260,677
1998 additions 333,473 2,406,187
----------- ----------------
BALANCE AT DECEMBER 31, 1998 60,040,567 8,666,864
1999 additions 108,795 2,628,696
----------- ----------------
BALANCE AT DECEMBER 31, 1999 $60,149,362 $11,295,560
=========== ================
S-2
EXHIBIT INDEX
-------------
(Wells Real Estate Fund VI, L.P.)
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.
Exhibit Sequential
Number Description of Document Page Number
- ------ ----------------------- ------------------
*3(a) Certificate of Limited Partnership of Wells Real Estate N/A
Fund VI, L.P. (Exhibit 3(c) to Registration Statement of
Wells Real Estate Fund VI, L.P. and Wells Real Estate
Fund VII, L.P., File No. 33-55908)
*4(a) Agreement of Limited Partnership of Wells Real Estate N/A
Fund VI, L.P. (Exhibit to Form 10-K of Wells Real Estate
Fund VI, L.P. for the fiscal year ended December 31,
1993, File No. 0-23656)
*10(a) Management Agreement between Wells Real Estate Fund VI, N/A
L.P. and Wells Management Company, Inc. (Exhibit to Form
10-K of Wells Real Estate Fund VI, L.P. for the fiscal
year ended December 31, 1993, File No. 0-23656)
*10(b) Leasing and Tenant Coordinating Agreement between Wells N/A
Real Estate Fund VI, L.P. and Wells Management Company,
Inc. (Exhibit to Form 10-K of Wells Real Estate Fund VI,
L.P. for the fiscal year ended December 31, 1993, File
No. 0-23656)
*10(c) Custodial Agency Agreement dated March 25, 1993, between N/A
Wells Real Estate Fund VI, L.P. and NationsBank of
Georgia, N.A. (Exhibit to Form 10-K of Wells Real Estate
Fund VI, L.P. for the fiscal year ended December 31,
1993, File No. 0-23656)
*10(d) Fund V and Fund VI Associates Joint Venture Agreement N/A
dated December 27, 1993 (Exhibit 10(g) to Post-Effective
Amendment No. 1 to Registration Statement of Wells Real
Estate Fund VI, L.P. and Wells Real Estate Fund VII,
L.P., File No. 33-55908)
Exhibit Sequential
Number Description of Document Page Number
- ------- ----------------------- ------------------
*10(e) Sale and Purchase Agreement dated November 17, 1993, N/A
with Hartford Accident and Indemnity Company (Exhibit
10(h) to Post-Effective Amendment No. 1 to Registration
Statement of Wells Real Estate Fund VI, L.P. and Wells
Real Estate Fund VII, L.P., File No. 33-55908)
*10(f) Lease with Hartford Fire Insurance Company December 29, N/A
1993 (Exhibit 10(i) to Post-Effective Amendment No. 1 to
Registration Statement of Wells Real Estate Fund VI,
L.P. and Wells Real Estate Fund VII, L.P., File No.
33-55908)
*10(g) Amended and Restated Custodial Agency Agreement dated N/A
April 1, 1994, between Wells Real Estate Fund VI, L.P.
and NationsBank of Georgia, N.A. (Exhibit to Form 10-K
of Wells Real Estate Fund VI, L.P. for the fiscal year
ended December 31, 1994, File No. 0-23656)
*10(h) First Amendment to Joint Venture Agreement of Fund V and N/A
Fund VI Associates dated July 1, 1994 (Exhibit 10(x) to
Form 10-K of Wells Real Estate Fund V, L.P. for the
fiscal year ended December 31, 1994, File No. 0-21580)
*10(i) Land and Building Lease Agreement dated March 29, 1994, N/A
between Apple Restaurants, Inc. and NationsBank of
Georgia, N.A., as Agent for Wells Real Estate Fund V,
L.P. (Exhibit 10(y) to Form 10-K of Wells Real Estate
Fund V, L.P. for the fiscal year ended December 31,
1994, File No. 0-21580)
*10(j) Building Lease Agreement dated September 9, 1994, N/A
between Glenn's Open-Pit Bar-B-Que, Inc. and NationsBank
of Georgia, N.A., as Agent for Fund V and Fund VI
Associates (Exhibit 10(z) to Form 10-K of Wells Real
Estate Fund V, L.P. for the fiscal year ended December
31, 1994, File No. 0-21580)
Exhibit Sequential
Number Description of Document Page Number
- ------ ----------------------- ------------------
*10(k) Joint Venture Agreement of Fund V, Fund VI and Fund VII N/A
Associates dated September 8, 1994, among Wells Real
Estate Fund V, L.P., Wells Real Estate Fund VI, L.P. and
Wells Real Estate Fund VII, L.P. (Exhibit 10(j) to
Post-Effective Amendment No. 6 to Registration Statement
of Wells Real Estate Fund VI, L.P. and Wells Real Estate
Fund VII, L.P., File No. 33-55908)
*10(l) Agreement for the Purchase and Sale of Property dated N/A
August 24, 1994, between Interglobia Inc. - Appleton and
NationsBank of Georgia, N.A., as Agent for Fund V and
Fund VI Associates (Exhibit 10(k) to Post-Effective
Amendment No. 6 to Registration Statement of Wells Real
Estate Fund VI, L.P. and Wells Real Estate Fund VII,
L.P., File No. 33-55908)
*10(m) Assignment and Assumption of Agreement for the Purchase N/A
and Sale of Real Property dated September 9, 1994,
between NationsBank of Georgia, N.A., as Agent for Fund
V and Fund VI Associates, and NationsBank of Georgia,
N.A., as Agent for Fund V, Fund VI and Fund VII
Associates (Exhibit 10(l) to Post-Effective Amendment
No. 6 to Registration Statement of Wells Real Estate
Fund VI, L.P. and Wells Real Estate Fund VII, L.P., File
No. 33-55908)
*10(n) Building Lease dated February 14, 1991, between N/A
Interglobia Inc. - Appleton and Marathon
Engineers/Architects/Planners, Inc. (included as part of
Exhibit D to Exhibit 10(k) to Post-Effective Amendment
No. 6 to Registration Statement of Wells Real Estate
Fund VI, L.P. and Wells Real Estate Fund VII, L.P., File
No. 33-55908)
Exhibit Sequential
Number Description of Document Page Number
- ------ ----------------------- ------------------
*10(o) Limited Guaranty of Lease dated January 1, 1993, by J. N/A
P. Finance OY and Fluor Daniel, Inc. for the benefit of
Interglobia Inc. - Appleton (included as Exhibit B to
Assignment, Assumption and Amendment of Lease referred
to as Exhibit 10(p) below, which is included as part of
Exhibit D to Exhibit 10(k) to Post-Effective Amendment
No. 6 to Registration Statement of Wells Real Estate
Fund VI, L.P. and Wells Real Estate Fund VII, L.P., File
No. 33-55908)
*10(p) Assignment, Assumption and Amendment of Lease dated N/A
January 1, 1993, among Interglobia Inc. - Appleton,
Marathon Engineers/Architects/Planners, Inc. and Jaakko
Poyry Fluor Daniel (included as part of Exhibit D to
Exhibit 10(k) to Post-Effective Amendment No. 6 to
Registration Statement of Wells Real Estate Fund VI,
L.P. and Wells Real Estate Fund VII, L.P., File No.
33-55908)
*10(q) Second Amendment to Building lease dated August 15, N/A
1994, between Interglobia Inc. - Appleton and Jaakko
Poyry Fluor Daniel (successor-in-interest to Marathon
Engineers/Architects/Planners, Inc.) (included as
Exhibit D-1 to Exhibit 10(k) to Post-Effective Amendment
No. 6 to Registration Statement of Wells Real Estate
Fund VI, L.P. and Wells Real Estate Fund VII, L.P., File
No. 33-55908)
*10(r) Assignment and Assumption of Lease dated September 6, N/A
1994, between Interglobia Inc. - Appleton and
NationsBank of Georgia, N.A., as Agent for Fund V, Fund
VI and Fund VII Associates (Exhibit 10(q) to
Post-Effective Amendment No. 6 to Registration Statement
of Wells Real Estate Fund VI, L.P. and Wells Real Estate
Fund VII, L.P., File No. 33-55908)
*10(s) Agreement for the Purchase and Sale of Real Property N/A
dated April 7, 1994, between 138 Industrial Ltd. and
NationsBank of Georgia, N.A., as Agent for Wells Real
Estate Fund VI, L.P. (Exhibit to Form 10-K of Wells Real
Estate Fund VI, L.P. for the fiscal year ended December
31, 1994, File No. 0-23656)
Exhibit Sequential
Number Description of Document Page Number
- ------- ----------------------- ------------------
*10(t) Land and Building Lease Agreement dated August 22, 1994, N/A
between KRR Stockbridge, Inc. d/b/a Kenny Rogers
Roasters and NationsBank of Georgia, N.A., as Agent for
Wells Real Estate Fund VI, L.P. (Exhibit to Form 10-K of
Wells Real Estate Fund VI, L.P. for the fiscal year
ended December 31, 1994, File No. 0-23656)
*10(u) Joint Venture Agreement of Fund VI and Fund VII N/A
Associates dated December 9, 1994 (Exhibit to Form 10-K
of Wells Real Estate Fund VI, L.P. for the fiscal year
ended December 31, 1994, File No. 0-23656)
*10(v) Building Lease Agreement dated December 19, 1994, N/A
between Damon's of Stockbridge, LLC d/b/a Damon's
Clubhouse and NationsBank of Georgia, N.A., as Agent for
Fund VI and Fund VII Associates (Exhibit to Form 10-K of
Wells Real Estate Fund VI, L.P. for the fiscal year
ended December 31, 1994, File No. 0-23656)
*10(w) Joint Venture Agreement of Fund II, III, VI and VII N/A
Associates dated January 10, 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(x) Joint Venture Agreement of Fund VI, Fund VII and Fund N/A
VIII Associates dated April 17, 1995 (Exhibit 10(q) to
Post-Effective Amendment No. 3 to Form S-11 Registration
Statement of Wells Real Estate Fund VIII, L.P. and Wells
Real Estate Fund IX, L.P., File No. 33-83852)
*10(y) Agreement for the Purchase and Sale of Real Property N/A
dated February 13, 1995, between G.L. National, Inc. and
Wells Capital, Inc. (Exhibit 10(r) to Post-Effective
Amendment No. 3 to Form S-11 Registration Statement of
Wells Real Estate Fund VIII, L.P. and Wells Real Estate
Fund IX, L.P., File No. 33-83852)
Exhibit Sequential
Number Description of Document Page Number
- ------- ----------------------- ------------------
*10(z) Agreement to Lease dated February 15, 1995, between N/A
NationsBank of Georgia, N.A., as Agent for Wells Real
Estate Fund VII, L.P. and BellSouth Advertising &
Publishing Corporation (Exhibit 10(s) to Post-Effective
Amendment No. 3 to Form S-11 Registration Statement of
Wells Real Estate Fund VIII, L.P. and Wells Real Estate
Fund IX, L.P., File No. 33-83852)
*10(aa) Development Agreement dated April 25, 1995, between Fund N/A
VI, Fund VII and Fund VIII Associates and ADEVCO
Corporation (Exhibit 10(t) to Post-Effective Amendment
No. 3 to Form S-11 Registration Statement of Wells Real
Estate Fund VIII, L.P. and Wells Real Estate Fund IX,
L.P., File No. 33-83852)
*10(bb) Owner-Contractor Agreement dated April 24, 1995, between N/A
Fund VI, Fund VII and Fund VIII Associates, as Owner,
and McDevitt Street Bovis, Inc., as Contractor (Exhibit
10(u) to Post-Effective Amendment No. 3 to Form S-11
Registration Statement of Wells Real Estate Fund VIII,
L.P. and Wells Real Estate Fund IX, L.P., File No.
33-83852)
*10(cc) Architect's Agreement dated February 15, 1995, between N/A
Wells Real Estate Fund VII, L.P., as Owner, and Mayes,
Suddereth & Etheredge, Inc., as Architect (Exhibit 10(v)
to Post-Effective Amendment No. 3 to Form S-11
Registration Statement of Wells Real Estate Fund VIII,
L.P. and Wells Real Estate Fund IX, L.P., File No.
33-83852)
*10(dd) First Amendment to Joint Venture Agreement of Fund VI N/A
and Fund VII Associates dated May 25, 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(ee) First Amendment to Joint Venture Agreement of Fund VI, N/A
Fund VII and Fund VIII Associates dated May 30, 1995
(Exhibit 10(w) to Post Effective Amendment No. 4 to Form
S-11 Registration Statement of Wells Real Estate Fund
VIII, L.P. and Wells Real Estate Fund IX, L.P., File No.
33-83852)
Exhibit Sequential
Number Description of Document Page Number
- ------- ----------------------- ------------------
*10(ff) Real Estate Purchase Agreement dated April 13, 1995 N/A
(Exhibit 10(x) to Post Effective Amendment No. 4 to Form
S-11 Registration Statement of Wells Real Estate Fund
VIII, L.P. and Wells Real Estate Fund IX, L.P., File No.
33-83852)
*10(gg) Lease Agreement dated February 27, 1995, between N/A
NationsBank of Georgia, N.A., as agent for Wells Real
Estate Fund VII, L.P., and Harris Teeter, Inc. (Exhibit
10(y) to Post Effective Amendment No. 4 to Form S-11
Registration Statement of Wells Real Estate Fund VIII,
L.P. and Wells Real Estate Fund IX, L.P., File No.
33-83852)
*10(hh) Development Agreement dated May 31, 1995, between Fund N/A
VI, Fund VII and Fund VIII Associates and Norcom
Development, Inc. (Exhibit 10(z) to Post Effective
Amendment No. 4 to Form S-11 Registration Statement of
Wells Real Estate Fund VIII, L.P. and Wells Real Estate
Fund IX, L.P., File No. 33-83852)
*10(ii) Joint Venture Agreement of Fund I, II, II-OW, VI and VII N/A
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(jj) Lease Modification Agreement No. 3 with The Kroger Co. N/A
dated December 31, 1993 (Exhibit 10(k) to Form 10-K of
Wells Real Estate Fund I for the fiscal year ended
December 31, 1993, File No. 0-14463)